Australian tax cases, appeals updates and DISs
Tax cases, appeals updates and decision impact statements (DISs) that feature in the CA ANZ Tax News AU for 2026.
Items released week ended 15 May 2026
Brisbane Club v Commissioner of Taxation (No 2) [2026] FCA 521 – payment under deed with property developer to be included in building’s cost base not sublease
This case follows on from Brisbane Club v Commissioner of Taxation [2026] FCA 220 where the Federal Court allowed the taxpayer’s appeal in part, holding the capital gain from the disposal of the building was to be disregarded as it was a pre-CGT asset but the relevant subleases acquired by the taxpayer were post CGT assets and thus the capital gain from their CGT event were subject to CGT.
The parties sought to be heard further on whether an indexed amount of $928,378 (being a payment of $600,000 in accordance with a deed with a property developer) should be included in the cost base of the taxpayer’s building (a pre-CGT asset) or in a sublease (a post-CGT asset).
The Federal Court held that although the words “in respect of” are words of wide import, a payment which was not in relation to the specific CGT asset being considered would not be captured. The taxpayer did not make the payment of $600,000 to its lessee “in respect of” the sublease, rather the payment was made to the property developer. Further, the payment of money required on the proper interpretation of the deed, was in respect of the building.
Read decisionCommissioner of Taxation v Toowoomba Regional Council [2026] FCAFC 50 – commercial parking station for FBT not limited to profitable operations
The Full Federal Court has unanimously allowed the Commissioner’s appeal, holding that a car park does not require an intention to make, or to be aimed at, a profit-marking purpose to be a “commercial parking station”.
The issue at hand was whether the car parking facilities provided at the Grand Central Toowoomba Shopping Centre (Grand Central Car Park) (being within one kilometre of the Council’s car park) was not a “commercial parking station” so as to engage one of the necessary integers of s 39A of the Fringe Benefits Tax Assessment Act 1986 for there to be a car parking benefit. A “commercial parking station” the Council argued, and was accepted by the primary judge, were facilities confined to those that do or are capable of generating a profit.
The Full Federal Court found that to be “commercial” means to be engaged in or in the nature of commerce. On the plain drafting of the provisions what is or is not a commercial parking station is a matter of objective determination. Parliament manifested an intention to widen the FBT net by focusing on any commercial parking station, not limited to profitable operations.
Shell Energy Holdings Australia Limited v Commissioner of Taxation [2026] FCA 577- control premium for shareholding allowed in share cost base
The Federal Court has allowed the taxpayer’s appeal holding that its capital gain from the sale of shares in a company (WPL) was based on a cost base of $11.12 per share, representing a premium of 18% to the closing listed price of WPL shares on 20 January 1997.
The issue in dispute was the cost base of the taxpayer’s shares in WPL. In particular, whether the taxpayer entitled to claim as part of the cost base under former s 160ZZSC(1) a premium over the volume weighted average price (VWAP) of WPL shares on 20 January 1997. The premium reflected the significant influence which the WPL shareholding conferred to the taxpayer, given that it comprised 34.27% of WPL shares.
The Federal Court found that former s 160ZZSC(1) of the ITAA 1936 created a statutory fiction that deemed the taxpayer to have acquired each share in WPL on 20 January 1997 for a consideration equal to the market value of each of those shares on that day. The market value is based on a deemed simultaneous acquisition of each share comprised in the entirety of the taxpayer’s shares in WPL on 20 January 1997. The Federal Court also accepted the taxpayer’s expert evidence about the market value of the shares in determining the market value of each share on 20 January 1997 as $11.12.
Cases 2026
Commissioner of Taxation v Hall [2026] FCAFC 43 – Occupancy and car expenses denied
The Full Federal Court has allowed the Commissioner’s appeal, holding that occupancy and car expenses incurred by the taxpayer during COVID were not deductible.
The taxpayer lived in a 2 bedroom unit in Melbourne. During COVID, his role at the ABC required him to generally work from home 75% of the time in the afternoon and 25% at his Southbank workplace in the evening.
The Court found the Administrative Review Tribunal (ART) had erroneously treated a singular amount of rent paid for a two-bedroom apartment as two outgoings: an outgoing for a one-bedroom apartment and “additional expenditure” for the second bedroom the taxpayer used exclusively for work. It permitted the ART to conclude that the “additional expenditure” was not “purely of a private or domestic nature, rather it was for the purposes of gaining his assessable income”.
In considering the rent as a singular outgoing, the mere use of a room in a home for work purposes did not, of itself, transform an otherwise private or domestic expense into a deductible one. The determinative inquiry remains the essential character of the expenditure, assessed by reference to what the expense secures, not how the secured room is used. The essential character of the expenditure was rent paid to secure domestic accommodation. While the prevailing conditions required the respondent to work from home, this necessity did not alter the essential character of the expense. The expenditure was still rent for domestic accommodation in its essential character.
