05 Mar 10
Joint Submission on TR 2009/D8: Income Tax: Division - 7A loans: trust entitlements
On 18 February 2010, a joint submission was lodged with the ATO in respect of draft Taxation Ruling TR 2009/D8 (Income Tax: Division 7A loans: trust entitlements) on behalf of the following professional bodies:
- The Institute of Chartered Accountants in Australia
- CPA Australia
- Taxpayers Australia Inc
- National Institute of Accountants
- The Taxation Institute of Australia
- Law Council of Australia.
The submission sets out concerns on the following key issues:
- The draft Ruling contradicts the underlying policy intent of Division 7A
- The application of section two of the draft Ruling concerning the extinguishment of a unpaid present entitlement (UPE) and its conversion into a loan
- The application of section three which provides that a subsisting UPE may amount to either the provision of financial accommodation or an in-substance loan under section 109D(3)
- The residual application of Subdivision EA, and
- Certain adverse tax consequences which arise from the draft Ruling.
For a copy of the joint submission, go here