From cadenalegal.com.au: The Bendel decision from the Administrative Appeals Tribunal ruled that Unpaid Present Entitlements owed to corporate beneficiaries by trusts are not classified as “loans” under Division 7A of the Income Tax Assessment Act 1936, challenging the Australian Taxation Office’s (ATO) previous interpretation.

The ATO plans to maintain its current guidelines and interpretations during the appeal process while potentially applying anti-avoidance provisions to prevent tax avoidance.

This ruling creates uncertainty regarding the tax treatment of UPEs, leaving taxpayers in a position to cautiously utilise the Bendel decision while awaiting further legal clarification.