2 June 2025 to 6 June 2025
Weekly Bulletin Contents
TAX
Monday 2 June 2025
Updated Guideline: Calculating electricity costs for charging PHEV at home
The ATO has issued an updated draft Practical Compliance Guideline PCG 2024/2 which provides guidance for workers to claim home electricity charging costs for their plug-in hybrid electric vehicles (PHEV). Workers who own a battery electric vehicle have been able to use a shortcut method to determine home charging costs, however until now there has been no guidance for workers who drive a PHEV and charge at home. The draft compliance guideline introduces a formula to calculate home charging costs for PHEVs, which includes applying a flat rate of 4.2 cents per kilometre for deemed travel on electricity – an extension of the shortcut method available to workers with battery electric vehicles. Comments are due by 25 July 2025.
Guideline: Deductions for funds for personal financial advice fees
The ATO has finalised Practical Compliance Guideline PCG 2025/1 which sets out a method that super funds (other than SMSFs) can use to determine the extent to which they can claim a deduction for payments of financial advice fees for the provision of personal financial advice to a member of the fund about their interest (in accordance with the requirements of s 295-490(1) of ITAA 1997, paras (a) to (d)). It also outlines the ATO’s compliance approach that applies in relation to a superannuation fund’s obligation to withhold from payments for personal financial advice fees in the income years prior to 1 July 2019.
Guideline: inbound, cross-border related party financing arrangement
The ATO has released Draft Practical Compliance Guidance PCG 2025/D2 which sets out its compliance approach regarding factors to consider when determining the amount of an inbound, cross-border related party financing arrangement. It contains specific guidance on this issue and examples on how the indicators and factors are used by the ATO. It follows amendment to s 815-140 of ITAA1997 as part of the broader changes to Australia’s thin capitalisation rules. Comments are due by 30 June 2025.
Tasmanian 2025-26 Budget
The Tasmanian Budget for 2025-26 Budget has been handed down. The Budget Papers can be accessed here.
Tuesday 3 June 2025
ATO: More time to update NFP’s governing documents
The ATO said it is providing additional support to NFPs and have extended the due date to update governing documents from 30 June 2025 to 30 June 2026 for organisations that have not made any distributions of income or assets to members. In this regard, the ATO said that NFP self-review return asks if the organisation has and follows clauses in its governing document that prohibit the distribution of income or assets to members while it is operating and winding up.
TPB warning: “Fin-influencers” on the rise
The Tax Practitioners Board (TPB) has warned that the number of “fin-influencers” who offer financial advice, including tax advice, on various social media platforms such as Instagram and TikTok is on the rise. It said unfortunately, they don’t always have the necessary qualifications to give out this advice. The TPB said the main way ‘finfluencers’ make their money is by getting paid by companies that want to promote their financial products through the ‘finfluencer’s’ social media platform.
Wednesday 4 June 2025
ATO: Upcoming employer obligations
The ATO has advised that as the end of financial year approaches, practitioners and employers need to take note of the following and the upcoming key dates:
- Super guarantee (SG) – for the quarter ending 30 June the 11.5% SG rate applies for salary and wage payments made before 1 July.
- Super guarantee rate – increases to 12% on 1 July. This rate applies for payments of salary and wages to eligible workers on and after 1 July, even if some or all of the pay period it relates to is before 1 July.
- PAYG withholding – from 1 July, some withholding schedules and tax tables will be updated. Use the correct tax tables or the tax withheld calculator to work out how much to withhold from your employees’ payments.
- Single touch payroll (STP) reporting – complete a STP finalisation declaration by 14 July.
Car limit for 2025-26
The ATO has released the car limit for 2025–26. It is $69,674 (unchanged from 2024–25). The car limit is used for capital allowance purposes to work out the first element of the cost of certain cars to which the car limit applies.
ATO: $1,200 threshold for Lump Sum E removed
The ATO has advised that, currently, if a back payment accrued more than 12 months ago and exceeds $1,200, you need to report this as Lump Sum E in your Single touch payroll (STP) reporting. However, it said that from 1 July, the $1,200 threshold will be removed. The ATO said that this means that you should report all back payments which accrued more than 12 months ago as Lump Sum E in your STP reporting, regardless of the amount.
