Australia: Related-party payments not deductible because no legally enforceable contract (Full Federal Court decision)
Taxpayer must demonstrate enforceable obligation to pay.
The Full Federal Court recently held in Commissioner of Taxation v S.N.A Group Pty Ltd [2026] FCAFC 10 that payments between related parties under purported license agreements for the use of intellectual property, rent rolls, and human capital, were not deductible because the license agreements were not legally enforceable contracts.
The court stressed that payments between related entities will not be deductible unless the taxpayer can demonstrate, through objective evidence, a real, enforceable obligation to pay, supported by objective evidence of agreement and consistent conduct.
For more information, contact a KPMG tax professional in Australia:
Kristie Schubert | kschubert3@kpmg.com.au
Marko Trifunovski | mtrifunovski@kpmg.com.au