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TR 2010/3 on UPEs and Div 7A: An unwelcome U-turn?

Published on 01 Apr 15 by "THE TAX SPECIALIST" JOURNAL ARTICLE

The utilisation of unpaid present entitlements by close-knit groups involving trusts and private corporate beneficiaries to retain working capital at the corporate tax rate was so prevalent that it became a cause for concern. In response, in 2009, the ATO took an unwelcome U-turn to regard certain unpaid present entitlements (UPEs) as loans. In the absence of judicial authority, the ATO faced a daunting task of using Div 7A of the Income Tax Assessment Act 1936 (Cth) to regulate UPEs against a backdrop of well-established legal and equitable principles. The result is TR 2010/3, which leaves taxpayers and advisers in an unsatisfactory state of flux, with significant administrative, commercial and legal ramifications.

Author profile:

Cindy Chan
Cindy is a tax writer at Wolters Kluwer, CCH. She contributes to various publications including Australian Master Tax Guide, Australian Federal Tax Reporter, Australian Tax Week and Australian Tax Monitor. Previously, she worked at Atax, University of New South Wales.
Current at 1 April 2015
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