ATO’s view on payments made to employees under deferred bonus plans

An ATO private binding ruling illustrates why the terms of any employee incentive plans need to be carefully considered, including in relation to the deductibility of any payments made under the plan, as detailed by Stacey Hannam and Mitchell Bird.

The Australian Taxation Office (ATO) recently released a private binding ruling (PBR) (authorisation number 1052302976514), on 29 November 2024, in relation to the income tax treatment of bonus payments made to members of a senior management team as part of a sale transaction. Relying heavily of the reasoning of the Full Federal Court in Clough v Commissioner of Taxation [2021] FCAFC 197, the ATO concluded that the payments were not immediately deductible under section 8-1 of the Income Tax ...

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Authors: Stacey Hannam, Mitchell Bird

Published Date: 28 February 2025