14 July 2025 to 18 July 2025
Weekly Bulletin Contents
TAX
Monday 14 July 2025
Extension of time allowed to object – in view of wider dispute
The ART has set aside the Commissioner’s decision to refuse a taxpayer’s request for an extension of time to object against GST assessments. While the ART was not entirely satisfied with the reasons given by the taxpayer for its failure to lodge its objection within time, it nevertheless found that as the taxpayer had other related GST disputes before the ART, it would be appropriate to grant the extension of time to object. In particular, the ART found that the taxpayer would potentially be impeded in putting its case in relation to the other matters before the ART if the extension was not granted. The ART also noted that the taxpayer had engaged sufficiently with the Commissioner in relation to the wider dispute such that the Commissioner should be sufficiently aware of the GST issue that was the subject of the late objection. (HV/LV Solutions Pty Ltd and FCT (Practice and procedure) [2025] ARTA 976, 7 July 2025)
ATO holds more GST fraudsters to account
The ATO has advised that its hunt for GST fraudsters continues as four more individuals are sentenced following action of Operation Protego. It said these recent sentencings reinforce the ATO’s unwavering commitment in investigating and holding all offenders to account. The ATO also sad that its ability to detect and halt GST fraud is unwavering thanks to partnerships, technologies, and risk models all working together to stay ahead of fraudsters and criminals. The ATO said that included in these sentencings are individuals who, at the time of offending, were current employees and contractors at the ATO.
Vic payroll tax: Reminder- changes to payroll tax threshold
Vic Revenue has issued a reminder that from 1 July 2025, the payroll tax-free threshold will increase from $900,000 to $1,000,000 for annual returns, and from $75,000 to $83,333 for monthly returns. In addition, it said that the payroll tax deduction continues to be phased out for employers and groups with wages between $3 million and $5 million, with no deduction applied for employers and groups with wages of $5 million or more.
Tuesday 15 July 2025
No grounds to pursue previously dismissed ART application
The ART has dismissed a taxpayer’s application for further directions in progressing its application before the tribunal. It did so because the proceedings had been previously dismissed under s 100 of the ART Act 2024 for failing to comply with directions of the Tribunal (ie pursuant to the self-executing nature of the dismissal order). In denying the taxpayer’s current application, the ART agreed with the Commissioner that it would not be appropriate to attempt to vary the “guillotine direction” and that any lack of notice to the taxpayer did not void the effect of a self-executing dismissal direction. However, the ART said that there was nothing to prevent the taxpayer from making a reinstatement application under s102 of the ART Act. (Australian Gold Dealers Pty Ltd and FCT (Practice and procedure) [2025] ARTA 989 (10 July 2025)
Overdue NFP self-review returns
The ATO has advised that non-charitable not-for-profits (NFPs) with an active ABN need to lodge an annual NFP self-review return to notify their eligibility to self-assess as income tax exempt. The return is due each year between 1 July and 31 October. The ATO said that if your organisation’s 2023–24 return is overdue, you will need to lodge that return before your 2024–25 return. The ATO also said that if you aren’t sure if your NFP is charitable, or you’re waiting on the outcome of your charity registration with the ACNC, you can check out the article in this edition of NFP news Lodging the NFP self-review return if your NFP may be charitable.
Wednesday 16 July 2025
Taxpayer fails to discharge onus in consultancy service matter
In a matter where the taxpayer was involved in the provision of consultancy services through one company to another in his capacity as bare trustee of a family trust and where only small amounts of taxable income were returned in relation to the services provided and substantial sums flowed between relevant entities, the ART has ruled that that the taxpayer did not discharge the burden of proving that amended assessments issued to him were excessive. Nor was it satisfied that payments between two related entities were not ordinary income nor personal services income of the taxpayer. In addition, it was not satisfied that the trustee of the family trust was acting as a bare trustee and that, therefore, the personal services business (PSB) issue could not be found in favour of the taxpayer. It also found that shortfall penalties for intentional disregard were appropriately applied – albeit, as there was no objection decision on the issue of remission of penalties, the ART remitted the matters to the Commissioner for determination. (SBXB and FCT (Taxation) [2025] ARTA 999, 10 July 2025)
Protecting biodiversity on farms and tax arrangements
The Productivity Commission has issued a research paper on “Protecting biodiversity on farms and tax arrangements”. The paper concludes that Australia must protect or conserve an additional 60 million hectares of land over the next five years to meet its commitment under the Kunming–Montreal Global Biodiversity Framework – and much of this will have to come from privately held land. In particular, the paper looks at how tax arrangements might affect farmers’ decisions to enter into conservation covenants to permanently protect areas of land on their properties. The key findings include that tax deductions for conservation covenants have been available for years but are rarely used – only 18 were approved between 2014 and 2022.
