The Federal Court has ruled that unpaid present entitlements (UPEs) are not Division 7A loans, contradicting the ATO’s long-held position. While this decision is a win for trusts and corporate beneficiaries, the ATO has a history of pushing back against court rulings, often issuing tax determinations or lobbying for legislative changes. With uncertainty around the ATO’s next move, business owners and tax professionals should stay vigilant and monitor further developments.