16 June 2025 to 20 June 2025
Weekly Bulletin Contents
TAX
Monday 16 June 2025
High Court grants special leave in Bendel’s case
The Commissioner has been granted special leave to appeal to the High Court from the Full Federal Court decision in FCT v Bendel & Anor [2025] FCAFC 15. The Full Court had unanimously dismissed the Commissioner’s appeal from the earlier decision of the AAT which found that an amount was not subject to Div 7A as an unpaid present entitlement (UPE) essentially because it did not involve the concept of a “repayment” as required under the relevant provisions. The decision is contrary to the ATO administrative practice.
Taxpayer resident for only one income years – not two
In a matter where the ATO had determined that the taxpayer was a resident of Australia for two income years (so that income that the taxpayer derived from working in China in his own right and through entities he controlled would be assessable in Australia) the ART has ruled that the taxpayer was resident for only one of those income years on the basis of the “ordinary resides” test. As a result, he was only assessable on the foreign income he derived for that income year. At the same time, the ART confirmed that he made an assessable capital gain in relation to a transfer of shares in one of those entities in that income year. However, the ART ruled that the controlled foreign corporation (CFC) rules did not apply to services the taxpayer provided through a Hong Kong company which was wholly owned by him, as the company was not a CFC. Finally, the ART ruled that the taxpayer was not assessable on a dividend he derived from his Australian resident country in the year that he was a foreign resident as the dividend was non-assessable non-exempt income on basis that he was a foreign resident in that year. (Abotomey and FCT (Taxation and business) [2025] ARTA 719, 10 June 2025)
ATO: GIC, SIC and interest on overpayments
The ATO has advised that the general interest charge (GIC) rates for the period from 1 July 2025 to 30 September 2025 is 10.78%. The ATO has also advised that the shortfall interest charge (SIC) for the period from 1 July 2025 to 30 September 2025 is 6.78%. The ATO has also advised that the interest rate on overpayments, early payments and delayed refund interest is 3.78%.
Tuesday 17 June 2025
ATO reminder re country-by-country regime
The ATO has issued a reminder that the public country-by-country (CBC) reporting regime requires certain large multinational enterprises to publish selected tax information to the public. This information must be reported either on a CBC basis or on an aggregated basis. Under the regime, the parent entity generally has the reporting obligation, rather than the Australian subsidiary (Public CBC reporting parent). The ATO also emphasised that the regime applies for reporting periods starting from 1 July 2024. For a Public CBC reporting parent with a reporting period end of 30 June, this will be from 1 July 2024 – and reports are due within 12 months of the end of the reporting period.
ATO: Review your client list
The ATO has issued a reminder to practitioners to review their client list to add new clients and remove those who no longer use your services. The ATO said that this will help to ensure that: new clients are covered by your lodgment program; the ATO won’t contact you about your previous clients; and your lodgment performance percentage is accurate.
Wednesday 18 June 2025
Bendel High Court appeal: ATO views
In the light of the High Court granting the ATO special leave to appeal the decision in FCT v Bendel [2025] FCAFC 15, the ATO has expressed its thoughts and views on some common questions it is hearing from private companies and their advisers, regarding the case decision and court process. The ATO also strongly encourages taxpayers to review its published Interim Decision Impact Statement on the decision.
TPB: Written caution to practitioner
The Tax Practitioners Board (TPB) has advised that it has issued a written caution to a tax agent company and its sole director and supervising agent after they were both found to be in breach of Code item 7 of the Code of Professional Conduct (Code). Code item 7 states you must ensure that a tax agent service that you provide, or that is provided on your behalf, is provided competently. After completing an investigation, the TPB found the tax agent company and sole director failed to take reasonable care in the preparation and lodgement of 217 income tax returns for clients which were subject to ATO compliance activities. They were found to have included overclaimed or incorrect deductions that did not have a sufficient link to assessable income or could not be substantiated resulting in tax shortfalls and penalties for clients.
Thursday 19 June 2025
Treasurer: Tax reform on roundtable reform
Treasurer Jim Chalmers has delivered a speech to the National Press Club titled “Economic Reform in our Second Term” in which he discussed the economy, inflation, wage growth, global volatility, productivity, private investment, skills, budget sustainability and tax reform. In particular, he emphasised that tax reform will be on the agenda of a comprehensive reform roundtable to be held from 19 to 21 August 2025. In doing so he said tax reform was crucial to lifting productivity and investment and budget sustainability. See also questions he addressed from the press, in which he also expressed his view on any proposed reform of GST, here.
