We attach a list of taxation and related topics we have published in the last 12 months. These issues remain most relevant for this year.
The articles outlined in this summary are:
- How a Trustee can remove the Appointor
- ATO Audit Warning – Family Trust Elections – When an Interposed Entity Election is Appropriate
- The Absentee (Foreigner) Land Tax Surcharge and Exemptions
- Merchant v Commissioner of Taxation [2025] FCAFC 56 – Part IVA applied to Cancel Capital Loss on Sale of Shares
- Landmine Div 7A decision for Commissioner – FCT v Bendel 2025 FCAF 15 (31 March 2025 – Backfire for Commissioner – Section 109D Div 7A attack on Corporate Beneficiaries fails and causes Commissioner other problems)
- Mixed Use Land for Primary Production? Whether Mixed Use Land is Exempt from Stamp Duty
- Common Employee or not? When grouping provisions do not apply
- Vacant Residential Land Tax Exemptions and Significant Amendments to Holiday Home Exemption – Do not Buy your New Holiday House in a Family Trust
- NSW Court of Appeal finds Uber liable for $81m Payroll Tax Assessment
- From Unit Trust to Company – A Snapshot of CGT Rollover Relief Provisions
| Trust and Taxation Topics | ||
| Topic | Key Consideration | |
| 1 | How a Trustee can remove the Appointor | Trustee may remove the Appointor if trust deed empowers it A trustee can remove the appointor and appoint a new one if the trust deed contains a broadly drafted variation power, even without the appointor’s consent. Appointor’s control is not absolute Although appointors are often seen as the trust’s ultimate controller (e.g., able to remove and appoint trustees), this case confirms trustees can override this role if the deed permits variation powers that include removing the appointor. Careful trust deed drafting is critical Unintentionally wide powers in trust deeds (e.g., to vary any provision) can expose the appointor role to being changed by trustees. Ensuring clear limitations or protections in the deed is essential. Importance of checks and balances This decision highlights the risks of establishing trusts without proper checks, emphasising the need for trust deeds to reflect intended governance and succession arrangements. Review trust deed wording regularly Regularly reviewing and, if necessary, amending trust deeds can help avoid unintended outcomes, such as the trustee having greater power over appointor succession than originally intended |
| 2 | ATO Audit Warning – Family Trust Elections – When an Interposed Entity Election is Appropriate | ATO scrutiny increasing The ATO is expected to allocate further audit resources to check whether family trust distributions are within the family group. 47% Family Trust Distribution Tax risks Distributions to entities that are outside of the family group will mean that the trustee is liable for the family trust distribution tax. Interposed Entity Election purpose An Interposed Entity Election can be used to include an interposed entity (another trust, company or partnership) in the family group so family trust distributions to these entities do not trigger the 47% Family Trust Distribution Tax. When is an IEE necessary? Discretionary trusts that are part of a family trust election typically require an interposed entity election to be made given some entities are part of the test individual’s family do not have a fixed entitlement to the proceeds and are not part of the family trust group. Family control test for Interposed Entity Election To make a valid Interposed Entity Election, the interposed entity must pass the family control test. Documentation and Governance Elections must be in writing on a form approved by the Commissioner. Trustees should ensure proper documentation and timing to support a valid Interposed Entity Election is made. |
| 3 | The Absentee (Foreigner) Land Tax Surcharge and Exemptions | Absentee Land Tax Surcharge This is a further tax levied on Victorian property owned by absentee (foreign) owners on top of land tax. Land Tax Surcharge From 2024, the surcharge rate is 4% of the taxable land value. Three Categories of Absentee Owners These include absentee individuals, absentee corporations, and trustees of absentee trusts. Ownership structures should be carefully reviewed to determine exposure. Exclusion of Australian citizens and Permanent Residents living overseas However, incorrect assessments generally do occur in our experience and can be challenged via an objection. Exemptions Available An application to the Victorian Treasurer under the Land Tax Act 2005 may be considered and will be assessed on factors such as economic contribution to Victoria, employment generation, compliance history, and good corporate behaviour. Proactive Review is Essential Ownership, residency status, trust beneficiaries and control arrangements should be reviewed regularly to manage surcharge exposure and identify exemption opportunities. |
| 4 | Merchant v Commissioner of Taxation [2025] FCAFC 56 – Part IVA applied to Cancel Capital Loss on Sale of Shares | The Full Federal Court held that the general anti-avoidance rules applied to a scheme involving a unit trust generating a large capital loss to offset a capital gain. The Merchant Family Unit Trust (MFUT), owned by the taxpayer, held shares in Billabong Group and owned 100% of Plantic Technology Ltd. Plantic was heavily funded by loans (approximately $55 million) from related entities within the Merchant Group, all ultimately controlled by the taxpayer. When the taxpayer sought to sell Plantic, he was advised that doing so would trigger a significant capital gain. To manage this outcome, MFUT sold its Billabong shares to the Gordon Merchant Superannuation Fund (also controlled by the taxpayer) at a substantial loss, creating a capital loss of $56.5 million. MFUT then sold Plantic to a third party, with the related-party loans forgiven for no consideration. The ATO determined that the transactions were entered into for the dominant purpose of obtaining a tax benefit, namely the creation of capital losses to offset the capital gain. As a result, the Commissioner applied sections 177D and 177F of the ITAA 1936 to cancel the tax benefit. The Full Federal Court dismissed the taxpayer’s appeal, confirming that Part IVA and the dividend stripping provisions applied, as the arrangement artificially generated capital losses as part of a tax avoidance scheme. Note: special leave to appeal was granted by the High Court on 9 October 2025. |
