29 September 2025 to 3 October 2025
Weekly Bulletin Contents
TAX
Monday 20 October 2025
Div 149 (converting pre-CGT assets) does not apply to a discretionary trust
The ART has ruled that Div 149 of the ITAA 1997 did not apply to convert pre-CGT shares owned by a discretionary trust into post-CGT shares as it found that there had not been a requisite change in “majority underlying interests” in the shares following of the appointment of a company (Beta) as a new beneficiary of the trust in 2011. The sole share in Beta was held by a “hybrid unit/discretionary” trust which had the same family member beneficiaries as the discretionary trust. The shares in the discretionary trust were sold in 2017 for $100m of which some $64m was distributed to the taxpayer as a beneficiary of the trust.
In finding that the addition of Beta as a beneficiary did not convert the pre-CGT Alpha shares into post shares, the ART emphasised that even though “for the purposes of Subdiv 149-B, the “ultimate owners” are taken to effectively have ownership interests in the assets of a discretionary trust on the basis that they may benefit”, it was impossible, as a factual matter, to be able to measure whether the “majority underlying interests” were not had by “ultimate owners” who had “majority underlying interests” in the asset before 20 September 1985, following the addition of Beta as a beneficiary. This was because the mere appointment of the new discretionary beneficiary did not, by virtue of that fact alone, mean that more than 50% of the “beneficial interests” that “ultimate owners” had in the assets of the trust had changed. In addition, there had been no substitution of a new family as beneficiaries and therefore the Commissioner’s view of a change in IT 2340 did not apply. Accordingly, the ART allowed the taxpayer’s application. (XLZH and FCT (Taxation) [2025] ARTA 2154, 3 October 2025)
GST: Taxpayer not entitled to input tax credits
A taxpayer who carried on a business of video production and content creation from a granny flat on his parents’ premises has been unsuccessful in obtaining GST input credits for purchases of various goods and services, including furniture and electrical equipment, construction materials (for a new building on the premises), tools, fuel, travel, insurance and expenses relating to the purchase of a vehicle. Broadly, the ART found that the taxpayer had failed to discharge the onus of showing that the expenses were incurred for a creditable purpose as they were either not acquired for the purpose of carrying on an enterprise or were generally of a private or domestic nature in all the circumstances. (Fraser and FCT (Taxation) [2025] ARTA 2153, 6 October 2025)
Period of tax agent’s registration ban reduced from 2 years to one year
A tax agent and her tax agent companies who had their tax agent registrations terminated for two years, have now been successful before the ART in having the termination period reduced to one year. The tax agents’ registrations were terminated in view of, among other things, a pattern of non-compliance with various tax obligations and in the making various false declarations. However, in reducing the two year termination period from two years to one year the ART took into account the tax agent’s attitude of contrition and the fact that she was working with the ATO to rectify defaults in relation to personal defaults and those in respect of family businesses, and also those of clients. (Cavallaro & Ors v TPB [2025] ARTA 2028, 29 September)
Tuesday 21 october 2025
ATO: Compliance focus for 2025-26
The ATO has (again) set out its compliance focus for 2025-26, as follows: the use of business money for personal or other group purposes, with a particular focus on Div 7A arrangements and the tax treatment of lifestyle assets; the tax consequences of succession planning activities; tax risks arising from specific industries or activities such as property and construction, private equity and international dealings; and ensuring compliance with core tax obligations (including correctly reporting income, sales, capital gains.
ATO: Offshore Merchant Data-Matching Program
The ATO has advised that it will acquire merchant data from the big 4 Australian banks; Australian and New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corporation for 2024-25 through to 2026-27. The data items include: The name of the offshore entity or other descriptors of the offshore entity and the Merchant country; contact details; the total aggregated value of the transactions in Australian dollars (AUD) for each offshore entity for the requested period; the count of transactions for each offshore entity; and all currencies used other than AUD.
Regs: Financial instruments issued by foreign regulated entities
The Income Tax Assessment (1997 Act) Amendment (Term Subordinated Note) Regulations 2025. Its purpose is to ensure consistent tax treatment for financial instruments issued by foreign regulated entities and APRA regulated entities that are subject to non-viability conditions.
Wednesday 22 October 2025
ATO: Compliance focus for 2025-26
The ATO has (again) set out its compliance focus for 2025-26, as follows: the use of business money for personal or other group purposes, with a particular focus on Div 7A arrangements and the tax treatment of lifestyle assets; the tax consequences of succession planning activities; tax risks arising from specific industries or activities such as property and construction, private equity and international dealings; and ensuring compliance with core tax obligations (including correctly reporting income, sales, capital gains.
