ATO maintains stance on Bendel case amid High Court appeal

Deputy Commissioner Louise Clarke has addressed recent developments concerning the Bendel case, emphasising the ATO’s current position on unpaid present entitlements (UPEs) and their classification under Division 7A.

The Full Federal Court’s decision in February 2025 contradicted the ATO’s longstanding view, prompting the Commissioner to seek special leave to appeal to the High Court.

Until the High Court’s decision, the ATO maintains its position as outlined in Taxation Determination TD 2022/11, which treats certain UPEs as loans under Division 7A.  Clarke advises taxpayers to review the ATO’s Interim Decision Impact Statement and consult with their tax agents to understand the implications for their specific circumstances.

The ATO has indicated that it will not grant blanket deferrals for tax return lodgments related to this issue.  However, the Commissioner may exercise his discretion under section 109RB to disregard deemed dividends in cases of honest mistakes or inadvertent omissions, should the High Court rule in the ATO’s favour.