29 September 2025 to 3 October 2025
Weekly Bulletin Contents
TAX
Monday 13 October 2025
GST: Taxpayer’s land development activities amount to “enterprise”
A taxpayer, who owned 70 hectares of rural land and who entered into an agreement with a developer to progressively subdivide, develop, market and sell over 750 housing lots over a number of years, has been unsuccessful before the ART in claiming that the sales were not made “in the course or furtherance of an enterprise” for GST purposes. Despite the taxpayer’s more passive involvement in the activities, the ART nevertheless found that the taxpayer’s activities exhibited some of the well-known indicia of a business, including a degree of regularity and repetition, a commercial flavour and a systematic manner in which they were carried out. Accordingly, the ART concluded that the activities were “in the form of an adventure or concern in the nature of trade” and were “the sort of thing a businessperson or person in trade” would do and, therefore, were undertaken in the furtherance of an enterprise” for the purposes of GST liability on the sale of the blocks. (VZFS and FCT (Taxation) [2025] ARTA 2013, 7 October 2025)
ATO: Rental data-matching letters to be sent
The ATO has advised that over the coming months, it will be sending rental data-matching letters where its data indicates tax returns including rental income may need to be lodged for specific years and/or rental income should be included in previously lodged tax returns. The ATO said that if your clients are affected, you’ll receive an email with a list of effected clients.
ATO impact statement: Use of information powers in transfer pricing matters
The ATO has issued a Decision impact statement which outlines the Commissioner’s response to a decision of the Federal Supreme Court of Switzerland (Court). In that decision, the Court dismissed a Swiss company’s appeal against a lower Swiss court’s earlier decision to uphold the fulfillment of a request for information relevant to a transfer pricing audit that the ATO made to the Swiss Federal Tax Administration under Article 25 of the Convention between Australia and the Swiss Confederation for the Avoidance of Double Taxation with respect to Taxes on Income, with Protocol [2014] ATS 33. Broadly, the ATO welcomed the decision stating that it supports the ATO’s use, in appropriate cases, of exchange of information powers under Australia’s income tax treaties, to request information from foreign jurisdictions which it consider relevant to administering or enforcing Australia’s transfer pricing laws.
Tuesday 14 october 2025
Changes to Division 296 tax
The government has announced changes to the proposed Division 296 tax measure which are a welcome improvement from the original design.
The key changes include:
- The tax will only apply to future actual earnings, not unrealised gains as originally proposed.
- The $3 million threshold will be indexed to the consumer price index (CPI) in $150,000 increments, keeping pace with the transfer balance cap (TBC).
- A new second threshold of $10 million will be introduced, with earnings above this level taxed at 40%. This will also be CPI-indexed in $500,000 increments.
- The start date will be delayed by one year to 1 July 2026, based on members’ total super balance (TSB) as at 30 June 2027, with first assessments expected in 2027-28.
- The tax will apply to defined benefit pensions, ensuring consistent treatment across super structures.
In summary, the effective cumulative tax rates within super are tiered to the extent they are attributable to balances exceeding $3m or $10m:
Earning relating to proportion of balance | Tax rate | Notes |
$0 – 3m | 15% | Standard 15% (TSB up to $3m) |
$3m – $10m | 30% | Standard 15% plus 15% Div 296 (TSB $3m – $10m) |
$10m + | 40% | Standard 15%, plus 15% Div 296 (TSB $3m – $10m), plus 10% (TSB >$10m) |
The ATO will continue to administer and calculate the Division 296 tax liability, however super funds will be responsible for calculating the realised earnings for each member based on taxable income concepts and report this information back to the ATO.
The government will introduce legislation to implement these changes ahead of the 1 July 2026 start date, following further consultation with industry.
Further information regarding this proposal can be found in our member update and media release.
Changes to LISTO
The government has announced it will boost the Low Income Superannuation Tax Offset (LISTO) by increasing the income threshold and payment cap. This will help provide additional support to low income workers to help build their retirement savings.
From 1 July 2027, the LISTO threshold will increase from $37,000 to $45,000 to match the top of the second income tax bracket. The maximum payment will also increase to $810 to account for recent increases in the superannuation guarantee rate.
The government stated these changes will make sure LISTO achieves its policy intent of providing low income individuals a tax concession on their superannuation contributions to support income in retirement.
Special leave to appeal to High Court: Billabong share sale scheme
Both the ATO and the taxpayers have been granted special leave to appeal to the High Court from the decision of the Full Federal Court in Merchant & Anor v FCT [2025] FCAFC 56. In that case, the Full Court by majority dismissed the taxpayers’ appeal from the decision at first instance in which it was held that Pt IVA and the dividend stripping provisions applied to a large capital loss arising from the sale of shares held by a family trust to a related party.
