10 November 2025 to 14 November 2025
Weekly Bulletin Contents
TAX
Monday 10 November 2025
No CGT on gain of $950m made on sale of shares – not TARP
The Federal Court has allowed a foreign company’s appeal against an amended assessment which included a capital gain of $950m in its assessable income from the sale of its 33% interest in a South Australian company (ElectraNet) that held electricity transmission leases and licences. The Commissioner argued that the transaction involved the sale of Taxable Australian Real Property (TARP) under Div 855 of the ITAA 1997 that was subject to CGT (in the form of an “indirect interest” in TARP ie, where more than 50% of the market value of property owned by ElectraNet was attributable to real property in Australia).
However, the Court found that the effect of the Electricity Corporations (Restructuring and Disposal) Act 1999 (SA) meant that the assets that were subject to a lease agreement that ElectraNet had with the SA government (eg, transmission wires, converting stations etc) had been “severed” from the land. This meant that it could not be said that the underlying leasehold assets of ElectraNet were “interests in land” under the TARP provisions – notwithstanding the Commissioner’s arguments that a broad interpretation of the provisions was required. In short, the Court held that the statutory rights ElectraNet owned to operate the electricity system were only in respect of the electricity infrastructure per se and were not in respect of an interest in the land (ie, ElectraNet owned leases over personal assets, not leases over land).
Accordingly, the Court held that the sale of the shares did not amount to a sale of an indirect interest in TARP and therefore the foreign taxpayer was not liable for CGT in Australia on the gain it made. (YTL Power Investments Ltd v FCT 30 October 2025).
Institute of Financial Professionals Australia comment: Ironically, there have been two big recent CGT cases involving longstanding common law principles. In XLZH and FCT (Taxation) [2025] ARTA 2154, it was relevant that as a matter of common law a beneficiary does not have any interests in the assets of a discretionary trust; and, in this case, the long standing common law principle of “that which is attached to land forms part of the land” was turned on its head (courtesy of statutory enactment).
PAYG withholding to nil: payments to directors, office holders etc
The ATO has issued draft Legislative Instrument LI 2025/D24. It reduces to nil the amount required to be withheld where the amount is a payment to an individual who is a director, member of a committee of management, or as an office holder – and that individual is then required to remit the payments to another entity of which they are a director, partner or employee. The instrument repeals and replaces the legislative instrument PAYG Withholding Variation: Company Directors and Office Holders which is due to sunset on 1 April 2026 – and it has substantially the same effect. Comments due: 5 December 2025.
ATO: FBT and end of year celebrations
The ATO has issued information to remind employers of their FBT obligations as end-of-year workplace celebrations approach. The ATO said that whether the benefits they provide will attract FBT will depend on: the amount spent on each employee; the type of benefit provided; when and where the event is held; and who attends the event. The information also explains when FBT may not apply.
Tuesday 11 November 2025
CGT: Another Federal Court TARP case
In another case involving the application of CGT to the sale of shares held by a foreign resident in an Australian company, the Federal Court has not made a final determination as whether the shares were an “indirect interest in Taxable Australian Real Property” (TARP) under Div 855 of the ITAA 1997 (ie, where more than 50% of the market value of the property of the company is attributable to real property in Australia). In this case, the Australian company and its subsidiaries were mining companies and the underlying assets included mining tenement leases and mining information. The capital gain assessed by the Commissioner was $96m. The issues dealt with by the Court included whether plant and equipment were fixtures caught by the rules or chattels. (The Court favoured the view that most were chattels due to their severability and mining tenement character and due to the relevant mining statutory schemes.) There were also issues of if the market value substitution rule for capital proceeds should apply to the sale and, if so, what they were. The Court concluded the matter by requiring the parties to file orders to give effect to its reasons and for the proceedings to be listed for a case management hearing in December 2025. (Newmont Canada FN Holdings ULC v FCT (No 2) [2025] FCA 1356)
TPB publishes 2024-25 Annual Report
The Tax Practitioners Board (TPB) has published its 2024-25 Annual Report. The TPB said it outlines the TPB’s ongoing commitment to engaging with tax practitioners and the broader community, with a strong focus on upholding professional standards and addressing tax adviser misconduct. It also details the steps taken to streamline registration processes and deliver targeted support and guidance to practitioners. The Chair of the TPB, Peter de Cure AM, said: ‘The Annual Report demonstrates our ongoing dedication to a strong and trusted tax profession. Through targeted reforms, proactive compliance, and enhanced education, we continue to protect the public and uphold professional standards.’
