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Melbourne man jailed over fraudulent BAS claims
The ATO, with the AFP, has secured an 18-month jail term (eight months non-parole) for a Melton man who defrauded the ATO of over $250,000 via false GST refund claims for a fictitious handyman business. He has also been ordered to pay $176,365 in reparation.
The case highlights the ATO’s focus on BAS and GST fraud. Even short-term or small-scale refund schemes can attract criminal prosecution and imprisonment.
Key takeaways for advisers:
- Ensure client GST refund claims reflect genuine business activity.
- Maintain robust documentation and records to support BAS lodgments.
- Advise clients on the serious consequences of fraudulent claims, including jail and financial penalties.
This serves as a reminder that the ATO treats GST refund fraud as serious financial crime, not a mere oversight.
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Melbourne man jailed over fraudulent business activity statements | Australian Taxation Office
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Pre-CGT status retained despite new beneficiary
The Administrative Review Tribunal (ART) has ruled that a $64.4 million distribution from a family trust was not taxable, confirming the trust’s shares remained a pre-CGT asset under s 149-30(2) of the ITAA 1997.
The Commissioner had argued that appointing a new corporate beneficiary in 2011 changed the trust’s “majority underlying interests,” causing the shares to lose pre-CGT status. The ART disagreed, finding that the same family group effectively controlled and benefitted from the trust before and after 1985.
The ART held that section 149-30(2) of the Income Tax Assessment Act (ITAA97) operates beneficially and can preserve pre-CGT status where tracing underlying interests in a discretionary trust is impractical. It accepted the taxpayer’s position that adding a discretionary object alone does not constitute a change in ownership.
For advisers, the case confirms that family trusts can retain pre-CGT asset status where effective control and benefit remain within the same family group, even if new discretionary objects are later added.
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XLZH and Commissioner of Taxation (Taxation) [2025] ARTA 2154 (3 October 2025)
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3.
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Appeal lodged in Barth Family Trust GST input tax credit case
The taxpayer has appealed to the Federal Court the ART’s decision in Trustee for Barth Family Trust v FC of T [2025] ARTA 1558.
The ART had ruled that the taxpayer was not entitled to input tax credits claimed in business activity statements lodged more than four years after the due date. The ART held that the entitlement had expired under s 93-5 of the A New Tax System (Goods and Services Tax) Act 1999, rejecting the taxpayer’s arguments that:
- the Commissioner had effectively granted extra time for lodgment; or
- the four-year limit did not apply in the context of an objection or review.
The Federal Court appeal will test the strict application of the four-year time limit and whether any administrative discretion or review rights can extend that period.
The outcome will be of interest to practitioners dealing with late BAS lodgments and historic GST credit claims.
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The Trustee for the Barth Family Trust and Commissioner of Taxation (Taxation) [2025] ARTA 1558 (28 August 2025)
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4.
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ATO withdraws outdated guidance on employee share schemes
The ATO has withdrawn Taxation Determination TD 93/60 and Taxation Ruling IT 2516, stating that both are now obsolete and have no ongoing relevance.
TD 93/60 dealt with Australian employees receiving shares in foreign companies under now-repealed s 26AAC of the Income Tax Assessment Act 1936 (ITAA36), while IT 2516 explained amendments to the former employee share scheme rules in s 26AAAC, including how discounts and cost bases were to be treated.
These provisions have long been replaced by Division 83A of the ITAA97, which currently governs employee share schemes. The withdrawals, effective 9 October 2025, are without replacement.
Tax agents should ensure that any references to these rulings are removed from practice materials and that advice on employee share schemes reflects the current Division 83A framework.
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TD 93/60W | Legal database
IT 2516W | Legal database
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5.
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High Court to hear Merchant/Billabong share sale scheme appeals
Both the Commissioner and the taxpayers have been granted special leave to appeal to the High Court from the Full Federal Court’s decision in Merchant & Anor v FC of T [2025] FCAFC 56.
The case concerns a family trust’s sale of high-cost shares in the Billabong Group to a related entity to generate a capital loss, and whether Part IVA (the general anti-avoidance rule) and the dividend-stripping provisions of s 177E of the ITAA36 applied.
A majority of the Full Court upheld much of the primary judge’s decision that both provisions applied, though it found some errors in reasoning. The majority clarified that s 177E does not apply merely because a dividend-related tax saving exists and rejected the view that it requires only partial tax avoidance. Logan J, in dissent, found that the dominant purpose was not to obtain a tax benefit and that s 177E was not engaged.
The Court was unanimous in dismissing the taxpayers’ arguments under Div 230 (TOFA), confirming that while certain future payment rights were financial arrangements, they were exempt from revenue treatment.
The upcoming High Court appeal is expected to provide important clarification on the interaction between Part IVA and the dividend-stripping provisions, particularly in complex related-party share sale arrangements.
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Merchant v Commissioner of Taxation [2025] FCAFC 56 (22 April 2025)
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TPB takes action following misconduct by Can Do Accounting
The Tax Practitioners Board (TPB) has terminated the registration of Can Do Accounting Services Pty Ltd, after uncovering serious breaches of the Code of Professional Conduct.
The TPB found that the company’s director, Ruaidhri Carslake, who was not a registered tax agent, had falsely listed supervising agents without their consent and lodged more than 3,000 tax returns without adequate supervision or control. The Board determined that Mr Carslake was not a fit and proper person to provide tax agent services.
As a result, Can Do Accounting’s registration was terminated, and the firm has been banned from reapplying for registration for two years.
The TPB reminded clients of the importance of verifying their agent’s registration on the TPB register and reinforced that registered practitioners must maintain proper supervision and control over all tax services provided under their authority.
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Protecting public trust: the TPB takes action against Can Do Accounting | Tax Practitioners Board
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ATO refreshes compliance focus for private groups for 2025-26
The ATO has published its refreshed 'Areas of Focus' for privately-owned and wealthy groups for the 2025-26 year, signalling heightened scrutiny across a range of governance, tax and structural issues.
Key focus areas include:
- Use of business funds or assets for personal or intra-group purposes, with particular reference to Division 7A arrangements and “lifestyle” assets.
- Succession planning and structuring activity: asset transfers, restructures and wealth-shifting aimed at tax outcomes.
- Core compliance-obligation risks: timely registration, lodgment, payment of tax, correct reporting of income/sales/capital gains.
- Industry and emerging-issue hot spots: property & construction, private equity, international dealings / cross-border, use of tax-exempt or concessional-tax entities, GST refund fraud.
Why this matters for advisers
The update underscores that the ATO is shifting from general oversight to targeted risk-based engagement with private groups, using analytics, intelligence and case-work to sharpen its focus.
Advisers should interpret this as a signal to revisit tax governance, documentation and structural arrangements for their private-group clients ahead of the year-end.
Practical adviser actions
- Review client structures for any Division?7A exposures or inappropriate use of business assets for personal or intra-group use.
- Where succession planning or restructuring is proposed or underway, ensure full tax-impact modelling (CGT, rollover eligibility, trust distribution implications) and document commercial rationale.
- Check that registration, lodgment and payment obligations are met across all group entities, including trusts, entities with concessional tax status, GST across group transactions.
For clients operating in higher-risk sectors (property/ construction, private equity, international operations), it is important for tax agents to assess whether systems/controls are sufficient and that transactions are clearly documented and arms-length.
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Private groups: what's on our radar for 2025-26 | Australian Taxation Office
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