From www.pitcher.com.au: The ATO has indicated that unpaid present entitlements must be converted into loans to comply with Division 7A, as per a controversial decision by the Full Federal Court.

Despite the ATO’s stance, it is argued that UPEs do not necessarily need to be legally transformed into loans, as they can be made subject to complying loan terms instead.

As uncertainty remains regarding the outcome of the ATO’s appeal to the High Court, clients are advised to review their situations and take appropriate action before the upcoming deadline.