In these circumstances, the ATO did not give the subjects the option to place the investment option 1 due under a 25-year Division 7A that complies with a loan agreement. The Commissioner will not treat UPEs as Loans of Division 7A until 16 December 2009, even if the UPE is not contracted into subtruses for the sole benefit of the beneficiary. It should also be noted that the EA sub-division of Division 7A may continue to be applied if the Trust makes a payment or loan to a shareholder or partner of the private company`s shareholder or assigns the debts of the shareholder or partner of the private company, provided that an EPU places the revenues of the private company, including all FONDS before December 16, 2009. The agent decides not to place UPE on a sub-trust until the day of Trust A`s 2016 tax return. Trust B`s agent is aware of this, but does not request that the payment of his EPU or funds representing this EPU be held to their exclusive advantage. As a result, UPE would constitute a financial deposit and therefore a loan from Trust B to Trust A for the purposes of Division 7A. As part of the dividend rules for private companies, The Australian Taxation Office (ATO) has published the Practical Compliance Guideline PCG 2017/2013 regarding the repayment of contemporary unpaid debts (ESUs) against private beneficiaries that have been invested in a seven-year interest loan and mature on June 30, 2018 or before June 30, 2018. In a positive move, the ATO confirmed that if the principal of the loan is not repaid on or before the due date, a seven-year Division 7A contract may be entered into between the trust and the beneficiary of the private company. This effectively allows the amount to be refunded for a further seven years, with regular payments in principal and interest. However, this is clearly a quick fix for investment agreements that will expire in the next 12 months.
It ignores agreements that expire after June 30, 2018 or taxpayers who have signed up for Investment Option 2 (i.e. interest of only 10 years), which could penalize many taxpayers. The EA division of Division 7A applies to certain fiduciary payments, loans and cancellations of debts to a shareholder (or associated company) of a private company on or after December 12, 2002. This is a welcome message for family groups that manage the reimbursement and maintenance of UPE investment agreements, as they offer them a desperately needed respite. The principles set out in TR 2010/3 and PS LA 2010/4 apply to COMPANIE-based UFEs, including another trust. Therefore, if Trust A appoints income to Trust B (a trust belonging to the same family group) but does not pay the funds to Trust B, UPE is able to obtain financial back-housing and may be a loan for divisions 7A purposes, unless the conditions set out in PS LA 2010/4 are met.