From taxbanter.com.au: The Full Federal Court ruled in the Bendel case that an unpaid present entitlement is not classified as a loan under s.109D(3) of Division 7A of the Income Tax Assessment Act 1936.

This decision contrasts with the Australian Taxation Office’s previous interpretation, which had deemed unpaid UPEs as loans under certain circumstances.

The tax implications and strategies for managing UPEs remain uncertain as practitioners await further guidance from the Australian Taxation Office following this ruling.