Division 7A and UPEs – The Road Ahead

The tax and regulatory environment for small and medium sized businesses continues to evolve at a rapid pace with Treasury releasing a consultation paper proposing changes to Div 7A in October 2018.   

Scheduled to commence on 1 July 2019, we spoke with Chris Wookey, CTA, about the proposed Div 7A changes.

In recent times, Chris has participated in confidential consultation sessions with representatives from Treasury, the Board of Taxation and the ATO about the upcoming changes to Div 7A as well as being a member of the Board of Taxation’s reference group for its review of small business tax concessions. 

When asked what he believed the blind spots where in this area, Chris explained that ‘at a technical level, they include the interposed entity rules (s109T) as well as those involving trusts with UPEs owed directly or indirectly to corporate beneficiaries’.  

At a practical level, he believed ‘the biggest blind spot would have to be the cash flow crunch in a couple of years’ time if the changes go through as currently proposed’. 

Now running his own specialist tax consulting practice, for nearly four years up to February 2019, Chris was a principal in the tax consulting division of Deloitte Private, specialising in tax issues confronting privately owned businesses and family groups. 

Chris will be presenting on ‘Division 7A and UPEs – The Road Ahead’ at the SME / Private Clients Day One in Melbourne on 28 March 2019.  

His session will cover the codification of the Div 7A treatment of unpaid trust distributions, about which he has been in discussions with Treasury. The session also covers the changes to Div 7A described in Treasury’s consultation paper released last year. 

Chris anticipates the session will ‘provide delegates with a sound understanding of how the proposed changes will affect their clients and some strategies to mitigate those effects’.

When asked what delegates can take away from his session, Chris explained, ‘they will take away an increased awareness of the likely practical effects of the proposed changes as well as some tools or techniques to minimise the pain’. 

When asked about his interest outside of tax, Chris confided his love for woodworking and cycling. He also admitted, “In the past, my wife and I have competed with friends in interstate and international hot air ballooning championships (and even won one!)”. 

However, when it comes to Division 7A, this is one practitioner that is not full of hot air.

Find out more about Chris’ session, and the rest of the program on our website.  


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