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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-Life
Photo of author, Arthur ATHANASIOU Arthur Athanasiou CTA (Life) practises mainly in the area of taxation advisory, with an emphasis on dispute resolution, particularly in the SME sector, with both the ATO and the SRO. Arthur has many years experience in complex tax litigation and tax audit negotiations and settlements. 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 qualified as a Chartered Accountant and also held senior taxation and management positions in the transport and motor vehicle industries. Arthur is a former President of The Tax Institute, has chaired the Law Institute’s Tax Law Advisory Committee for a decade and now serves on the Industry Advisory Board of the IPA-Deakin University SME Research Centre. 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. - Current at 21 September 2018
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