Tax News and Updates March 2025

1.

Steven Bendel triumphant against the ATO

On 19 February 2025, the Full Federal Court decided that unpaid present entitlements are not 'loans' for Division 7A purposes.

Here’s our practical analysis of the top 5 technical aspects of Bendel:

(1) Clients who have been subjected to additional tax, penalties and/or interest for years under audit, objection or dispute since FY2010 must revisit those assessments and decisions, and likely lodge tax objections. There are still some steps to play out in the coming weeks and months, but historical decisions are likely untenable.  Act now.

(2) Clients who followed the ATO's guidance since 2010 likely won't get much love from the decision.  They were corralled into establishing loans or sub-trusts.  If you're in that boat, don't expect ATO refunds any time soon albeit you were likely materially disadvantaged from following the guidance.

(3) Those who are deep into FY24 lodgment time, or FY25 tax planning, should be careful to consider sub-division EA and EB (s 109XA onwards).  UPEs can still be subjected to Division 7A consequences and for most private groups, we would have thought that they will continue to be captured as "benefits leave the trust".  Those rules are very specific though.  Just be careful.  There are different ways to skin a cat.

(4) Clients' costs of capital/funding have fallen now that they are not required to pay interest on certain unpaid present entitlements.

(5) ATO edicts are not the law.

The case

2.

TPB on the lookout for tax agents who seek to defraud government systems

The Tax Practitioners Board's (TPB) Fraud Fusion Taskforce is actively monitoring non-compliant tax practitioners and terminating their registration.

Recently, the TPB terminated the registration of tax agent, Mr Raheel Chaudhry.  Mr Chaudhry was found to have misled the TPB and failed to comply with his own tax obligations, with a tax debt, including penalties amounting to approximately $1.5 million.  Mr Chaudhry was banned from seeking re-registration by the TPB for the maximum 5-year period and he was also banned from delivering NDIS Services for 5 years.

On this matter, Chair of the TPB, Mr Peter de Cure AM, noted:

‘Tax agents hold a trusted professional position and are expected to act with the utmost honesty and integrity. Mr Chaudhry has undermined the integrity of the tax system as well as public confidence in the registered tax practitioner profession, the majority of whom do the right thing.'

In respect on non-compliance, Mr Peter de Cure AM reiterated that:

‘This case shows the benefits of government agencies working across the system to stamp out illegal behaviour. We will continue to work with our FFT partners to swiftly remove any tax practitioners who engage in such behaviours in the interests of improving integrity of government systems.’

TPB takes down tax agent for defrauding government systems | Tax Practitioners Board

3.

Small businesses being moved to monthly GST reporting

From 1 April 2025, small businesses may be moved by the ATO from quarterly to monthly GST reporting.

This will happen if businesses have a history of not meeting their compliance obligations including:

• missing payments;
• lodging BAS late; and
• reporting GST incorrectly.

If businesses are moved to monthly GST reporting, they will be notified in writing by the ATO.

Click here

4.

Contractors and taxi / ride sharing providers remain in the ATO's sights

The ATO has released a statement confirming that they are continuing to focus on small businesses who "deliberately operate outside the tax, super and registry system".

Specifically, this includes contractors incorrectly reporting or omitting income, and the GST registration and income reporting of taxi services and ride-sharing sourcing providers.

Operating outside the system  Australian Taxation Office

5.

Highlights from the 2025 SMSFA conference

At the recent 2025 SMSF Association conference, the following issues and updates were discussed (as outlined by the ATO):

• Non-lodgment of Self-Managed Super Fund annual returns (SARs) continues to be a concern for the ATO. If a trustee fails to lodge on time and doesn't contact the ATO, their SMSF's compliance status could be removed from Super Fund lookup.  This can prevent rollovers and impact employer contributions.  Trustees may also face penalties.
• The SMSF illegal early access gap decreased from $256.1 million in 2020–21 to $250.1 million in 2021–22. The latest estimate shows the amount accessed illegally either blatantly, or through prohibited loans being $481.8 million this is a statistically significant increase from the 2021 estimate.  Prohibited loans contributed to this increase, highlighting the ongoing need for compliance from the ATO.
• Identity fraud and scams continue to rise in the SMSF sector. The ATO have strengthened identity checks, but its important trustees educate themselves about being vigilant to identity fraudsters.
• Recent changes to the TPB Code of Conduct reinforce obligations for registered agents. They include maintaining client records, providing advice, and managing conflicts of interest and confidentiality.
• Trustees not actioning release authorities. This means super could be taxed concessionally when it shouldn’t be and there are consequences for this.
• The proposed commencement of Payday Super in July 2026 seek to drive significant change for funds in the way contributions are received.

Highlights from the 2025 SMSFA conference | Australian Taxation Office

6.

ATO statistical report on self-managed super funds for the period leading up to December 2024

The ATO has just released its statistical report on the self-managed super funds for the period leading up to December 2024.

The report covers areas such as:

• the population of SMSFs and members;
• asset allocation (break-up of assets into various classes);
• asset allocation by asset value of the fund;
• member demographics (age, gender and income of members);
• total asset ranges (distribution of SMSFs by the asset size of SMSFs and the assets held);
• average and median assets (per member and per SMSF); and
• flow of funds (contributions, transfers, benefits and expenses).

It also covers:

• new funds by state or territory;
• age and gender of new members; and
• income range of new members.

The data will help the ATO identify key issues for the upcoming year, allowing them to conduct reviews and audits of SMSF clients.

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7.

Record-keeping reminder for the ATO's Next 5,000 private groups

If clients form part of the Next 5,000 private groups tax performance program, the ATO will expect timely lodgments and accurate record-keeping for income tax returns and BAS statements. 

If not, the ATO warn that a failure to maintain good records could result in lengthy and costly audits potentially denying your deductions and input tax credits.

The ATO recommend using their guide to stay on top of record-keeping responsibilities (available here: Record keeping for business | Australian Taxation Office).

Click here