13/12/2025 • 17 min read
BBlood Enterprises & s100A: What It Means (2025)
BBlood Enterprises & s100A: What It Means (2025)
BBlood Enterprises materially strengthens the ATO’s and courts’ focus on the substance of trust distributions for section 100A purposes: if a beneficiary is made presently entitled on paper, but someone else effectively enjoys the economic benefit under a connected arrangement, there is an increased risk the distribution will be treated as part of a reimbursement agreement and the trustee assessed under s100A at the top marginal rate. For Australian accounting practices, the case reinforces that documentation alone is not enough—your file must evidence commerciality, purpose, and who actually received and benefited from the distribution, consistent with the ATO’s post-2022 guidance.
What is s100A and why does it matter after BBlood Enterprises?
Section 100A is the anti-avoidance rule that can apply where a beneficiary’s present entitlement to trust income arises under a “reimbursement agreement”. If it applies, the beneficiary is taken never to have been presently entitled, and the trustee can be assessed on that share (commonly at the top marginal rate, subject to the operative provisions).
From an Australian practice standpoint, s100A matters because it targets common distribution outcomes where:
- A low-tax beneficiary is “distributed to” on paper, but
- Another person/entity in the family group gets the cash, benefit, or effective control, and
- The arrangement has a tax reduction purpose (not necessarily the sole purpose).
Legislative anchor points that must be considered in every file:
- Income Tax Assessment Act 1936 (ITAA 1936) s100A: reimbursement agreements and trustee assessment consequences.
- Trust present entitlement principles: the distribution must be validly made (trust deed + resolution timing + identification of income).
What did BBlood Enterprises actually change about how s100A is applied?
BBlood Enterprises did not “rewrite” s100A, but it reinforces several practical application points that the ATO has been pressing in its published position since the 2022 guidance package.
Key practical implications for advisers:
- Form vs substance: Courts will look beyond trustee minutes and journal entries to what economically occurred.
- Connection and benefit: The more clearly benefits are redirected to someone other than the appointed beneficiary, the higher the s100A risk.
- Purpose enquiry: The presence of a tax reduction purpose (even alongside other purposes) remains central.
- Evidence burden in practice: Your defence is not a clever minute; it is contemporaneous evidence of why the arrangement occurred and who benefited.
This is aligned with the ATO’s views in:
- Taxation Ruling TR 2022/4 (the ATO’s view on s100A reimbursement agreements)
- Practical Compliance Guideline PCG 2022/2 (ATO risk framework for trust distributions and s100A)
- ATO web guidance and alerts on trust distributions and s100A compliance (as updated from time to time)
It should be noted that while ATO rulings/PCGs do not override the law, they are highly predictive of audit approach, evidence expectations, and dispute posture.
Why does BBlood Enterprises matter for “ordinary family or commercial dealing”?
The “ordinary family or commercial dealing” exclusion in s100A is often the battleground. BBlood Enterprises strengthens the message that the exclusion is not a blanket safe harbour for family groups; the arrangement must genuinely be ordinary, and the entitled beneficiary must not merely be a tax-motivated conduit.
In practice, “ordinary family dealing” is harder to sustain where:
- The beneficiary never sees funds and has no genuine benefit
- The funds are immediately lent, assigned, set-off, or “journaled” for someone else’s benefit without credible non-tax reasons
- The arrangement repeats year after year with the same low-tax outcome
- There is poor documentation of decision-making and benefit flows
Conversely, lower risk indicators typically include:
- The beneficiary actually receives cash or a clearly documented benefit (e.g., fees paid on their behalf) consistent with the entitlement
- The beneficiary has capacity and control consistent with the distribution outcome
- Any loans are real, on commercial or at least defensible terms, and actually administered
- There is a clear non-tax family/commercial rationale evidenced contemporaneously
How does BBlood Enterprises affect common trust distribution strategies in Australia?
It increases audit and dispute risk where distributions rely on “paper present entitlements” that are not matched by real-world benefit.
What does it mean for distributions to adult children?
It means adult children distributions require more than being over 18 and on a low marginal rate. The file should prove:
- Why that beneficiary was chosen (non-tax rationale should be considered and documented)
- Whether the beneficiary received cash/benefit
- Whether any redirection occurred (and if so, why it is ordinary and not tax-driven)
Practical example (higher risk):
- A discretionary trust resolves to distribute $60,000 to an adult child studying.
- The amount is never paid.
- The child’s UPE is immediately applied to reduce a parent-related entity loan or used to fund family expenses without credible documentation.
- Result: increased likelihood the ATO characterises a reimbursement agreement under s100A, particularly if the pattern repeats.
Practical example (lower risk):
- Trust distributes $30,000 to an adult child.
- Funds are paid to the child’s bank account within a reasonable time.
- The child uses part to pay their own rent/HECS/transport, and part is gifted back voluntarily later (with evidence of independent choice).
- Result: materially stronger position, though the full facts and evidence remain critical.
What does it mean for corporate beneficiaries (bucket companies)?
It means bucket company strategies remain viable, but the integrity is in the administration:
- Was the distribution actually credited and controlled by the company?
- Are UPEs managed consistently with the trust deed, company constitution, and any sub-trust/loan arrangements?
- If funds are used by others, is it properly documented as a loan/dividend/payment with tax consequences recognised?
