Tax News and Updates July 2025

1.

ATO issues Interim Decision Impact Statement on Hall v FC of T

The ATO has released an interim decision impact statement following the Administrative Review Tribunal (ART) decision in Hall v FC of T [2025] ARTA 600.  The case concerned deductions for home office (occupancy) and car expenses incurred during Melbourne’s COVID-19 restrictions.

The ART held that the taxpayer was entitled to:

• home office deductions for a portion of rent under section 8-1 of the ITAA 1997, and
• car expenses for travel between home and the employer’s workplace under section 28-12 of the ITAA 1997, rejecting the Commissioner’s argument that these were personal/domestic in nature.

The Commissioner has appealed the decision to the Full Federal Court. While that process is underway, the ATO has confirmed it will not change its current guidance, including:

• TR 93/30: Home office expense deductions;
• TR 2021/1: Transport expense deductions; and
• Employees guide for work expenses.

Tax agents should continue to examine clients' claims in detail, including whether to rely on the ART's decision or the ATO's publications.

Hall and Commissioner of Taxation [2025] ARTA 600 (Published 25 June 2025) | Legal database

2.

TD 2025/4 - New travel and overtime meal allowance rates

The ATO has released Taxation Determination TD 2025/4, setting out the reasonable travel and overtime meal allowance amounts for the 2025-2026 financial year.  The Determination helps clients avoid the need for detailed substantiation when claiming certain work-related expenses.

TD 2025/4 outlines "reasonable amounts" that can be claimed for:

• overtime meal expenses (e.g. food and drink when working extra hours);
• travel within Australia (accommodation, meals, and incidentals while travelling for work); and
• overseas travel (meals and incidentals only, accommodation must always be substantiated).

If your client receives a bona fide travel or meal allowance and their claim doesn’t exceed the reasonable amount, they don’t need to keep written evidence of the expense.  However, they must still have actually incurred the cost and be able to explain it if requested by the ATO.

The Determination also sets special rates for truck drivers, office holders covered by the Remuneration Tribunal, and Federal MPs and Senators.

Make sure to check the relevant table that matches your client’s circumstances.

Use TD 2025/4 to help streamline claims for eligible clients, especially those who frequently travel or do shift/overtime work. It’s a practical way to reduce paperwork, as long as the claims stay within the set limits and allowances are properly recorded in payroll.  If the allowances paid exceeds these limits, the full substantiation rules apply and the amount must be shown on the payment summary and reported through STP. 

TD 2025/4 | Legal database

3.

TPB deregisters tax agent for serious misconduct

The Tax Practitioners Board (TPB) has deregistered Bankstown tax agent Mr Kahtan Al Hassan and banned him from reapplying for the maximum five-year period for serious breaches of professional and ethical standards.  His company, Tabark Pty Ltd, has also been deregistered for five years.

Mr Al Hassan was found to have breached the Code of Professional Conduct and was deemed not fit and proper to be registered.  His misconduct spanned both the tax system and the National Disability Insurance Scheme (NDIS), including:

• lodging false GST figures for a business that was not operating;
• failing to notify the TPB of a permanent NDIS ban;
• not lodging tax returns or paying debts;
• not disclosing that Tabark entered external administration; and
• failing to complete required CPE or maintain professional indemnity insurance.

TPB Chair Peter de Cure AM said the case highlights the Board’s commitment to protecting public funds and upholding trust in the tax profession.  The TPB, as part of the Fraud Fusion Taskforce, continues to work across government to identify and remove unethical practitioners from the system.

Tax agents are reminded that misconduct, particularly where it intersects with other government programs, can be dealt with by the TPB.

TPB removes NDIS scammer from the tax profession | Tax Practitioners Board

4.

ATO clarifies work-from-home deduction rules

The ATO has answered the top five questions on claiming work-from-home (WFH) deductions for the 2024-2025 financial year, including updates to the fixed rate method and record-keeping requirements.

