This month's edition includes updates on Travel & Allowance Ruling, FBT Scope Expanded, Payroll Tax Reforms & New Withholding Rules.

Global Employer Services update

Travel & Allowance Ruling, FBT Scope Expanded, Payroll Tax Reforms & New Withholding Rules.

As we commence a new financial year, the RSM Global Employer Services team presents a strategic update on key employment, expatriate, and payroll tax developments from May to June 2025. During this period, landmark decisions have clarified the treatment of travel allowances, work-related deductions, and tax residency for fly-in fly-out personnel.

The courts have expanded the scope of employer responsibility under FBT law, and new ATO guidelines now address electric vehicle charging costs.
Significant payroll tax reforms are underway across Victoria, New South Wales, the ACT, and Queensland, along with enhanced reporting obligations for contractors and labor hire.
Changes to PAYG reporting, including the removal of the Lump Sum E threshold, align with STP2 compliance objectives.
Finally, heightened data-matching between the ATO and Home Affairs will bolster oversight of employer and visa-holder obligations.

With these shifts set to intensify ahead of Payday Super, businesses must sharpen their payroll and employment tax readiness for FY26.

Transcript

Employment Tax Update – May & June 2025 Summary

The RSM Global Employer Services team provided a comprehensive overview of recent developments in employment, expatriate, and payroll tax.

Key Employment and Expatriate Tax Cases

CBRX v FCT: Travel expenses for a fly-in fly-out worker were deemed private, with related allowances not qualifying as travel allowances under ITAA 1997.
Hall v FCT: A sports presenter successfully claimed home office and car deductions, as travel between two workplaces was considered work-related.
Evans v FCT: A fly-in fly-out worker was found to be an Australian tax resident despite extended overseas work during COVID due to strong family and asset ties to Australia.

Fringe Benefits Tax (FBT)

FCT v SEL: The Federal Court ruled that directors and beneficiaries of a family trust who received luxury car benefits were employees for FBT purposes.
Updates were also released on electric vehicle charging cost calculations, including new guidance for plug-in hybrids.

Payroll Tax

Victoria: Threshold increases to $1 million from 1 July 2025, with phase-out for higher wages.
NSW & ACT: New reporting and compliance requirements, including GP contractor disclosures and revised ACT payroll tax framework from 2026.
Queensland: New exemptions for GPs and extended rebates for apprentices and trainees.
Nova Security v Commissioner of State Revenue (NSW): Security guards were ruled not to be employment agency contractors, supporting the taxpayer.

PAYG and Withholding Changes

From 1 July 2025, all lump sum E back payments (regardless of amount) must be reported, aligning with STP2 requirements.
A new withholding variation instrument will replace the 2015 version to simplify rules for certain deductible allowances.

Other Developments

Data-matching between the ATO and Home Affairs will tighten employer and visa-holder compliance monitoring.
A test case on childcare deductibility is challenging the long-standing position that childcare is not deductible as a work-related expense.

Outlook

ATO audits in employment tax are increasing, with more activity expected ahead of Payday Super’s commencement on 1 July 2026.
RSM’s team encourages businesses to review compliance and reach out for tailored advice.