The SMSF Association has provided its feedback on the ATO’s decision impact statement with regard to the High Court of Australia ruling in the Bendel case recommending the possible revision to one of the regulator’s guidance materials.
In its submission, the industry body recognised the Bendel case was not sector related, but still singled out Self Managed Superannuation Funds Ruling (SMSFR) 2009/3, which provides direction for members with regard to unpaid trust distributions payable to an SMSF, as potentially requiring revision now.
“We pointed out we understand this is not an SMSF case, but [we said] there is a lot of cross over here with this ruling, SMSFR 2009/3, [and] you need to review that,” association chief executive Peter Burgess told delegates at the recent SMSF Association Technical Summit 2026 held in Sydney.
“[That’s because the ATO’s] views may now have changed as a result of this High Court decision. And if [the ATO’s] view has changed, we need a remediation pathway for those SMSFs that have to restructure Division 7A loans [now].”
According to Burgess, the application of SMSFR 2009/3 in the past has forced trustees to restructure unpaid trust distributions into Division 7A loans and this action itself has caused compliance issues.
“[This action] has implications. If there are related parties involved, it can result in in-house asset issues or sole purpose issues or NALI (non-arm’s-length income) issues,” he explained.
The High Court ruled in Commissioner of Taxation v Bendel that failing to demand payment of an unpaid present entitlement from a trust is a passive action and does not constitute the provision of a financial accommodation or a transaction.
Further, it stipulated if the individual to whom the entitlement is to be paid takes no action or just acquiesces to the retention of funds, this does not satisfy the definition of a loan.
The SMSF Association will be presenting at the SMSF Trustee Empowerment Day 2026. Use this link to register and secure your seat at this must attend event.