Thursday 17 July 2025
Draft Guideline: Global and domestic minimum tax lodgment obligations
The ATO has released Draft Practical Compliance Guideline PCG 2025/D3 Global and domestic minimum tax lodgment obligations – transitional approach. It sets out the ATO’s transitional approach to penalties and expectations in relation to the 4 new lodgment obligations introduced for Pillar Two for applicable multinational enterprise groups. It is intended to complement existing ATO guidance relating to its administration of lodgment obligations and penalties. It was developed to provide tailored advice to assist taxpayers to meet their new obligations and provide certainty to taxpayers during the transition period (being any fiscal year beginning on or before 31 December 2026 but not ending after 30 June 2028). The Guideline covers the following matters: Pillar Two lodgment obligations and due date; requests for lodgment deferrals and suspension of lodgment enforcement action; and our approach to failure to lodge penalties and statement penalties during the transition period. This includes the ATO taking a ‘soft-landing’ transitional approach during the transition period where taxpayers take reasonable measures to understand and comply with their lodgment obligations. Comments are due by: 29 August 2025.
Ruling updated: Private rulings on Pillar Two provisions
The ATO has updated TR 2006/11DC Private Rulings to provide advice on the ability to obtain private rulings on interpretative issues about Pillar Two and the new Pillar Two “decline to rule” provision. The update includes: a revised reference to the provisions that are relevant to rulings, which include the new Pillar Two provisions; and, an explanation that the Commissioner may decline to rule on a private ruling application on the Australian income inclusion rule or undertaxed profit rule tax or domestic minimum top-up tax if the Commissioner considers it would not be reasonable to comply with the application. The updates include examples where this might occur. The ATO also said that it will make further updates to TR 2006/11 to address recent case law developments – and that it will release another draft for consultation.
FRIDAY 18 July 2025
ATO warning re scammers
The ATO has warned that as millions of Australians are preparing to lodge their tax returns, scammers are actively seeking new ways to exploit personal information. If successful, the ATO says that they can use stolen details not only to commit fraud against the ATO itself, but also carry out broader identity theft and financial crimes across the community. The ATO has reported a sharp rise in impersonation scams, with a 150% increase over the last 12 months, with 90% of ATO impersonation scams are currently being sent via email. The ATO warns that scammers are constantly enhancing their methods to impersonate the ATO, making it increasingly difficult for individuals to recognise fraudulent messages. It also said that staying informed and vigilant is essential to protecting personal information.
Child care centre fails to show assessments excessive
Three beneficiaries of a family trust that ran childcare centres have been unsuccessful before the ART in challenging assessments that increased their assessable income by some $10m in total plus substantial penalties. The matter came to the ATO’s attention after the Commonwealth cancelled their Child Care Service’s approval due to non-compliance with the Commonwealth’s Family Assistance Laws. In failing to show that the amended assessments were excessive, the ART dismissed the taxpayers’ claim that the parents of the children contracted directly with the 700 educators that the trust engaged (in a type of Everett Assignment) in relation to Child Care Benefits received from the government. (BHMH and FCT (Taxation and business) [2025] ARTA 996, 27 June 2025)
SUPER & FINANCIAL SERVICES
ASIC Fines Two AFS Licensees for Unregistered Financial Advisers
In a recent media release, ASIC announced it had issued infringement notices’ to two AFS licensees for authorising unregistered financial advisers to provide personal advice. Each paid a $31,300 penalty. Both licensees promptly registered their advisers and reported the breaches to ASIC.
ASIC has issued five such notices in 2025, highlighting the importance of compliance with registration requirements under the Corporations Act. Financial advisers must be registered on the Financial Advisers Register before providing personal advice to retail clients. Non-compliance risks consumer protection and may lead to regulatory action, including referral to the Financial Services and Credit Panel.
AFS licensees and advisers should verify registration status and understand ongoing obligations to avoid breaches.
