This article provides an update on key developments in taxation law for accountants and participants in the tax advice industry up to mid-May. This update in summary covers:
- Deputy Commissioner Comments on Bendel Decision
- Primary Production Exemption found not to Apply for NSW Taxpayer
- ATO's Closer Scrutiny on Work Related Expenses
1 – Deputy Commissioner Comments on Bendel Decision
In late March, we covered the decision of the Full Federal court in Bendel, here, and the implications that this case has on UPEs. Recently, the Deputy Commissioner of Taxation has released an article covering how private companies and their advisors should treat Bendel.
In short, the Deputy Commissioner is confident on the prospects of their application for special leave to the High Court being successful "in the next few months". However in the scenario the High Court rejects their application, the ATO will endeavour to publish practical guidelines for taxpayers as well as updating their Decision Impact Statement. As a reminder, the ATO's position on Bendel is that they will continue to administer the law in accordance with their views expressed in TD 2022/11 pending a decision in the High Court.
The Deputy Commissioner also notes that no deferral for the lodgement of tax returns for affected private companies will be granted due to the unknown timeframe and flagged the possibility of using section 100A and subdivision EA for UPEs.
The Deputy Commissioner does say that while it is up to the discretion of taxpayers to decide their own approach following the Full Court decision, taxpayers that continue to follow the ATO's views on UPEs will have certainty, regardless of the outcome whether special leave to the High Court is successful.
2 – Zonadi Holdings Pty Ltd ATF Wombat Investment Trust v Chief Commissioner of State Revenue [2025] NSWCATAD 84 – Primary Production Exemption found not to Apply
The NSW Civil and Administrative Tribunal found in this case that a taxpayer did not qualify for the primary production exemption found in s 10AA of the LTMA 1956.
The relevant property was used as a vineyard in which grapes were produced and of which were either sold or used to produce wine which was subsequently sold. The taxpayer argued that the land was used for primary production given it was used to produce grapes. However, the Tribunal found that the dominant purpose of the land was for the production of wine which was not within the ambit of s10AA. For the exemption to apply, the cultivation must have been namely for the purpose of selling the produce of the cultivation rather than the product of wine.
The production of wine, rather than the sale of the grapes, was found by the Tribunal to be the dominant purpose for which the land was used for.
3 – ATO's Key Area of Focus – Closer Scrutiny on Work Related Expenses
On 7 May 2025, the ATO issued a media release detailing its focus on areas such as work related expenses, working from home deductions in respect to multiple income sources. Further they remind taxpayers that "work related expenses must have a close connection to your income earning activities, and you should be prepared to back it up with records like a receipt or invoice".
Indeed, some of the more outrageous work related expenses taxpayers have claimed that the ATO noted down include:
- A mechanic tried to claim an air fryer, microwave, 2 vacuum cleaners, a TV, gaming console and gaming accessories as work-related. The claim was denied as these expenses are personal in nature.
- A truck driver tried to claim swimwear because it was hot where they stopped in transit and they wanted to go for a swim. The claim was denied as these expenses are personal in nature.
- A manager in the fashion industry tried to claim well over $10,000 in luxury-branded clothing and accessories to be well presented at work, and to attend events, dinners and functions. The clothing was all conventional in nature and was not allowed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
