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The Tax Institute Submission | Draft Taxation Determination TD 2022/D1 | Income tax: Division 7A: when will an unpaid present entitlement or amount held on sub-trust become the provision of ‘financial accommodation’?

Published on 02 May 22 by THE TAX INSTITUTE

In the development of this submission, we have closely consulted with our National Small and Medium Enterprises Technical Committee and National Taxation of Individuals Committee to prepare a considered response which represents the views of the broader membership of The Tax Institute.

Given that the draft TD will effectively replace Taxation Ruling TR 2010/3: Income tax: Division 7A loans: trust entitlements (TR 2010/3), and Law Administration Practice Statement PS LA 2010/4: Division 7A: trust entitlements (PS LA 2010/4), it is important to ensure that taxpayers will still have access to the relevant information and be able to effectively transition from the existing guidance to the new guidance. In particular, this will involve ensuring that any safe harbours or existing concessions — particularly, the treatment of pre-16 December 2009 unpaid present entitlements (UPEs) and the availability of the sub-trust options set out
in PS LA 2010/4 until maturity for existing arrangements — continue to be in place, otherwise taxpayers will risk being unfairly targeted for following and applying historical ATO guidance.

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The Tax Institute is Australia's leading professional association and educator in tax, with offices in most major cities. Focusing solely on tax, the Institute provides the best resources, education and networks. Our mission is to equip tax professionals with everything they need to demonstrate the highest level of expertise and increase the advancement of public knowledge and understanding. We are also committed to propelling members into the future and onto the global stage with the introduction of the Chartered Tax Adviser designation.
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