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Division 7A and complex structures

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Published on 01 Oct 13 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

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), is an Accredited Tax Law Specialist and Principal of AGA Legal Pty Ltd. He is a highly competent and well-respected tax lawyer with 30 years’ experience. While he provides clients with tax and structuring advice, his main area of focus is in resolving tax disputes with the ATO and SRO and settling tax audits. Arthur also practises in matters involving tax agents and inquiries by the Tax Practitioners Board including appealing adverse TPB decisions. His practice also extends to white-collar crime, and other taxation offences. He also has a Deceased Estates practice. Arthur has qualified as a Chartered Accountant and is a former President of The Tax Institute. He has been appointed as an Adjunct Professor at La Trobe University Law School and chaired the Law Institute’s Tax Law Advisory Committee for a decade. Arthur has been recognized by Doyle's Guide who has recognized him as a "Leading Lawyer, Tax Law, Victoria" multiple times (2016, 2018-2024) and a "Recommended Lawyer, Tax Law, Victoria" (2015, 2017). Best Lawyers Peer Review recognised him as "Best Lawyer Trusts and Estates" (2022-2026) and for his work in Tax Law (since 2023). He is a widely published writer on taxation issues and regularly appears in mainstream media and presents at tax conferences and seminars. - Current at 03 June 2025
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