The Tax Workshop is perfect for sole practitioners and small practices, offering practical, expert-led sessions designed to refresh your knowledge and keep you ahead in the ever-changing tax landscape.

The following topics will be covered in the September session:

Tax Brief

What we cover: Our Tax Brief is a review of the current tax landscape to keep you up-to-date with any changes and current news.

FTEs: The Practical Essentials

Even after 27 years in the 1936 Tax Act, the Trust loss rules in Schedule 2F can seem impenetrable. The judicial consideration of the rules has been limited, for example: 

• Colonial First State [2011] FCA 16 – what is a fixed entitlement/fixed trust
• Eldersmede Pty Ltd [2004] AATA 710 – the income injection test
• Advanced Holdings Pty Limited ATF The Demian Trust [2020] FCA 1479 – the control test and circularity of distributions.

At least once a year advisers have to turn their minds to whether their clients’ trusts should have made a family trust election (FTE) and other entities an interposed entity election (IEE) in order to:

• Recoup prior year losses against income received from another family entity or facilitate a loss company in which the trust has a majority interest to satisfy the continuity of ownership test
• Satisfy the 45-day holding period rule in relation to franked dividend received by the trust so that beneficiaries can benefit from the franking credits escape the trustee beneficiary reporting rules
• Satisfy ultimate ownership conditions for the purposes of the small business roll-over in Subdiv 328-G of the ITAA 1997

If an FTE or IEE has been made, consideration may have to be given to whether a revocation is desirable or even possible.

UPEs Post the Bendel Decision

The Full Federal Court’s decision in February 2025 that a ‘loan’ for the purposes of s. 109 in Div 7A of the ITAA 1936 did not extend to unpaid present entitlements (UPEs) – i.e. it was not financial accommodation – generated widely varying responses: 

• The Commissioner was unmoved – the interim decision impact statement tells us that, pending the High Court’s decision, it is business as usual and anyway, the anti-avoidance provision in s. 100A of the ITAA 1936 could apply.
• Some tax advisers were ready to object to any unfavourable decisions based on the Commissioner’s now impugned view which the ATO had issued to their clients.
• Other tax advisers lamented the potential prospect of having to deal with UPEs under Subdiv EA

In this session we consider, subject to the outcome of the High Court appeal:

• The Div 7A implications of a UPE being treated as financial accommodation i.e. a loan and the alternative if the UPE is treated as an equitable entitlement, but not a loan
• The scope of Subdivision EA – UPEs
• The Commissioner’s view of when the anti-avoidance provision in s .100A could be applied to a present entitlement: TR 2022/4 and PCG 2022/2
• Options for advisers in respect of their clients’ UPEs

All TaxBanter tax training qualifies as eligible CPE/CPD hours.