In this edition of Andersen in Australia’s Monthly Tax Update, we provide recent legislative updates and outline the latest developments in the areas of corporate tax, individual tax, indirect tax and international tax. We also examine the ATO’s recent activities, publications, rulings and other guidelines and discuss the latest Australian tax cases.

Key Sections

Legislation Updates

Loss carry-back and IAWO tax reform Bill now law

The Treasury Laws Amendment (Tax Reform No 2) Act 2026 has received Royal Assent on 26 August 2026, becoming Act No 71 of 2026.

The Act introduces four key measures:

• a loss carry-back tax offset;
• a permanent $20,000 small business instant asset write-off (IAWO) threshold;
• an income tax exemption for employment income earned with PNG Chiefs Limited; and
• amendments to the tax treatment of certain residential property interests transferred following inheritance or relationship breakdown.

The property amendments allow a person who acquires an ownership interest in a residential dwelling from a spouse, former spouse or co-owner in specified circumstances to retain the negative gearing treatment that applied to the interest before its transfer.

They also allow a person acquiring an interest in a new residential dwelling through inheritance or relationship breakdown to choose between CGT discount treatment or cost-base indexation, together with the minimum tax on capital gains.

The amendments also preserve specified exceptions to the general loss-quarantining rules for certain main residences acquired before the 2026–27 Budget Night and new residential dwellings that are subsequently used to produce assessable income.

The government amendments did not change the original loss carry-back, $20,000 IAWO or PNG Chiefs Limited measures. The four measures commence on 1 October 2026, although their application dates differ.

Bill to increase penalties for illicit tobacco offences now law

The Combatting Illicit Tobacco Act 2026 received Royal Assent on 26 August 2026, becoming Act No 82 of 2026. The Act expands law enforcement powers and increases penalties and other consequences for offences involving illicit tobacco.

Schedule 1 increases penalties under the Customs Act 1901, Excise Act 1901 and Taxation Administration Act 1953 for offences involving the importation, possession, purchase, sale, supply, manufacture and production of illicit tobacco.

Key amendments include:

• increased penalties for importing, moving or possessing tobacco in circumstances involving an intention to defraud the revenue;
• increased penalties for fault-based and strict liability offences involving the dealing, manufacture, storage and production of illicit tobacco;
• increased penalties for offences involving counterfeit tobacco bale labels and infringement notices;
• increased penalties for possessing, selling or purchasing specified quantities of tobacco on which customs or excise duty has not been paid;
• extending offences relating to the sale of illicit tobacco to also cover its supply;
• introducing a new 10 kg or more threshold for certain reasonable-suspicion and fault-based offences;
• increased penalties for possessing equipment used in the illegal manufacture or production of tobacco; and
• an increased civil penalty for possessing tobacco without the required documentation.

Consequential amendments have also been made to the Taxation Administration Regulations 2017.

Schedule 1 commenced on 27 August 2026, the day after Royal Assent.

Other Legislation Update

Draft legislation released: 30% minimum tax on discretionary trusts

The Government has released exposure draft legislation introducing a proposed 30% minimum tax on certain discretionary trusts, commencing from 1 July 2028. The measure, first announced in the 2026–27 Federal Budget, includes proposed three-year rollover relief from 1 July 2027 for taxpayers seeking to restructure from a discretionary trust into another structure, such as a company or fixed trust.

For what these proposals could mean for family groups, read our analysis of the proposed family trust changes.

The minimum tax will not apply to certain trusts, including:

• charitable trusts;
• complying superannuation funds;
• special disability trusts;
• deceased estates; and
• discretionary testamentary trusts established for genuine testamentary purposes.

Certain income, including primary production income and specified income relating to vulnerable minors, will also be excluded.

Importantly, the draft legislation introduces a new election regime for discretionary trusts existing at 1 July 2028. Trustees may elect to remain outside the minimum tax regime by committing to make fixed distributions to nominated beneficiaries. This provides an alternative to restructuring and may help taxpayers avoid associated costs, including potential state transfer duties.

There is no limit on the number of beneficiaries that can initially be nominated. However, changes are generally restricted to circumstances involving the death of a nominated beneficiary or a family breakdown.

The election may be revoked and will be automatically revoked if distributions are made inconsistently with the election.

Following revocation, the trustee may be subject to tax at the highest marginal rate plus Medicare levy, with the minimum tax applying to subsequent income years.

