Tax Alert - ATO appeals to High Court in the Bendel Case decision
Lowe Lippmann Chartered Accountants
ATO appeals to High Court in the Bendel Case decision
The Australian Taxation Office (ATO) has now applied to the High Court for special leave to appeal the Full Federal Court’s decision in FCT v Bendel [2025] FCAFC 15.
Last month, we released a Tax Alert (see here) after the Federal Court delivered their unanimous decision that an unpaid present entitlement (or UPE) owed by a discretionary trust to a corporate beneficiary is not a “loan” for Division 7A purposes.
The ATO has also issued an Interim Decision Impact Statement (DIS) in response to the Full Federal Court decision. A DIS provides information for taxpayers and advisers, and includes: details of the case, a brief summary of facts, issues decided by the court or tribunal, and relevant legislation and case law.
What is the ATO’s current view?
The ATO view can be summarised as follows:
- Will continue to administer the tax rules in their current form (ie. treating UPEs as loans for Division 7A purposes) until the outcome of the appeal process is known.
- Will hold off processing amendments, private rulings and objections relating to this issue until the appeal process is finalised.
- Regardless of the new interpretation by the Full Federal Court, the reimbursement agreement rules in section 100A will continue to be considered, and this decision does not change the potential for exposure to Subdivision EA (ie. a trust makes a UPE to corporate beneficiary, and then the trust makes a payment or loan, to the shareholders or associates of the corporate beneficiary).
What can we do now?
Unfortunately, the way forward in the short term is unclear until we see how the appeal process moves to, and through, the High Court.
Again, there is an element of having to “wait and see” what happens next. We will continue to keep you updated on all future developments.
Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.
Liability limited by a scheme approved under Professional Standards Legislation
ATO to continue accepting credit cards until 30 June 2027, but the clock it still ticking Last month, in our Practice Update for October 2026 ( see here ), we noted the Australian Tax Office ( ATO ) announced it will stop accepting credit cards as a payment method after 30 November 2026, following the Reserve Bank of Australia’s ( RBA ) ban on card surcharges from 1 October 2026. The ATO has since confirmed that it will continue to accept credit card payments for tax obligations until 30 June 2027 . After 30 June 2027, taxpayers who wish to continue using a credit card to meet their tax obligations may continue to use third-party payment providers as outlined at www.ato.gov.au/howtopay What do these change mean for you? The extension does not cancel the planned withdrawal of direct credit card payments. From 1 July 2027, you will need to use another method to pay the ATO directly. Available alternatives include: Debit card BPAY Bank transfer Direct debit Payment at Australia Post (where available) International money transfer services (where applicable) Some third-party payment providers may continue to offer ways to pay tax using a credit card after the deadline. However, these services may charge additional fees and take longer to process payments. Check the total cost, processing time and payment conditions before relying on one. Why does your payment method matter? Credit cards can help bridge short-term cash-flow gaps, but the convenience comes at a cost. Interest, annual fees and other charges can erode the benefit, particularly if you regularly carry a balance. There is also a risk that a payment will not be processed in time, potentially leaving you with an overdue tax liability and additional interest. Switching to BPAY, bank transfer or direct debit may provide a simpler and more predictable way to manage tax payments. The right option will depend on your circumstances, including when funds are available in your business account and whether you need to retain flexibility over payment dates. Pay particular attention if you have an existing ATO payment plan linked to a credit card. The ATO has been contacting affected taxpayers, but you should check your own arrangements rather than assume they will continue unchanged. Confirm how future instalments will be paid and allow enough time to update the payment method before the deadline. What should you do now? Use the extended timeframe to prepare rather than leaving the change until the last minute. Review your current arrangements. Check whether you use a credit card for one-off tax payments, regular instalments or an ATO payment plan. Choose an alternative. Consider which payment method best suits your cash-flow cycle, taking account of fees and processing times. Update recurring payments early. Make sure any new arrangements are in place well before 30 June 2027 and check that payments are processed successfully. Review your cash flow. If you rely on the credit card interest-free period to manage tax liabilities, consider whether you need to set aside funds earlier or adjust your payment planning. Seek advice if needed. If tax payments are putting pressure on your cash flow, speak with us early so we can help you review your position and consider practical ways to manage upcoming liabilities. The extension to 30 June 2027 gives businesses more time to adjust, but it should not be mistaken for a permanent reprieve. Planning ahead can help you avoid unnecessary fees, missed payments and last-minute disruption when the ATO’s direct credit card facility closes.
ATO to stop accepting credit cards as payment method after 30 November 2026 The Australian Tax Office ( ATO ) has announced it will stop accepting credit cards as a payment method after 30 November 2026. The move follows after the Reserve Bank of Australia’s ( RBA ) Review of Merchant Card Payment Costs and Surcharging, where the RBA concluded that “it is in the public interest” to scrap surcharging for all designated card networks from 1 October 2026 (including EFTPOS, Mastercard, and Visa). It said that as a government agency, the ATO has decided it would not be appropriate for the cost of credit card merchant fees to be transferred to the community. The ATO recognises that some taxpayers currently rely on credit card payments to manage their tax payments and understands this change may require some adjustments. The ATO is writing directly to those who currently have a payment plan linked to a credit card to explain the changes and outlining the steps they need to take. There are alternative payment options available for taxpayers, including direct deposit, direct debit from a debit card, direct debit from an Australian cheque or savings account, Government EasyPay, in person at Australia Post, by mail, or international money remitter. The ATO said it is committed to helping taxpayers transition to alternative payment methods and will continue to support those experiencing financial hardship or other circumstances that make it difficult to meet their obligations. Alternative payment options for taxpayers are outlined at www.ato.gov.au/howtopay Taxpayers who need extra support are encouraged to visit www.ato.gov.au/supporttolodgeandpay , contact the ATO on 13 11 42 during business hours or speak with their registered tax professional.
Yesterday, Treasurer Jim Chalmers released draft legislation to implement the key components of the 30% minimum trust tax on discretionary trusts announced in the Federal Budget during May 2026.
