June 2025 Essential Tax Summary

Tax Insights & Updates: What You Need to Know This Month

As 30 June approaches, the focus will be on ensuring that trustees turn their attention to making valid resolutions for trust distributions for the 2025 income year. The ATO has released some guidance on key things that need to be considered when working through this process, including checking trust deeds for any specific requirements, how income is defined under the deed, and carefully checking family trust elections and interposed entity elections.

The ATO is also focusing on succession planning activities, issuing guidance on tax governance practices for wind-ups and the disposal of businesses. The amounts involved are often significant, which means that clients need to be aware of key tax issues that could be triggered as part of the succession planning process.

As change occurs, we’ll keep you posted through our social media accounts.

From the Regulators

‘Wild’ tax deduction attempts

The ATO has put out a warning about some of the unusual (and often rejected) tax deductions that people have tried to claim in past years.

Here are a few examples of the more ‘creative’ claims the ATO denied last year:

• A mechanic tried to claim an air fryer, microwave, two vacuum cleaners, a TV, a gaming console, and gaming accessories as work-related expenses. These were all considered personal items and weren’t allowed.
• A truck driver tried to claim swimwear because it was hot at their stops and they wanted to go swimming. This was also denied because it was personal in nature.
• A fashion industry manager tried to claim over $10,000 for luxury-brand clothes and accessories to look good at work events. The clothing was all conventional in nature and was not allowed as a deduction.

The ATO is paying extra attention to claims where they see common mistakes—like work-related expenses, working from home deductions, and income from side jobs.

If you want to claim a working-from-home deduction:

• You need to actually be working from home to do your job (not just doing occasional admin tasks).
• You must keep records to prove any extra expenses you claim.

There are two ways you can claim these deductions:

• Fixed rate method: You can claim 70 cents per hour worked from home. This covers internet, phone, electricity, and stationery costs. You must keep a record of the hours you worked—estimates aren’t enough.
• Actual cost method: You must keep records of every expense you’re claiming, and show how it relates to your work.

The ATO also reminds taxpayers to report all sources of income—including income from side jobs like rideshare driving or offering services through apps.

$20,000 Instant Asset Write-Off for the 2024–25 Year

The ATO is reminding businesses that the instant asset write-off threshold is now $20,000 for the 2024–25 year.

This means that small businesses with an aggregated annual turnover of less than $10 million that use the simplified depreciation rules may be able to immediately deduct the business portion of the cost of eligible assets.

Here are the key things to remember:

• The cost of each asset (after claiming any GST credits) must be less than $20,000.
• To claim the deduction in your 2025 tax return, the asset generally needs to be first used, or installed ready for use, between 1 July 2024 and 30 June 2025.
• Both new and second-hand assets can qualify, though some exclusions and limits apply.
• If you claimed an immediate deduction for an asset under the simplified depreciation rules in a previous year, you can also immediately deduct the cost of any improvements to that asset (if the cost is under $20,000) if incurred between 1 July 2024 and 30 June 2025.
• The $20,000 limit applies per asset, so you can write off multiple assets as long as each one costs less than $20,000.

You can only claim the business portion of the expense, and you must keep records to support any deductions claimed.

General Purpose Financial Statements (GPFS)

The ATO has shared guidelines on who needs to lodge a General Purpose Financial Statement (GPFS) and when it needs to be lodged.

Here’s a quick overview:

Certain entities are required t o submit a GPFS with the ATO under section 3CA of the Taxation Administration Act 1953 if they are:

• Companies and other corporate tax entities (like certain partnerships or trusts)
• Country-by-country reporting entities (generally large multinational groups)
• Businesses that have a branch or permanent establishment in Australia, even if they’re based overseas

Do subsidiaries need to lodge?
Yes—if you’re a subsidiary that isn’t part of a tax-consolidated group, you may still need to lodge a GPFS, even if your parent company has already done so.

Who doesn’t need to lodge?
Trusts or partnerships that lodge a trust or partnership tax return aren’t required to lodge a GPFS.