ATO Grants Extension for Capital Gains Tax Exemption on Inherited Property
In a recent private ruling, the ATO extended the two-year main residence exemption period for an estate or beneficiary to sell an inherited family home, disregarding any capital gain or loss for CGT purposes.
The property was acquired in the 1990s by the deceased. After the deceased’s passing in 2023, the property was inherited by their seven children, with Child B appointed as executor. No family member was granted occupancy rights under the will.
Child A, who had lived in the home as a full-time unpaid carer for both parents, faced significant health challenges, including a serious medical condition requiring specific accommodation (mould-free, pet-free). The family agreed to prioritise Child A’s health and financial well-being, allowing them to remain in the home until suitable accommodation was found.
Despite challenges, including Child A’s health issues, the COVID-19 pandemic, lockdowns, and a rental crisis, Child A moved out in 2024 after securing a suitable rental property. Child B promptly prepared the property for sale, with a contract signed and settlement completed in 2024.
Institute of Financial Professionals Australia (IFPA) Comment
An inherited property is exempt from CGT if disposed of within two years of the deceased’s death, provided the deceased acquired it before September 1985 or it was their main residence and not used to produce income. The two-year limit can be extended automatically if specific conditions are met, such as delays due to exceptional circumstances like challenges to the will, complex estate administration, or government restrictions (eg, COVID-19 lockdowns), provided more than 12 months within the first two years is spent addressing these issues, the property is listed for sale as soon as practicable, the sale is actively managed, and settlement occurs within 12 months of listing, with no delays due to market timing, refurbishment, or executor inactivity. The required extension must not exceed 18 months.
If these conditions are not met, a request for the Commissioner’s discretion is necessary. The ATO will only grant such an extension for exceptional circumstances outside the taxpayer’s control, typically after the property is sold and settled. For more details, see PCG 2019/5.
Question of the week
Question
Can a 66-year-old client living in Europe, receiving a Commonwealth Superannuation Corporation (CSC) pension and earning $40,000 in interest income on an Australian Bank account, be considered a non-resident for Australian tax purposes, and what would this mean for the tax treatment of her CSC pension and interest income?
Answer
An individual’s tax residency will determine how their income is taxed in Australia. Tax residency is determined by several statutory tests, which are outlined on the ATO’s page, Your tax residency. These statutory tests are:
- Resides Test: A person is an Australian resident for tax purposes if they reside in Australia, based on factors such as physical presence, intention and purpose of stay, family ties, business or employment ties, maintenance and location of assets, and social and living arrangements.
- Domicile Test: A person is a resident if their domicile (permanent home by law, eg, by birth or choice) is in Australia, unless the Commissioner of Taxation is satisfied that their permanent place of abode is outside Australia.
- 183-Day Test: A person is a resident if they are present in Australia for more than half the income year (183 days), continuously or intermittently, unless their usual place of abode is outside Australia and they have no intention of taking up residence in Australia.
- Commonwealth Superannuation Test: A person is a resident if they are a contributing member of the Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS) and work at Australian posts overseas.
Given the client is 66 and receiving a CSC pension, they are unlikely to be a contributing member of the CSS or PSS, so this test would not apply unless they are working at an Australian post overseas.
Determining tax residency is highly fact specific. The client’s physical presence in Australia, family and economic ties, and intentions regarding residence must be carefully assessed to confirm their status as a non-resident.
Tax Implications for a Resident:
If the client is deemed an Australian tax resident, their interest income ($40,000 from an Australian bank account) will be taxed at ordinary marginal tax rates. Because the client is 66, the CSC pension will only be taxable if it contains a taxable-untaxed element (ie, the portion of the pension that has not been subject to tax in the superannuation fund, such as certain government contributions or benefits). If this is the case, the taxable-untaxed element will be taxed at marginal rates, with a 10% tax offset applied to reduce the tax liability.
Tax Implications for a Non-Resident:
If the client is a non-resident for Australian tax purposes, the interest income from an Australian bank account is subject to a final withholding tax of 10%, which is typically withheld at source by the bank before the interest is paid to the client. The CSC pension may be taxable in Australia depending on whether there is any untaxed element and whether or not is taxed in the country of residency. Whether the pension is taxed in the country of residency will depend on their rules and any double tax agreement between Australia and the country of residency.