As we move through the final quarter of 2025, several important tax developments have emerged across state and federal levels. In this issue, our team highlights recent cases and reforms impacting businesses, trustees and individuals. From Victoria’s landholder duty regime to national payroll tax compliance, FBT exposure for trust directors, and student loan relief measures.

Landholder Duty Regime Risk when Acquiring Units

In Victoria, an entity may be liable for landholder duty (charged at the same rate as land transfer duty and subject to the same exemptions) if the entity acquires a significant interest in a company (i.e. ≥ 50% of shares in a private company or ≥ 90% of shares in a listed company) or trust (i.e. ≥ 20% of units in a private unit trust) that hold land valued at $1 million or more. The interests of all associated entities are aggregated when determining if a significant interest has been acquired.

In the recent case of Victory International Pty Ltd v Commissioner of State Revenue (Vic), the taxpayer acquired units in a hybrid unit trust (with fixed entitlements to trust’s capital but the trustee had discretionary powers over the distribution of trust income) that held Victorian land valued over $1 million.

The amount of landholder duty depends on the unitholder’s “entitlement … on a winding up”. The taxpayer argued that they were not subject to landholder duty because the trustee’s wide discretionary powers made it impossible to determine if the taxpayer had a “significant interest” of 20% or more in the assets of the trust until the trustee exercised its discretion (i.e. no unitholder possessed a fixed or certain entitlement to the trust’s property on winding up).

However, the SRO and Supreme Court rejected this argument and found that the taxpayer actually acquired a 100% interest in the hybrid unit trust – and was therefore subject to landholder duty because the trustee had the power to amend the trust deed so that a single unitholder could become entitled to 100% of the trust property on winding up.

Although this decision – that levied landholder duty not based on the unitholder’s actual entitlement but rather on their maximum potential entitlement – is being appealed to the Court of Appeal, the significant risk created by the current judgement (i.e. that the acquisition of a single unit in any unit trust/hybrid trust can potentially trigger a duty liability calculated on 100% of the value of the trust’s landholdings) remains for now. Watch this space!

Payroll Tax Update

Payroll Tax Grouping Considerations

With the Victorian SRO and other state revenue authorities looking to bring in more revenue, we have noticed an increase in payroll tax compliance activities. Specifically, the SRO are focused on ensuring that payroll tax groups are correctly registered to avoid related entities getting a double benefit from the payroll tax-free threshold, which increased from $900,000 to $1M from 1 July 2025.

The payroll tax grouping provisions are quite broad. Employers can be grouped for payroll tax purposes where:

• Related companies: A holding/subsidiary relationship where ownership is more than 50%.
• Common control: Companies with common directors.
• Common employees: Businesses that share common employees, or where employees perform duties for another business.
• Tracing of interests: Businesses that have common controlling interests/ownership (in the case of businesses operated through a discretionary trust, a beneficiary is deemed to have a controlling interest in the trust).

However, the Commissioner has discretion to exclude a member from a group in certain circumstances where he is satisfied the business of the member is independent of, and not connected with the business of any other member of the group.

If you’re unsure whether your business may be part of a payroll tax group, please reach out to your SiP advisor, especially because all members of a group are jointly and severally liable for the group’s total payroll tax debt.

Uber Stung for $80M of Payroll Tax

Finally, Revenue NSW recently issued Uber a payroll tax assessment in excess of $80M in relation to payments made to drivers. The Supreme Court initially decided in Uber’s favour, before the decision was overturned after a successful appeal by the Commissioner. Uber has since lodged an appeal to the High Court.

The key issue in this case was whether Uber drivers are considered independent contractors for payroll tax purposes. The payroll tax legislation provides a wide definition of ‘contractor’, essentially being a worker engaged under a ‘relevant contract’ who is paid ‘for or in relation to the performance of work’.

Uber argued that they were merely a payment collection agent between the driver and the rider/passenger and that the driver was supplying a service to the rider/passenger rather than to Uber itself. However, the Court of Appeal determined that the service being provided by the drivers to Uber was fundamental to the rideshare business model, and therefore the payments Uber made to the drivers were wages for payroll purposes.

Should the High Court uphold the decision, this could have significant implications for the gig economy and other marketplace platforms who operate as an intermediary between the customer and service providers that facilitate payments. This comes after the recent attack by state revenue authorities on medical practices, which determined that medical practitioners who consult at medical centres may be subject to payroll tax.

The Uber case illustrates the ambiguity of the payroll tax contractor provisions, and that the state revenue authorities have their sights set on targeting these kinds of arrangements.

Directors of Trustee Company Deemed to be Employees for FBT Purposes

In the Commissioner v SEPL Pty Ltd (“SEPL”), the Court found that three brothers who were directors of the corporate trustee of a family trust which operated the family business, were employees of the business under the statutory meaning of ‘employee’ in the FBT legislation despite not being legal employees. The brothers played a ‘hands on role’ in the family business, as well as being eligible beneficiaries of the family trust.