What does the GPFS need to include?
The GPFS must follow the correct accounting standards—special purpose financial statements (SPFS) are not acceptable.

When is it due?
The GPFS is due at the same time as your company’s tax return unless you’ve already lodged it with ASIC.

Why does this matter?
Lodging the GPFS on time in the correct format helps avoid penalties. These penalties can be higher for large, global companies.

Employer Obligations

The ATO is reminding employers about their key tax and superannuation responsibilities. This information is especially helpful for clients who have started a new business or are hiring employees for the first time.

If you have employees, here’s what you need to do:

• Withhold tax (PAYG withholding) from your employees’ wages, and report and pay these amounts to the ATO.
• Pay superannuation guarantee contributions at least quarterly for eligible employees. The current rate is 11.5%, and it will increase to 12% from 1 July 2025.
• Report and pay Fringe Benefits Tax (FBT) if you provide employees with certain non-cash or fringe benefits.
• Report employees’ tax and super information to the ATO each pay cycle using Single Touch Payroll (STP).
• Keep records of payments, tax amounts withheld, and super contributions for at least five years.

SuperStream Release Authority Lodgments

The ATO has issued guidance on common problems that can cause delays when lodging SuperStream Release Authority Statements (RAS).

Here’s what employers and super funds need to know:

• You must lodge the RAS within 10 business days of receiving the release authority from the ATO via SuperStream. If you don’t, penalties may apply.
• Avoid overpaying or making duplicate payments—this can lead to member refunds or even illegal early access to super.
  • Only release the amount requested in the release authority.
• If you can’t lodge a RAS or if your RAS is rejected, contact your software provider to fix the issue.
• You must send a successful RAS with each payment; otherwise, payments can’t be matched to the member’s account. A successful RAS must be confirmed by a Release Authority Statement Outcome Response (RASOR) with the code SUPER.GEN.RLVR.2.
  • Make sure you have good processes in place to ensure RAS payments are accurate and processed correctly.

ATO Small Business Focus Areas

The ATO has released website guidance on the small business risks they’re focusing on this quarter.

Here’s a summary:

Focus Area	Risks
Business income is not personal income	– Using business money and assets for personal benefit
Deductions and concessions	– Non-commercial business losses
Small business measures	– Small business capital gains tax concession  – Small business boost measures
Operating outside of the system	– GST registration and income from taxi, limousine, and ride-sourcing services  – Contractors omitting income
Building good habits	– Quarterly to monthly GST reporting  – Getting ready for business tax obligations

New GST Return for Large Businesses

The ATO has released information about a new Supplementary Annual GST Return that some large businesses will need to lodge if they’ve had a GST review.

Who needs to lodge it?
Public and multinational businesses must lodge this extra return for the 2024–25 financial year if they received any of the following from the ATO on or before 30 June 2024:

• A Top 100 GST Assurance Report
• A Top 1,000 Combined Assurance Review Report (with a GST assurance rating)
• A Top 1,000 GST Streamlined Assurance Review

The ATO notified the tax payers who need to lodge Supplementary annual GST return via email late last year, and they will receive a notice to lodge by email and post approximately 4 months before the lodgment due date.

What does the return include?
The supplementary return asks businesses to:

• Explain what they’ve done about any issues, risks, or recommendations from their most recent GST review.
• Outline any updates they’ve made to their GST governance or systems since their last review.
• Provide a reconciliation between their audited financial statements and their business activity statements.
• Disclose any GST positions that might be uncertain.
• Identify and correct any major GST errors, including any large credits claimed for earlier periods.

The ATO has also updated its website with instructions to help businesses fill out this supplementary annual GST return.

New Business Owners

The ATO is focusing on new business owners who might make mistakes with their registrations, reporting, and record-keeping responsibilities.

