From www.pwc.com.au: The Full Federal Court dismissed the ATO appeal, ruling that a UPE from a trust to a private company does not constitute a loan under Division 7A, effectively overturning the ATO’s long-standing position.

The court clarified that merely having a UPE does not create an obligation to repay, thus distinguishing it from loans as defined by tax law.

The decision may prompt the ATO to seek an appeal to the High Court or legislative amendments to address the implications for private companies and their trust distribution strategies.