Wednesday 15 October 2025
ATO: SMSF non compliance with release authorities
The ATO has advised that it is seeing a rise in non-compliance among SMSFs when responding to release authorities. In particular, the ATO said it is seeing a rise in SMSFs that receive a release authority and are either not responding within 10 business days as required or responding incorrectly. The ATO warned that failure to meet these obligations may result in significant penalties for the fund. (Note: Release authorities are documents issued by the ATO to super funds, authorising the release of money from a member’s super account to pay specific liabilities, including excess concessional contributions and Div 293 tax assessments.)
Vic: State Taxation Acts Amendment Bill – miscellaneous
The State Taxation Acts Amendment Bill 2025 (Vic) has been introduced into the Victorian Parliament. It amends the following revenue-related Acts as follows:
- Commercial and Industrial Property Tax Reform Act 2024 in relation to: authorising the Commissioner to provisionally determine that land has a qualifying use for the purposes of that Act.
- Duties Act 2000 in relation to: duty payable on a transaction that relates to subdivided tax reform scheme land; and exempting persons affected by family violence from certain requirements under that Act.
- First Home Owner Grant and Home Buyer Schemes Act 2000 to exempt persons affected by family violence from certain conditions imposed by that Act.
- Land Tax Act 2005 in relation to: exempting persons affected by family violence from certain requirements under that Act; dwellings in a build to rent development; circumstances in which the Commissioner must be notified of matters involving land subject to a trust; and making further provision for exemptions from land tax for land used and occupied as a person’s principal place of residence.
- Payroll Tax Act 2007 to make further provision for the circumstances in which an employee will be a regional employee for the purposes of that Act.
Taxation Administration Act 1997 to introduce a new rate of penalty tax for recklessness by a taxpayer or their agent as to the operation of a taxation law or their obligations under certain taxation laws.
ASIC concerned Australians not getting right super info
ASIC is concerned that many Australians may not have the information they need to make confident and informed decisions about retirement after a review identified a lack of urgency in improving retirement communications among superannuation trustees collectively responsible for millions of members. ASIC’s review, Report 818 From superficial to super engaged: Better practices for trustee retirement communications (REP 818), found some trustees offer one-size fits all retirement communications aimed primarily at pre-retirees, missing opportunities to engage with members throughout retirement and provide more meaningful support.
Thursday 16 October 2025
Tax Ombudsman: Dissatisfaction with ATO’s phone service
The Tax Ombudsman’s has advised that its review into the ATO service to agents has found increasing agent dissatisfaction with poor service and evidence of a strained relationship with the ATO. The Tax Ombudsman said she had been overwhelmed by the strong feedback from tax agents. She said agents were reporting an increasingly poor experience with the ATO’s agent phone line over the last 2 years, citing inconsistent advice and a lack of suitably skilled staff – and this was contributing to a general feeling of not being valued by the ATO.
Update: Private rulings and Pillar Two global minimum tax
The ATO has updated TR 2006/11 Private rulings. It has been updated to provide advice on the ability to obtain private rulings on interpretative issues about the Pillar Two global and domestic minimum tax, which is applicable to large multinational enterprise groups, and the new Pillar Two decline to rule provision.
Super release on compassionate grounds – health practitioner information
The ATO has released information for health practitioners assisting their patients to apply for early access to super on compassionate grounds. The information includes material on: providing medical documents; medical report requirements; behaviours of concern; and how to report concerns.
Friday 17 October 2025
ATO and Ahpra: warning about extracting super early
The ATO and the Australian Health Practitioner Regulation Agency (Ahpra) have advised that they have joined forces to stamp out business models and inappropriate practices that seek to use superannuation to pay for overly expensive or unnecessary medical treatments. New data released by the ATO shows significant growth in applications for compassionate release of super, particularly for dental services, where the number of requests has more than doubled in two years. The ATO said that it is concerned that some health practitioners and registered agents are inappropriately supporting individuals to access their superannuation on compassionate grounds, particularly for cosmetic procedures that aren’t aligned to compassionate release requirements. It also said compassionate release of super should only be considered as a last resort, where all other options of paying have been exhausted.
Note also: The ATO has released information for health practitioners assisting their patients to apply for early access to super on compassionate grounds. The information includes material on: providing medical documents; medical report requirements; behaviours of concern.