Here are the top seven things to know when starting a business:

1. Use digital tools and keep good records. This helps you manage your day-to-day activities and cash flow.
2. Get the right registrations. This includes things like registering for an Australian Business Number (ABN) or a business name.
3. Claim tax deductions correctly. Most business expenses can be claimed if they relate directly to earning income. Make sure to keep records and only claim the business portion of mixed-use expenses.
4. Choose the right business structure. Your choice (e.g. sole trader, partnership, company) affects your tax and registration requirements. Understand what’s involved before deciding.
5. Know your employer obligations. If you have employees, you’ll have extra responsibilities like paying superannuation and withholding tax.
6. Lodge and pay your taxes on time. You can make prepayments of your estimated tax through PAYG instalments to help manage cash flow and avoid a big tax bill at tax time.
7. Stay on top of record-keeping and payments. Businesses that keep accurate records, lodge and pay on time, and avoid errors are less likely to face penalties and interest charges, and tend to be more resilient when challenges come up.

Fake News on Superannuation Preservation Age

The ATO is warning taxpayers about fake news circulating online about changes to superannuation preservation age and withdrawal rules supposedly starting from 1 June.

The superannuation preservation age is the age at which you can access your super savings when you retire. It remains 60 years old for anyone born after 1 July 1964.

It’s best to rely on trusted sources like the ATO website, your super fund’s website, registered tax agents, or licensed financial advisers. Avoid relying on social media, unofficial websites, or third-party sources that may be unreliable or misleading.

Taxpayers should also be cautious about websites that might be trying to steal personal information, such as your Tax File Number (TFN), identity details, or myGov logins.

Closing a Business

The ATO has issued guidance on how to make sure your tax matters are in order when you’re closing all or part of your business or private group structure.

Companies

If a company is wound up, liquidated or deregistered, you should keep documentation for tax purposes, including:

• Contracts for the sale of assets
• Documents showing any forgiven loans
• Minutes of meetings with directors, liquidators, etc.

Trusts

If you’re winding up a trust (vesting the trust), the trustee needs to carefully review the trust deed to make sure everything is done properly. The trustee should:

• Prepare written trust resolutions to formally record all decisions, especially if there’s discretion to exclude certain beneficiaries or unit holders from getting income or capital distributions.
• Properly document any forgiveness or assignment of loans involving related entities and assess the tax implications.
• For unit trusts, review the rights of each unit class to determine which are eligible for distributions during the wind-up.
• Record any decision to transfer assets to beneficiaries or unit holders (if allowed under the trust deed).
• Consider getting a market valuation of any assets being transferred, to make sure the value doesn’t exceed the beneficiary’s or unit holder’s entitlement—this also helps with calculating any potential capital gains tax.
• Notify all beneficiaries or unit holders of their share of income or capital so they can meet their tax obligations.

Partnerships

If a partnership is ending, a final distribution is often required. Each partner should keep records to show the cost base of their interest in the partnership for capital gains tax (CGT) purposes.

Disposing of a Business

The ATO is reminding taxpayers to consider key tax issues and governance processes when selling their business. This could involve selling shares or ownership interests or selling the business assets themselves.

Important Documents to Keep

Both the seller and the buyer should keep documents that show the details of the sale, including:

• Contracts for the sale
• Minutes of meetings explaining why the business was sold and the decisions made by directors and key decision-makers
• Communications between the seller and buyer, including any discussions about liabilities
• Details of the assets sold, how the purchase price was divided among them, and how that division was decided
• Capital Gains Tax (CGT) calculations, including allocations of purchase price to depreciating assets, and details of any payments held in escrow
• Advice about why certain tax positions were taken
• Settlement documents
• Asset registers
• Trust resolutions showing how income or capital was distributed to beneficiaries

Partial Disposals

Sometimes only part of a business is sold. This can happen through:

• Creating a new class of shareholders or unit holders, or changing rights for existing share classes
• Selling a portion of shares
• Retiring from a partnership
• Admitting a new partner into a partnership

These transactions can have tax consequences, like CGT, value shifting, and limits on future deductions or capital losses. You may also need to update key documents like the company constitution, trust deed, or partnership agreement.

