A recent High Court decision has brought welcome clarity for many Australian business owners, family trusts and property investors. In Commissioner of Taxation v Bendel [2026] HCA 18, the High Court ruled that an unpaid present entitlement (UPE) owed by a discretionary trust to a corporate beneficiary is not automatically a loan for the purposes of Division 7A of the Income Tax Assessment Act 1936. This overturns the Australian Taxation Office’s long-held administrative view and provides greater certainty for many trust structures.
The decision is particularly significant for families and businesses that use discretionary trusts and “bucket companies” as part of their asset and tax planning. Previously, many trustees entered into complying Division 7A loan agreements simply because a corporate beneficiary had not immediately received payment of its entitlement. Following Bendel, that position has changed. However, the decision does not remove all tax obligations. Other integrity provisions, including Subdivision EA, section 100A and the general anti-avoidance rules, may still apply depending on the circumstances. Trust deeds and trustee resolutions also remain critically important.
What the High Court Confirmed
| Issue | What the Decision Means |
| Unpaid Present Entitlements (UPEs) | A UPE is not automatically treated as a Division 7A loan. |
| Corporate beneficiaries | Simply not demanding payment does not, by itself, create a loan. |
| Trust deeds | The wording of the trust deed and trustee resolutions remains essential. |
| Existing trust structures | Professional advice should be obtained before making changes. |
While the judgment provides greater certainty, it should not be seen as a reason to stop reviewing your business or investment structure. Property acquisitions through trusts and companies still require careful legal and taxation planning. Purchasing property in the wrong entity, incorrectly executing contracts or overlooking trustee requirements can create unnecessary legal and financial complications, regardless of the Bendel decision.
Property Transactions Through Trusts
| Legal Consideration | Why It Matters |
| Purchasing entity | The contract should correctly identify the buyer or trustee. |
| Trust documentation | Trustee powers and resolutions should support the transaction. |
| Title registration | Ensures ownership is recorded correctly with NSW Land Registry Services. |
| Professional advice | Conveyancers, accountants and legal advisers each play an important role. |
Flash Conveyancing Advice
If you’re buying property through a trust or company, don’t assume the purchasing structure is correct simply because it has been used before. A review before you exchange contracts can help avoid costly mistakes and ensure your property purchase aligns with your broader legal and taxation strategy.
At Flash Conveyancing, Julian & Renee understand that many property investors, family businesses and developers purchase real estate through trusts and corporate entities. They work closely with clients and their accountants to ensure contracts correctly identify the purchasing entity, trustee details and ownership structure before settlement. By taking the time to review the legal documentation carefully, they help clients protect both their property interests and the asset structures that support their long-term investment goals.
With extensive experience throughout Blacktown, Hawkesbury, Blue Mountains, The Hills, Hornsby and Parramatta, Julian & Renee proudly assist clients buying, selling and transferring property across 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, Winston Hills, Sydney, Newcastle and Wollongong, delivering personalised service, practical legal advice and meticulous attention to detail for every property transaction.
