The decision by the full Federal Court makes clear that informal arrangements and internal accounting entries are not enough to support deductions for related-party transactions. This case has particular significance to taxpayers who enter related party transactions with specific relevance to family groups that may currently lack the requisite written documentation. This case also has potential ramifications for corporate groups that are not consolidated for income tax purposes and cross border related party transactions.

The background

Two companies in the S.N.A Group entered into agreements with two asset-owning trusts for the use of rent rolls, trademarks, and associated assets in 2005. The agreements covered the period from 2005 until 2015, at which point they lapsed and were not renewed. Despite this, the operating companies continued to use the assets and continued to make payments after the agreements had lapsed, claiming the payments as deductible service fees.

The primary judge found in favor of the taxpayer, concluding that the taxpayers were subject to a presently existing liability and that the fees were therefore deductible under section 8-1. The primary judge held that, although there was no longer a written contract, the terms could be inferred from the parties’ conduct. The primary judge was particularly sympathetic to the commercial practice of small businesses, where related-party transactions are not always documented.

However, the Full Federal Court held that, there was no objective evidence after 2015 of communications between the parties, their bookkeeper, or their external tax accountant indicating that the companies were subject to a liability for the use of the assets. Nor were any tax invoices issued by the trusts. Furthermore, the method for calculating the payments for the use of the assets, which was based on the unitholders of the trusts receiving a specified percentage return, was inconsistent with the fees ultimately paid.

The making of payments and recording those payments in the books of related parties is not sufficient to infer a request for the provision of services or assets. Taxpayers must be able to objectively support a liability when charging fees for services and the use of assets by related entities. They should ensure that agreements between related parties are properly documented and kept up to date so as to cover the relevant period for which deductions are claimed.

Practical implications

Taxpayers who do not have written agreements, or who are unable to objectively demonstrate the existence of a contract are at risk of having deductions denied for transactions with related entities.

Contemporaneous documentation for related-party transactions should be prepared and regularly reviewed so that it covers the relevant period of any deductions and clearly details the method of calculation. Where documentation is not available, taxpayers should identify and retain other evidence to support the existence of a contract, including emails, minutes, invoices, or workpapers.

How SW can help

The decision in Commissioner of Taxation v S.N.A Group Pty Ltd [2026] FCAFC 10 makes clear that informal arrangements and internal accounting entries are not enough to support deductions for related-party transactions. Groups with inter-entity dealings should take this opportunity to review whether their agreements are properly documented and supported by objective evidence.

SW can assist by reviewing your existing related-party arrangements, assessing the robustness of your charging methodology, identifying gaps in contemporaneous documentation, and helping you update or formalise agreements to ensure they withstand scrutiny. Taking proactive steps now can significantly reduce the risk of deductions being denied in the future.

Contributors

Stephen Peries

Richard Osborn

The post Full Federal Court denies deductions for transactions between related parties appeared first on SW Accountants & Advisors.

He has extensive experience in international tax matters, helping clients navigate complex global tax structures to achieve the best worldwide tax results. Darren also supports small to medium-sized businesses with accounting, taxation, and broader business needs, including structuring, budgeting, forecasting, and financial modelling.

His industry expertise spans property and construction, primary production, trades, not-for-profits, professional sports, and professional and legal services.

Darren is a Fellow of the Taxation Institute of Australia and a Registered Self-Managed Superannuation Fund Auditor.

The post Darren O’Malley, Consulting Director appeared first on SW Accountants & Advisors.

The Draft is intended to replace 51 separate Legislative Instruments that currently specify recipients, circumstances and requirements that enable RCTIs to be issued.  This consolidation into a single Legislative Instrument is a positive simplification and aims to enable recipients to self-assess their eligibility more easily.

Who can issue Recipient Created Tax Invoices (RCTI)?

Holding a valid tax invoice (including a RCTI) is a prerequisite to claiming input tax credits, so ensuring compliance with these requirements is fundamental to meeting GST obligations for affected taxpayers.  Usually, it is the supplier of a taxable supply (e.g. the service provider) who will issue a tax invoice to the recipient (e.g. the customer). 

