15 December 2025 to 19 December 2025
Weekly Bulletin Contents
TAX
Monday 15 December 2025
Property developer’s payment to lender an affair of capital – not interest
The Full Federal Court has upheld the decision of the Primary Judge that the payment by a property developer of the entire net proceeds from the sale of three properties made to a lender under a guarantee arrangement was an affair of capital and that the AAT had erred in presuming that part of the payment represented deductible interest.
“The character of the advantage obtained by CAPL remains that of reducing the extent of its overall liability as a guarantor of the Suncorp Facility and of forestalling a sale of the Charles Street Properties by Suncorp as mortgagee in possession.”
Charles Apartments Pty Limited v Commissioner of Taxation [2025] FCAFC 180 (11 December 2025)
COVID employee WFH claims mostly denied
In another COVID-related Working from Home employee expense case, the Applicant taxpayer, who was employed in an IT technical support role, came away mostly empty-handed:
- The Commissioner had allowed $1,220 for occupancy costs, but the Applicant claimed he was entitled to $2,210. The Tribunal ruled that the Applicant’s employer had not directed him to WFH three days a week and that his “home office” was an adjunct to his workplace, thereby distinguishing Hall’s case (which is under appeal).
- The Commissioner had allowed $3,600 for car expenses under the cents per kilometre method. The Applicant wanted a lot more under the logbook method, but the Tribunal noted the logbook provided had not been contemporaneously completed and was inconsistent with other records.
- On mobile phone expenses, the Tribunal was prepared to increase the deductible percentage from the 30% allowed by the Commissioner to 50% (the Applicant had claimed 92%).
- The Tribunal found the Applicant had not discharged the onus of proving he was entitled to 90% of home internet charges and was not prepared to go beyond the 60% already allowed by the Commissioner.
- The Tribunal did allow a claim for $342 for software subscriptions relating to the use of the Applicant’s own computer when WFH.
- An administrative penalty of 50% was not reduced by the Tribunal.
Applebee v Commissioner of Taxation [2025] ARTA 2625 (8 December 2025)
Tuesday 16 December 2025
Special value and CGT market valuations
The Full Federal Court has upheld the decision of the Primary Judge that the market value of a parcel of shares for CGT purposes includes any special value factored in by either of the parties to a transaction – provided the parties are dealing with each other at arm’s length.
The case involved the sale of two 20% parcels of shares in a betting company, Punters, to News Corp for the amount of $6.2 million each. The Appellant, Mrs Kilgour, was the vendor of one of the 20% parcels. The $6.2 million pushed the taxpayer just above the $6 million threshold to benefit from the small business concession in Div 152 of the ITAA 1997.
The acquisition by Newscorp of a controlling interest in Punters created synergies that were said to have a value separate from the price paid for the 20% parcel of shares. The Primary Judge rejected that argument, holding that on the basis of the evidence, the parties were acting at arm’s length and therefore the “market value substitution rule” was not applicable.
In three separate decisions the Full Court upheld the findings and reasoning of the Primary Judge, including that the exclusion of any alleged special value being sought by the Appellant was an economic paradox and a contradiction in terms – and that the special or strategic price element was just part of the market value of the parcel of shares.
It’s very difficult to establish that the price actually paid for an asset by a “willing but not anxious” buyer acting at arm’s length from the seller is anything but its the market price. And Mr Murdoch wouldn’t like it said that he paid over the odds for the shares.
Kilgour v Commissioner of Taxation [2025] FCAFC 183 (12 December 2025)
Review of electric car discount
Since its introduction in 2023, the FBT exemption for battery electric vehicles (BEVs) has no doubt contributed to the uptake of electric vehicles in Australia, which for the September quarter stood at 12.4% for sedans and SUVs (Australian Automobile Association data). To get the incentive through the parliament, the government had to agree to phase out plug-in electric vehicles (which has now happened) and also to conduct a review of the impact and effectiveness of the concession after the first three years of operation.
This is enshrined in the law and Treasury has this week announced it will carry out a review of the impact of the scheme, with the aim of deciding whether it should continue or be modified in some respects.
As things stand, packaging up a BEV as part of someone’s salary package is still the smartest piece of tax planning going around, but the scheme could become the victim of its own success if the government starts to tote up all the FBT it’s been missing out on. There are also discussions going on between the Treasurer and the States about how to bring in a road user charging system for EVs that is not in breach of the constitution. It is unclear where and when that will land, but it seems likely that BEV salary packaging will remain an attractive option for those who are prepared to take the leap. Maybe people should consider getting in while the going is good.