ATO: No deduction for dental expenses
The ATO has warned that it is seeing a number of deduction claims for dental expenses this tax time. These include preventative and necessary dental treatment, medical expenses, and other costs relating to personal appearance, like teeth whitening, makeup, skin care, shaving products, and haircuts. The ATO emphasised that these are not deductible, even if an employer expects the person to maintain a certain appearance or pays them an allowance to cover grooming expenses.
Wednesday 12 November 2025
ATO calls on employers to prepare for Payday Super
The ATO is urging employers to get ready for the introduction of Payday Super which will take effect from 1 July 2026. It means employers will be required to pay employees’ super at the same time as salary and wages. The ATO said this is a once in a generation change and wants employers to give themselves the best opportunity to be prepared for 1 July 2026. It said it wants employers to start planning for Payday Super now to ensure they are prepared for when the law takes effect. The ATO also said employers don’t have to wait to start paying super contributions more regularly and that many employers are already paying on pay day.
Div 293 Tax: Tribunal upholds receipts method for backpay
In a recent ART decision, a university employee received a backpay settlement via the Fair Work Commission, totaling over $106,000 plus super contributions, in the 2022–23 income year for unpaid work performed between 2015 and 2020. This lump sum pushed his income above the $250,000 Div 293 threshold, triggering an additional 15% tax on concessional super contributions. The key issue was whether the income could be assessed based on when it was earned rather than when it was received. The ART upheld the ATO’s position that employment income is derived upon receipt. There is no discretion under Div 293 to reallocate or disregard income, even in exceptional circumstances. This contrasts with Commissioner discretion concerning excess super contributions. (Uddin and FCT [2025] ARTA 2365, 5 November 2025).
Institute of Financial Professionals Australia comment: Advisers should note this decision reinforces the risks of additional tax where a taxpayer receives backpay or a settlement.
Old ruling on rental properties withdrawn
The ATO has advised that it will withdraw Taxation Ruling IT 2167 with effect from 12 November 2025. The Ruling provided the ATO’s views on the: general deduction provision for rental properties and the letting of a holiday home; and the extent to which losses and outgoings incurred in connection with the rent producing properties are allowable as income tax deductions. IT 2167 will be replaced by Draft Taxation Ruling TR 2025/D1 Income tax: rental property income and deductions for individuals who are not in business (to be issued this week). TR 2025/D1 modernises the views expressed in IT 2167 to the extent that they continue to apply and incorporates developments in case law.
Thursday 13 November 2025
Draft rulings on rental property income and deductions
The ATO has released the following draft rulings on rental properties, assessable income and allowable deductions (including in relation to holiday homes).
- Draft Taxation Ruling TR 2025/D1 Income tax: rental property income and deductions for individuals who are not in business. It will replace Taxation Ruling IT 2167 Income Tax: rental properties – non-economic rental, holiday home, share of resident, etc. cases, family trusts cases. It provides guidance for individuals relating to declaring income and claiming deductions for rental properties, including holiday homes. It covers situations where a property is rented to family and friends as well as apportionment for non-income-producing use. It provides the ATO view on the application of s 26-50 of the ITAA 1997, which is an integrity rule relating to the use of holiday homes.
- Draft Practical Compliance Guideline PCG 2025/D6 Apportionment of rental property deductions – ATO compliance approach. It complements draft TR 2025/D1 Income tax: rental property income and deductions for individuals who are not in business (above). It explains the ATO’s compliance approach regarding apportionment of deductions on a ‘fair and reasonable’ basis where the integrity rule relating to holiday homes does not apply. It sets out apportionment methodologies the ATO will accept as fair and reasonable in common situations.
