From taxrambling.com: The Federal Court ruled in Commissioner of Taxation v Bendel that Division 7A does not apply to unpaid present entitlements (UPEs) for corporate beneficiaries unless there is a loan to an individual shareholder.

his decision means a trust can distribute a company’s profits while retaining operational funds without being affected by Division 7A, as long as the trust does not lend to shareholders.

The court’s ruling indicates that the Commissioner has misapplied the law since December 2009, leading to unnecessary tax burdens on taxpayers.