Where the “bucket company” is merely a label and the money is enjoyed elsewhere, the BBlood Enterprises message amplifies s100A exposure.
What does it mean for UPEs, journal entries and “on-paper” set-offs?
It means journal entries without economic reality are increasingly fragile.
Risk increases where:
- UPEs are never paid and are repeatedly rolled
- Offsets occur without clear contractual basis
- Beneficiaries have no practical ability to demand payment
- The accounting reflects an outcome that the parties never intended to honour
Good practice requires:
- Clear beneficiary loan account ledgers
- Payment evidence or legally effective set-off documentation
- Consistent trustee/company minutes
- Ongoing administration (repayments, interest where relevant, and enforcement capability)
How should Australian accounting practices document s100A positions after BBlood Enterprises?
You should assume that, in any ATO review, the first question will be: “Who got the benefit?” The second will be: “Why was it done that way?”
Minimum defensible file standard (practice checklist):
- Trust deed review: confirm distribution powers, income definition, streaming rules, and timing requirements.
- Resolution integrity: correct beneficiary identification, correct amounts/types, made by required date per deed.
- Beneficiary communication: evidence the beneficiary was informed (and ideally accepted) the entitlement.
- Funds flow evidence: bank payments, invoices paid on behalf, or clearly documented set-offs.
- Loan documentation: if funds are left in trust or used elsewhere, have an executed loan agreement and an administration trail.
- Purpose memo: short contemporaneous memo stating commercial/family rationale beyond tax.
- Consistency check: ensure tax returns, financial statements, and minutes all tell the same story.
ATO guidance indicates that contemporaneous evidence and actual conduct matter heavily. This aligns with the compliance approach described in PCG 2022/2 and the interpretive stance in TR 2022/4.
What are the ATO’s current risk lenses and how does BBlood Enterprises interact with them?
The ATO’s post-2022 framework is explicit: it is looking for arrangements where entitlement is separated from benefit, particularly in family groups. BBlood Enterprises reinforces that lens by validating a substance-first approach.
From a practical risk-management perspective, advisers should map client arrangements against the PCG risk factors, including:
- Whether the beneficiary receives and enjoys the distribution
- Whether amounts are returned to the controller (directly or indirectly)
- Whether there are circular cash flows
- Whether there is a pattern of distributions to low-tax beneficiaries without corresponding benefit
- Whether documents were created after the fact
Where risk is elevated, the adviser’s focus should be on restructuring the economic flow, not merely improving minutes.
How do you “de-risk” a trust distribution plan in 2025?
You de-risk by aligning legal entitlement, economic benefit, and evidence.
A practical approach for year-end (30 June) planning:
- Identify intended beneficiaries early: confirm their tax profiles and, critically, the real intended benefit recipient.
- Decide the benefit pathway: pay cash, pay expenses for the beneficiary, or document a genuine loan/set-off.
- Prepare resolutions correctly and on time: comply with deed timing and content requirements.
- Execute payment/loan steps promptly: do not leave everything as an indefinite UPE without administration.
- Prepare a one-page s100A support memo: document rationale and how it is ordinary family/commercial dealing (where relevant).
- Reconcile accounting to conduct: ensure journals reflect real agreements and actual flows.
- Review repeat-pattern risk: if the same low-tax beneficiary is used every year with benefits redirecting to controllers, assume ATO scrutiny.
What real-world scenarios are most likely to attract s100A scrutiny after BBlood Enterprises?
High scrutiny scenarios typically include:
- Adult child distributions funding parent expenses: especially where the child does not control funds.
- Circular arrangements: distributions that “come back” to the controller via loans, management fees, or offsets without commercial rationale.
- Bucket company not respected: company assessed on income, but cash effectively enjoyed personally without proper tax treatment.
- Backdated documentation: minutes and agreements produced only after ATO queries.
- Repeated low-tax beneficiary patterns: no change in behaviour, no genuine benefit to the nominated beneficiary.
In each scenario, the practice response should be to trace the benefit, document the reason, and correct administration prospectively.
How Fedix can help (practical CTA)
Fedix helps Australian accounting practices reduce compliance risk and time spent assembling evidence by systemising financial data, reconciliations, and workpaper support.
If your firm is reviewing trust distribution administration and s100A risk post-BBlood Enterprises, consider how MyLedger by Fedix can assist with:
- Faster month-end and year-end readiness using automated bank reconciliation (often 10–15 minutes per client rather than hours)
- Cleaner beneficiary loan account support through consistent ledger workflows and audit-friendly snapshots
- Centralised working paper processes to better evidence timing, adjustments, and substantiation
Learn more at home.fedix.ai and assess whether MyLedger fits your trust compliance workflow for the 2025–2026 tax year.
Conclusion: What should practices take away from BBlood Enterprises for s100A?
BBlood Enterprises reinforces that s100A is driven by economic reality: if a beneficiary is appointed income but another person benefits under a connected arrangement with a tax reduction purpose, the trustee is exposed. For Australian accounting practices, the response must be improved administration, funds-flow integrity, and contemporaneous evidence aligned with ATO guidance (TR 2022/4 and PCG 2022/2) and the trust deed.
Disclaimer: This article is general information only and does not constitute tax or legal advice. Section 100A is complex, highly fact-dependent, and subject to changing ATO views and litigation outcomes. Advice should be obtained from a suitably qualified Australian tax professional with reference to the client’s trust deed and full circumstances.