The Court rejected Ceramics' arguments that "the interposition of the Unit Trust and of Tile as trustee of it between Ceramics and the unitholders should be ignored" and that the case should be "considered as one of payments made by Ceramics as to three quarters to itself and as to one quarter to [the other unitholder]". Likewise, their submission "that it is unrealistic and unjust that it should be considered otherwise" was also rejected.
The Court said, at para 112:
"Instead of having actually paid a dividend to Tile as trustee, Ceramics is deemed to have done so, and instead of a bare trust for them, Tile holds on the terms of a unit trust under which they are, it is accepted, presently entitled to income. Once it is accepted that the deemed dividend provisions of Div 7A are enlivened, so are the provisions of Div 6."
Di Lorenzo Ceramics Pty Ltd v FCT  FCA 1006 (Federal Court, Lindgren J, 5 July 2007).
For a copy of the decision, go here