Complex Business Sales

For more complicated business sales—such as earn-out arrangements, scrip-for-scrip rollovers, initial public offerings, or exits from consolidated groups—the ATO also outlines governance practices that should be followed.

Superannuation on Government-Funded Parental Leave Pay

From 1 July 2025, the ATO will start paying superannuation on government-funded Parental Leave Pay. This is called the Paid Parental Leave Super Contribution (PPLSC).

Here’s what you need to know:

• It applies to children born or adopted from 1 July 2025.
• It will apply to the 2026–27 financial year.
• PPLSC is calculated using the current Superannuation Guarantee rate and includes an interest component.
• It will be paid as a lump sum after the end of the financial year in which the Parental Leave Pay was received, to the super fund where the person’s contributions are usually made (including SMSFs).
• Eligible parents need to apply for Parental Leave Pay through Services Australia, and make sure their name and address match with the ATO, Services Australia, and their super fund.

Family Trust Distribution Tax (FTDT)

The ATO is reminding taxpayers to consider potential FTDT liabilities before making trust distribution decisions this financial year.

Here’s a quick summary:

• Trustees of family trusts (with a Family Trust Election [FTE] in place) or entities that have made an Interposed Entity Election [IEE] should review their elections and check which individuals or entities are part of the relevant family group.
• Distributions made outside the specified family group may attract FTDT at 47%, payable by the trustee, director, or partner of the entity making the distribution.
• In private groups, there can be multiple family trusts with different specified individuals, leading to different family groups for FTDT purposes. Business expansions, new entities, or family changes (like divorce) can also impact who is in the family group.
• To avoid accidentally triggering FTDT liabilities, trustees should review FTE and IEE details every year and keep them in mind when managing tax affairs.
• The ATO cannot ignore or extend the time to revoke or vary these elections—so it’s important to get it right.

Important Tip:
Before making a new FTE or IEE, consider the long-term implications—these elections can have significant financial and tax impacts on your future planning.

Trustees’ Top 5 EOFY Checklist

The ATO has updated its guidance on trusts and shared an End of Financial Year (EOFY) checklist to help trustees stay on track as the 30 June deadline for trust distribution resolutions approaches.

Here are the top 5 things trustees need to check:

1. Understand how trust income is defined
   Trustees must work out trust income each year based on the trust deed. Mistakes can happen when accounting profit is confused with distributable income or when trustee powers are misused. Always review the trust deed carefully.
2. Identify the trust’s beneficiaries
   Make sure distributions are only made to valid beneficiaries listed in the trust deed. Mistakes often occur when trustees don’t read the deed properly or distribute to ineligible parties—especially when there are Family Trust Elections (FTEs) or Interposed Entity Elections (IEEs) in place.
3. Understand resolutions and present entitlement
   Resolutions to distribute income must be made by 30 June each year to be effective for tax purposes. If they’re invalid or late, the trustee could be taxed on the trust’s taxable income, or default beneficiaries might end up paying the tax. Resolutions must be timely, clear, and follow the deed.
4. Check for FTEs or IEEs
   Distributions outside the specified family group (under an FTE or IEE) can attract Family Trust Distribution Tax (FTDT) at 47%, with no discretion from the ATO. Keep track of elections, understand who’s in the family group, and maintain proper records.
5. Keep clear and accurate records
   Poor record-keeping is a common cause of compliance problems. Trustees are personally liable for trust debts, so it’s essential to keep accurate and complete records to avoid unexpected liabilities.

Succession Planning Tax Risks

The ATO is reminding taxpayers about the importance of careful succession planning, especially for privately owned and wealthy groups. The ATO is particularly focused on private groups that get the tax consequences of transactions or structures wrong—sometimes to try to reduce or avoid tax—when planning for succession.

