Recording: RSM Quarterly Tax Briefing - June Quarter 2025

Welcome and Agenda Overview – Steve Healey

Steve Healey opened the session with a brief overview of the agenda:

• Tax reform updates
• Indirect tax developments
• Corporate tax updates
• International tax and transfer pricing insights

He highlighted recent developments including:

• A High Court decision favoring taxpayers
• Updates in indirect tax and GST governance
• Broader economic challenges and reform proposals

Federal Tax Reform Overview – Steve Hilly

Steve discussed the long-standing nature of tax reform in Australia, referencing:

• The Henry Review (2008–2010): Advocated for reduced reliance on income tax, lower corporate tax rates, and replacing stamp duty with land tax.
• GST Reform Challenges: Due to federation complexities, GST remains a "sacred cow" and difficult to reform.
• Recent Proposals:
  • Replace stamp duty with broad-based property taxes
  • Reduce superannuation concessions and CGT discounts
  • Wind back negative gearing
  • Introduce a minimum tax on trust distributions
  • Broaden or increase GST
  • Introduce a net cash flow tax on corporate cash inflows

Indirect Tax Updates – Sam

Supplementary Annual GST Return

• ATO is shifting from intensive audits to ongoing monitoring for Top 100/1000 taxpayers.
• New annual return includes six narrative-based elements:
  • Actions taken post-review
  • Enhancements to risk frameworks
  • Use of GST Analytical Tool (GAP)
  • Reporting uncertain GST positions
  • Disclosure of major GST errors
  • Deferred input tax credit claims

Payroll Tax – Uber Case

• NSW Court of Appeal ruled that payments from Uber to drivers are subject to payroll tax.
• Despite drivers owning the funds, the flow of money was deemed remuneration.
• Potential implications across other states; appeal to High Court expected.

Foreign Surcharge Tax Constitutionality

• A German company challenged Queensland’s surcharge taxes.
• Queensland introduced a backup tax to maintain revenue even if the High Court rules the original surcharge unconstitutional.

Corporate Tax Updates – Belinda

ATO Priorities

• Focus on:
  • MET group structures
  • BYP arrangements (especially royalties and software)
  • Private equity investments
  • Top 500 program threshold increases

SNA Group Case

• Court ruled in favor of taxpayer despite lack of formal documentation.
• Emphasized commercial substance over form and criticized ATO’s rigid audit approach.

Employment Tax Updates – Belinda

Electric Vehicle Charging

• Updated guidance for calculating electricity costs when employees charge EVs at home.

BQKD Case

• Court ruled directors of trustee companies can be considered employees for FBT purposes.

Regional Council Case

• Commissioner appealed; ATO will maintain its position pending outcome.

Superannuation Guarantee Changes (Effective July 2026)

• Contributions must be made within 7 days of payment.
• New penalties and interest components introduced.
• Late payments now deductible (excluding GIC and penalties).

International Tax & Transfer Pricing – Tristan

PepsiCo Case

• High Court ruled against the Commissioner on:
  • Embedded royalty claims
  • Income derivation by US entities
  • Application of Diverted Profits Tax (DPT)

Key Takeaways:

• Payments were for concentrate only, not royalties.
• No constructive payment to US entities.
• No principal purpose of tax avoidance.
• Sets precedent for DPT application.

Arm’s Length Debt Guidance

• New PCG introduces risk zones (white, green, blue, red).
• Most taxpayers fall into the blue zone.
• Emphasizes documentation and commercial rationale for debt levels.

Other Updates

• Public CBC Reporting: Registration process open; exemptions limited.
• Global Pillar Two Developments: G7 may carve out US-parented entities; Australian subsidiaries still subject to domestic obligations.

Closing Remarks

Steve thanked attendees and invited questions. No questions were raised.