Regarding the car expenses, the taxpayer’s commute to Southbank was travel “to” perform income producing activities, not travel “in” performing income producing activities. The work performed by the taxpayer at his home was “quite distinct” to the work performed by him at the Southbank workplace. The respondent ceased income producing activities when he stopped performing work at home and commenced different income producing activities upon starting work at Southbank.
SEPL Pty Ltd as trustee of the SFT Trust v Commissioner of Taxation [2026] FCAFC 36 – Beneficiaries performing business functions not employees
The Full Federal Court unanimously allowed the taxpayer’s appeal, holding that three brothers were not employees of the taxpayer and that the luxury cars provided to them was done so in their capacity as beneficiaries, not in respect of employment.
The Court found that s 137 of the FBT Act 1986 does not deem beneficiaries performing functions for a company to be employees whenever they receive non cash benefits. It was necessary to determine whether each brother would have received a hypothetical cash payment “as an employee” within the meaning of s 12-35 of Sch 1 of the TAA 1953, which necessarily required recourse to the ordinary (common law) meaning of “employee”.
Having regard to the evidence, it was open to conclude that the benefit arose because of the brothers’ relationship to the taxpayer and not because of any relationship of employment.
Commissioner of Taxation v Morton [2026] FCAFC 31 – Agency not relevant to determining existence of business or profit-making plan
In this case, the Full Federal Court unanimously dismissed the Commissioner’s appeal, holding that the subdivision and sale of the taxpayer’s land was a mere realisation of a capital asset. The land was a pre-CGT asset, so no parts of the proceeds of the sale were assessable income to the taxpayer.
The Commissioner contended that the taxpayer appointed a developer to carry out the development “on behalf” of the taxpayer as his agent and that the taxpayer therefore ventured the land to a business venture or to a profit-making undertaking or plan.
The Court rejected the Commissioner’s contention, finding that the relevant questions regarded whether the taxpayer carried on a business in developing, subdividing and selling the land, and whether the proceeds arose from carrying out a profit-making plan.
In addressing these questions, the Court largely agreed with the reasons of the primary judge. In particular, the primary judge found that the taxpayer did not acquire the land with an intention of profiting from its sale, the decision to engage property developers was prompted by external changes that brought an end to the viability of the taxpayer’s farming business, and the taxpayer continued to farm the land after it was rezoned. The taxpayer played little active role in the land development and was not involved in obtaining finance for the development.
Tabcorp Maxgaming Holdings Limited v Commissioner of Taxation [2026] FCAFC 30 – Taxpayer did not have a financial arrangement
The Full Federal Court has unanimously dismissed the taxpayer’s appeal, holding the taxpayer did not have a financial arrangement upon the expiry of its gaming operator’s licence. The taxpayer did not have a “cash settlable legal or equitable right to receive a financial benefit” within the s 230-45(1) of the ITAA 1997 meaning of “financial arrangement”, even taking into account s 230-85(a) of the ITAA 1997. Section 230-85(a) provides that “a right is treated as a right for the purposes of this Division even if it is subject to a contingency”.
The taxpayer claimed a deduction for a loss under Div 230 of the ITAA 1997 from a “financial arrangement” which was said to have come into existence on the expiry of its gaming licence at midnight on 15 August 2012 and ceased six months later. The “financial arrangement” is said to have comprised a contingent right to a terminal payment from the State of Victoria arising from an agreement made with the State in 1995 and / or the provisions of the Gambling Regulation Act 2003 (Vic).
The Court found that at 16 August 2012 (and during the next six months), no amount could or would be payable because no new gaming operator’s licence under the Gaming Machine Control Act 1991 (Vic) or Gambling Regulation Act 2003 (Vic) could or would be issued. As at 16 August 2012, Gambling Regulation Act 2003 (Vic) prohibited the issue of a new gaming operator’s licence to anyone. Further, it found a right that is subject to a condition that has no real possibility of being satisfied is not a right that is subject to a “contingency” within the meaning of s 230-85.
Brisbane Club v Commissioner of Taxation [2026] FCA 220 – Building not a separate CGT asset from pre-CGT land
The Federal Court has allowed the taxpayer’s appeal in part, holding the capital gain from the disposal of the building was to be disregarded as it was a pre-CGT asset but the relevant subleases acquired by the taxpayer were post CGT assets and thus the capital gain from their CGT event were subject to CGT.
The issues at hand were whether:
(1) section 108-55(2)(a) of the ITAA 1997 applied to separate the building sold by the taxpayer from land (which was acquired prior to 20 September 1985) for CGT purposes
(2) two subleases acquired by the taxpayer were pre-CGT assets.
