The Administrative Review Tribunal ('ART') recently held that a taxpayer had carried on an enterprise of dog breeding for GST purposes. He had lodged activity statements for the quarters ended 30 September 2018 to 31 December 2021 inclusive, claiming input tax credits ('ITCs') for the dog breeding activities he carried on from his home (among other activities). The ATO disallowed the taxpayer's claims for the above periods, arguing that enterprises were not carried on, and that there was a lack of appropriate substantiation (among other reasons). The ART however held that the taxpayer's dog breeding operation was an enterprise for GST purposes, noting that his activities had "the necessary commercial character." Therefore, the taxpayer was entitled to ITCs for that enterprise. However, the ART affirmed the ATO's decision to reduce the taxpayer's other ITC claims, such as in relation to stamp duty on the acquisition of a property and for café and grocery expenses. The ART also admonished the taxpayer for apparently using artificial intelligence in the presentation of his case, as he appeared to rely on cases and principles that did not exist. Please contact our office for more information.
Taxpayers should note that GST credits and fuel tax credits will expire if not claimed within the 4-year credit time limit (i.e., generally four years from the due date of the original BAS in which the taxpayer could have claimed them). Once credits expire, the ATO has no discretion or ability to amend the assessment to include those credits. The 4-year credit time limit is different to the period of review and applies more strictly. There may be situations where the ATO is able to amend for overpaid or underpaid GST or overclaimed credits, but additional credits cannot be included in an amendment assessment. If credits are near expiry, instead of writing to request an amendment, taxpayers should consider: claiming the credits in their next BAS that is still within the 4-year credit time limit; requesting the amendment by lodging a revised BAS for the tax period to which the credits are attributable (these are generally processed faster than amendment requests in other forms); or lodging a valid objection against their assessment for the period to which the GST credits are attributable before the end of the 4-year credit time limit. Please contact our office for more information.
The ATO has advised that it will acquire child support data from Services Australia for the 2025 to 2027 income years, including the following: client identification details (names, addresses, phone numbers, and dates of birth); and child support details (child support identification reference number, child support role type, and child support category). The ATO estimates that records relating to up to 300,000 individuals will be obtained each financial year, which will be matched against ATO records. The objectives of this program are to (among other things): allow Services Australia to more accurately assess child support obligations, and maximise opportunities to collect child support debts; and identify and educate individuals who may be failing to meet their lodgment obligations and help them to finalise their lodgment obligations, or notify the ATO that an income tax return is not required. Please contact our office for more information.
The Government recently announced that it was delivering on its commitment "to mandate cash acceptance for essential purchases by finalising regulations that require fuel and grocery retailers to accept cash from 1 January 2026." The changes mean that, from 1 January 2026 , most food and grocery retailers must accept cash for in-person transactions of $500 or less between 7am and 9pm. Small businesses with aggregate annual turnover under $10 million are generally exempted from this mandate. However, this mandate still applies to small businesses that choose to share a trademark with a large retailer. The Government noted that, in addition to the cash mandate for fuel and groceries, consumers also already have the option to pay their bills, including utilities, phone bills and council rates, in cash at their local Australia Post outlet through Post Billpay. The Government will review this mandate after three years, to ensure it is functioning as intended. Please contact our office for more information.
The ATO is warning the community to steer clear of an emerging tax scheme involving barter credits — a type of alternative currency used in some business networks. A tax scheme that involves artificially inflating deductions for donations of barter credits to deductible gift recipients ('DGRs') is on the rise. While it may seem enticing, promoters and taxpayers could face potentially significant consequences if they are involved. The ATO is concerned that such schemes are being enabled by several barter exchanges that are allowing participants to access barter credits with a nominal face value that is much more than any payments actually made to the exchange. Participants then donate these barter credits to a DGR and claim a larger tax deduction than they are entitled to. Those involved may have to repay the tax, plus face heavy penalties, interest and legal action. Please contact our office for more information.
The ATO has announced that it will take a somewhat different approach in relation to expenses that are claimed in relation to holiday homes. Broadly, the ATO now takes the view that, if a taxpayer's rental property is also their holiday home, certain deductions relating to holding it will be completely denied (rather than being apportioned). Expenses relating to ownership and use of the holiday home (e.g., interest, rates and maintenance) will not be deductible, unless the holiday home is 'mainly' used to produce assessable income. Whether a holiday home is used 'mainly' to produce assessable income will be determined based on a consideration of a number of factors. However, this will generally not apply to expenses incurred in relation to holiday homes that are rental properties before 1 July 2026, if those expenses are incurred under an arrangement entered into prior to 12 November 2025. Please contact our office for more information.
The ATO has hit a major milestone of over 300,000 tip-offs from the community about tax avoidance and other dishonest behaviours since 1 July 2019. In the 2024/25 financial year alone, almost 50,000 red flags were raised by members of the community who spotted something suspicious. Most of the tip-offs received related to shadow economy activity, coming from customers, employees, other businesses, and even family and friends. This year, Australians reported businesses and individuals who: did not declare their income; demanded or paid for work in cash to avoid tax; lived lifestyles that did not match their known income; and failed to report all sales. The top three industries seeing a surge in 'red flags' this financial year are: building and construction; cafes and restaurants; and hairdressing and beauty services. Please contact our office for more information.
The ATO has been seeing a number of deduction claims for dental expenses this tax time. Dental expenses, including preventative and necessary dental treatment, medical expenses and other costs relating to client's personal appearance (such as teeth whitening, makeup, skin care, shaving products and haircuts) are not deductible. These expenses are generally private expenses, even if an employer expects an employee to maintain a certain appearance, or pays them an allowance to cover grooming expenses. Taxpayers should remember that they can only claim an expense that directly relates to earning their income. Private expenses cannot be claimed as a deduction. Taxpayers should have written evidence of all their expenses, and be able to show a direct connection with those expenses to their employment income. Please contact our office for more information.
Employee super contributions for the quarter ending 31 December 2025 must be received by the relevant super funds by 28 January 2026. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. The SG rate is 12% for the 2026 income year (increased from 11.5% for the 2025 income year). Please contact our office for more information.
Employers should start preparing for the permanent closure of the Small Business Superannuation Clearing House ('SBSCH') on 1 July 2026. By acting now to find an alternative service, employers will: have an established process in place to pay super guarantee ('SG') for the March and June quarters (if they currently pay quarterly); reduce the risk of late payment of SG for the June 2026 quarter due date (28 July), as the SBSCH will be already closed; have more time to set up their business cash flow to enable frequent payments of SG; and have finalised payments and downloaded any reports from the SBSCH before it closes permanently. Employers that are still using the SBSCH should be aware of the following key dates. 10 December 2025 — Super payments, along with instructions, must be received by 5.30 pm AEDT on this date. The ATO says payments received after this time will be processed from 2 January 2026. 28 January 2026 — December 2025 SG quarterly payments due date. February to March 2026 — Employers should move to an alternative option to the SBSCH. 28 April 2026 — March 2026 SG quarterly payments due date. 30 June 2026 — Final day for employers to use the service, make any final payments and download reports. 1 July 2026 — SBSCH is no longer available. Employers may already have other options readily available so they can exit from using the SBSCH ahead of time. They should check their existing software and payroll packages, as they may already include super functions they can use to pay SG. Otherwise, employers can look for options from super funds or digital service providers offering payroll services, software or commercial clearing houses. Please contact our office for more information.