Since March 1998 the provisions of section 109UB extended the operation of the deemed dividend rules to certain trust loans. From a practical perspective, these provisions have often been criticised for being poorly drafted, both leading to unsuspecting taxpayers being caught up in the provisions in the absence of any real 'mischief' and also to significant planning opportunities.
New legislation has now been introduced to Parliament with the aim of overcoming both the 'unfairness' and the 'gaps' in s109 UB. However, whilst the changes are significant, they leave open several issues, including some planning opportunities. In addition, the timing rules as to whether the new provisions (109XA) or the old 109UB apply are complex and contain many potential pitfalls.
If you have clients with trusts that have, or may have, corporate trustees, these materials will inform you of the latest developments.