Thursday 5 June 2025
Interim Decision impact statement on Shaw’s case
The ATO has released an Interim decision impact statement on Shaw and FCT [2025] ARTA 224, which concerned whether the taxpayer, an employee long-haul truck driver, was entitled to a deduction under s 8-1 of the ITAA 1997 for work-related travel expenses claimed in respect of meals. The Tribunal held that the meal expenses were deductible under section 8-1 because they were incurred in gaining or producing his assessable income. The Tribunal also considered whether the taxpayer was entitled to rely upon the exception from substantiation under s 900-50 and whether s 900-200 would have applied to relieve the taxpayer from the obligation to substantiate the meal expenses. The ATO said that until the appeal process is finalised, it does not intend to revise the current ATO views contained in the following public rulings dealing with work-related travel expenses and record keeping, including substantiation and the substantiation exception: TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses; TR 95/18 Income tax: employee truck drivers-allowances, reimbursements and work-related deductions; TR 97/24 Income tax: relief from the effects of failing to substantiate; and TD 2020/5 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2020-2021 income year?
Draft GST determinations issued
The ATO has issued the following draft GST related determinations:
- LI 2025/D6: A New Tax System (Goods and Services Tax) (Application of Intermediary Arrangements to the Multi-Media Industry) Determination 2025 – which specify that supplies or acquisitions of multi-media products will be taken to be supplies or acquisitions to which the arrangements in s 153-50 of the GST Act for multi-media products apply. It will replace the existing 2015 instrument which will sunset on 1 October 2025 and has the same substantive effect as the 2015 Determination. Comments due 25 June 2025.
- LI 2025/D7: A New Tax System (Goods and Services Tax) (Waiver of Tax Invoice Requirement – Direct Entry Services) Determination 2025 – which waives the requirement for a recipient of a supply of a “direct entry service” to hold a tax invoice before the relevant input tax credit will be attributable to a tax period – in certain defined circumstances. It will replace the existing 2015 instrument which will sunset on 1 October 2025 and has the same substantive effect as the 2015 Determination. Comments due 25 June 2025.
ATO: Upcoming personal transfer balance cap changes
The ATO has advised that new proportionally indexed personal transfer balance caps are expected to display in ATO online from 11 July 2025. By way of background, the ATO said the general transfer balance cap (TBC) will be indexed on 1 July 2025, increasing from $1.9m to $2m. This increase will impact members with a personal TBC. Members who have commenced a pension prior to 1 July 2025 and haven’t previously reached or exceeded their personal cap will be eligible for a proportional increase, based on their highest ever transfer balance and the amount of unused cap space. The ATO also said that members starting a pension for the first time on or after 1 July 2025 will be entitled to a personal TBC of $2m.
FRIDAY 6 June 2025
FBT applies to car benefits provided to directors
The Federal Court has allowed the Commissioner’s appeal from the decision at first instance in which the AAT ruled that the directors of a company were neither employees of the company nor received car benefits in respect of their employment – and that therefore there was no liability for FBT. However, on appeal the Federal Court found that as a question of “mixed fact and law”, the exclusive use of the cars by the directors were provided to them “in respect of” their employment within the meaning of the FBTAA 1986 and that therefore FBT applied in the circumstances. (FCT v SEPL Pty Ltd as trustee of the SFT Trust [2025] FCA 581)
PAYG withholding schedules for 2025-26
The Taxation Administration (Withholding Schedules) Instrument 2025 has been made. It contains the withholding schedules that specify the amount, formulas and procedures to be used for working out the amount required to be withheld by an entity under the PAYG system. The instrument contains fifteen withholding schedules. The following 4 withholding schedules have been updated from the 2024 instrument:
- Withholding schedule 5 has been updated to remove the $1,200 lump sum E threshold. From 1 July 2025, all back payments that accrued more than 12 months before the date of payment should be treated as lump sum E regardless of the amount.
- Withholding schedule 8 has been updated to account for the annual indexing and changing of the repayment income thresholds for study and training support loans.