Here are some situations that may catch the ATO’s attention:

• Failing to recognise that a CGT event happened when an asset is restructured or transferred.
• Incorrectly applying tax concessions or rollovers that don’t actually apply.
• Using complex structures or arrangements to try to access tax concessions or rollovers that would not normally be available.
• Failing to review the pre-CGT status of assets after something happens that changes who benefits from those assets.
• Transferring wealth (for example, through loans, payments, or forgiving debts) without considering the impact of Division 7A.
• Amending trust deeds (for example, changing the trustee or appointor, adding or removing beneficiaries, or changing the vesting date) without checking the impact on family trust elections or interposed entity elections—especially if distributions are made outside the family group.
• Using self-managed super funds (SMSFs) inappropriately to try to access lower tax rates.

It’s essential for taxpayers to get advice and carefully review the tax implications of succession planning decisions to avoid ATO scrutiny and potential penalties.

Varying PAYG Instalments for Your SMSF

The ATO is reminding taxpayers that PAYG instalments for the 2025–26 income year are increased by the GDP adjustment factor, which is 4%.

If you think your SMSF’s PAYG instalments will be too high or too low compared to your expected tax liability for the year, you can vary them. The new amount or rate you set will apply for the rest of the income year, unless you make another variation.

You can lodge the variation through Online Services for Business.

2024 SMSF Annual Return Lodgment

The ATO is reminding taxpayers that if their SMSF was registered before the 2024 income year and they’ve appointed a tax agent, their SMSF annual return (SAR) may have been due on 15 May 2025.

It’s important to note that not all SMSFs have the same lodgment due date.

Failing to lodge by the due date can result in penalties and the loss of the fund’s tax concessions.

If a client’s SAR is more than two weeks overdue and the ATO hasn’t been contacted, the ATO may change the fund’s compliance status on Super Fund Lookup to ‘Regulation details removed’ until all overdue lodgments are brought up to date.

GST Fraud

The ATO has announced that it is continuing to investigate and prosecute people who commit GST fraud as part of Operation Protego. Taxpayers who engage in GST fraud can face criminal charges.

In May, three taxpayers were sentenced to jail for different GST fraud offences. These included:

• Running a fake beauty salon business
• Submitting false information in Business Activity Statement (BAS) lodgements
• Operating a fake road freight transport business

Rulings, Determinations & Guidance

Requirement to Lodge Returns for the 2025 Year

The ATO has issued a draft legislative instrument (LI 2025/6) — Taxation Laws (Requirement to Lodge a Return for the 2025 Year) Instrument 2025.

This instrument outlines who must lodge various returns for the 2025 financial year, including:

• Income tax returns
• Franking returns
• Venture capital deficit tax returns
• Ancillary fund returns

It also sets out when these returns must be lodged.

What’s new?
Compared to the 2024 instrument, this draft also includes a new requirement: Not-for-Profit (NFP) self-review returns must now be lodged for the 2025 year.

Cents Per Kilometre Rate for the 2025–26 Year

The cents per kilometre rate for car expenses will remain at 88 cents per kilometre from 1 July 2025.

The Income Tax Assessment (Cents per Kilometre Deduction Rate for Car Expenses) Determination 2024 will continue to apply for the 2025–26 income year.

Electric Vehicle Home Charging Rate Extended to Certain Hybrid Vehicles

The ATO has released draft updates to PCG 2024/2, which sets out a simplified method to calculate the cost of charging an electric vehicle at home.

Initially, this guidance only applied to zero emissions vehicles and couldn’t be used for hybrid vehicles. However, the ATO is now updating the PCG to include a method for calculating the cost of charging a plug-in hybrid vehicle (PHEV) at home.

What’s changing?
Once finalised, the updated PCG will apply:

• From 1 April 2024 for Fringe Benefits Tax (FBT) purposes
• From 1 July 2024 for income tax purposes

The PCG will also include some transitional measures to help taxpayers who haven’t kept odometer records for PHEVs.

Inbound, Cross-Border Related Party Financing

The ATO has released an updated draft Practical Compliance Guideline (PCG 2025/D2), following changes to section 815-140 of the Income Tax Assessment Act 1997 as part of the broader changes to Australia’s thin capitalisation rules.