Full Court grants stay pending outcome of MAP process
The Full Federal Court has allowed the taxpayer’s appeal from the decision in Oracle Corporation Australia Pty Ltd v FCT (Stay Application) [2024] FCA 1262 in which the Federal Court refused the taxpayer’s application for a temporary stay in relation to a withholding tax dispute concerning the characterisation of certain payments as “royalties”. The taxpayer had sought the stay pending the finalisation of a mutual agreement procedure (MAP) under the double taxation treaty between Australia and Ireland in relation to the dispute. In granting the stay, the Full Court indicated that the Court at first instance had erred in the manner it took into the account of the fact that there were 15 other litigants involved in the dispute. (Oracle Corporation Australia Pty Ltd v FCT [2025] FCAFC 145, 21 October 2025.)
Thursday 23 October 2025
ATO: New ATO Vulnerability Framework released
The ATO has advised that it has released its Vulnerability Framework, its commitment to better support people experiencing vulnerability when interacting with the tax system. The ATO said it is now working to embed these principles across its organisation, improve staff capability, and ensure accessible support pathways, including non-digital options. It said tax professionals are encouraged to: refer to the framework when supporting clients interacting with the tax system that may be experiencing vulnerability; share the framework and supporting resources with your clients; and encourage early engagement with the ATO. The final Framework, Easy Read summary, and supporting resources are available at ato.gov.au/VulnerabilityFramework.
No jurisdiction re refund offset against Centrelink debt – but taxpayer “wins”
The ART has ruled that it had no jurisdiction to determine if the ATO had the authority to “intercept a taxpayer’s tax return and have part of tax refund applied to Centrelink debts arising from the overpayment of family tax benefit”. However, the taxpayer was, in effect, successful in her actions as it resulted in the ATO reversing its offsetting decision. The Tribunal also noted that liaison between Services Australia and the ATO had now taken place to address the issue, and that on 25 July 2025 information was published on the ATO website about how a person can apply for a refund following an offset decision in addition to outlining the avenues of appeal against an offset decision relating to family tax benefit debts. (McNair and FCT (Taxation) [2025] ARTA 2188, 20 October 2025)
AUSTRAC guidance for AML/CTF regime changes
AUSTRAC has advised that it has released guidance material to help current and future reporting entities comply with changes to the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) legislation. It said that from 1 July next year, thousands of new businesses will come under the AML/CTF regime, including real estate agents, accountants, lawyers and dealers in precious metals and stones. For current reporting entities, the new laws will come into force on 31 March 2026. AUSTRAC emphasised that the guidance is designed to help incoming reporting businesses understand and implement their new obligations, while giving existing reporting entities information on what will change.
ATO: Value of goods taken from stock for private use for 2025–26 year
The ATO has released TD 2025/7 Income tax: value of goods taken from stock for private use for the 2025–26 income year. It provides the amounts that the Commissioner will accept in the 2025-26 income year as estimates of the value of goods taken from trading stock for private use by taxpayers in named industries. At the same time, the ATO has withdrawn TD 2020/1 Income tax: value of goods taken from stock for private use for the 2019-20 income year.
Friday 24 October 2025
NOTICE TO MEMBERS
Taxpayers Australia Ltd (TAL) Annual General Meeting
Notice is hereby given that the 2025 Annual General Meeting (AGM) of Members of Taxpayers Australia Ltd (TAL), a public company limited by guarantee incorporated under the Corporations Act 2001 (Cth) (the Act), will be held on Friday, 28 November 2025 at 10.00am AEST (Brisbane time) at the office of AEPMA, Airport Gateway Business Centre, Unit 6 / 12 Navigator Place, Hendra QLD 4011. Members are invited to attend the meeting in person.
Further details regarding the meeting, including access to relevant documentation, are available on our website.
TAI Practitioners and Advisers Ltd (TAI PAL) Annual General Meeting
Notice is hereby given that the 2025 Annual General Meeting (AGM) of Members of TAI Practitioners and Advisers Ltd (TAI PAL), a public company limited by guarantee incorporated under the Corporations Act 2001 (Cth) (the Act), will be held on Friday 28 November 2025 at 11.00am AEST (Brisbane time) at the office of AEPMA, Airport Gateway Business Centre, Unit 6 / 12 Navigator Place, Hendra QLD 4011. Members are encouraged to attend at the meeting in person.
Further details regarding the meeting, including access to relevant documentation, are available on our website.
