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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.

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