23 June 2025 to 27 June 2025
Weekly Bulletin Contents
TAX
Monday 23 June 2025
FOI request: No waiver of LPP on basis of inadvertent disclosure
The Federal Court has overturned a decision of the AAT in Alcoa of Australia Ltd v FCT (FOI) [2024] AATA 423 in which the AAT ruled that certain documents that the taxpayer had sought in an FOI request (in relation to the dispute with the Commissioner involving transfer pricing) were not exempt and should be released to Alcoa. The Commissioner had argued that various exemptions from FOI applied – including in relation to legal professional privilege (LPP). However, the Federal Court has now overturned that AAT decision essentially on the basis of finding that the AAT erred in ruling that LPP did not apply – and, in particular, erred in ruling that inadvertent disclosure of information constituted a waiver of LPP over drafts of the expert report in question. (FCT v Alcoa of Australia Ltd [2025] FCA 651, 19 June 2025)
Institute of Financial Professionals Australia (IFPA) comment: What this means for the decision in Alcoa of Australia Ltd v FCT [2025] ARTA 482 is not clear. In that case, Alcoa was successful in its dispute with the ATO over whether the transfer pricing rules applied to various transactions it entered.
Vic: Payroll tax threshold increased to $1 million
The Victorian Government has announced that from 1 July 2025, the payroll tax-free threshold will lift from $900,000 to $1 million. It follows the lifting of the threshold from $700,000 at the start of the financial year. The change will mean about 6,000 businesses no longer paying any payroll tax and a further 22,500 businesses paying a reduced amount.
Western Australian State Budget 2025
The Western Australian State Budget 2025-26 has been handed down. The Budget Papers and related announcements can be viewed here
Tuesday 24 June 2025
CGT improvement threshold for 2025-26
The ATO has released the CGT improvement threshold for the 2025–26 year. It is $187,962. The improvement threshold is used for the purposes of determining when a capital improvement to a pre-CGT asset is a separate asset pursuant to s 108-70 of ITAA 1997.
ATO: Top 5 work-from-home questions
The ATO has released information about claiming work-from-home deductions for this tax time. It deals with the following matters: What is the fixed rate for Tax Time 2024?; Is there a minimum number of hours to qualify for a working from home (WFH) deduction?; What types of records do taxpayers need to prove their ‘total hours worked from home’?; What is a practical way to prove work use of my phone?; and, Can an employee claim rent as part of the actual cost method if they work from home full time?
ATO: Div 7A Myths debunked
The ATO has released information to help avoid making Division 7A mistakes. It deals with the following matters: Business structure; Record keeping; Payments to other entities; Division 7A benchmark interest rate; Attempts to circumvent Division 7A; and the ATO’s discretion.
Wednesday 25 June 2025
NSW Budget for 2025-26 handed down
The NSW Budget for 2025-26 has been handed down. Among other things, the Budget measures will make permanent the 50% land tax discount for build-to-rent projects (previously the concession was set to end 31 December 2039). Full details of the Budget can be found here.
APRA: Better practice areas for improvement
APRA has advised that it has released a letter to Registrable Superannuation Entity (RSE) licensees setting out initial observations, examples of better practice, and areas for improvement to support compliance with legal duties and to achieve better outcomes for members. APRA said that this continues to be an area of supervisory focus for APRA, given the impact on member outcomes.
Thursday 26 June 2025
Taxation Determination: Reasonable travel and overtime meal allowance
The ATO has issued TD 2025/4 Income tax: reasonable travel and overtime meal allowance expense amounts for the 2025–26 income year. It sets out the amounts that the Commissioner considers are reasonable for the substantiation exception in Subdiv 900 B of the ITAA 1997 for the 2025-26 income year in relation to claims made by employees for: overtime meal expenses – for food and drink when working overtime; domestic travel expenses – for accommodation, food and drink, and incidentals when travelling away from home overnight for work (particular reasonable amounts are given for employee truck drivers, office holders covered by the Remuneration Tribunal and Federal Members of Parliament); and overseas travel expenses ( for food and drink, and incidentals when travelling overseas for work).
