Birchstone Brief for the week ended 5 May 2023

2023-2024 Federal Budget

The Commonwealth Treasurer will deliver the 2023-2024 Federal Budget at approximately 7.30PM AEST on Tuesday 9 May.

We will include a summary of any noteworthy tax and superannuation measures in next week’s edition of the Birchstone Brief.


ATO Updates

Proposed cents per kilometre rate for 2023-2024

LI 2023/D12 proposes to set the rate at which work-related car expense deductions may be claimed at 85 cents per kilometre for the income year commencing 1 July 2023, up from the current rate of 78 cents per kilometre.

Class ruling issued

The ATO has issued the following class ruling:

  • CR 2023/22 – Museums Victoria – Early retirement scheme 2023.


Other News

New ‘payday super’ measure announced

The Commonwealth Treasurer has announced that, from 1 July 2026, Australian employers will be required to pay their employees’ super at the same time as their salary and wages. Treasury and the ATO will consult closely with industry and stakeholders regarding the proposed changes in the second half of 2023.

Small business energy incentive to be included in 2023-24 Budget

According to a press release from the Commonwealth Treasurer, a ‘Small Business Energy Incentive’ will be included in the 2023-24 Budget measures. This will enable businesses with an annual turnover of up to $50 million to claim an additional 20% deduction on eligible expenditure supporting electrification and more efficient use of energy, capped at $20,000.



Leppington Pastoral Co Pty Ltd v Chief Commissioner of State Revenue (NSW) [2023] NSWSC 463 – Developers’ rights under agreement held not to constitute a declaration of trust

The NSW Supreme Court has held that a ‘Development Rights Agreement’ between the taxpayer and a developer did not effect or evidence a declaration of trust over dutiable property for the purposes of the Duties Act 1997 (NSW), despite clause 16.1 of that Agreement expressly acknowledging that the developer had a beneficial and equitable interest in the project land.

The central reason for this decision was that, contrary to the Commissioner’s submissions, neither the Agreement nor any other document entered into by the parties required the taxpayer to hold the project land for the developer’s benefit. Rather:

  • the documents made clear that the taxpayer held the land for its own benefit, subject to the extensive contractual rights conferred on the developer and the corresponding obligations imposed on the taxpayer – a situation which was fundamentally inconsistent with the fiduciary obligations the taxpayer would have owed the developer had it held the land on trust; and
  • the developer’s beneficial and equitable interest in the project land acknowledged by the Agreement referred only to the developer’s equitable rights created under an earlier Call Option Deed.

Lakes Oil NL v Innovation and Science Australia [2023] AATA 811 – AAT confirms no R&D offset for hydrocarbon exploration activities

The AAT has ruled that a taxpayer company was not entitled to the R&D tax offset in respect of activities aimed at determining the location, se and quality of gas deposits. This was because the activities, found to involve ‘prospecting, exploring or drilling’, fell within the exemption in section 355-25(2)(b) of the ITAA 1997 and were therefore not eligible R&D activities, even if they may also have served other purposes.  

Earlmist Pty Ltd as the Trustee for the Earlmist Unit Trust v FCT [2023] AATA 978 – Input tax credits denied for a property development and construction group

In a mammoth 100-page decision, the AAT has rejected claims by members of the Westpoint group of companies for over $7.2 million in input tax credits relating to five property developments undertaken by the group in tax periods prior to its collapse in 2005. The reasons as to why the Tribunal denied the relevant input tax credits varied for each development, and the facts are far too detailed to attempt to summarise here. However, any subscribers with an interest are encouraged to read the thorough and well-written decision.

WZWK v FCT [2023] AATA 872 – Benefits paid in breach of operating standards assessable as income

The AAT has held that payments made to a taxpayer by an SMSF (of which he was the sole member and director) after a company owned and operated by him terminated his employment were made in breach of the prescribed operating standards and therefore correctly included in his assessable income pursuant to section 304-10 of the ITAA 1997.

The Tribunal also:

  • upheld the taxpayer’s disqualification from being eligible to act as a superannuation fund trustee, finding that he was not a fit and proper person to be a trustee as he had breached the operating standards and several other SIS Act provisions in his capacity as director of the SMSF trustee; and
  • affirmed the administrative penalties imposed. 

HNQH v FCT [2023] AATA 980  – Taxpayer fails to show amended assessments were excessive

The AAT has affirmed amended assessments issued by the Commissioner for the 2011-2014 income years (which increased the relevant taxpayer’s taxable income by more than $1.5 million in total) and the decision not to remit associated penalties and interest. The Tribunal decided the review application in favour of the Commissioner due to the taxpayer’s failure to produce any substantively relevant or reliable evidence to discharge his onus of proving that the amended assessments were excessive. 


The taxpayer has applied to the High Court for special leave to appeal against the decision of the NSW Court of Appeal in Chief Commissioner of State Revenue (NSW) v Godolphin Australia Pty Ltd [2023] NSWCA 44 (covered in the Birchstone Brief for the week ended 31 March 2023).



Draft regulations regarding military superannuation benefits released for consultation

Treasury has released exposure draft regulations and explanatory material which:



Birchstone Brief

Curated for the needs of SME tax professionals. The Birchstone Brief is delivered to your inbox every week. It contains all the tax developments you need to know from the previous week, with insights from the team at Birchstone Tax Law.

Subscribe to our mailing list, you will receive the Birchstone Brief and updates to our webinars and resources.