• What is the amount of the loan?

    The amount of the loan is the lesser of:

    • the amount loaned by the trustee
    • the unpaid present entitlement to net income less amounts that have previously been taken to be dividends under these rules or taken to be loans under section 109UB (the former rules) but only to the extent those amounts relate to the unpaid present entitlement.

    Example 8

    Anthony is a shareholder of Tony Pty Ltd and also a beneficiary of the Z Trust. Tony Pty Ltd became presently entitled to an amount of $200,000 of the net income of the trust for the 2002 income year. That amount remains unpaid at the earlier of the due date for lodgment or date of lodgment of the trust's tax return for the 2004 income year.

    On 14 April 2004, the Z Trust loaned Anthony an amount of $100,000. The loan is not put under a written agreement or repaid by the earlier of the due date for lodgment or date of lodgment of the Z Trust's tax return of the 2004 year. In the 2002 year Anthony was taken under the former section 109UB to receive a loan from Tony Pty Ltd of $130,000 and that amount was included in his assessable income as an unfranked dividend.

    The amount of the loan for the purpose of determining whether Anthony is taken to receive a dividend in the 2004 year is the lesser of:

    the $100,000 loaned by the Z Trust

    the unpaid present entitlement to Tony Pty Ltd of $200,000, reduced by the $130,000 loan made to Anthony in the 2002 year and included in his assessable income (that is, $70,000).

    As $70,000 is the lesser of these amounts, the amount of the loan is $70,000.

      Last modified: 18 Aug 2010QC 17634