The ATO wishes to dispel the ‘common myth’ that dual cab utes are automatically exempt from fringe benefits tax (‘FBT’). If an employer provides dual cab utes to staff to complete their duties and the vehicle is available for personal use, then the benefit may be subject to FBT.

By understanding how their employees use their dual cab utes, employers can work out if FBT applies and meet their FBT obligations.

To qualify for an exemption, the dual cab ute must be an ‘eligible vehicle’. That is, it must be designed to carry a load of one tonne or more, or more than eight passengers (including the driver), or a load under one tonne and not primarily designed for carrying passengers.

The dual cab ute must also only be used for limited private use (i.e., minor, infrequent and irregular), such as the occasional trip to the tip or helping a mate move house.

If an employee’s personal use of the dual cab ute does not meet both of the above exemption conditions, then the employer will be liable for FBT.

Taxpayers can claim a tax deduction for most business expenses, provided they meet the ATO’s three ‘golden rules’:

1) The expense must be for business use, not for private use.

2) If the expense is for a mix of business and private use, they can only claim the portion that is used for business.

3) They must have records to prove their claim.

The ATO also wants business taxpayers to remember that there are some expenses that they cannot claim, including entertainment expenses, traffic fines, and expenses that relate to earning non-assessable income.

The ATO is ‘detecting and addressing’ recurring errors in specific industries when businesses have a turnover between $1 million and $10 million.

These industries include property and construction (including builders, contractors and tradies), and professional, scientific and technical services (including engineering, design, IT and consulting professionals).

In these industries, the ATO continues to see recurring issues, including:
1) omitted sales and income in BAS and tax returns, including income from related entities;
2) overclaimed expenses and GST credits;
3) private expenses incorrectly reported as business-related, or not properly apportioned between business and personal use;
4) failure to register for GST when required;
5) incorrect claims for the research and development (R&D) tax incentive offset, especially for activities that do not meet the eligibility criteria; and
6) not seeking independent advice from a registered tax agent, particularly in head contractor/subcontractor arrangements.

By sharing the issues that it is seeing, the ATO hopes to help taxpayers running a small business in one of these (or other) industries to avoid common errors and get it right from the start.

The ATO acquires and uses data for pre-filling, detecting dishonest or fraudulent behaviour, and identifying areas where it can educate taxpayers to help them understand their tax obligations.

When data does not match, the ATO may contact tax agents and their clients to find out why.

Rental Income Data-Matching
Over the coming months, the ATO will be sending letters where its data indicates:
1) tax returns including rental income may need to be lodged for specific years; or
2) rental income should be included in previously lodged tax returns.
Editor: Please contact FSA if you receive such a letter.

Offshore Merchant Data-Matching Program
The ATO will acquire merchant data from the big four Australian banks (ANZ, Commonwealth Bank, National Australia Bank and Westpac) for the 2025 to 2027 income years.

The ATO estimates that records relating to approximately 9,000 offshore merchants will be obtained each financial year.

Release authorities are documents issued by the ATO to super funds, authorising the release of money from a member’s super account to pay specific liabilities, including in relation to excess concessional contributions, excess non-concessional contributions, and Division 293 tax assessments.

The ATO is seeing a rise in SMSFs that receive a release authority and are either:

1) not responding within 10 business days as required; or
2) responding incorrectly (i.e., either not releasing the requested amount, or failing to submit a release authority statement back to the ATO, or both).

Failure to meet these obligations may result in significant penalties for the fund. SMSF trustees should make sure they have effective processes in place to respond to release authorities promptly and accurately.

The Administrative Review Tribunal (‘ART’) recently held that some sales of subdivided farmland were subject to GST as they were made by the taxpayer in the course of carrying on an enterprise.

The taxpayer owned farmland near Adelaide. He entered into an agreement with a developer, under which the developer sought rezoning and development approvals, carried out development works, and marketed the subdivided lots.

The taxpayer progressively gave the developer access to the property as required and signed documents where necessary, including contracts for the sale of the subdivided lots. The taxpayer received 20% of the proceeds of sale progressively as sales of the subdivided lots were completed, with the developer receiving the remaining 80%.

The taxpayer argued that his role was passive, and that such rights as he had, and actions he took under the agreement with the developer, were of an administrative nature not amounting to a series of activities in the form of a business.

The ART disagreed, finding that the sales of the subdivided land were subject to GST as they were made in the course of carrying on an enterprise.