Wednesday 17 december 2025
ATO accused of “wilful blindness” in pursuing tax debt
In what hasn’t been the ATO’s finest hour, it has been severely criticised by the Supreme Court of NSW of exhibiting somewhat excessive zeal in collecting some $20 million in a settlement reached with a director who had defrauded a company that was seeking relief under the laws of equity:
“In effect, the ATO had instituted a policy of wilful blindness in relation to the claims in the Chameleon Proceedings akin to a “tax now, ask questions later” approach. Although in this case, it did not even bother to ask any questions later.”
And a very senior ATO officer’s evidence given in the case was found to be self-serving and not to be relied upon:
“all of these matters adversely impact [the ATO officer’s] reliability and credibility as a witness in these proceedings.”
The Commissioner was ordered to pay back $1.1 million to Kurang Resources, the victim of the fraud.
Kupang Resources Pty Ltd v Commonwealth of Australia (No 4) [2025] NSWSC 1477
Greens on ending CGT discount (again)
Like a dog with a bone, the Greens are at it again, pushing for the end the CGT discount, with a recent statement calling for its abolition, at least for wealthier Australians. Combined with changes to negative gearing, that will apparently solve the housing crisis. But no mention is made of restoring indexation and averaging, which were two important features of the pre-1999 rules, meaning that in a Greens world the system would be taxing inflationary gains for long-term investments.
Arguments about how the top income earners benefit disproportionately from the “concession” don’t hold up when considering that under our highly progressive personal tax system those same taxpayers also pay the lion’s share of personal tax. There are not a lot of complaints about that from progressive voices.
Regardless, don’t be surprised if in the near future the government summons up the courage to tweak the tax rules around investment properties, perhaps by halving the CGT discount and limiting deductions for multiple properties.
In the broader scheme of things, however, the best solution to the housing crisis is supply, supply, supply.
Thursday 18 December 2025
Government Debt to Exceed $1 trillion in 2027 FY
The latest Mid-Year Economic and Fiscal Outlook (MYEFO) shows gross government debt is projected to exceed $1 trillion, reaching $1.07 trillion in 2026–27. Debt is expected to continue rising across the forward estimates, reaching $1.21 trillion by 2028–29, before peaking at around 37% of GDP in 2030–31.
Inflation to hit 3.75%
The MYEFO projects headline CPI inflation of 3.75% in 2025–26. Treasury expects inflation, excluding the impact of electricity rebates and fuel prices, to return to the Reserve Bank’s 2–3% target band by the end of 2026.
Further Income Tax Cuts Confirmed
The Government has reconfirmed the two legislated rounds of personal income tax cuts. From 1 July 2026, the 16% marginal tax rate applying to incomes between $18,201 and $45,000 will be reduced to 15%, before falling again to 14% from 1 July 2027.
Electric Car Discount Review Launched
In a recent media release, the Government has released the terms of reference for the Electric Car Discount review. The policy provides a fringe benefits tax and tariff exemption for eligible electric vehicles.
Almost 100,000 vehicles have received the FBT exemption, with electric vehicles now accounting for around 10% of new car sales.
The cost of the scheme is reflected in MYEFO, with forgone revenue estimated at $1.35 billion in 2025–26. Submissions to the review close on 6 February 2026.
Friday 19 December 2025
News just in – Draft Division 296 legislation released
Draft legislation (Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2025 and associated Imposition Bill) for the proposed Division 296 tax has been released today [19 December 2025].
The proposed measures
- Two thresholds:
- $3 million “large superannuation balance threshold” (indexed to CPI in $150,000 increments)
- $10 million “very large superannuation balance threshold” (indexed to CPI in $500,000 increments)
- Tax rates (Division 296 tax) are proposed to apply based on the proportion of a client’s TSB above the thresholds:
- 15% on earnings corresponding to the proportion of total super balance (TSB) over $3m (up to $10m), and
- A further 10% on earnings corresponding to the proportion of TSB over $10m (ie, a higher effective Division 296 impost for balances above $10m).
- Scope of “TSB”: The proposals operate on a client’s total super across APRA-regulated funds, SMSFs and exempt public sector schemes (with special rules for certain other arrangements).
- Exemptions: the EM notes exceptions, including child recipients of super income streams and individuals with certain structured settlement contributions for personal injury.
How it’s paid (and client cashflow)
- Division 296 tax is proposed to be assessed by the Commissioner and generally payable 84 days after the notice of assessment. If unpaid after that period, the Commissioner may issue a release authority to one or more super providers.
- Clients are proposed to have 60 days to elect to release amounts from one or more super funds to pay the tax without incurring interest, with flexibility to choose which interest(s) to release from.
Defined benefit members
For many defined benefit interests, the proposed approach generally defers payment (reflecting access constraints), with the Commissioner maintaining a Division 296 debt account and charging interest calculated at the long term bond rate where the account remains in debit at year end. Amounts generally become payable within 21 days after the end benefit becomes payable.