Four draft Bills have been released covering:

• the core minimum tax rules, including new concepts of “minimum tax trust” and “fixed trust” (Draft Treasury Laws Amendment Bill 2026: Minimum tax on discretionary trusts);
• the 30% minimum tax rate (Draft Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026);
• proposed 3-year rollover relief (Draft Treasury Laws Amendment Bill 2026: Minimum tax on discretionary trusts — roll-over relief); and
• the new election regime (Draft Treasury Laws Amendment Bill 2026: minimum tax on discretionary trusts – electable regime).

The draft legislation also provides for exclusions for distributions to certain tax-exempt entities and addresses the treatment of excess franking credits.

Submissions on the draft legislation and explanatory material close on 18 September 2026.

Feedback is sought on:

• the operation of the minimum tax;
• excluded trusts and categories of income;
• the proposed definition of fixed trust;
• the treatment of income tax-exempt entities;
• the proposed rollover relief;
• the new election regime; and
• the treatment of excess franking credits.

The draft legislation does not address the treatment of unpaid present entitlements (UPEs). The Government has indicated that these amendments will be progressed separately.

Waiver of GST adjustment note requirement for reverse-charged supplies extended

The waiver of the requirement for recipients to hold an adjustment note for certain decreasing GST adjustments relating to reverse-charged supplies will continue.

Under s 83-5 of the GST Act, the liability to pay GST on certain supplies is shifted from a non-resident supplier to the recipient. As recipients may have difficulty obtaining adjustment notes from non-resident suppliers, the Commissioner has waived the usual adjustment note requirement in these circumstances.

The A New Tax System (Goods and Services Tax) (Waiver of Adjustment Note Requirement – Reverse Charged Supplies) Determination 2026 waives the requirement for a recipient to hold an adjustment note when claiming a decreasing adjustment relating to a reverse-charged supply to which s 83-5 applies.

The determination repeals and replaces the 2016 instrument, which was due to sunset on 1 October 2026, and has the same substantive effect. No substantive changes were made between the draft and final determination.

The determination commences the day after its registration on the Federal Register of Legislation.

New AI practice direction in the Administrative Review Tribunal

The Administrative Review Tribunal has introduced a new Practice Direction governing the use of generative AI in Tribunal proceedings. The  Administrative Review Tribunal (Use of Generative AI) Practice Direction 2026 (Practice Direction) commenced on 20 August 2026 and applies to all Tribunal matters, including existing proceedings.

The Practice Direction permits lawyers, parties, experts and self-represented litigants to use generative AI, subject to safeguards designed to protect the integrity of proceedings, accuracy of evidence and confidentiality. It broadly aligns the Tribunal’s approach with the Federal Court’s practice direction on generative AI.

Users remain responsible for any AI-assisted material filed with the Tribunal. They must understand the risks of AI, independently verify its output and be able to explain how AI was used and its output checked. AI must not be relied upon to verify its own work.

The Practice Direction highlights the risk of AI generating fictitious authorities, incorrect citations, inaccurate legal analysis and factual errors. Particular care is required for witness statements, statutory declarations and expert reports: AI must not be used to fabricate, alter or embellish a person’s evidence, and expert reports must reflect the expert’s own reasoning and conclusions.

Disclosure may also be required where AI has materially affected evidence or other information relied upon by the Tribunal.

The Tribunal has emphasised the need to protect confidential, private and privileged information, warning against entering such material into publicly available AI systems unless this is lawful and authorised.

Non-compliance may result in the Tribunal requiring material to be corrected, replaced or withdrawn, giving it less weight or declining to rely on it. In appropriate cases, conduct by legal representatives may also be referred to the relevant professional regulator.

Third party reporting on real properties by states and territories

An instrument has been registered to change the reporting period for certain third-party reporting obligations of state and territory authorities concerning transfers of real property.

The Taxation Administration (Change of Reporting Period for Third Party Reports on Real Property Transfers) Legislative Instrument 2026 changes the reporting period under item 3 of s 396-55 of Sch 1 to the Taxation Administration Act 1953 from a financial year to four quarterly periods. The relevant periods are the three months ending 30 September, 31 December, 31 March and 30 June.

The instrument has the same substantive effect as the previous 2016 determination, which has been repealed ahead of its scheduled sunset on 1 October 2026.

OECD Updates

OECD releases annual report on Tax Policy Reforms

The OECD has released its annual report on tax policy reforms, outlining measures introduced or announced in 2025 across 92 jurisdictions and highlighting key developments and trends in country tax policy.

