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Bendel appeal could affect Section 100A approach, says ATO


A decision by the Full Federal Court that ends up being unfavourable to the ATO for the Bendel appeal could have implications for the ATO’s Section 100A approach.

By Miranda Brownlee 11 minute read

In a recent webinar, the Australian Taxation Office (ATO) stressed that until the Full Federal Court hands down its decision on the Bendel case later this year, the ATO will continue to apply the rules of the law based on the ATO’s view established in TD 2022/11.

In September last year, the Administrative Appeals Tribunal (AAT) in Bendel v FCT [2023] AATA 3074 determined that an unpaid present entitlement (UPE) between a corporate beneficiary and trust did not constitute a loan under s109D(3) ITAA 1936.

This challenged the ATO’s established view set out in TD 2022/11 that an unpaid present entitlement to a company constitutes a Division 7A loan.


The ATO announced in November it would appeal the AAT’s decision in respect of loans made to trusts and unpaid present entitlements.

It previously outlined in its decision impact statement that until the appeal is finalised, it will not revise its current views on unpaid present entitlements or seek to finalise affected objection decisions.

“We’ll continue to apply current advice and guidance as set out in TD 2022/11,” it said.

In a recent webinar, Anthony Marvello, ATO assistant commissioner, small business, said the Full Federal Court will hand down its decision on the appeal in August this year, which may potentially also have implications for Section 100A depending on the outcome.

“There is an element of concern that if that [decision] doesn’t go how we expect it to go, then there may also be issues associated with Section 100A of the Income Tax Assessment Act 1936,” Marvello said.

“[There may be] implications that arise under that so it’s a bit of a watch this space thing.”

Marvello said that until the decision comes down, the ATO will continue to apply the law to loans that fall into the scope of Bendel based on TD 2022/11.

Kasey Macfarlane, ATO assistant commissioner, private wealth, said for clients who have either paid out their present entitlement or put it on complying Division 7A terms, there is unlikely to be much impact for them regardless of the decision in Bendel.

Macfarlane said there has also been some speculation in presentations and forums that if the commissioner’s view is upheld in Bendel that the Commissioner may seek to bring pre-2009 UPEs in the mix of Division 7A, contrary to previous undertakings.

“I want to clarify that that is pure speculation and not what the commissioner proposes to do regardless of the outcome in Bendel,” said Macfarlane.

Miranda Brownlee

Miranda Brownlee


Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda
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