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Certain trust amounts treated as loans

Last updated 11 January 2005

A deemed loan may arise, made by the private company to the shareholder or the associate of the shareholder, if a private company is a beneficiary of a trust estate, and:

  • the private company is or has been presently entitled to an amount from the net income of the trust estate
  • the trustee has not paid the amount to the private company
  • the trustee has made a loan to a shareholder of the private company or an associate of the shareholder after the time that the private company first became presently entitled to that amount.

Note: On 12 December 2002 the Government announced that, with effect from that date, it would replace section 109UB of the ITAA 1936 dealing with 'certain trust amounts treated as loans' so as to improve its effectiveness and remove the unfairness associated with its operation.

Tax Laws Amendment (2004 Measures No. 1) Bill 2004 which contains the amendments to replace section 109UB, was introduced into Parliament on 19 February 2004. At the time of printing the Bill had yet to be enacted.