The report highlights significant divergence in tax policy approaches across jurisdictions, reflecting differing economic conditions and national priorities. Many countries continued to provide targeted relief to households facing cost-of-living pressures, while several introduced measures aimed at attracting and retaining high-skilled workers, high-net-worth individuals and nationals living abroad.

Social security contribution reforms also continued to broaden tax bases and increase rates in a number of jurisdictions, driven in part by demographic pressures and the rising cost of social protection systems.

Corporate income tax (CIT) reforms remained focused on supporting investment and competitiveness. The average combined CIT rate was broadly unchanged for the third consecutive year, while governments continued to introduce targeted incentives for research and development, artificial intelligence, defence and other strategically important sectors. At the same time, higher taxes on financial institutions and other highly profitable sectors became increasingly common, often through temporary surtaxes or excess profit taxes.

Value-added tax (VAT) reforms continued to respond to the growth of the digital economy, including measures extending VAT obligations to non-resident suppliers and online platforms. Health-related taxes were among the most common revenue-raising measures introduced in 2025, particularly increases in taxes on cigarettes and newer tobacco and nicotine products.

Several jurisdictions also increased carbon taxes or expanded carbon pricing mechanisms, while others reduced taxes on fuel or electricity to help mitigate cost pressures for households and businesses.

The report provides a useful overview of the evolving global tax landscape and the policy priorities shaping tax reform across jurisdictions.

For further information, please refer here.

Other Updates

Tax Ombudsman’s 2027–30 Corporate Plan

The Tax Ombudsman has released its 2027–30 Corporate Plan, setting out its strategic priorities for the next four years.

The Ombudsman, which oversees the ATO and Tax Practitioners Board (TPB) and assists in resolving complaints from taxpayers and tax practitioners, will focus on improving customer service and making its services more accessible and efficient. This includes working with the ATO and TPB to improve the end-to-end customer experience.

The Ombudsman also plans to strengthen its role as an independent adviser to government on tax administration. It will monitor emerging issues through publications, consultations, stakeholder engagement and online discussions, and publish regular analysis of complaint themes.

The plan also aims to increase ATO accountability. While the ATO agreed to 97% of the Ombudsman’s recommended improvements in the previous year, the Ombudsman intends to publicly explain cases where the ATO disagrees with its recommendations.

The corporate plan also updates key performance indicators to reflect the significant increase in complaints received over the past year.

For further information, please refer here.

Tax Ombudsman to review director penalty regime

The Tax Ombudsman will undertake a systemic review of the director penalty regime, which can make company directors personally liable for unpaid tax and superannuation guarantee charge amounts.

The regime allows the ATO to issue Director Penalty Notices (DPNs) to recover certain company tax debts from directors, including in some circumstances where the individual is no longer a director. The ATO issued more than 84,000 DPNs in 2024–25, highlighting the increasing use of the regime as a compliance tool.

The proposed review by the ombudsman will consider whether the regime strikes an appropriate balance between protecting public revenue and employee entitlements and fairly treating affected directors.

Particular attention will be given to:

• the ATO’s selection of cases for DPNs;
• the adequacy and clarity of ATO communications;
• how the circumstances of affected directors are considered;
• consistency in the ATO’s treatment of directors;
• safeguards where companies become insolvent or are restructured;
• circumstances involving coerced directorships or financial abuse; and
• the impact of the regime on small businesses.

Company directors, advisers, tax professionals and community organisations are invited to contribute through webinars, surveys or written submissions.

Submissions close on 29 September 2026, with the Ombudsman expected to report by April 2027.

• For further information, please refer to:
  
  Review: ATO’s administration of Director Penalty Notices
• Terms of reference: Review ATO’s administration of Director Penalty Notices

Tax Ombudsman seeks feedback on potential systemic reviews

The Tax Ombudsman is seeking community feedback on areas of the tax administration system that may benefit from systemic review and practical improvements.

Potential review topics include Tax Practitioners Board (TPB) sanctions and complaint handling, as well as a range of ATO administrative matters.

TPB administration

The Ombudsman is considering a review of the TPB’s management of complaints and alleged breaches of the Tax Agent Services Act 2009, including whether its processes support the appropriate, consistent and transparent management of complaints and the imposition of sanctions.

