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Bendel High Court Decision: ATO Updates Its Position on Unpaid Present Entitlements

July 2, 2026

Australian Taxation Office (ATO) has now released its Decision Impact Statement (DIS) following the High Court’s landmark decision in the Bendel case. The statement explains how the ATO will apply the law going forward and provides greater certainty for trustees, companies and private groups dealing with unpaid present entitlements (UPEs).

While the decision is welcome news for many taxpayers, it does not remove the need for careful tax planning. The ATO has confirmed it will continue to examine trust arrangements using other anti-avoidance provisions where appropriate.

ATO Withdraws Previous Division 7A Guidance

One of the most significant outcomes is the withdrawal of the ATO’s previous guidance that treated certain unpaid present entitlements as loans under Division 7A.

Following the High Court’s decision, that administrative approach is no longer being applied, providing greater clarity for many trust structures involving corporate beneficiaries.

Delayed ATO Reviews Will Now Resume

During the Bendel litigation, the ATO deferred action on a range of matters while waiting for the Court’s final decision. These included objection decisions, private ruling requests and some amended assessments.

The Decision Impact Statement confirms that these matters will now be progressed using the principles established by the High Court.

Taxpayers who have outstanding ATO matters relating to unpaid present entitlements should consider reviewing their position with their tax adviser.

The ATO Will Still Monitor Trust Arrangements

Although the High Court found that a typical unpaid present entitlement is not automatically treated as a loan for Division 7A purposes, the ATO has made it clear that it will continue to monitor arrangements that may give rise to other tax concerns.

Depending on the facts, the Commissioner may still consider the application of:

  • Subdivision EA, where trust funds are later made available to shareholders or their associates;
  • Section 100A, where trust distributions form part of reimbursement arrangements; and
  • Part IVA, Australia’s general anti-avoidance rules.

Each trust arrangement should therefore be assessed on its own circumstances rather than assuming the Bendel decision resolves every Division 7A issue.

What Trustees Should Do Next

The Bendel decision is an important development for family trusts and private groups. However, it should not be viewed as a reason to ignore existing trust structures or documentation.

Trustees should consider reviewing:

  • unpaid present entitlement arrangements;
  • trust distribution resolutions;
  • loans involving corporate beneficiaries;
  • trust cash flow movements; and
  • overall Division 7A and Section 100A compliance.

Taking a proactive approach can reduce the risk of future ATO reviews and help ensure trust arrangements remain effective.

How Gavin Ma & Co Can Help

At Gavin Ma & Co, we work closely with business owners, family groups and SMSF trustees to navigate complex tax legislation and changing ATO positions.

Our team can assist with:

  • Division 7A advice;
  • Trust distribution planning;
  • Family trust tax strategies;
  • Section 100A reviews;
  • Corporate beneficiary arrangements; and
  • Responding to ATO enquiries and reviews.

If your trust has unpaid present entitlements or you are unsure how the Bendel decision affects your circumstances, we can help you understand the implications and implement practical, compliant solutions.

Disclaimer: This article provides general information only and should not be relied upon as taxation or legal advice. Tax outcomes depend on your individual circumstances. Professional advice should be obtained before making any decisions based on this information.