- Withholding schedule 12 has been updated to account for the annual indexation to the untaxed plan cap.
- Withholding schedule 13 has been updated due to the indexation of the general transfer balance cap and the defined benefit income cap amount.
SUPER & FINANCIAL SERVICES
New Aged Care Act Postponed to 1 November 2025
The implementation of the new Aged Care Act will be postponed to 1 November 2025.
The delay is intended to provide the sector with additional time to prepare for and implement these changes. The new Act introduces significant reforms to Residential Aged Care and Home Care and was originally set to take effect on 1 July 2025. Many details of the new reforms are still under consultation and have yet to be finalised.
Institute of Financial Professionals Australia (IFPA) comment
Existing aged care residents and those who enter before the implementation date will continue to be covered under existing fee rules. A useful calculator to estimate residential aged care and homecare fees can be found on the myagedcare webpage.
Guideline: Deductions for funds for personal financial advice fees
The ATO has finalised Practical Compliance Guideline PCG 2025/1 clarifying the deductibility of financial advice fees paid from a super member’s account.
For fees to be deductible to the fund, a number of conditions must be satisfied which are that the fee must be:
- Incurred for personal advice about the member’s fund interest
- With member consent
- Supported with a copy of the written request or consent is retained
- A fee that does not relate to exempt or non-assessable income.
SMSF members should ensure robust documentation to support deductions and compliance with tax obligations.
The guideline also provides large super funds (non-SMSFs) an optional account-based method to determine deductible fees from accumulation accounts. SMSFs cannot use the simplified account-based method for determining deductible fees under s 295-490(1). SMSF Trustees must instead review each individual piece of personal advice to determine deductibility.
IFPA comment
PCG 2025/1 clarifies deductibility of fees paid from member accounts by a super fund . TD 2024/7 clarifies when individuals can claim deductions for financial advice fees they pay under section 8-1 (general deductions) or section 25-5 (tax-related expenses).
ATO Issues Updated Guidance on Succession Planning for Private Groups
The ATO has updated their guidance to help private groups navigate succession planning and avoid unintended tax consequences. The ATO Deputy Commissioner emphasised the importance of considering the tax implications when planning to sell a family business or transfer wealth to the next generation.
Key recommendations include:
- Developing and regularly updating a succession plan to account for changes in family dynamics, health, or business structure.
- Considering tax consequences and maintaining documentation to support transactions, including valuations where needed.
- Implementing a strong tax governance framework to manage risks effectively.
- Seeking advice from the ATO or a tax adviser as required.
The ATO warns against deliberate tax avoidance and highlights tax risks that may attract scrutiny.
Question of the week – Voluntary work and satisfying the work test
My client is 70 and is a regular volunteer who receives a non-taxable benefit. Does volunteering for more than 40 hours in a 30-day period qualify as gainful employment under the work test to allow a personal super contribution and claim a tax deduction?
Answer
There is no work test requirement to make a personal super contribution. Members approaching 75 are reminded that the last day a super fund may receive a personal contribution is the 28th day of the month following their 75th birthday. The super fund may not accept personal contributions after this time.
On the other hand, members between ages 67 and 74 (including up to 28 days after the end of the month in which they reach age 75) who have made a personal contribution and wish to claim a tax deduction on the contribution must satisfy the work test or work test exemption.
To satisfy the work test the member must be gainfully employed for at least 40 hours over 30 consecutive days. To be ‘gainfully employed’ means employed or self employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment (SISR 1.03(1)).
Voluntary work will not ordinarily satisfy the work test. Incidental benefits or gifts not connected with services provided are generally tax-free and being unconnected to services provided do not constitute gain or reward. To this end, voluntary work is not ordinarily gainful employment.
Members between ages 67 and 74 (including up to 28 days after the end of the month in which they reach age 75) may claim a deduction on personal super contributions if they satisfy the work test exemption. To satisfy the work test exemption, the member must have satisfied the work test in the previous income year, have a total super balance less than $300,000 at 30 June of the prior year and have not used the work test exemption in a prior year.