Bendel and FCT - Interim Decision Impact Statement
The Commissioner’s Interim Decision Impact Statement outlines the ATO’s response to the decision of the Tribunal in Bendel and FCT [2023] AATA 3074.
The Tribunal found, in favour of the Taxpayers, that the outstanding unpaid present entitlements (UPEs) between the Trust and the corporate beneficiary from the 2014 to 2017 income years were not loans for the purposes of s. 109D(3) of the ITAA 1936 and therefore did not give rise to deemed dividends under Div 7A.
The Tribunal found: a loan within the meaning of s. 109D(3) did not reach so far as to embrace the rights in equity created when entitlements to trust income (or capital) were created but not satisfied and remained unpaid, the balance of an outstanding or unpaid entitlement of a corporate beneficiary of a trust, whether held on a separate trust or otherwise, was not a loan to the trustee of the trust.
The Commissioner has appealed the Tribunal’s decision — until the appeal process is finalised the Commissioner: does not intend to revise the current ATO views relating to private company entitlement to trust income, will administer the law in accordance with the published views, does not propose to finalise objection decisions in relation to objections to past year assessments where the decision turns on whether or not a UPE was a s. 109D(3) loan.
