When money left in a trust isn’t automatically a loan
Family trusts and private companies sit behind plenty of Australian businesses and investment structures, including property portfolios. That is what makes the High Court’s decision in Commissioner of Taxation v Bendel [2026] HCA 18 so interesting. It settles an important Division 7A question, but it is also a case where the detail matters just as much as the headline.
On 10 June 2026, the High Court dismissed the Commissioner’s appeal by a 5–2 majority. At the centre of the dispute was an unpaid present entitlement, or UPE, owed by a discretionary trust to a private company beneficiary. The question was whether leaving that entitlement unpaid amounted to a “loan” for Division 7A purposes under the Income Tax Assessment Act 1936 (Cth).
Behind the tax terminology was a fairly simple arrangement. Between the 2014 and 2017 income years, the trustee of the Steven Bendel 2005 Discretionary Trust allocated portions of its net income to beneficiaries, including Gleewin Investments Pty Ltd. The company’s entitlements were not immediately paid out. Under the trust deed, the amounts set aside were held on separate trust pending payment.
That became important because the ATO had long maintained that certain UPE arrangements could fall within Division 7A’s extended definition of a loan. Where Division 7A applies, amounts can potentially be treated as deemed dividends, subject to the legislation’s various conditions and exceptions.
The High Court majority rejected the Commissioner’s argument on the circumstances before it. Simply leaving the company’s entitlement unpaid — and the company not demanding immediate payment — was not enough, without something more, to constitute “financial accommodation” or a loan under section 109D(3).
| Issue | What Bendel establishes | Why it matters |
| UPE | An unpaid entitlement is not, by itself, a Div 7A loan | Non-payment alone does not trigger s 109D |
| Corporate beneficiary | Not demanding payment was insufficient | What happens around the UPE still matters |
| Trust deed | Its terms helped define the legal relationship | Documentation matters |
| Trustee resolutions | Their legal effect formed part of the analysis | Trust administration cannot be casual |
| Division 7A | Still applies to actual loans and other qualifying arrangements | Bendel did not abolish Div 7A |
| Other tax rules | Subdivision EA and s 100A can remain relevant | A UPE is not automatically tax-free |
Good news for taxpayers, but not a blank cheque
It is understandable to describe Bendel as a significant taxpayer win. What would be dangerous is turning that into “UPEs are no longer a Division 7A problem”.
The majority’s reasoning depended on the legal character of the arrangement. The trust deed, trustee resolutions and conduct surrounding the entitlement mattered. A UPE can also evolve into something legally different if later transactions change the relationship between the trust and corporate beneficiary.
The ATO has accepted the High Court’s decision. Its post-Bendel position recognises that a corporate beneficiary simply having a UPE, without further relevant conduct, does not itself create a Division 7A loan. Other tax rules have not vanished, however. Subdivision EA and section 100A can still matter, while an entitlement later converted into an actual loan may produce a different result. Existing complying Division 7A loan arrangements are not automatically unwound by the judgment.
For property investors, this distinction is crucial. Bendel did not decide that family trusts are preferable vehicles for buying property. It did not protect “real estate equity” from taxation, nor did it approve a particular trust strategy. The case concerned a much narrower federal tax question: what counts as a “loan” for Division 7A purposes.
There is still a useful property lesson hiding inside all that tax law. If you intend to buy through a trust or corporate trustee, get the purchasing entity right before exchange. Check • who the trustee is • whether the trust deed permits property acquisition and borrowing • whose name will appear on title • what structure the lender requires • whether guarantees will be needed • what NSW transfer duty and land-tax consequences may follow • and whether appropriate tax advice has been obtained.
A sophisticated structure on an accountant’s diagram is not much help if the contract, trust deed, finance documents and title all tell different stories.
Flash Conveyancing Advice
If you’re planning to purchase through a family trust or corporate trustee, settle the structure before signing the contract. Have your accountant or tax adviser confirm the tax position, then make sure the purchaser named in the Contract for Sale reflects the intended legal arrangement. Bendel clarifies an important Division 7A issue, but it does not remove questions about transfer duty, land tax, finance, trustee powers or other federal tax provisions.
Flash Conveyancing, led by Julian & Renee, specialises in property transactions throughout NSW. When a purchase involves a company or trust, getting the purchaser’s legal identity right at the beginning can avoid considerable trouble later.
It is not simply a matter of putting the trust’s name in the purchaser box. A trust is not ordinarily registered as the legal owner in the same way as an individual or company. Legal title is held by the trustee in its trustee capacity, making the precise structure and supporting documentation important.
Flash Conveyancing can review the Contract for Sale, identify the proposed purchaser and deal with the relevant transaction documents within the scope of the conveyance. Where the strategy moves into Division 7A, section 100A, tax optimisation, asset protection, SMSF compliance or sophisticated trust restructuring, the conveyancing work should sit alongside advice from an appropriately qualified accountant, tax adviser or specialist lawyer. Bendel itself is a good reminder that a few words in a trust deed or resolution can make a considerable legal difference.
Julian and Renee personally oversee files as part of Flash Conveyancing’s boutique, human-led service. According to the practice’s own procedures, sensitive settlement instructions are directly voice-verified, while confidential client information is supported by offline local-storage measures.
Flash Conveyancing assists buyers and sellers across Sydney, Newcastle and Wollongong, together with Blacktown, Hawkesbury, the Blue Mountains, The Hills, Hornsby and Parramatta. The practice also services Acacia Gardens, Angus, Arndell Park, Blacktown, Colebee, Glendenning, Glenwood, Grantham Farm, Kellyville Ridge, Kings Langley, Marsden Park, Melonba, Oakhurst, Parklea, Quakers Hill, Riverstone, Schofields, Seven Hills, Stanhope Gardens, Tallawong, The Ponds, Baulkham Hills, Beaumont Hills, Bella Vista, Castle Hill, Kellyville, Kenthurst, North Rocks, Northmead, Rouse Hill, Vineyard, Windsor, Annangrove, Box Hill, Cattai, Dural, Gables, Galston, Glenhaven, Glenorie, Maraylya, Middle Dural, Nelson, North Kellyville, Norwest and Winston Hills.
The practical lesson from Bendel isn’t that trusts have been handed a tax shortcut. It is that legal character matters. Before buying the property, make sure the trust deed, purchaser, finance arrangements and title are all telling the same story.