SMSFs and CGT transitional rules
The EM outlines CGT transitional adjustments relevant to how Division 296 fund earnings are calculated:
- Small superannuation funds can elect (in an approved form) to apply a CGT cost base adjustment for Division 296 purposes, with the election applying to all CGT assets held at 30 June 2026, due by the 2026–27 return lodgement due date, and irrevocable.
- For other complying funds, the EM outlines a factor-based approach to transitional relief, applying for prescribed years including 2026–27 through 2029–30, with the factor to be set in regulations.
Institute of Financial Professionals Australia (IFPA) comment
Time to respond to this consultation is limited, with submissions closing on Friday 16 January 2026. If you have any feedback, please email us at [email protected] by Friday 9 January 2026.
Upcoming end of year closure and systems availability
The ATO have advised they will be closed from 12:00 pm AEDT Wednesday 24 December 2025 and will reopen 8:30 am AEDT Friday 2 January 2026.
During this time phone support will be unavailable. ATO online services will remain available and it will still be possible to lodge, report, and make payments. However, lodgments, records, and payments won’t be processed or visible until after 2 January 2026.
ATO developing guidance on CGT issues in deceased estates
The ATO is developing and finalising draft advice and guidance on CGT issues, with materials expected to be available in early 2026. Among them are two draft Taxation Determinations focusing on deceased estates:
- Deceased Estates: ‘Double Death’ Scenario
Addresses CGT consequences under Division 128 when a beneficiary of a deceased estate passes away before receiving a CGT asset. It aims to clarify the Commissioner’s view on applying the CGT rollover concession in such cases. Targeted consultation is currently underway and expected to conclude in early 2026.
- Deceased Estates: Right to Occupy
Explores what constitutes a “right to occupy a dwelling under a deceased’s will” for the purpose of claiming the CGT main residence exemption under section 118-195. It will outline the Commissioner’s perspective on when an individual qualifies for this exemption.
These developments aim to provide clearer tax outcomes for executors, beneficiaries, and advisors handling complex estate matters.
During this time phone support will be unavailable. ATO online services will remain available and it will still be possible to lodge, report, and make payments. However, lodgments, records, and payments won’t be processed or visible until after 2 January 2026.
ATO updates Pillar 2 guidance
The ATO has published new guidance on how Pillar Two rules apply tax consolidated groups and specific issues relevant to Pillar Two obligations. These updates are designed to help in-scope multinational enterprise groups (MNE groups) and tax advisers understand how the rules interact with Australia’s tax consolidation regime, clarify key compliance obligations, and support reporting under the global and domestic minimum tax framework. Practitioners can find further updates at ato.gov.au/Pillar2 or contact the ATO at [email protected].
Draft legislation to change TFN reporting for closely held trusts
Treasury has released exposure draft legislation proposing to move closely held trust beneficiary TFN reporting into the annual trust tax return, replacing separate quarterly TFN reports (where a beneficiary is presently entitled and has quoted their TFN). The changes are intended to reduce compliance and improve ATO data matching and pre-filling, and clarify the Commissioner’s notification requirements where an incorrect TFN is reported. The amendments are proposed to apply for income years starting on or after 1 July 2026.
Did you miss our 2025 Tax, Super & Financial Services Wrap-Up?
If you didn’t catch our 2025 Tax, Super and Financial Services Wrap-Up sent out earlier this week, no problem. You can read our Tax Year in Review and our Super and Financial Services Year in Review to catch up on the key highlights and developments from the year.
Last Daily & Weekly Update for 2025
As we wrap up 2025, this marks the final edition of the Daily & Weekly Update for the year. Regular publications will resume on Monday, 19 January 2026.
On behalf of everyone at the Institute of Financial Professionals Australia, we extend our heartfelt gratitude for your support throughout the year. We wish you a joyous Christmas and a wonderful festive season filled with happiness and success.
SUPER & FINANCIAL SERVICES
News just in – Draft Division 296 legislation released
Draft legislation (Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2025 and associated Imposition Bill) for the proposed Division 296 tax has been released today [19 December 2025].
The proposed measures
- Two thresholds:
- $3 million “large superannuation balance threshold” (indexed to CPI in $150,000 increments)
- $10 million “very large superannuation balance threshold” (indexed to CPI in $500,000 increments)
- Tax rates (Division 296 tax) are proposed to apply based on the proportion of a client’s TSB above the thresholds:
- 15% on earnings corresponding to the proportion of total super balance (TSB) over $3m (up to $10m), and
- A further 10% on earnings corresponding to the proportion of TSB over $10m (ie, a higher effective Division 296 impost for balances above $10m).
- Scope of “TSB”: The proposals operate on a client’s total super across APRA-regulated funds, SMSFs and exempt public sector schemes (with special rules for certain other arrangements).