Interim Decision impact statement in Hall case
The ATO has issued an Interim Decision impact statement on the decision in Hall and FCT [2025] ARTA 600. It outlines the ATO’s response to the AAT’s decision in that case which concerned whether the taxpayer was entitled to a deduction for occupancy expenses and car expenses under ssn 8-1 and 28-12 of the ITAA 1997. The AAT held that the occupancy expenses and the car expenses were deductible because they were incurred in gaining or producing the taxpayer’s assessable income. The Commissioner is appealing the decision and in the interim, will continue to apply the current ATO views contained in: TR 93/30 Income tax: deductions for home office expenses; TR 2021/1 Income tax: when are deductions allowed for employees’ transport expenses?; and Employees guide for work expenses.
Draft instruments: Effective life and withholding variation for allowances
The ATO has released the following draft Legislative Instruments:
- LI 2025/D14: Draft Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025 – which sets out the ATO’s effective life of depreciating assets across various industries and asset categories.
- LI 2025/D15: Draft Taxation Administration (Withholding Variation for Payment of Certain Allowances) Legislative Instrument 2025 – which provides that the amount a payer is required to be withheld from specified allowances is varied to nil.
FRIDAY 27 June 2025
Taxpayer a resident despite effect of COVID travel restrictions
The ART has affirmed the Commissioner’s decision to treat a taxpayer as a resident of Australia for tax purposes for the 2021 income year. The taxpayer, a fly in fly out mining worker, argued that he was a non-resident in that year as he was forced to remain in Botswana for 10 months due to Covid travel restrictions. However, the ART found that he was a resident of Australia under the ordinary concepts test because of his continuity of association with Australia by way of, among other things, retaining his home in Australia where he had 3 dependent children and a spouse, his property interests in Australia and the maintenance of private health insurance in Australia. The ART also found that he was a resident of Australia under the domicile test and because he did not have a permanent place of abode outside Australia in that year. (Evans and FCT (Taxation) [2025] ARTA 824, 25 June 2025)
APRA: Data on superannuation retirement products
APRA has published data on superannuation retirement products for the first time. The new data increases transparency regarding investment returns, fees and costs and investment strategies at a product level. APRA says the data is the latest enhancement to its superannuation publications and reflects its continuing focus to drive better outcomes for members in retirement.
SUPER & FINANCIAL SERVICES
APRA Releases Data on Super Fund’s Returns, Fees and Asset Allocations
The Australian Prudential Regulation Authority (APRA) has published its first dataset on superannuation retirement products, detailing performance metrics for 600 multi-sector investment options. The data, covering investment returns, fees, and asset allocations, is now available on APRA’s webpage APRA shines light on retirement product performance
Institute of Financial Professionals Australia (IFPA) comment
With Australia’s superannuation system holding $4.1 trillion in assets, additional transparency of APRA regulated funds is welcomed.
APRA Intensifies Oversight of Super Fund Spending
APRA has ramped up scrutiny of superannuation fund expenditure, releasing findings from a review of 14 registrable superannuation entities (RSE) licensees. The review, part of APRA’s commitment to enforcing the Best Financial Interests Duty (BFID), focuses on discretionary spending, marketing, and payments to connected entities. APRA has outlined expectations for better governance, clear links between spending and strategic goals, robust expenditure frameworks, and transparent monitoring.
APRA’s recommendations include using standardised processes, proactive risk management, and evidence-based monitoring to align spending with member outcomes. Areas for improvement include stronger justification for expenditure, clearer staff guidance on BFID compliance, and reduced reliance on third-party reporting. APRA urges RSE licensees to address deficiencies promptly.
Question of the Week
Application of proposed Division 296 tax
Assume on 30 June 2025 our client has $4m in their fund, $1.5m in pension and $2.5m in accumulation.
If the fund grows to $4.5m on 30 June 2026 with the entire $500K increase due to capital growth, would this amount be subject to Division 296 tax?
What if the fund still earns $500K during 2025/26 but the client makes a large withdrawal during the year, leaving a balance of $2.5m as at 30 June 2026. Would the member still be subject to Division 296 tax, given their balance has fallen below the $3m threshold?
Answer
If Division 296 is legislated as originally proposed without changes, only a portion of the $500K increase in the Total Super Balance (TSB) would be subject to the Division 296 tax in the first scenario.
The formula for calculating what proportion of earnings is subject to the additional 15% tax is provided below.
| Proportion of earnings = | Your TSB at the end of the year – $3 million | x 100% | |
| Your TSB at the end of the year | |||
If the client withdraws an amount that gets them below $3m before 30 June 2026 then no Div 296 tax is payable. This is because if your proportion of earnings is nil, then there is no Div 296 tax to pay.