The ATO Lost, Won, and Sent an Invoice

Tax cases are often presented as victories for a side. Their greater value is usually narrower: they show which words, documents and facts did the work. The result rarely authorises the nearest vaguely similar arrangement.

PepsiCo: follow the legal payment

In Commissioner of Taxation v PepsiCo Inc [2025] HCA 30, the High Court considered royalty withholding tax and diverted profits tax in bottling arrangements involving intellectual property and concentrate payments. The judgments focus on the agreements, payment obligations, derivation and reasonable alternative postulates. The case is a warning against assuming that commercial integration itself identifies the legal recipient or character of a payment.

Bendel: one provision, large consequences

The Bendel litigation concerned whether an unpaid present entitlement owed by a trust to a private company amounted to financial accommodation and therefore a Division 7A loan. The dispute exposed tension between the statutory text and the ATO’s administrative position. Taxpayers should not reduce it to ‘UPEs are safe’ or ‘nothing changed’; the arrangement date, appellate status, TD 2022/11 and other Division 7A steps remain essential.

Super decisions: market terms are not a universal solvent

Aussiegolfa and later ATO commentary considered in-house assets and the sole-purpose test where an SMSF investment ultimately involved premises leased to a member’s relative. Market rent was relevant, but the ATO stressed that each case depends on the whole arrangement and that market value alone does not make every related-party benefit compliant.

Three practical lessons

First, read the contract and trace the payment. Second, identify the exact statutory element in dispute. Third, check what the court did not decide. A case summary is a research starting point, not a tax opinion with the names changed.