From smsmagazine.com.au: A recent full Federal Court decision has challenged the classification of unpaid present entitlements (UPEs) from unit trusts as loans under Division 7A of the Income Tax Assessment Act.

The court clarified that UPEs do not meet the definition of financial accommodation, as they do not involve an advancement of principal with an obligation to repay.

This ruling has significant implications for self-managed superannuation funds (SMSFs) due to parallels between the Income Tax Assessment Act and the Superannuation Industry (Supervision) Act.