Tax Round Up

April 2025 Round Up | What the ATO says you should do with the Bendel case

2 min read

30/04/25 14:35

This month, what the ATO says you should do with the Bendel case.

Plus, the legislation that passed Parliament enabling the threshold change to the instant asset write off for 2024-25, and changes to the deductibility of general interest charges.

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Inside this month, Michael Carruthers (Tax Director) and Amy Yan (Associate Tax Director) bring you:

ATO position on the Bendel decision

As mentioned in the previous edition of the tax round up, the ATO has released an interim decision impact statement on the Bendel case, with the ATO confirming that it won’t revise its current views on the treatment of unpaid distribution owed to corporate beneficiaries as set out in TD 2022/11 until the appeal process is exhausted. The ATO has now released some further information on common issues that have been raised by private companies and their advisers.

First, the ATO will not be granting a blanket extension of time for affected companies to lodge their tax returns pending the special leave application or subsequent appeals. The ATO indicates that the application of other integrity rules in section 100A and in Subdivision EA of Division 7A don’t depend on the outcome of the Bendel High Court process and there is a clear pathway for taxpayers who want to minimize their exposure to these integrity rules, regardless of the outcome of the High Court appeal process.

Where a deemed dividend has arisen due to a group arranging their affairs in reliance on the views expressed by the Full Federal Court, the Commissioner will not be granting a blanket exercise of the discretion in section 109RB to disregard any deemed dividends that might arise under Division 7A if the ATO is ultimately successful before the High Court.

Section 109RB allows the Commissioner to exercise discretion to disregard a deemed dividend that arises under Division 7A or to allow a deemed dividend to be franked where the deemed dividend arose because of an honest mistake or inadvertent omission. The Commissioner will look to the individual facts and circumstances on a case-by-case basis and can only exercise the discretion in a specific case where a deemed dividend has actually arisen.

While the ATO notes that taxpayers and their advisers need to consider their own circumstances and make their own decision on how to proceed in this area while waiting for the appeal process to be finalised, the ATO has indicated that by adopting the approach taken in TD 2022/11 taxpayers reduce the risk of being subject to deemed unfranked dividends or other adverse tax implications, regardless of whether the ATO’s appeal is successful.

Reference:

Deputy Commissioner Louise Clarke discusses Bendel decision

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