Published on 11 Jun 09
by VICTORIAN DIVISION, THE TAX INSTITUTE
This paper discusses the classification and taxation of loans and unpaid present entitlements under
Division 7A ITAA 1936 and the comments made by Deputy Commissioner Mark Konza on 31 March 2009. Particular topics covered are:
- what constitutes a loan and an UPE
- identification of uncertainties for applying Subdivision EA
- the potential risks of misdescribing a UPE as a loan in the accounts
- the potential application of Division 7A to amount held on sub trust
- the management of sub trust amounts retained by the head trust.
The paper also considers the recent statements in the press regarding the ATO's view on the taxation of trusts.
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