ATO: Matters under consultation
The ATO has advised that it is currently consulting with the community on the following matters:
- Individuals: [202514] The ATO’s approach to taxpayer relief provisions; [202513] Deceased estates: ‘double death’; [202511] Review of the tax treatment of digital assets and transactions in Australia; [202507] Agent authorisation process for individuals and sole traders;
- Business: [202517] Credit unions: arrangements designed to improperly obtain item 16 reduced input tax credits [NEW]; [202516] Top 100 GST Program: a changed approach for high assurance GST reporters [NEW]; [202515] Public country-by-country report lodgment instruction; [202514] The ATO’s approach to taxpayer relief provisions; [202511] Review of the tax treatment of digital assets and transactions in Australia; [202510] Small business future tax administration; [202507] Agent authorisation process for individuals and sole traders; [202404] Modernising PAYG instalment systems for small businesses with business accounting software.
- Not-for-profit: [202514] The ATO’s approach to taxpayer relief provisions; [202512] Not-for-profit roadmap – Phase 1
- Superannuation: [202514] The ATO’s approach to taxpayer relief provisions
Intermediaries: [202516] Top 100 GST Program: a changed approach for high assurance GST reporters [NEW]; 202515] Public country-by-country report lodgment instruction; [202514] Approach to taxpayer relief provisions; [202511] Review of the tax treatment of digital assets and transactions in Australia; [202510] Small business future tax administration; [202404] Modernising PAYG instalment systems for small businesses with business accounting software
SUPER & FINANCIAL SERVICES
Changes to Division 296 tax
On Monday, the government announced changes to the proposed Division 296 tax measure which are a welcome improvement from the original design.
The key changes include:
- The tax will only apply to future actual earnings, not unrealised gains as originally proposed.
- The $3 million threshold will be indexed to the consumer price index (CPI) in $150,000 increments, keeping pace with the transfer balance cap (TBC).
- A new second threshold of $10 million will be introduced, with earnings above this level taxed at 40%. This will also be CPI-indexed in $500,000 increments.
- The start date will be delayed by one year to 1 July 2026, based on members’ total super balance (TSB) as at 30 June 2027, with first assessments expected in 2027-28.
- The tax will apply to defined benefit pensions, ensuring consistent treatment across super structures.
In summary, the effective cumulative tax rates within super are tiered to the extent they are attributable to balances exceeding $3m or $10m:
Earning relating to proportion of balance | Tax rate | Notes |
$0 – 3m | 15% | Standard 15% (TSB up to $3m) |
$3m – $10m | 30% | Standard 15% plus 15% Div 296 (TSB $3m – $10m) |
$10m + | 40% | Standard 15%, plus 15% Div 296 (TSB $3m – $10m), plus 10% (TSB >$10m) |
The ATO will continue to administer and calculate the Division 296 tax liability, however super funds will be responsible for calculating the realised earnings for each member based on taxable income concepts and report this information back to the ATO.
The government will introduce legislation to implement these changes ahead of the 1 July 2026 start date, following further consultation with industry.
Further information regarding this proposal can be found in our member update and media release
ASIC warns trustees to lift retirement communications
ASIC has called out a lack of urgency among superannuation trustees in helping members plan for retirement. In Report 818, ASIC reviewed retirement communications from 12 trustees that together manage more than 9.3 million accounts.
The regulator found many messages focus on product promotion over member guidance, with weak tailoring for different member needs. Most content for retirees focused on early retirement rather than later stages such as aged care and estate planning.
Website checks across the sector showed uneven practice, although many funds now host retirement hubs, calculators and outcome metrics.
The regulator urges funds to review content routinely, expand targeted nudges, improve accessibility and language support, and align communications with the retirement income strategy.
ATO and Ahpra warn on early super access for medical treatments
The ATO and the Australian Health Practitioner Regulation Agency (Ahpra) are looking to ‘stamp out’ schemes that inappropriately use superannuation for medical and dental treatments.
Their joint communication identifies several issues including a surge in dental claims which has doubled in two years. In 2024-25, there were 93,500 medical claims. The three most common reasons were for dental, IVF and weight loss.
The ATO has released information for health practitioners assisting their patients to apply for early access to super on compassionate grounds.
ATO rules super death benefits in minor’s trust as ‘excepted income’
The ATO has issued a private ruling confirming that income derived from investing a superannuation death benefit paid into a trust for a minor beneficiary qualifies as “excepted trust income” under section 102AG of the ITAA 1936. This allows the minor to be taxed at standard adult rates rather than punitive minor rates under Division 6AA (up to 66% on eligible income).
The ATO also confirm that income or capital gains from reinvesting unpaid present entitlements UPEs remain excepted trust income.