The trustee purchased a number of luxury vehicles across the relevant FBT years, which were available for exclusive use by the brothers for both business and personal purposes. The ATO assessed the trust for additional FBT in respect of the personal use of the luxury vehicles by the brothers on the basis that they were deemed to be ‘employees’ for FBT purposes – a decision that was upheld by the Federal Court.

As per the FBT legislation, a person is an employee where broadly:

• They are provided with a benefit from another person/entity that would be considered salary & wages if it had been paid in cash; and
• The benefit is provided in respect of their ‘employment’ – which is defined as “the holding of any office or appointment, the performance of functions or duties, or the engaging in of any work” (i.e. there must be a sufficient nexus between the benefit provided and the ’employment’ of the directors/owners).

Key Takeaways

• An ‘employee’ for FBT purposes is broader than under common law. The FBT Act extends the definition to include individuals who receive benefits in respect of work performed, even if they are not formally employed.
• Should you operate a business via a trust, you may be considered an employee for FBT purposes in your capacity as director of the trustee company.
• Business owners using a trust structure should be aware that their personal use of business assets, especially motor vehicles, may give rise to FBT consequences.

It is often assumed that if you aren’t an employee, you have no FBT exposure from the use of business assets. However, as this decision highlights this is not always the case.

If you operate your business through a trust and would like to understand whether you may be exposed to FBT consequences, we encourage you to reach out to your SiP advisor.

Three Priorities Outlined as a Basis for Future Tax Reform

The Economic Reform Roundtable was a 3-day gathering of policy makers, business representatives and academics aimed at trying to tackle some of Australia’s most pressing economic challenges. In relation to tax reform – a contentious issue as always – Treasurer Jim Chalmers outlined 3 broad priority reform areas, which we have summarised below.

1. Intergenerational Equity

According to Chalmers, “one of the most troubling imperfections is best seen through an intergenerational lens”. The current tax system presents “horizontal inequity”, resulting in workers being penalised, while investors and wealth holders receive generous concessions. This creates a disproportionate burden being placed on younger Australians who generate high levels of income, being taxed more at a time where funds are generally needed to pay for things like childcare and a mortgage.

Proposed reforms include:

• Reducing concessions for investment income
• Increasing taxation of savings and accumulated wealth
• Use wealth taxes to fund personal and corporate income tax cuts

Any future reforms aimed at reducing income tax burdens would benefit those whose income is mostly sourced from wages. However, those that rely heavily on investment income or property may face potential changes to concessions, such as the contentious negative gearing and CGT discount – which are yet to officially be put on the chopping block.

2. Boosting Business Investment

The Government is seeking an affordable, responsible way to stimulate business growth without relying solely on corporate tax cuts. This includes targeted tax incentives that reward innovation and infrastructure investment, as well as the need for regulatory reform. Various levers are required to improve the current business investment climate, although previous investment incentives have had a limited impact.

For example, we would like to see the instant asset write off become a permanent fixture of the tax system. With the asset threshold being increased from the current $20,000 and eligibility extended to all businesses (not just those with turnover below $10M).

3. Simplifying and Sustaining the Tax System

The goal is to make the tax system more efficient, sustainable and easier to navigate through the implementation of various initiatives. These include:

• A “tell-us-once” system to reduce duplication across Government agencies
• Digitally transforming tax administration to reduce friction and improve compliance, with a focus on AI implementation
• Abolish inefficient state-level taxes, such as stamp duty and insurance taxes

20% Reduction of Student Loan Debt

As mentioned in our December 2024 newsletter, the Federal Government proposed a number of reforms to reduce student debt, which have now successfully passed through parliament and are now law.

The legislation reduces Higher Education Loan Program (“HELP”) and other student loans by 20%, applied to student debt balances at 1 June 2025. This once-off reduction measure should benefit over 3 million Australians and remove over $16B in student debt.

Other considerations:

• The 20% reduction will be retrospectively applied to the debt balance at 1 June 2025, requiring no action by the taxpayer.
• Voluntary repayments made after 1 June 2025 will not impact the amount of the reduction to the debt. Therefore, there may be circumstances where the 20% reduction will result in a credit to one’s HELP account which will be in the form of a refund.
• If a taxpayer had already paid off their HELP or other student loan debts prior to 1 June 2025, they will not be entitled to receive any reduction or credits.
• Additionally, there is a new minimum income repayment threshold, increasing from $54,435 to $67,000 in FY26 (indexed annually to wage growth).

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The above tax summary is intended to be general in nature and does not constitute advice. Should you believe that any of the above matters may be relevant to you or your Group’s particular circumstances, please discuss the specific details with your Slomoi Immerman Partners advisor.