UPE – Dividends

James Murphy Tax

Further to my conversation about UPE’S, what is the time frame for these dividends to be paid?

I was under the impression that the payment had to take place within five years. Maybe I am wrong?

Answer

There is no 5-year requirement for the dividends.

The real issue is the UPE between the discretionary trust and the company.

You have a year to convert the UPE into a Division 7A loan and ensure a complying loan agreement is in place.

Interest must be paid  (currently 4.52%), and if unsecured, the loan must be paid out within 7 years.

At the relevant time, this may involve the company paying dividends.