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.
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.