- Draft Practical Compliance Guideline PCG 2025/D7 Application of s 26-50 of the ITAA 1997 to holiday homes that you also rent out – ATO compliance approach. It complements draft TR 2025/D1 Income tax: rental property income and deductions for individuals who are not in business (above). It explains the ATO’s compliance approach regarding the integrity rule relating to holiday homes. It sets out how the ATO will assess the level of risk for a range of rental property arrangements to which the integrity rule may apply, and how the ATO may allocate compliance resources to consider the application of that rule to rental property arrangements.
Comments on the draft Rulings are due by: 30 January 2026.
Draft Ruling: Provision of benefits by ancillary funds
The ATO has released Draft Taxation Determination TD 2025/D3 Income tax: when does a private or public ancillary fund ‘provide’ a ‘benefit?’. It explains the Commissioner’s view on when a public or private ancillary fund provides a benefit under the Taxation Administration (Private Ancillary Fund) Guidelines 2019 and the Taxation Administration (Public Ancillary Fund) Guidelines 2022. It clarifies the meaning of ‘provision of… benefits’ in s 15(4) and ‘provide any benefit, directly or indirectly’ in s 22(3) of those Guidelines. It will assist trustees of ancillary funds to understand how benefits to deductible gift recipients may satisfy minimum annual distribution requirements and when transactions may contravene the prohibition on providing benefits to related entities. When finalised, it will apply both before and after issue and promote consistent compliance and protect the integrity of concessional treatment for deductible gifts, ensuring ancillary funds operate exclusively in support of philanthropic purposes.
ATO: Avoid delays when winding up your SMSF
The ATO has advised that once you’ve decided to wind up your SMSF, when you lodge your final SMSF annual return (SAR), make sure you follow the correct process so you get it right the first time and avoid any errors or delays. In this regard it is important that you: keep your contact details up to date so your accountant or tax agent can reach you quickly; finalise outstanding transactions and pay remaining debts; only close the SMSF bank account once the wind-up is confirmed, as closing too early can delay final reconciliations or refunds; and roll over most of the SMSF’s assets to another fund before lodging your final SAR. The ATO also emphasised that after lodging your final SAR, you have 28 days to complete the final rollover before the fund is officially wound up.
Friday 14 November 2025
Full Court finds application of GST anti-avoidance rules to be reconsidered
The Full Federal Court has unanimously allowed the Commissioner’s appeal from the decision in CPG Group Pty Ltd and FCT (Taxation) [2024] AATA 199 where the AAT found that the GST anti-avoidance provisions in Div 165 of the GST Act 1999 did not apply to the scheme for creation of taxable supplies of precious metal. Instead, the AAT found the dominant purpose of the scheme was “to create a product that the marketplace traded at a GST-informed price” and not to obtain GST benefits in the form of input tax credits of some $9.5m. However, the Full Federal Court found that the Tribunal misconstrued and misapplied the statutory tests for “dominant purpose and principal effect” in Div 165 and, among other things, failed to consider the importance of the taxpayer getting input tax credits to the economic feasibility of the scheme. Accordingly, the Full Court remitted the matter to the ART for rehearing according to its findings. (FCT v CPG Group Pty Ltd [2025] FCAFC 147, 24 October 2025)
Draft Ruling: Provision of benefits by ancillary funds
The ATO has released Draft Taxation Determination TD 2025/D3 Income tax: when does a private or public ancillary fund ‘provide’ a ‘benefit?’. It explains the Commissioner’s view on when a public or private ancillary fund provides a benefit under the Taxation Administration (Private Ancillary Fund) Guidelines 2019 and the Taxation Administration (Public Ancillary Fund) Guidelines 2022. It clarifies the meaning of ‘provision of… benefits’ in s 15(4) and ‘provide any benefit, directly or indirectly’ in s 22(3) of those Guidelines. It will assist trustees of ancillary funds to understand how benefits to deductible gift recipients may satisfy minimum annual distribution requirements and when transactions may contravene the prohibition on providing benefits to related entities. When finalised, it will apply both before and after issue and promote consistent compliance and protect the integrity of concessional treatment for deductible gifts, ensuring ancillary funds operate exclusively in support of philanthropic purposes.
