This article provides an update on key developments in taxation law for accountants and participants in the tax advice industry up to early April. This update in summary covers:
- 4 year Imprisonment for Taxpayer who obtained $2.4m in GST refunds;
- Denial of Primary Production Exemption in Section 67 of the Land Tax Act 2005; and
- Federal Court Decision on Non-Binding Death Benefit Nomination in estranged family situation.
1 - 4 Year Imprisonment for taxpayer who fraudulently obtained $2.4m in GST refunds
A Victorian man has been jailed for fraudulently obtaining $2.4m in GST refunds for his plumbing business as part of the ATO's Operation Protego. Practitioners may remember the TikTok tax scam where influencers on social media convinced viewers that they could create a fake business to submit false BAS statements to gain a GST refund. This resulted in $1.7 billion in losses to the government.
The taxpayer had lodged around 30 business activity statements claiming $30 million worth of purchases spending the refund on various luxury items. As a result, he received a sentence of 4 years and 7 months imprisonment.
Further as at 28 February 2025 and as part of Operation Protego:
- 104 people have been arrested
- 98 people have been convicted; and
- The ATO has finalised 61 investigations, referring 51 briefs to the Commonwealth Director of Public Prosecutions.
2 - Australian Investment & Development Pty Ltd v Commissioner of State Revenue [2025] VSCA 47 - Primary Production Exemption Denied
This case concerned whether the primary production exemption found in section 67 of the Land Tax Act 2005 (Vic) applied in respect of land the taxpayer owned at Diggers Rest.
The taxpayer claimed that the exemption applied on the basis it was located wholly in greater Melbourne, wholly in an urban zone and given it was primarily used for the cultivation of cassinia trees, it was used for the business of primary production.
The cassinia trees that grew naturally on the land were used mainly to remedy the high salinity content of the soil which were identified by experts in 2007. The experts were initially consulted by the taxpayer in regard to the development of the land for residential premises. The taxpayer had obtained planning permissions for a multi-lot staged development of the land with several planning applications obtained for the subdivision of the land. Further, a business name was registered. In addition to this, the Court also found that another use for the land was for the agistment of animals.
Croft J at trial held that while there were certainly a number of purposes of the land, which included the cultivation of cassinia trees, the agistment of animals and the proposed development of the land, the cultivation of cassinia was not the primary use of the land and therefore the exemption did not apply.
The Victorian Court of Appeal rejected the taxpayer's claims that Croft J erred by making a " wholesale unattributed copy" of the Commissioner's closing submissions, that they were inconsistent and that Croft J had erred in applying a number of decisions which the taxpayer relied upon.
3 - Lynn v Australian Financial Complaints Authority [2025] FCA 175 - Issues of not having a Binding Death Nomination in Place
This Federal Court decision highlights the issues with not having a binding death nomination in place. Mr L, deceased at 51 in 2021, was legally married to Ms L. She was an eligible beneficiary of the deceased's superannuation death benefit which amounted to $171,300. However, Mr L had a non-binding death benefit nomination in place in favour of his 6 children in equal shares. Mr L also had in place a will which left his entire estate to Ms L.
The evidence showed that Mr and Ms L were estranged for a number of years but were still legally married. Interestingly, prior to his death, Mr L had emailed his lawyers to prepare a new will in favour of his 4 daughters as equal beneficiaries and around this time had obtained an interim Violence Restraining Order against Ms L. At Mr L's death, the trustee paid 100% of the death benefit to Ms L due to her financial dependency following her objection to the trustee's decision to pay all of it to the LPR of Mr L's estate.
After a complaint by the children, AFCA determined that 50% of the death benefit should be paid to Ms L with the balance to the children in equal proportions. Ms L appealed this.
The Court found that AFCA had applied the provisions under the Trust Deed and Superannuation Industry (Supervision) Act 1993 correctly by identifying all the dependants and expectations of financial support.
This decision highlights the issues found in not having a binding death benefit nomination in place where family members are estranged. A superfund is legally obliged to follow a binding death benefit nomination whereas in a non-binding version, the superfund is allowed to use its discretion in deciding which beneficiaries will be paid the death benefit. This is needlessly complicated in circumstances where members of families are estranged which would lead to drawn out disputes such as this one which took 3 years to resolve through the Federal Court decision.
Should you wish to discuss the above, please contact Tony Pointon and Andrew Pointon of our Taxation Team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
