In ‘Bendel Case Part 2’ – not the most creative title we ever came up with – we will drill deeper into what The Bendel Case means for you. Please go back to Part 1 if you haven’t listened to Part 1 yet.
The Bendel Case Part 2
In this episode, you will examine five different trusts with Andrew Henshaw of Velocity Legal in Melbourne and how these five trusts cope with Subdivision EA and TD 2022/11.
Here is what we learned, but please listen in as Andrew explains all this much better than we ever could.
To listen while you drive, walk or work, just access the episode through a free podcast app on your mobile phone.
The Bendel Case Part 2
In the second part of this interview, we look at five scenarios where the trust makes a private company presently entitled. And then look out ahead where to go from here.
Five Scenarios
In all five scenarios, the trust makes a private company presently entitled.
Trust A
The trust pays the distribution to the company.
TD 2022/11 has no issue with this since there is no longer a UPE. The trust paid the entitlement.
Subdiv EA has no issue either. The money didn’t go to the shareholder or their associates, so all good.
s100A also has no issue as long as the money doesn’t go back to the trust after it was paid to the company.
Trust B
The Trust keeps the money.
TD 2022/11 says UPE. There is a deemed dividend back to the trust. Hence, trading trusts became unpractical from 2009 onwards when TR 2010/3 (the predecessor to TD 2022/11) came out.
Subdiv EA has no issue since the money didn’t go to the shareholder or their associates.
s100A might have an issue unless this is part of ordinary commercial or family dealings.
Trust C
The trust pays the money to a third party – a company, trust, partnership or individual.
Again, TD 2022/11 says UPE. There is a deemed dividend back to the trust.
Subdiv EA has no issue since the money didn’t go to the shareholder or their associates.
s100A will probably have a problem if there is an agreement.
Trust D
The trust pays the money to a related company.
Again, TD 2022/11 says UPE. There is a deemed dividend back to the trust.
Subdiv EA has no issue since the money didn’t go to the shareholder or their associates. Div 7A has no issue with loans from a private company to another private company.
s100A will be an issue if there is an agreement.
Trust E
The trust pays the money to the shareholder of the private company or their associates.
Again, TD 2022/11 says UPE. There is a deemed dividend back to the trust.
Subdiv EA says deemed dividend from the company to the recipient of the payment
s100A will likely have an issue, too.
Summary
So regarding Trust A and Trust E, all three – TD 2022/11, Subdivision EA and s100A – agree.
For Trust A, all agree that there is no issue.
And for Trust E, all agree there is an issue. They deal with this issue differently, but all see an issue.
But in between – for Trust B, C and D – TD 2022/11 and Subdivision EA clash.
Subdiv EA
The actual law for Subdivision EA is in s109 XA, XB, XC and XD ITAA 1936.
Looking Ahead
So even though we are all very excited about the recent Full Federal Court decision, nothing has changed – yet. Subdiv EA continues as before. So, if the money has left the trust and gone to a shareholder of the UPE company, you still have a problem under Subdiv EA.
And the ATO’s position in TD 2022/11 continues as before – the ATO hasn’t withdrawn it yet.
However, this full federal court decision is still one more nail in the coffin of TD 2022/11.
The ATO will either appeal to the High Court, withdraw TD 2022/11, or change the law. Any law change, of course, depends on the outcome of the upcoming election. We recorded the interview on 26 February 2025, and so far, no election has been called, but that can change at any moment.
These are just some quick notes from this interview. Please listen in since Andrew Henshaw goes into a lot more detail.
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UPE To Company: The Bendel Case
Disclaimer: Tax Talks does not provide financial or tax advice. All information on Tax Talks is of a general nature only and might no longer be up to date or correct. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.
Last Updated on 24 March 2025
Tax Talks spoke to Andrew Henshaw - Director at Velocity Legal - for more details.
