The Australian Taxation Office has issued a decision impact statement following the High Court’s ruling in favour of accountant Steve Bendel in the Commissioner of Taxation v Bendel [2026] tax avoidance case.
In June 2026, the High Court rejected the ATO's position that an unpaid present entitlement automatically counts as a loan under Division 7A - the tax laws designed to prevent companies from disguising dividends as loans to avoid tax.
The tax assessments made by the ATO against Bendel were found to be incorrect, meaning Bendel did not have to pay the extra tax, penalties, and interest he was being chased on.
The ATO has officially responded to their court loss in their decision impact statement, saying:
If a private company beneficiary has not taken any relevant action on its unpaid present entitlement, the ATO cannot tax it
Contrastingly, if a company does act on the unpaid present entitlement such that it benefits the owners, it can be taxed
They acknowledge companies taxed in the past may want to challenge their tax assessments under the new ruling
Companies that have set up arrangements based on the ATO’s guidance prior to the ruling should review their systems
For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au.
Source: Chartered Accountants ANZ