| 5 | Landmine Div 7A decision for Commissioner – FCT v Bendel 2025 FCAFC 15 (31 March 2025 – Backfire for Commissioner – Section 109D Div 7A attack on Corporate Beneficiaries fails and causes Commissioner other problems) | Federal Court Decision in Favour of Taxpayers The Full Federal Court upheld the AAT’s earlier finding that a UPE to a corporate beneficiary is not a loan for Division 7A purposes under section 109D(3) of the ITAA36. Long-held view of the Commissioner was Rejected The ATO’s long-standing position that a UPE constitutes financial accommodation was dismissed. ATO still holds view that UPE is a loan for Div 7A purposes In its decision impact statement (link here), the ATO notes that until the appeal process is finalised, they do not intend to revise its long-standing view and notes that if they fail in the High Court, section 100A can still apply. High Court Decision Pending The case was heard in the High Court on 14 October 2025, a decision is expected to be published and finalised in the first half of 2026. |
| 6 | Mixed Use Land for Primary Production? Whether Mixed Use Land is Exempt from Stamp Duty | Exemption Depends on the Land’s Dominant Use Land will only qualify for the primary production exemption if its main use is genuinely for primary production activities, such as farming or grazing, not other uses such as for rent. Tribunal Case Highlights Key Area of Risk In this case, the dominant use was for residential rental income, despite some cattle grazing/maintenance, and the exemption was denied. Assessment of Dominant Use Considers Several Factors Factors taken into account include the nature and intensity of competing uses, extent of physical area used for each activity and time and labour spent on each use. Proactive Review is Recommended Owners of mixed-use properties should regularly assess their actual land use patterns, income sources and expenses before relying on the exemptions. |
| 7 | Common Employee or not? When grouping provisions do not apply | Purpose of Grouping Provisions The main purpose of the grouping provisions is to prevent businesses from splitting wage-paying activities across different entities to avoid the payroll tax threshold. Ways to Group Entities can be grouped through several methods. These include whether entities are related, whether an entity has a controlling interest over another and whether entities can share employees. Difficulties in Applying Provisions in Context of Management Agreements and Pharmaceutical Businesses In the context of pharmacies where two businesses can operate on the same premises and appear to share employees, the SRO often errs in deciding that the two businesses share employees and are caught by the grouping provisions. Independence Factors Several factors are used to assess whether two businesses are separate entities for payroll tax purposes. These include the degree of commercial transactions between the businesses, the degree to which the members share resources, the level of control one entity has over another and the respective duties of each business’s employees. |
| 8 | Vacant Residential Land Tax Exemptions and Significant Amendments to Holiday Home Exemption – Do not Buy your New Holiday House in a Family Trust | Holiday Home Exemption Expansion From 1 January 2025, the holiday home exemption for Vacant Residential Land Tax will be available for eligible holiday homes in Victoria that are owned by companies or trusts. Exemption Requirements To qualify for the exemption, the owner (or vested beneficiary) must have used another piece of land as their principal place of residence for the tax year and must have used the holiday home for 4 weeks out of the year. Inclusion of Companies and Trusts in Exemption From 1 January 2025, companies and trusts may be eligible for the exemption if the land was continuously owned (or held on trust) by them since 28 November 2023, there has been no change in beneficial ownership since that date and natural persons that are connected to the company/trust have occupied the property for 4 weeks. Other Exemptions Still Apply Other exemptions such as land sold in the preceding year, land that has recently become residential, and land used to attend work or business can qualify for an exemption. |
| 9 | NSW Court of Appeal finds Uber liable for $81m Payroll Tax Assessment | Central Issue The central issue here was whether Uber’s drivers supplied services to Uber, making the payment taxable wages, or only to the riders. The Court found that the drivers’ services were supplied to Uber because Uber derived a financial benefit from them and the payments were connected to work under the drivers’ contracts. Implications flowing from this Revenue authorities from other States and Territories with similar pieces of legislation are expected to ramp up collecting revenue from businesses with similar structures to Uber. Review may be necessary Business arrangements that are analogous to this case may need to review their arrangements and also be aware of potential liabilities in payroll and WorkCover that may be assessed to them. |
| 10 | From Unit Trust to Company – A Snapshot of CGT Rollover Relief Provisions | Reasons for Restructuring Your Business There are several reasons to contemplate a business restructure. These could include alignment with long-term business development strategies, addressing working capital needs or obtaining taxation benefits. 122-A Rollover Where an individual, trust or partnership wants to dispose of an asset or all of their assets into a corporate structure. The transferor must receive 100% of the shares in the company immediately following the transfer. 124-N Rollover Used for unit trusts only where unit trust is replaced by a company to be owned by the former unitholders of the trust. Under this provision, all the assets of the trust are transferred to a new company. 328-G Rollover Also known as the small business restructure rollover. May be utilised when an entity transfers its business assets to another small business entity without altering the ultimate economic ownership of the asset. The advantage of this is that a broad range of active assets may be transferred. 615 Rollover Available to members of a company or a unit trust and applies to enable the tax-free interposition of a holding company between the shareholders/unitholders of a company/unit trust. |
Authors:
Tony Pointon, Pointon Partners Tony.Pointon@pointonpartners.com.au
Andrew Pointon, Pointon Partners Andrew.Pointon@pointonpartners.com.au
