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Division 7A and complex structures


TR 2010/3 and PS LA 2010/4 consider the circumstances in which a private company with an unpaid present entitlement (UPE) to an amount from an associated trust estate makes a loan to that trust within the meaning of Div 7A of Pt III of the Income Tax Assessment Act 1936. This article examines the ruling and practice statement, and a recent decision of the Administrative Appeals Tribunal which suggests that compliance with the ruling and the practice statement is mandatory. The author considers that the ruling and practice statement, and Div 7A itself, can never be ignored in any commercial enterprise structure, from the most basic to the most complex.

The article outlines the proper approach to UPEs in this context, and also considers typical scenarios in which Div 7A applies, other than a UPE scenario. Finally, the article examines the Commissioner’s discretion in s 109RB.

Author profile

Arthur Athanasiou CTA
Photo of author, Arthur ATHANASIOU Arthur, a Partner at Thomson Geer Lawyers, has many years experience in complex tax litigation and tax audit negotiations and settlements. Arthur’s main area of practice is taxation advisory, with an emphasis on dispute resolution, particularly in the SME sector, with both the ATO and the SRO. He also has broad experience in the taxation of trusts and SME entities, with an emphasis on Div 7A and high-wealth individuals and family groups. Arthur has extensive experience in all areas of direct and indirect taxation and has qualified as a Chartered Accountant. He has also held senior taxation and management positions in the transport and motor vehicle industries, with specialist experience in logistics, supply chain, chain of responsibility and contract warehousing. Arthur is the President of The Tax Institute as well as a State Councillor, and also chairs the Law Institute’s Tax Law Advisory Committee. Arthur is an Accredited Tax Law Specialist and a widely published writer on taxation issues. He regularly appears in the mainstream media, and presents at tax seminars and discussion groups. Arthur has been recognised in Doyle’s Guide 2015 as a recommended tax lawyer in Victoria. - Current at 12 April 2017
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