The Federal Court held that:
(1) the development deed entered into on 8 May 1985 was the relevant contract to construct the building, and not the Building Agreement (which was subject to the provisions of the Deed) entered into on 10 January 1986. Therefore the building was a pre-CGT asset and section 108-55(2)(a) did not apply.
(2) two subleases owned by the taxpayer were granted on 18 June 1986 and were therefore post-CGT assets.
Aitken v Commissioner of Taxation [2026] FCAFC 18 - exercise of put option was a CGT event
The Full Federal Court has dismissed the taxpayer’s appeal from the decision in Aitken v Commissioner of Taxation [2025] FCA 372.
The issue at hand was whether there was one or more CGT events that occurred in relation to the taxpayer’s forestry interests under s 394-25(1)(c) of the ITAA 1997, being the exercise of a put option which reduced the market value of the taxpayer’s forestry interests, and the disposal of the appellant’s forestry interests by way of a novation deed.
The Full Federal Court found that the exercise of the put option was a CGT event that happened in relation to the forestry interests under s 394-25(1)(c) which, together with the novation of the forestry interests, meant there were two CGT events. The existence of the put option, and the fact that all investors in the project held put options in relation to their forestry interests on the same terms was material for the purposes of determining the market value of the appellant’s forestry interests. The exercise of the put option decreased the market value of the taxpayer’s forestry interests.
Commissioner of Taxation v Shaw [2026] FCA 197 – Trucker not required to fully substantiate meal expense deductions
The Federal Court has dismissed the Commissioner’s appeal holding that the taxpayer was able to claim a deduction for his meal expenses.
In this case, the taxpayer was a long-haul truck driver who had been paid travel allowances and claimed a deduction for meal expenses of $32,782.50 in the 2021 income year. The claimed amount was less than the amount he actually spent and not more than the maximum reasonable daily allowance in TD 2020/5.
At first instance, the Administrative Reviews Tribunal (ART) held the taxpayer did not have to substantiate his deductions since he claimed less than the maximum reasonable daily allowance either under s 900-50 of the Income Tax Assessment Act 1997 (ITAA 1997), or s 900-200 of the ITAA 1997 and TR 2004/6. Further, the ART held the taxpayer incurred the expenses based on evidence he provided including bank statements.
On appeal, the Federal Court confirmed that s 900-200 only provided relief from the substantiation requirements; the taxpayer still needed prove the claimed amounts were incurred. The Court also considered whether the deduction had to be apportioned for the small amounts that bank statements revealed could have included household expenditure. It also considered whether the ART reversed the onus of proof which meant the Commissioner had to prove the meal expenses were not deductible by pursuing certain ‘areas of investigation’.
The Federal Court upheld the ART’s finding that the taxpayer provided a considerable amount of evidence about the way in which the meal costs were incurred and this supported the conclusion the bank statement amounts were linked to the meal expenditure. It was not necessary to undertake some form of precise apportionment of the bank statement amounts between meal expenditure and the small amounts which could be household expenditure. The Federal Court also found that there was no reversal of the onus of proof of the kind alleged.
Commissioner of Taxation v Baya Casal [2026] FCAFC 11 – Employee genuinely made redundant
The Full Federal Court has unanimously dismissed the Commissioner’s appeal holding that the taxpayer was genuinely made redundant.
The issue was whether the taxpayer’s position was genuinely redundant after a restructure left her with only alternative roles that involved similar duties but significantly reduced hours and pay, or a redundancy payment.
The Court held that the Commissioner’s approach erroneously focused too narrowly on the specific tasks an employee performs. Rather, the circumstances in which a reduction in remuneration may support a conclusion that a position has become redundant include where the reduction in remuneration results from a change to the scope of the responsibilities or duties to be performed, the scale of the tasks to be carried out or the location of the role. The issue of redundancy is a matter of fact and degree and in this case, the scope and scale of taxpayer’s role were significantly diminished.
Commissioner of Taxation v S.N.A Group Pty Ltd [2026] FCAFC 10 – intragroup service fee payments non-deductible
The Full Federal Court has allowed the Commissioner’s appeal holding that the taxpayers could not claim a deduction for service fee payments within a corporate group.
The taxpayers were two entities within a corporate group. After a restructure, each taxpayer entered into written agreements under which they paid service fees to other trusts within the group for use of the assets of the trusts. After the agreements came to an end, the taxpayers continued to use the trust assets and to make certain payments to the trustees. The matter before the Court was whether the taxpayers entered into inferred contracts with the trusts for use of trust assets upon payment of a fair and reasonable fee in each relevant year.
The Court held that there was insufficient evidence of an objective manifestation of mutual assent of the taxpayers and the trustees to contract on terms by which the taxpayers were liable to pay a fair and reasonable fee for use of the trust assets.
