• Complying loan agreement as an alternative

    The private company may agree for its UPE to be set-off against a loan it makes back to the trust under a Division 7A complying loan agreement (that is, for its UPE to be satisfied and lent back under such an agreement) instead of the trustee holding the funds on a sub-trust for the sole benefit of the private company beneficiary. In these circumstances, the private company would not have any subsisting UPE but rather a loan asset owing from the trust. Minimum yearly repayments will need to be made in accordance with section 109N.

      Last modified: 22 Jun 2011QC 24445