In a matter relating to whether unexplained deposits of some $735,000 received by a property trust were assessable as ordinary income to the taxpayers (the husband and wife controllers of the trust who also ran a restaurant and takeaway businesses), the Full Federal Court has now unanimously allowed the Commissioner’s appeal from decision of the Federal Court at first instance. Originally, the AAT found for the Commissioner on the basis that it did not accept the evidence of the taxpayers that the moneys were loans or equity injections from their parents to assist the trust in the purchase of property. The Federal Court at first instance allowed the taxpayers’ appeal from the decision of the AAT, finding that the AAT had not properly carried out its statutory function in arriving at its decision. However, the Full Federal Court has now ruled that the AAT had not erred in the manner it carried out its task and the conclusion it reached that the taxpayers had not discharged the onus of proving the deposits were not ordinary income of the trust. (
FCT v Liang [2025] FCAFC 4, 31 January 2025.)February
Full Court: Commissioner’s appeal allowed – bank deposits income
he Government has advised that it is directing the Treasury to undertake a comprehensive review of the Compensation Scheme of Last Resort (CSLR) to ensure victims of financial misconduct have a sustainable avenue for redress. The review is aimed at ensuring the scheme remains sustainable into the future for consumers and for the industry. This is in the light of new data from the operator of the CSLR shows that the financial advice industry will have to provide $78m to compensate victims in 2025–26 (largely as a result of the liquidation of financial advisory firm United Global Capital Pty Ltd. In this regard, the CSLR said that a special levy may be required to fund this liability above the relevant $20m cap – and that the consideration of any special levy will be determined by the Minister and subject to separate parliamentary approval.
The Administrative Review Tribunal (ART) has upheld the decision of the Industry Innovation and Science Australia that the activities of the applicant (BBM) were not a core R&D activity as defined in s 355-25(1) of the ITAA 1997. As a consequence, its activities were not entitled to be registered which in turn meant that the R&D tax incentive was not available to it. Broadly, its activities related to the development of an integrated program and an associated app for an mental health treatment. However, after examining the requirement that the activity be “based on principles of established science” and whether the activities were excluded as “research in social sciences, arts or humanities”, the ART concluded that its activities were neither “core”, nor “supporting”, R&D activities for the purposes of R&D registration. Note: The applicant apparently used Artificial Intelligence to search for supporting case law and the AI came up with references to non-existent cases! The Tribunal warned that adverse inferences can be drawn against an applicant in such circumstances. (Body by Michael Pty Ltd and Industry Innovation and Science Australia (Taxation and business) [2025] ARTA 44, 24 January 2025)