This draft PCG outlines the ATO’s proposed compliance approach to assessing tax risks associated with inbound, cross-border related party financing arrangements.

The guideline also includes:

• An overview of the factors to consider when determining the amount of an inbound related party financing arrangement
• Types of documentation and evidence that would be useful for supporting the arrangement

When finalised, the guideline is proposed to apply to:

• Income years starting on or after 1 July 2023
• Both existing and new financing arrangements

The ATO notes that PCG 2017/4 will continue to apply for determining the rate or pricing of cross-border related party financing arrangements.

Interim ATO Statement on Shaw Case

The ATO has released an interim decision statement on the case Shaw and Commissioner of Taxation [2025] ARTA 224, which focused on work-related expenses and substantiation requirements.

What was the Shaw case about?

• The case involved a long-haul truck driver who initially claimed $32,782.50 in meal expenses by multiplying the number of days away (310 days) by the maximum daily allowance of $105.75 (as set out in TD 2020/5).
• The ATO reviewed the driver’s logbook, fatigue diary, and bank statements, and reduced the claim to $5,890 (averaging $19 per day).
• The driver argued he had actually spent more than the daily allowance but claimed the lower amount on his tax agent’s advice, believing it meant he didn’t need to keep detailed records.

What did the Tribunal decide?

• The Tribunal sided with the taxpayer, allowing the full claim.
• It found the ATO’s allowance of $19 per day was unreasonably low.
• The Tribunal confirmed that since the claimed amount was at or below the reasonable daily allowance, detailed receipts weren’t required.
• The key issue was the amount claimed, not the actual amount spent, and it was legitimate for the taxpayer to limit the claim to avoid paperwork.
• The Tribunal also accepted that the taxpayer reasonably relied on their tax agent’s advice, meaning the exception under section 900-200 applied.

What happens next?

• The Commissioner has appealed the decision to the Federal Court.
• While the appeal is ongoing, the ATO will continue to apply the law according to its existing views.

Guidance to refer to:

• TR 2004/6 – Substantiation exception for reasonable travel and overtime meal allowance expenses
• TR 95/18 – Employee truck drivers: allowances, reimbursements, and work-related deductions
• TR 97/24 – Relief from the effects of failing to substantiate
• TD 2020/5 – Reasonable travel and overtime meal allowance expense amounts for the 2020–21 year
• Other annual determinations on reasonable travel and overtime meal allowance expense amounts

Cases

Subdivided Farming Land – Capital vs Revenue

The Federal Court has found in favour of the taxpayer, concluding that he was not carrying on a business of land development or a profit-making venture when subdividing and selling part of his farming property.

This case is helpful as it provides updated guidance on when a property subdivision project should be taxed as capital gains or as business income. However, the ATO has appealed the decision, so it’s not yet final.

Background
Mr Morton, a retired farmer, owned a pre-CGT farming property on the outskirts of Melbourne, known as “Dave’s Block.” In 2010, the property was brought into the Melbourne Urban Growth Boundary and rezoned, which increased rates and land tax and affected the farm’s profitability.

Mr Morton started talking with a developer in 2010, and they entered into development agreements in 2012. The land was later subdivided and sold as smaller lots.

ATO’s Position
The ATO issued amended assessments for the 2019 and 2021 income years, treating the sales as assessable income. Mr Morton objected, but his objections were disallowed, so he appealed.

The ATO argued that:

• Mr Morton was carrying on a business of property development, so the land was trading stock and the proceeds were taxable as ordinary income; or
• Mr Morton was engaged in a profit-making venture, so the proceeds should be taxed as income rather than capital gains.

Mr Morton’s Argument
Mr Morton argued the proceeds were capital receipts—realised upon the sale of a capital asset—and should not be included as assessable income. He said the subdivision and sale were simply the best way to sell a long-held asset, not a business activity.