Offshore oil and gas worker denied work-related travel deductions
The AAT has disallowed work-related travel claims of $30,000 by an employee of a large oil and gas producer who resided in Queensland with his family but whose employment was primarily based at an offshore facility off the coast of Western Australia. His work arrangements also included training days, working from home, or working from the Employer’s Perth office. In disallowing the travel claims the ART found that the expenses were not incurred in gaining or producing his assessable income as they were incurred when he was off-duty and on leave between rotating cycles at the facility. The ART also found that he failed to show that depreciation expenses associated with his Omega watch (which he regarded necessary to carry out his duties) and a tool chest were deductable for the purposes of 40-25 of the ITAA 97. However, the ART accepted that home office expenses he claimed did not include a private element and therefore were allowable. (CBRX and FCT (Taxation and business) [2025] ARTA 768,16 June 2025)
TD: Pt IVA can apply to early stage innovation company investments
The ATO has released TD 2025/3 Income tax: application of Part IVA of the Income Tax Assessment Act 1936 to certain early stage innovation company investment arrangements. It sets out the Commissioner’s view that Pt IVA of the ITAA 1936 can apply to early stage innovation company schemes as described in Taxpayer Alert TA 2024/1 Early stage investor tax offset claimed using circular financing arrangements.
Draft Instrument: extension of time to register foreign acquisitions
The Government has released Draft Legislative Instrument LI 2025/D13 Foreign Acquisitions and Takeovers (Register Notices – Extensions of Time) Instrument 2025. It will allow the Commissioner, as Registrar, to extend the 30 day period in s 130W(2)(b) of the Foreign Acquisitions and Takeovers Act 1975 in which foreign must notify the ATO of acquisitions of property and other assets in Australia. Under the draft instrument, the period can be extended for any number of times and by any period of time.
FRIDAY 20 June 2025
Draft GST determination: input tax credits for second hand goods
The ATO has issued draft LI 2025/D11 A New Tax System (Goods and Services Tax) (Acquisitions of Second-hand Goods) Determination 2025. It repeals A New Tax System (Goods and Services Tax) Act 1999 Rules for Applying Subdivision 66-B Determination (No.31) 2015. The new instrument will continue to allow GST registered entities to apply a global accounting method for calculating GST liabilities on acquisitions of certain kinds of second hand goods as set out in the Determination.
Rulings withdrawn as no longer current
These ATO has withdrawn the following rulings as they are no longer current due to developments in case law and legislation:
TR 95/8W Income tax: employee cleaners – allowances, reimbursements and work-related deductions;
TR 95/9W Income tax: employee lawyers – allowances, reimbursements and work-related deductions;
TR 95/10W Income tax: employee shop assistants – allowances, reimbursements and work-related deductions;
TR 95/11W Income tax: hospitality industry employees – allowances, reimbursements and work-related deductions;
TR 95/12W Income tax: employee factory workers – allowances, reimbursements and work-related deductions;
TR 95/13W Income tax: employee police officers – allowance, reimbursements and work-related deductions;
TR 95/14W Income tax: employee teachers – allowances, reimbursements and work-related deductions;
TR 95/15W Income tax: nursing industry employees – allowances, reimbursements and work-related deductions;
TR 95/16W Income tax: employee hairdressers – allowances, reimbursements and work-related deductions;
TR 95/17W Income tax: employee work-related deductions of employees of the Australian Defence Force;
TR 95/18W Income tax: employee truck drivers-allowances, reimbursements and work-related deductions;
TR 95/19W Income tax: airline industry employees – allowances, reimbursements and work-related deductions;
TR 95/20W Income tax: employee performing artists – allowances, reimbursements and work-related expenses;
TR 95/22W Income tax: employee building workers – allowances, reimbursements, long service payments, redundancy trust payments and work-related deductions;
OECD report on Tax Administration Digitalisation and Initiatives
The OECD has released a report titled Tax Administration Digitalisation and Digital Transformation Initiatives. It summarises the data from the Inventory of Tax Technology Initiatives (ITTI) for the 54 members of the OECD Forum on Tax Administration (FTA). The inventory is a collaboration between the FTA and nine international and regional tax bodies. It contains a wealth of information from more than 100 jurisdictions on the use of technology by tax administrations globally and its primary purpose is to assist tax administrations when considering possible domestic reforms as well as to help identify where future collaboration between tax administrations might be of most value.
SUPER & FINANCIAL SERVICES
ATO Guidance on Legacy Pensions
The ATO has published a page titled Relaxed commutation rules for legacy retirement products on legacy pension commutation rules and reserve allocation changes effective from 7 December 2024. The guidance details which legacy pension products can be commuted, potential consequences, and the treatment of reserve allocations for contribution cap purposes before and after the law change.
Institute of Financial Professionals Australia (IFPA) comment
Advisers should assess each client’s circumstances, including transfer balance cap implications, tax outcomes, and social security considerations, before recommending commutation.
