The corporate beneficiary is the sole unit holder. My understanding is that Div 7a doesn't apply because there are no other beneficiaries of the trust, especially not individuals whom are also shareholders of the corporate trustee.
From accountantsdaily today:
The ATO will stick to its guns on loans and trust entitlements as it awaits an appeal against the AAT decision in the recent Bendel case, which overturned more than a decade of edicts.
Since 2009 the ATO has ruled that an unpaid present entitlement to a company constitutes a Division 7A loan and its position has informed the tax outcomes for thousands of trusts.
“Until the appeal process is finalised, the Commissioner does not intend to revise the current ATO views relating to private company entitlements to trust income, as set out in Taxation Determination TD 2022/11 Income tax: Division 7A: when will an unpaid present entitlement or amount held on sub-trust become the provision of ‘financial accommodation’?
“Pending the outcome of the appeal process, the ATO is administering the law in accordance with the published views relating to private company entitlements and trust income in TD 2022/11.”
From accountantsdaily today:
The ATO will stick to its guns on loans and trust entitlements as it awaits an appeal against the AAT decision in the recent Bendel case, which overturned more than a decade of edicts.
Since 2009 the ATO has ruled that an unpaid present entitlement to a company constitutes a Division 7A loan and its position has informed the tax outcomes for thousands of trusts.
“Until the appeal process is finalised, the Commissioner does not intend to revise the current ATO views relating to private company entitlements to trust income, as set out in Taxation Determination TD 2022/11 Income tax: Division 7A: when will an unpaid present entitlement or amount held on sub-trust become the provision of ‘financial accommodation’?
“Pending the outcome of the appeal process, the ATO is administering the law in accordance with the published views relating to private company entitlements and trust income in TD 2022/11.”
Thanks Bruce - I came across a law firm's position on this, which may not be correct, so to quote one sentence...
"Before TR 2010/3 an UPE was ok as long as the money was not paid to a shareholder. But now – since 16 December 2009 – the existence of the UPE itself is the problem if the shareholder is also a beneficiary of the trust".
The question for me is, does the shareholder have to be a beneficiary of the trust to become 'associated' or can it be so simply by being the trustee, or director of trustee company, of the trust - if the latter is correct then the statement by the law firm is incorrect. In my clients case, the trust is a unit trust where the beneficiary is soley the company - no other beneficiaries.
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