However, the Commissioner has the power to specify a class of tax invoices that may be issued by the recipient of the taxable supply, rather than by the supplier. This is relevant particularly in circumstances where the value of the supply is established by the recipient rather than the supplier, including where analysis of goods must be undertaken before their value can be ascertained.

The Draft is expected to have impact on GSTR 2000/10 which sets out generic rules which allow the use of RCTIs, without the need to apply to or notify the Commissioner.  Under the Draft, recipients that may issue RCTIs, subject to satisfying the relevant requirements as set out in the Draft, are:

• a government related entity
• a large business entity
• a business entity.

The requirements that must be satisfied by a recipient depend in part on the category of entity.  Where a recipient falls into more than one category, it only needs to satisfy the requirements applicable to at least one category.

Verification of GST registration

Section 7 of the Draft sets out the relevant requirements.  In broad terms these are largely consistent with current administrative practice. However, one critical change is the requirement for a recipient to take positive action to verify that the supplier is registered for GST. This verification needs to be done each and every time a RCTI is issued. This change is significantly more onerous than the current requirement to be reasonably satisfied of the GST registration of the supplier.

Should the Draft be implemented in its current form, many businesses issuing RCTIs will need to ensure that processes are in place to satisfy this verification requirement and retain evidence to substantiate that this requirement was satisfied. 

How we can help

Submissions in relation to the Draft are required by 16 December 2022 and SW would be happy to take into consideration your comments.

The Draft will take effect the day after the final instrument is registered, which is expected in early 2023. A submission point will be to request a transition period.

However, if you currently rely on one of the existing 51 Legislative Instruments when issuing RCTIs, we advise you to revisit your existing current RCTI arrangements to confirm compliance with the Draft before it takes effect.

If you would like to discuss the Draft, or your current RCTI arrangements, please contact any of the SW tax Directors listed or your primary SW contact.

The post RCTI changes include GST verification for every issue appeared first on SW Accountants & Advisors.

Introduction to SMSF | 自我管理退休金簡介（國語中字）

Treatment of overseas income | 移民澳洲如何處理海外收入（國語中字）

Tax issue of investment in Australia properties | 澳洲房地產投資的稅務問題（粵語中字）

Family Trust structure in Australia | 詳解澳洲家族信託架構（粵語中字）

Transfer Pricing | 轉讓定價（國語中字）

Setting up a business | 在澳洲開設企業（國語中字）

Migration Visa | 移民簽證（英語中字）

Investing in Australia | 澳洲投資（中文字幕）

Capital Gains Tax | 資本增值稅（中文字幕）

Tax issues of principal place of residence | 主要居住地稅務問體（中文字幕）

Education in Australia | 澳洲教育（中文字幕）

Audit requirements in Australia | 澳洲審計要求（中文字幕）

Introduction to Australian taxation | 澳洲稅務需知（中文字幕）

Tax Residency | 澳洲稅務居民身份（中文字幕）

Reach out to our experts to start the conversation today! 如果您有任何移民相關的問題請聯絡我們。

The post Migration video series | 移民澳洲系列 appeared first on SW Accountants & Advisors.

In this fast-paced and technology-driven environment, retail businesses are compelled to prioritise flexibility in their operations to remain competitive and meet the ever-changing demands of the market. Whether it’s:

• adjusting inventory levels to align with shifting consumer trends
• optimising supply chain logistics to ensure timely deliveries, or,
• implementing innovative payment solutions to enhance the checkout experience, agility is key to staying ahead in the retail sector.

At SW, we understand the complexity of navigating this dynamic retail environment. Our experienced advisors work closely with retailers to address industry-specific challenges and provide tailored, strategic solutions that drive growth and performance.

Our services include:

• Strategic business planning to enhance operational efficiency
• Tax, audit, and risk advisory services tailored to retail challenges
• Expert guidance on navigating regulatory compliance and market disruption

We are committed to helping retailers not only meet immediate challenges but also build sustainable, future-focused business models.

Digital Transformation panel discussion

Post COVID-19, we were joined by 3 CEOs, including Ruslan Kogan from Kogan.com, to talk about their digital transformation journeys and opportunities of operating a digital first business. How social engineering techniques are utilised to prevent cyber-attacks was a popular topic.  

The post Retail & distribution appeared first on SW Accountants & Advisors.