The ART noted that the taxpayer’s activities “exhibited some of the well-known indicia of a business.”

Amongst other factors, the taxpayer’s activities in facilitating the implementation of the development agreement “had a degree of regularity and repetition“, including allowing access to the land progressively as required, an ongoing obligation not to encumber or sell the land during the project, and the continuous signing of sales contracts and monitoring of sales returns.

Treasurer Jim Chalmers has announced welcome adjustments to the Government’s proposed Division 296 measure, which seeks to tax earnings on superannuation balances above $3 million.

The revisions to Labor’s ‘Better Target Super Concessions’ policy follow extensive consultation and industry feedback calling for a fairer, more practical design.

Some of the key components of today’s announced changes include:

1. Delayed start date
   The commencement date has been deferred for one year to 1 July 2026 (focusing on a taxpayer’s Total Super Balance at 30 June 2027), allowing time for consultation and legislative drafting.
2. Two-tier thresholds introduced for higher superannuation balances
   A progressive tax model is now proposed to apply:
   Balances up to the $3 million threshold are to be taxed at 15% on earnings
   Balances between $3 million and $10 million threshold are to be taxed at 30% on earnings
   Balances above $10 million are to be taxed at 40% on earnings
3. Indexation will apply to the new $3 million and $10 million thresholds
   Both thresholds (i.e., $3 million and $10 million) will be indexed to maintain alignment with the Transfer Balance Cap and to reflect inflation over time.
4. ‘Realised earnings’ taxed under changes
   The new rates will apply only to future realised earnings and not to unrealised gains.This shift addresses strong criticism that the original design could create cash-flow issues for SMSFs or funds with illiquid assets. Treasury will consult on how realised gains will be calculated and attributed to members.
5. Defined benefit parity
   Defined benefit schemes will receive commensurate treatment to ensure equivalent tax outcomes. Treasury will consult on the calculation method.

These changes mark a significant improvement on the original proposal and reflect the strong, coordinated feedback provided by the wider profession.

Employers that supply work vehicles to their employees need to check how the work vehicles are used and whether any exemptions apply to determine if they attract fringe benefits tax (‘FBT’).

FBT generally applies when a work vehicle is made available for private use, even if it is not actually used. Private use includes any travel not directly related to the employee’s job.

Exemptions may apply depending on the vehicle’s specifications and the nature of the private use.

The most common issues the ATO sees include the following:

• incorrectly treating private use as business use;
• assuming dual cab utes are exempt from FBT — exemptions only apply if the vehicle is eligible for the specific FBT exemption and private use is limited;
• incorrectly classifying vehicles;
• poor record keeping that does not support the claims or the FBT calculations made; and
• not reporting or paying on time.

Taxpayers who have had work done on their rental property should ensure the expense is categorised correctly to avoid errors when completing their tax return.

A deduction for ‘repairs and maintenance’ expenses can be claimed for work done to remedy, or prevent defects, damage or deterioration from using the property to earn income. These expenses can be claimed in the year they were incurred.

However, some ‘capital’ expenditure may not be immediately deductible, such as for ‘initial repairs’, ‘capital works’, ‘improvements’ and depreciating assets.

Initial repairs include fixing any pre-existing damage or deterioration that existed at the time of purchasing the property, even if the damage or deterioration was unknown to the taxpayer at the time of purchase. Initial repairs are treated as part of the acquisition cost and included in the cost base of the property for CGT purposes, unless they are capital works or depreciating assets.

Capital works are structural improvements, alterations and extensions to the property, and can generally be claimed at 2.5% over 40 years. Capital works deductions can only be claimed after the work has been completed, regardless of when the taxpayer pays the deposit and instalments.

Improvements or renovations that are structural are also capital works. Work that goes beyond remedying defects, damage or deterioration that improves the function of the property is regarded as an improvement.

Repairs to an ‘entirety’ are capital and cannot be claimed as repairs. Repairs to an entirety generally involve the replacement or reconstruction of something separately identifiable as a capital item.

Depreciating assets are treated as follows:

• Deductions for ‘new’ assets must generally be claimed over time according to their effective life.
• Second-hand depreciating assets generally cannot be deducted.

Employers are reminded that employee super contributions for the quarter ending 30 September 2025 must be received by the relevant super funds by Tuesday, 28 October 2025. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which (as noted above) includes a penalty and interest component.