The High Court heard the Commissioner’s appeal in Commissioner of Taxation v Bendel [2025] FCAFC 1 on 14 October 2025.

At issue is whether unpaid present entitlements (UPEs) from a trust to a corporate beneficiary amount to a “loan” under section 109D of the Income Tax Assessment Act 1936, on the basis that allowing the trust to retain and use those funds is “financial accommodation.”

During the hearing, the Justices questioned several aspects of the Commissioner’s argument — including whether a debtor–creditor relationship arises from a trustee setting aside income, the risk of double taxation between Division 7A and Subdivision EA, and whether a separate trust for the UPE was ever created.

Given the complexity of the issues, the Court has relisted the matter for further hearing in December 2025 to consider:

• Whether a debtor–creditor relationship exists under the trust deed
• Whether a separate trust was created when income was set aside
• How “financial accommodation” or “in substance loan” provisions under section 109D apply

This case remains significant for family groups and private companies with trust-to-company loans or unpaid entitlements. Divergent Numbers will continue to monitor developments and update clients once the final judgment is released.

UPDATE: January 2026

As of January 2026, the High Court has not yet handed down its final judgment in Commissioner of Taxation v Bendel.

The High Court granted special leave to appeal the Full Federal Court decision in favour of Mr Bendel back in June 2025.

The case has been heard by the High Court, but the actual judgment — i.e., the High Court’s decision on the appeal — has not yet been released publicly. There’s no published High Court judgment overturning or affirming the Full Federal Court’s ruling at this stage.

We’ll keep you updated when we hear more.