Members are reminded to log in to the member portal to view all associated papers and information relating to the AGM.
Taxpayer fails to discharge onus – evidence not reliable
A company taxpayer has been unsuccessful in discharging the onus of proving that amended assessment for the 2014 to 2016 income years were excessive (albeit the Commissioner made various concessions before the proceedings). Essentially, the ART found that the evidence presented was not sufficiently reliable to discharge the onus – and this included lack of business records, unexplained bank deposits and a witness statement where the witness was not available for cross examination. In addition, the taxpayer failed to discharge the onus that administrative penalties for misleading statements were excessive, with the ART saying there had been “a disregard or indifference to a risk that was foreseeable”. (Bani Samuel Pty Ltd and FCT (Taxation) [2025] ARTA 2186, 17 October 2025)
CBC reporting: routine profits test
The ATO has released information on how to apply the routine profits test for the transitional CBC reporting safe harbour under Pillar Two. The ATO said that the routine profits test is one of the 3 tests that can be used to determine if the transitional CBC reporting safe harbour applies to a jurisdiction for a fiscal year. The test compares the multinational enterprise group’s (MNE group) profit for the jurisdiction, as reported in its qualified CBC report, against a prescribed percentage of its eligible payroll costs and tangible assets for the jurisdiction.
AFCA 2024-25 Annual Review – complaints high again
The Australian Financial Complaints Authority’s (AFCA) Annual Review showed that in the 2024–25 financial year, and for the second year in a row, AFCA has received more than 100,000 complaints. AFCA said that it knows many Australians continue to feel financially stretched and stressed – and behind every complaint we receive is a person seeking fairness and resolution in a time of uncertainty. It also said that in times of economic pressure, it’s critical that financial firms strengthen their internal dispute resolution processes and ensure resources are available to deal with disputes in a fair and timely manner.
SUPER & FINANCIAL SERVICES
ATO releases new vulnerability framework to support SMSF trustees
The ATO has released its new vulnerability framework, a principle-based guide outlining how it will better support people who may be experiencing vulnerability when interacting with the tax and superannuation systems, including SMSF trustees.
Developed through public consultation, the framework emphasises empathy, clear communication, and connecting individuals with appropriate support. It also recognises that vulnerability can affect anyone at any time and that SMSF trustees may need tailored assistance in meeting their tax and super obligations.
The ATO has published additional online resources, including the full framework, an ‘easy read’ summary, and examples of current support options. SMSF advisers and trustees are encouraged to review and share this information to ensure those in vulnerable situations know what help is available.
Average super balances soar to $172,834, easing retirement worries
According to ASFA research, average super balances have hit a record of $172,834, with members aged 65–69 averaging $420,934 in retirement savings, and males with balances of $192,119 and females at $154,641.
Super funds flagged to lift US exposure to $1.44tn by 2035
The White House says Australia’s superannuation funds will increase their investment in the United States to $1.44 trillion by 2035, nearly $1 trillion more than today. Presented as part of a wider economic package, the claim casts super funds as a major source of long-term capital for US projects and jobs while underscoring the depth of financial ties between the two countries.
It is understood that this figure is a projection rather than goal, however, the shadow finance spokesman, James Paterson, said it would be a concern if government sought to direct super capital as part of a political arrangement. He asked if the Future Fund was pressured to increase its US weighting, emphasising that investment decisions should rest with trustees and committees.
ATO updates: What SMSF auditors must check
The ATO has refreshed its guidance for SMSF auditors, outlining core responsibilities and the minimum SISA/SISR checks expected during a compliance audit. The update emphasises documentation quality, independence, and timely reporting of breaches.
Essential checks include:
- Confirm audit planning, materiality, risk assessment, evidence gathering, and working papers meet ATO expectations.
- Identify and report relevant breaches to the ATO using the Auditor Contravention Report where required.
Pay close attention to common risk areas including sole purpose test, loans or financial assistance to members, related-party rules and LRBAs, in-house assets, arm’s length terms, asset valuation, investment strategy, pensions, contributions, and payment standards.
Treasury reviews super death benefits for indigenous kinship
Treasury received submissions on superannuation death benefits for Aboriginal and Torres Strait Islander kinship structures. Proposals included amending “child” definitions to include traditional adoptions.
Submissions urged clearer trustee guidance, aligned with AUSTRAC’s flexible ID approach, and evidence from community elders for dependency. The Law Council emphasised simpler nominations. Challenges include disputes from misaligned cultural terms, language barriers, and remote access issues.