ATO administration

Potential areas for review include:

• Release from tax debts — how applications for release on serious hardship grounds are assessed.
• Consultation arrangements — whether the ATO’s consultation framework is effective and fit for purpose.
• Early release of superannuation — processes for compassionate release applications and measures to prevent inappropriate access.
• Deceased estates — clarity and consistency of ATO services, guidance and processes.
• Compromised accounts — whether the ATO’s management of compromised taxpayer accounts reflects principles of good administration, including accessibility and low compliance costs.
• First Home Super Saver Scheme — application processes, governance and the clarity of ATO guidance.
• Test case litigation program — its operations and governance, and whether it is achieving its intended community benefits.
• Unpaid superannuation notifications — management of existing employee notifications and the transition to processes under Payday Super.
• Research and Development Tax Incentive — whether administration is timely, consistent and proportionate.

The Ombudsman typically conducts four systemic reviews each year, but may undertake additional consultation where matters are considered important to the community.

For further information, please refer here.

ATO Rulings & Activity

ATO provides administrative relief from Local File reporting obligations

The ATO has finalised its guidance on when cross-border payments made under software arrangements will be treated as royalties and therefore subject to royalty withholding tax.

Taxation Ruling TR 2026/2 applies to cross-border payments made under a software intermediation arrangement by Australian residents or non-residents carrying on business through a permanent establishment in Australia.

In addition, the ATO has released draft Practical Compliance Guideline PCG 2026/D4, which outlines its compliance approach and risk assessment framework for software intermediation arrangements (refer below).

The Ruling confirms that the characterisation of payments under a software intermediation arrangement depends on the facts and circumstances of each case. Relevant considerations include the express and implied terms of agreements between the parties and the parties’ conduct. Valuation evidence and the identification of the monetary and non-monetary undertakings arising under the agreements may also be relevant.

Under the standard tax treaty definition, a “royalty” is an amount paid “as consideration for” certain specified rights, property or information. According to TR 2026/2, a payment will be characterised as a royalty where it is made as consideration for:

• the grant of a right to use intellectual property (IP), regardless of whether that right is exercised
• the use of any IP right
• the supply of know-how
• the supply of assistance provided as a means of enabling the application or enjoyment of the above
• the right to use, or use of, any IP right in software embedded in tangible goods, and
• wholly or partly refraining from using or supplying any of the property or rights referred to above.

The following payments are not royalties:

• consideration solely for the grant of a right to distribute copies of a computer program made by the copyright holder, where the payment is not for the use of, or right to use, any IP rights
• consideration wholly for the assignment of all rights relating to the copyright in software
• a payment by a distributor that is consideration wholly for acquiring a tangible good containing embedded software, provided the distributor does not use, and is not granted the right to use, any IP right in the embedded software
• a payment by a distributor that is consideration wholly for acquiring physical media on which software is stored, provided the distributor does not use, and is not granted the right to use, any IP right in the software stored on that media
• consideration wholly for services that are unrelated to the right to use any copyright, patent, design or model, plan, secret formula or process, trademark or other similar property or right, and
• consideration wholly for services that are unrelated to scientific, technical, industrial or commercial knowledge or information.

Where a payment is consideration for multiple things, the amount may need to be apportioned to reflect the extent to which it constitutes a royalty.

The ruling was previously released in draft form as TR 2024/D1. The ATO has also issued a compendium addressing feedback received on the draft ruling.

Draft compliance guideline on cross-border software payments

The ATO has released its draft compliance approach for determining whether a cross-border payment made to a non-resident contains a royalty component and is therefore subject to royalty withholding tax.

Draft Practical Compliance Guideline PCG 2026/D4 provides a risk assessment framework for software intermediation arrangements and should be read together with Taxation Ruling TR 2026/2. The ruling sets out the ATO’s interpretative position on when payments made under software intermediation arrangements are subject to royalty withholding tax.

Broadly, taxpayers that align with the ATO’s position may fall within the white zone. An arrangement will fall within the white zone for an income year where any of the following apply:

• the taxpayer has a settlement agreement or advance pricing arrangement (APA) with the ATO that expressly covers the Australian withholding tax treatment of the arrangement for the relevant year, and the taxpayer has complied with its terms
• a court or tribunal has determined, in proceedings to which the taxpayer was a party, that a payment under the arrangement does or does not constitute a royalty, or
• the arrangement was reviewed or audited by the ATO during the income year and the taxpayer received a “low risk” rating in relation to the royalty risk.

Taxpayers that do not fall within the white zone will fall into one of four risk zones: green, yellow, amber or red.