TPB shuts down tax agent after large-scale misappropriation of client funds
The Tax Practitioners Board (TPB) has advised that it has terminated the registrations of a tax agent and his company, and has imposed a 3-year ban on him reapplying for TPB registration. This decision was made after uncovering extensive unlawful activity engineered by an unregistered preparer which resulted in the misappropriation of almost $1m from clients because of inadequate supervision and control by the tax agent. Over approximately 3 years, the unregistered preparer lodged business activity statements, income tax returns and JobKeeper forms on behalf of clients, directing the refunds into bank accounts he controlled. TPB investigations found his actions were possible due to the tax agent involved not having proper supervision or controls to ensure tax agent services were competent and lawful.
SUPER & FINANCIAL SERVICES
Mulino sets super priorities for 2025 to 2026
At the ASFA Conference on 12 November 2025, Assistant Treasurer Dr Daniel Mulino set out the Government’s focus for superannuation. Issues the Government will focus on include:
- Access to advice – The Government will commit to the DBFO reforms to enable appropriate guidance where full fee advice is not feasible.
- Member service standards – Work will continue on lifting and enforcing service quality across super funds.
- Retirement phase products – Continuation of a best principles framework and expanded data collection to help develop methods to encourage providers to offer more diverse retirement products.
Div 293 Tax: Tribunal upholds receipts method for backpay
In a recent ART decision, a university employee received a backpay settlement via the Fair Work Commission, totalling over $106,000 plus super contributions, in the 2022–23 income year for unpaid work performed between 2015 and 2020. This lump sum pushed his income above the $250,000 Div 293 threshold, triggering an additional 15% tax on concessional super contributions. The key issue was whether the income could be assessed based on when it was earned rather than when it was received. The ART upheld the ATO’s position that employment income is derived upon receipt. There is no discretion under Div 293 to reallocate or disregard income, even in exceptional circumstances. This contrasts with Commissioner discretion concerning excess super contributions.
Institute of Financial Professionals Australia comment
Advisers should note this decision reinforces the risks of additional tax where a taxpayer receives backpay or a settlement.
ATO calls on employers to prepare for Payday Super
The ATO is urging employers to get ready for the introduction of Payday Super which will take effect from 1 July 2026. It means employers will be required to pay employees’ super at the same time as salary and wages. The ATO said this is a once in a generation change and wants employers to give themselves the best opportunity to be prepared for 1 July 2026. It said it wants employers to start planning for Payday Super now to ensure they are prepared for when the law takes effect. The ATO also said employers don’t have to wait to start paying super contributions more regularly and that many employers are already paying on pay day.
ATO updates SMSF wind-up guidance: Key steps to avoid delays
The ATO has recently updated its guidance on winding up SMSFs, emphasising the need to ensure all accounting and compliance obligations are current to avoid processing delays.
In a webpage refreshed on 12 November 2025 titled Get it right! Avoid delays when winding up your SMSF, the ATO advises trustees to:
- Maintain up-to-date contact details
- Finalise transactions and debts
- Delay closing the fund’s bank account until wind-up confirmation
- Conduct asset rollovers in two stages
The ATO recommends rolling over most of the fund’s assets before lodging the final SMSF annual return (SAR), with the remainder within 28 days post-lodgment after settling any tax liabilities or refunds.
APRA to super funds: Lift governance, resilience and retirement delivery
At the ASFA Conference 2025, APRA Executive Director Carmen Beverley‑Smith said public trust in super is being tested and set out three baseline capabilities for trustees: strong leadership, operational resilience and acting in members’ best financial interests.
Key takeaways include:
- Governance and boards – APRA will consult on draft cross‑industry board governance standards after finding weaknesses in investment governance and conflicts oversight. It was found many trustees needed improvements in unlisted asset valuation and managing liquidity risk.
- Platforms under scrutiny – A review of platform trustees found gaps in due diligence, onboarding, monitoring and remediation
- Operational resilience and accountability – Funds must understand critical processes (including outsourced ones) and be ready to respond quickly when things go wrong.
- Cyber expectations – Recent credential‑stuffing incidents exposed weak authentication
- Best‑financial‑interest – APRA has intensified scrutiny of discretionary expenditure, now publishing annual fund‑level spend data.
- Retirement delivery – Progress on the Retirement Income Covenant is uneven noting the urgency given the volume of members moving into retirement this decade.