Upe Investment Agreement

In these circumstances, the ATO did not give the subjects the option to place the investment option 1 due under a 25-year Division 7A that complies with a loan agreement. We would consider the following document, which is part of the tax return documents of the trust`s tax trust, to be sufficient evidence of a legally binding agreement when a UPE is created this year. The document states that the day 2015 for discFamily Trust`s position of trust is May 15, 2016. If the Trust does not pay annual refunds or annual returns to the private company until the day of the trust, we will assume that the requirements imposed by the Commissioner are not met because the agent would have breached the terms of the investment agreement. Non-payment of repayments or annual returns may result in a Division 7A dividend being considered to be paid to the principal fund. The Commissioner demands that an investment agreement be legally binding. The document indicating that a legally binding agreement can be drawn up as part of the tax declaration working documents. This is based on the fact that Options 1 and 2 are only interest rate options including an annual payment of the annual return and the obligation to repay UPE at the end of the investment period (7 or 10 years). These transactions should be clearly visible in the financial accounts of the main trust fund and the beneficiaries of the private enterprise. These investment options are the safe harbour options provided.

If the agent chooses to accept one of these three investment options, we assume that the subtrus funds have since been held for the exclusive benefit of the private company beneficiary. In other words, when we look at the tax issues of core trust, we will ensure that the conditions set out by the Commissioner are met. The agent of PrivCo Sub-Trust and the agent of DiscFamily Trust have agreed that PrivCo Sous-Trust will lend US$10,000 in PS LA 2010/4 to DiscFamily Trust. This loan was granted and the agreement came into effect on May 15, 2016 for a period of seven years. Interest is payable at Division 7A`s reference rate within the meaning of section 109N (2) of the Income Tax Act 1936. Instead of implementing a sub-trust agreement, the agent may avoid a dividend being classified in Division 7A if the private company agrees to have its UPE billed against a loan it returns to the Trust under a Division 7A credit contract (i.e. for the execution of its UPE and then repayment under such an agreement). Under these conditions, the private company would not have an iron NEA, but a credit value due by the Trust.

The investment agreement not only demonstrates the subtruse`s investment in core trust, but also helps to demonstrate that the agent has decided to hold the funds representing UPE for the exclusive benefit of the private beneficiary company. If a Division 7A fulfilling the loan agreement is not concluded on the date of the private company`s liability, a dividend is considered a Division 7A dividend at the end of the profit year in which the loan matures. This is a welcome message for family groups that manage the reimbursement and maintenance of UPE investment agreements, as they offer them a desperately needed respite.


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