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Unpaid present entitlement paper


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.

Author profile

Ronald Jorgensen CTA
Ron Jorgensen, CTA, principally consults on Commonwealth and State tax laws, tax dispute resolution and compliance enforcement. Ron specialises in trusts and trust disputes, succession and asset protection, business and investment structuring and tax sensitive commercial and property transactions. Ron is an Accredited Specialist Tax Law and member of the Tax Law Advisory Committee with the Law Institute of Victoria. He is a member of the Law Institute of Victoria and The Tax Institute. Ron is a member of the Tax Technical Committee (Vic), a member and former chair of the States Taxes Committee (Vic) and former representative of the Victorian State Taxes Consultative Council for The Tax Institute. Ron is a member of the Property Council of Australia Tax Committee (Victorian Division). Ron was recognised by Doyle’s Guide as a Recommended Tax Lawyer for 2015, 2016, 2017 and 2018 and as a Leading Tax Lawyer for 2020 and in Best Lawyers Australia 2021. - Current at 16 December 2020
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Unpaid present entitlement

Author(s):  Ron JORGENSEN

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