A reimbursement agreement for Section 100A purposes is an arrangement — formal or informal — where a beneficiary becomes entitled to trust income, but the economic benefit of that entitlement flows to someone else or is used in a way that is not consistent with ordinary dealing. Common examples include a beneficiary leaving their entitlement as an unpaid present entitlement (UPE) that is then on-lent to a related company at below-market rates, a beneficiary receiving cash but immediately using it to repay a debt to the trustee or a related party, or a low-income beneficiary receiving a distribution that is informally arranged to benefit a high-income related party. Section 100A does not apply to arrangements that are consistent with ordinary family or commercial dealing — the "ordinary dealing" exception is assessed in detail through the PCG 2022/2 questionnaire in ChangeGPS Section 100A.
What is a reimbursement agreement for Section 100A purposes?
Overview of reimbursement agreements, including benefit flow and the ordinary dealing test