Court’s Decision
The Federal Court agreed with Mr Morton, finding:

• He was not carrying on a property development business or a profit-making venture.
• The land was a capital asset that he sold to get the best price.
• Mr Morton didn’t buy the land with the intention of selling it for profit.
• Even after rezoning in 2010 and after the development agreements, he continued to farm the land, showing he was committed to his farming activity.
• The developer, not Mr Morton, was responsible for the subdivision and development work.
• Mr Morton wasn’t personally involved in financing the development—this was handled by the developer.
• While the scale of the project was significant, that alone didn’t mean Mr Morton was running a land development business.

Key Takeaway
This decision is a helpful reminder that the intention of the taxpayer, the level of involvement, and the circumstances of the sale all matter when deciding whether a project is taxable as income or as a capital gain.

Important Note:
This case is still being appealed by the ATO, so the final outcome is yet to be confirmed. Each case needs to be assessed on its own facts and merits.

Retired Partner Assessable on WIP Adjustments

The AAT has held that deferred work-in-progress (WIP) adjustments paid to a former equity partner of an accounting firm remain assessable as partnership income under section 92 of the ITAA 1936, even after the partner has retired.

Background

• The taxpayer was a partner at an accounting firm.
• On retirement, he entered into a Partnership Retirement Deed, which included a clause to address taxation timing differences from deferred WIP.
• This clause stated that deferred WIP would be recognised as assessable income over five years (2018–2022), with $62,602 to be returned each year.

The Taxpayer’s Argument

• The taxpayer argued that he should not be assessed on this income because:
  • He was no longer a partner.
  • He had no entitlement to the partnership’s net income.
  • He hadn’t actually received any distribution.

The ATO’s Position

• The Commissioner argued that section 92 could apply even if the taxpayer was no longer a partner.
• The entitlement to the WIP adjustments arose from his former interest in the partnership’s net income, and so section 92 continued to apply.

AAT Decision

• The Tribunal agreed with the Commissioner.
• Even though the taxpayer had retired, he remained in a tax law partnership due to his ongoing right to receive statutory income (the WIP adjustments) jointly with others.
• The income was allocated to him according to the agreed terms of the retirement deed.
• The taxpayer did not need to be a partner during the relevant years, nor was actual or constructive receipt necessary.
• What mattered was that the amounts were applied for his benefit under binding partnership documents, meeting the derivation requirement under section 92.
• The deferred WIP arrangement was a way of unwinding timing differences from his earlier years in the partnership after his retirement.

Key Takeaway
This decision shows that deferred income streams from partnership timing differences can still be taxable under section 92, even after a partner has formally retired, if the income continues to be allocated or applied under a retirement deed or partnership agreement.

Home Office and Car Expenses During COVID-19

The ART has allowed a taxpayer to claim home office and car expense deductions after being required to work from home during COVID-19.

What happened?
The taxpayer was a full-time employee of the Australian Broadcasting Corporation (ABC). His duties were split between:

• A digital role at ABC Sport Digital Radio Station (about 75% of his time)
• Producing ABC live sports broadcasts (the live role)

During the 2021 income year, COVID-19 restrictions meant the taxpayer had to perform his digital role from the second bedroom of his two-bedroom apartment. He still performed his live role from ABC studios.

Typically, he worked his digital role in the morning and then drove to ABC studios in the afternoon or evening for his live role.

What did he claim?

• Home office expenses: $5,879 (a portion of his apartment rent related to using the second bedroom as a home office for his digital role)
• Car expenses: $1,148 (for driving between his apartment and ABC studios on days he worked both roles)

Tribunal’s Decision
The ART held that both claims were allowable:

• The home office expenses were deductible because working from home wasn’t his choice—it was required by his employer due to COVID-19. The expenses were incurred to earn his assessable income and weren’t private or domestic.
• The car expenses were also deductible on the days he performed both roles because he was travelling between two workplaces.

If you have any questions regarding the above information, please do not hesitate to contact our office to speak to one of our team.