Pre-16 December 2009 UPEs not Division 7A loans

The Commissioner will not treat any pre-16 December 2009 UPEs as Division 7A loans, this is so even when the UPEs are not placed on sub-trusts for the sole benefit of the beneficiary.

Therefore, there is no need for you to pay out any pre-16 December 2009 UPEs to prevent them being treated as dividends paid by the private company to the main-trust. However, you should quarantine or isolate any pre-16 December 2009 UPEs in the books of the trust so that any pre-16 December 2009 UPEs can be clearly identified.

You should also note that Subdivision EA of Division 7A can still apply if the trust makes a payment or loan to, or forgives the debt of, a shareholder or associate of the shareholder of the private company for as long a there is a UPE of the private company to trust income, including any pre-16 December 2009 UPEs.

    Last modified: 22 Jun 2011QC 24445