Transcript: Global Employer Services Update – February 2025

0:00
Welcome to our Global Employer Services update for February 2025. In this video, we'll cover recent wage compliance activity, insights on future superannuation rates, updates for FBT and electric cars, and some PAYG withholding penalties. Let's dive into the key developments and their implications for employers and employees.

0:24
While the purpose of this update is to cover developments during February, it would be remiss not to mention the recent Federal Court decision in Toowoomba Regional Council v Commissioner of Taxation. In this case, it was successfully argued that the Grand Central Shopping Centre car park in Toowoomba was not considered a commercial car park, resulting in a significant FBT saving. This ruling challenges the ATO's interpretation in TR 2021/2, which removed the commissioner's previous position that parking provided for short-term shoppers would not be considered commercial parking stations. We will provide a more detailed update on this in due course.

1:03
Australian retailer Lisa is facing a class action lawsuit over allegations of underpayment and other worker rights violations. It has been alleged that employees were not allowed to take meal or toilet breaks during long shifts, were required to work before and after shifts without compensation, were forced to work extra hours during peak sales periods without overtime pay, and were subjected to hostile working conditions. Lisa has denied the allegations and stated that it takes its obligations under the Fair Work Act seriously. The company has also said that it has processes in place to monitor compliance with employment laws.

1:44
The Fair Work Ombudsman has launched legal action against former construction business operators in Sydney's southwest for failing to pay the final wages of a visa holder worker. The watchdog has commenced legal action against Cam the Handyman and Landscapes Pty Ltd, which operates Cam's Home Transformations, and the company's sole director, Kamal Taha, following the belief that it had failed to pay workers' wages. Cam the Handyman and Landscapes Pty Ltd faces a penalty of up to $46,900, while Taha faces a penalty of up to $939. The watchdog said that in the seven financial years leading up to June 2024, it initiated 146 litigations against employers involving visa holder workers and successfully secured nearly $23 million in penalties.

2:36
An interesting update on where superannuation rates may be going: the Superannuation Guarantee Amendment (Frontline Emergency Service Workers) Bill 2025 was introduced in the Senate as a private member's bill. Private members' bills historically have a low incidence of progressing through Parliament. The bill increases the superannuation guarantee rate for firefighters and paramedics by 4.4% to 16.4% to match the base rate of superannuation contributions provided to Australian Defence Force personnel. This is intended to set a national minimum rate of superannuation contributions for firefighters and paramedics, either through legal effect or through symbolism, depending on the jurisdiction.

3:22
From 1 April 2025, a plug-in hybrid electric vehicle will no longer be considered a zero or low emissions vehicle and will not meet the eligibility criteria for the FBT exemption for electric cars, except in limited transitional circumstances for those cars with a financially binding commitment established before 1 April 2025. Broadly, transitional rules will apply to allow the FBT exemption for plug-in hybrid electric vehicles that satisfy the following two criteria: use of the plug-in hybrid electric vehicle was exempt from FBT before 1 April 2025, and there is a financially binding commitment in place before that time to continue providing private use of the vehicle to an employee or their associate on and after 1 April 2025, and that commitment remains in place unaltered. The ATO has provided guidance on when a financially binding commitment is considered to be altered and includes observations in relation to pooled plug-in hybrid electric vehicles, which broadly provide that such vehicles are not eligible for exemption from 1 April 2025 on the basis that pooled vehicles do not involve a commitment to provide private use to any single employee.

4:30
In Bier Castle v DCT, the Federal Court has held that the taxpayer's position was genuinely redundant when her workplace was restructured, as new roles which she rejected involved a material reduction in hours and remuneration. The taxpayer was employed by a school as an Early Learning Center assistant on a part-time basis of 34 hours per week. Following a restructure of the school's Early Learning Center in October 2021, the taxpayer was offered three new roles; however, she chose not to accept any of them as they would have had reduced hours and changed working days. Accordingly, her position was terminated. The ATO issued a private ruling stating that a payment of just over $1,532 received by the taxpayer from the school was an employment termination payment and not a genuine redundancy payment. The court came to a different conclusion. The new roles offered to the taxpayer would have involved a reduction in working hours and a 20 to 40% reduction in remuneration. In the court's view, those new roles were not an appropriate alternative to the taxpayer's pre-restructure position, and therefore, her position was deemed genuinely redundant.

5:53
In DJG Consulting Pty Ltd as trustee for David Garen's Family Trust v FC of T, the Administrative Appeals Tribunal has held that the taxpayer was subject to PAYG withholding obligations and, as a result of associated non-compliance with this obligation, administrative penalties imposed for false or misleading statements made in business activity statements were affirmed. The primary issue under consideration was whether the taxpayer was responsible for the PAYG withholding obligations, given that another entity within the group was the legal employer. Under an arrangement between the taxpayer and the other entity, the taxpayer handled payroll for the other entity's employees. The taxpayer argued that the legal employer was responsible for the PAYG obligations, notwithstanding wages were being paid from the taxpayer's bank account. The taxpayer contended that it had followed guidance from the Australian Taxation Office, including from previous audits, and accordingly did not make false or misleading statements by not including details in its BAS. The tribunal held that the taxpayer was liable for the PAYG withholding obligations on wages dispersed from its bank accounts, regardless of formal employment status. The tribunal concluded that the taxpayer did not exercise reasonable care and demonstrated recklessness in its PAYG withholding compliance, observing that the taxpayer's sole shareholder and director was a registered tax agent. Consequently, the administrative penalties imposed by the Commissioner of Taxation were upheld, with some remission granted due to overlapping audits and objections.

7:29
Thank you for joining our update for February 2025. We can see a lot of activity in the wage compliance space, and we encourage all employers to actively look at their level of compliance. As always, please feel free to connect with your local RSM contact: myself and Peter in Melbourne, Gina and Neeve in Perth, and Jason in Sydney.