ASFA Projects Bright Retirement Future with 12% Super Guarantee
In a recent media release, Association of Superannuation Funds of Australia (ASFA) has estimated that a 30-year-old earning the median wage of $75,000 is projected to achieve a comfortable retirement, following an increase in the super guarantee (SG) rate to 12% effective from July 2025.
With a starting super balance of $30,000 and the 12% SG, a 30-year-old is expected to accumulate $610,000 by age 67. This exceeds the $595,000 estimated by the latest ASFA Retirement Standard for a comfortable retirement for a single homeowner.
The increase from 11.5% to 12% is expected to add an extra $20,000 to the super savings of a 30-year-old earning the median wage over their working life.
IFPA comment
ASFA’s projections highlight the positive impact of the SG increase to 12%. However, uncertainties such as future inflation, investment returns, cost-of-living increases, and potential changes to superannuation policies may impact whether these thresholds will truly deliver a comfortable retirement. Financial advisers should use ASFA’s Retirement Standard figures – $100,000 for a modest single retirement, $595,000 for a comfortable single retirement, and $690,000 for a comfortable couple’s retirement – as a guide. They should also incorporate robust planning to address these uncertainties and tailor strategies to clients’ individual needs.
ATO Sets GIC, SIC, and Credit Rates for July–September 2025
The ATO has released the general interest charge (GIC) and shortfall interest charge (SIC) rates for the period 1 July 2025 to 30 September 2025. The rates are as follows:
- General Interest Charge (GIC):
- Annual rate: 10.78%
- Daily compounding rate: 0.02953425%
- Shortfall Interest Charge (SIC):
- Annual rate: 6.78%
- Daily compounding rate: 0.01857534%
- Interest on overpayments, early payments, and delayed refunds: 3.78%
For more information on these rates including historical rates, see the ATO’s pages: General interest charge (GIC) rates, Shortfall interest charge (SIC) rates and Credit interest rates and calculation, published 12 June 2025
Question of the Week: How Can SMSF Members Use Contribution Reserving before 30 June?
Question
A member of an SMSF has already made a personal deductible contribution of $30,000 and is considering making another personal deductible contribution of $30,000 in June as part of a contribution reserve strategy. I understand that the SMSF administrator must submit a Request to Adjust Concessional Contributions – are there any other considerations to keep in mind?
Answer
The following outlines key considerations specific to using a contribution reserve strategy where an SMSF member has already made a $30,000 personal deductible contribution in 2024/25 and is considering an additional $30,000 contribution in June 2025. This strategy allows the member to claim a tax deduction in 2024/25 while having the contribution count toward the 2025/26 concessional contributions cap. The following only covers some key points specific to the contribution reserve strategy, noting that the full process involves additional requirements.
Verify SMSF Deed and Trustee Powers
Ensure the SMSF’s trust deed explicitly permits the use of a contribution reserve (unallocated contributions account) and allows the trustee to hold contributions for allocation. It is also necessary to document the trustee’s decision to use the contribution reserve strategy.
Timing and Allocation of the Contribution
The member must make the additional $30,000 personal contribution before 30 June 2025, ensuring the SMSF receives the funds by this date to claim a tax deduction in 2024/25. The SMSF trustee must hold the contribution in an unallocated account until after 1 July 2025 to prevent allocation to the member’s account in 2024/25.
Allocate the additional $30,000 to the member’s account between 1 July and 28 July 2025 (within 28 days after June’s end, per SISR s7.08(2)). This ensures it counts toward the 2025/26 concessional cap ($30,000).
Document the allocation with a trustee resolution, recording the date and amount allocated.
Notice of Intent to Claim a Deduction
The member must submit a valid Notice of Intent to Claim a Deduction for Personal Super Contributions (under s290-170 ITAA 1997) to the SMSF trustee before filing their 2024/25 tax return or by 30 June 2026, whichever is earlier.
ATO Reporting and Adjustments
The SMSF must report the additional $30,000 contribution in its 2024/25 annual return, as contributions are reported in the year received.
To ensure the contribution is counted against the member’s 2025/26 concessional cap rather than 2024/25, a Request to Adjust Concessional Contributions form to the ATO (per QC 46558) must be lodged with the ATO (refer to QC 46558).
While the contribution will be included in the SMSF’s assessable income in 2024/25, it will counts toward the 2025/26 concessional contribution cap for contribution cap purposes.
Compliance and ATO Scrutiny
Member’s should be warned that the process may not be smooth and a reserved contribution may trigger excess contributions determination and subsequent assessment, which may take some paperwork to rectify.
Whilst the strategy is accepted by the ATO (see ATO’s TD 2013/22), it may still be scrutinised by the ATO. It is important to ensure necessary documentation is in place including the SMSF deed with contribution reserving powers and trustee resolutions.