• The fixed rate for 2024–25 is 70 cents per hour worked from home. This includes running costs like electricity, internet, phone, and stationery.
• There’s no minimum number of hours required, but your client must be working from home and performing real employment duties, not just minimal tasks.
• To use the fixed rate method, clients must record total hours worked from home, at the time of work (diaries, spreadsheets, rosters accepted). Estimates are no longer allowed.
• If using the actual cost method, clients can still claim WFH expenses separately, including a percentage of phone/internet use, based on a 4-week representative diary.
• Rent or mortgage interest is generally not deductible unless a dedicated home office qualifies as a place of business, which may have CGT implications.

Tax agents should encourage clients to use the ATO’s home office expenses calculator and to maintain accurate records throughout the year to support any WFH claims, unless of course full substantiation is possible meaning the cents per hour method is not required.

Your top 5 work-from-home questions | Australian Taxation Office

5.

Division 7A benchmark interest rate set for 2025–26

The benchmark interest rate for Division 7A purposes for the 2025-2026 financial year is 8.37%, down from 8.77% in 2024-25.

This rate is based on the RBA’s standard variable housing loan rate for owner-occupiers, as published prior to 1 July each year.  While the ATO no longer issues annual rulings for this rate, it will update the relevant webpage (Division 7A - benchmark interest rate, QC 17928) in due course.

Tax agents should use this new rate when assessing or setting up complying Div 7A loan agreements for the 2025-26 year.

Division 7A – benchmark interest rate | Australian Taxation Office

6.

ATO debunks common Division 7A myths

The ATO has addressed several misconceptions regarding Division 7A, aiming to help tax agents and clients avoid costly errors.

• Business structure matters: The tax implications differ significantly between operating as a sole trader, partnership, trust, or private company. Operating through a private company may subject transactions to Division 7A.
• Company funds are not personal: A private company is a separate legal entity. Shareholders and directors cannot freely access company funds without proper documentation and adherence to Division 7A requirements.
• Division 7A applies to associates: The definition of 'associate' is broad and includes relatives, entities controlled by the shareholder, and trustees of trusts benefiting the shareholder or their associates.
• Record-keeping is essential: Proper documentation is crucial. Using journal entries without supporting evidence is insufficient to offset obligations under Division 7A.
• Indirect transactions are not exempt: Attempting to circumvent Division 7A by routing payments or loans through other entities does not exempt them from scrutiny.

Division 7A Myths debunked | Australian Taxation Office

7.

Important dates

• 21 July 2025:
  • Fringe Benefits Tax (FBT): Quarterly instalment due for non-deferred BAS payers.
  • PAYG Withholding: Medium withholders must remit June PAYG withholding amounts.
  • Business Activity Statement (BAS): Monthly BAS for June is due.
  • PAYG Instalments: Quarterly instalments due for monthly GST payers, and head entities of consolidated groups only.
• 28 July 2025:
  • PAYG Instalments: Quarterly instalments for April–June 2025 are due.
  • PAYG Withholding: Small withholders must remit PAYG withholding amounts for the April–June quarter.
  • BAS Lodgment (Paper): For tax agents, paper lodgment of the Q4 BAS is due.

8.

SMSF trustee declaration: ATO clarifies requirements

The ATO has reiterated the importance of the trustee declaration for all self-managed super funds (SMSFs).  Trustees and directors of corporate trustees must complete this declaration within 21 days of commencing their role to confirm their understanding of their obligations and responsibilities.

• Retention period: Trustees must keep the completed declaration for as long as they remain a trustee or for 10 years, whichever is longer.
• Education recommendation: Before signing, trustees are encouraged to undertake the ATO's free trustee education courses to ensure a clear understanding of their duties.
• Responsibilities include:

• Ensuring the fund operates solely for the purpose of managing superannuation for its members.
• Protecting super assets within the fund.
• Making decisions in the best interest of members.
• Complying with superannuation laws.
• Implementing and regularly reviewing the SMSF's investment strategy.

Trustee declaration - get it right | Australian Taxation Office

9.

Your clients' franking credits may be at risk with newly incorporated companies

The ATO is presently targeting cases involving newly incorporated companies and the potential breach of the 45-day holding period rule.  This is one to watch out for in respect of tax planning before 30 June.

Tax Insight: Your franking credits are at risk - newly incorporated companies breaching the 45-day holding period rule - HWL Ebsworth Lawyers