Bendel decision | ATO appeals and updates Decision Impact Statement
20/03/2025
The Commissioner has sought special leave to appeal the Full Federal court decision that unpaid present entitlements are not loans for the purpose of Division 7A.
Since the appeal application has been made, the Commissioner has released a decision impact statement outlining their approach to Division 7A in the interim, pending the outcome of the appeal process.
For more insight on the original decision of the Full Federal Court see our previous alert.
What the Commissioner states
The Commissioner states that they will:
- continue to apply the law as though an unpaid present entitlement (UPE) is a loan for Division 7A purposes
- consider the application of other provisions (for example section 100A) where UPE remain unpaid.
- not issue any amended assessments, private binding rulings or objection decisions. If such decisions are required to be made, decisions will be made in accordance with the ATO’s existing view.
What an appeal involves
An appeal to the High Court is a 2-step process.
- There must be a special leave application accepted by the High Court (at this stage the Commissioner has only lodged an application) and
- if the special leave application is accepted, there will be a full hearing. However, only 10 – 15% of special leave applications are accepted by the High Court.
How SW can help
There is going to be a period of uncertainty for taxpayers about how to treat an UPE given the Commissioner’s position and the Commissioner’s chance of success.
In the meantime, we encourage you to discuss the Bendel decision and its impact on your own group’s UPEs with your SW contact or the specialist tax contacts listed in this alert.