- Exemptions: the EM notes exceptions, including child recipients of super income streams and individuals with certain structured settlement contributions for personal injury.
How it’s paid (and client cashflow)
- Division 296 tax is proposed to be assessed by the Commissioner and generally payable 84 days after the notice of assessment. If unpaid after that period, the Commissioner may issue a release authority to one or more super providers.
- Clients are proposed to have 60 days to elect to release amounts from one or more super funds to pay the tax without incurring interest, with flexibility to choose which interest(s) to release from.
Defined benefit members
For many defined benefit interests, the proposed approach generally defers payment (reflecting access constraints), with the Commissioner maintaining a Division 296 debt account and charging interest calculated at the long term bond rate where the account remains in debit at year end. Amounts generally become payable within 21 days after the end benefit becomes payable.
SMSFs and CGT transitional rules
The EM outlines CGT transitional adjustments relevant to how Division 296 fund earnings are calculated:
- Small superannuation funds can elect (in an approved form) to apply a CGT cost base adjustment for Division 296 purposes, with the election applying to all CGT assets held at 30 June 2026, due by the 2026–27 return lodgement due date, and irrevocable.
- For other complying funds, the EM outlines a factor-based approach to transitional relief, applying for prescribed years including 2026–27 through 2029–30, with the factor to be set in regulations.
Institute of Financial Professionals Australia (IFPA) comment
Time to respond to this consultation is limited, with submissions closing on Friday 16 January 2026. If you have any feedback, please email us at [email protected] by Friday 9 January 2026.
ATO advice under development – superannuation issues
The ATO is developing and finalising advice and guidance on several superannuation issues, with most expected to be finalised in the new year. Key consultation papers are outlined below:
- Ordinary meaning of ‘employee’ [new]
A draft update to Taxation Ruling TR 2013/1 is being considered to reflect recent court decisions on the meaning of ‘employee’. The update relates to identifying an employer under Australia’s tax treaties. Expected completion is December 2025 to January 2026.
- Penalties for event-based reporting failures [updated]
Draft Law Administration Practice Statements are being developed on how penalties will be administered where employers or super funds fail to meet event-based reporting obligations, including Single Touch Payroll and super reporting. Guidance will cover incorrect, incomplete or non-reporting. Expected completion is early 2026.
- Education directions for SMSF trustees
A final Practice Statement is being prepared on when the ATO may issue education directions to trustees of SMSFs for SIS Act contraventions. Consultation on the draft closed on 31 October 2025.
- Payday super – first year compliance approach
A draft Practical Compliance Guideline sets out the ATO’s proposed compliance approach for the first year of payday super, applying to qualifying earnings days from 1 July 2026 to 30 June 2027. Consultation closed on 7 November 2025.
ATO rules adult child not an interdependent or financial dependant
In a recent ATO private ruling, an adult child who received a superannuation death benefit from a deceased parent was found to be neither in an interdependency relationship nor financially dependent. Although the child lived with the parent and received accommodation, food, intermittent financial assistance and help with medical care during serious illness, the ATO considered this consistent with a normal parent adult child arrangement and not a mutual commitment to a shared life (required for interdependency).
The ATO also accepted the child had income/support from other sources, so was not financially reliant on the parent to maintain their normal standard of living. Accordingly, the child was not a death benefits dependant and the taxable component of the super death benefit was assessable and taxed.
MYEFO Flags Further Deeming Rate Increases
The Mid-Year Economic and Fiscal Outlook signals that social security deeming rates will be gradually returned to pre-pandemic settings, indicating further increases after the recent adjustments. Deeming rates were cut sharply during COVID and held at unusually low levels for several years. Deeming rates are currently 0.75% on financial assets up to $64,200 for singles (or $106,200 for couples) and 2.75% on balances above those amounts. Deeming rates are used to assess income from financial assets for the Age Pension and other income-tested payments, meaning higher rates can increase assessed income and reduce entitlements for some recipients.
Indexation of social security rates and thresholds on 1 January 2026
Indexation of some social security rates and thresholds will apply on 1 January 2026.
Did you miss our 2025 Super & Financial Services wrap up?
Did you miss our 2025 Super and Financial Services Wrap Up that was sent out yesterday [Thursday 18 December]? If so, no problems – you can read our year in review here and catch up on some of the key highlights that occurred this year.
Last Weekly Super & Financial Services Bulletin for 2025
As we wrap up 2025, this marks the final edition of the Weekly Super & Financial Services Bulletin for the year. Regular publications will resume on Friday, 23 January 2026.
On behalf of everyone at the Institute of Financial Professionals Australia, we extend our heartfelt gratitude for your support throughout the year. We wish you a joyous Christmas and a wonderful festive season filled with happiness and success.