An arrangement will fall within the red zone (high risk) where, under the arrangement:

• the taxpayer makes copies of, or modifies, software held by the offshore supplier, or has the right to do so or authorise others to do so, in the course of selling products or services to Australian customers
• the taxpayer has previously paid a royalty to the offshore supplier under the same or a similar agreement, or
• the recipient of the undissected payment is a tax resident of a specified jurisdiction, or has a branch in a specified jurisdiction to which the payment is made, and any of the following applies:
  • the recipient is subject to a preferential tax regime considered harmful by the OECD Forum on Harmful Tax Practices
  • the recipient benefits, or expects to benefit, from a tax holiday, exemption or concession that is likely to substantially shelter or reduce its tax liability
  • the recipient has access to research and development tax offsets or credits, deductible amortisation or depreciation relating to the intellectual property rights, or significant tax losses that are expected to substantially offset or shelter its income, or
  • the recipient is a foreign hybrid company under Division 830 of the ITAA 1997 and is a member of a tax consolidated group or multiple entry consolidated group, or is characterised differently for income tax purposes in two or more jurisdictions.

Where an arrangement falls within the red zone and is subject to an ATO review or audit, taxpayers can expect the ATO to require detailed and comprehensive information and documentation to assess the royalty risk. This may include information about the costs incurred by the offshore supplier in relation to the software.

Comments on the draft guideline can be submitted until 2 October 2026.

ATO provides administrative relief from Local File reporting obligations

The ATO has updated its guidance on country-by-country (CbC) reporting obligations, confirming that certain CbC reporting entities that are not required to lodge an income tax return may also qualify for administrative relief from local file reporting obligations.

An entity may be eligible for the relief where:

• it is not the only CbC reporting entity in its Australian CbC reporting group, whether as an entity or permanent establishment (PE);
• it maintains documentation demonstrating that it is not required to lodge an income tax return for the relevant income year; and
• it identifies the entity within its CbC reporting group that will meet the CbC report notification and master file lodgment obligations for the relevant reporting period, or confirms that the relevant entity is otherwise exempt.

Where an entity does not have a tax file number (TFN), it should also retain evidence demonstrating that it is not required to hold one.

The administrative relief is applied automatically, meaning an exemption request does not need to be submitted to the ATO. However, eligible entities should retain appropriate supporting documentation to substantiate their eligibility.

Failure to maintain adequate records may expose an entity to penalties if the ATO reviews its CbC reporting obligations. Accordingly, CbC reporting groups should review their Australian entities and PEs to determine whether the administrative relief applies and ensure the relevant supporting documentation is retained.

Draft guidance on the standard deduction for work-related expenses

The ATO has issued Draft Law Companion Ruling LCR 2026/D5, explaining how the new standard deduction for work-related expenses under s 25-130 of the ITAA 1997 will operate.

Broadly, eligible Australian tax-resident individuals who derive assessable labour income can claim a standard deduction of up to $1,000 per income year for work-related expenses without needing to substantiate those expenses. The measure is intended to reduce compliance costs. Taxpayers with genuine work-related expenses exceeding $1,000 can instead claim their actual expenses by substantiating them, in which case the standard deduction is reduced to nil.

The draft ruling explains:

• who is eligible for the standard deduction;
• how the deduction is calculated;
• which deductions reduce the standard deduction;
• which expenses can continue to be claimed separately; and
• how the measure interacts with the capital allowance and FBT rules.

The ruling is divided into three parts covering the application of the deduction to individuals, its interaction with the capital allowance rules in Div 40 of the ITAA 1997, and its interaction with the FBT rules for employers.

Comments are invited by 9 October 2026. If finalised, the ruling is proposed to apply from 1 July 2026.

ATO releases draft guidance on crypto assets

The ATO has released draft guidance on the income tax and CGT treatment of certain crypto asset transactions, covering airdrops and the wrapping and unwrapping of crypto assets.

Receipt and disposal of crypto assets by airdrop

Draft Taxation Ruling TR 2026/D1 outlines the tax consequences of issuing and receiving crypto assets through airdrops. Where a taxpayer carries on a business of crypto asset trading, the market value of airdropped crypto assets received is generally assessable as ordinary income under s 6-5. Similar treatment applies where the crypto asset is received in return for goods or services.

For taxpayers who are not carrying on a crypto asset trading business and who receive an airdrop outside an income-producing activity, the market value is generally not ordinary income. Instead, CGT event A1 occurs when the crypto asset is subsequently disposed of. The draft ruling also addresses the treatment of airdropped assets for issuers, valuation, and the distinction between hobby and business activities.

Comments on Draft TR 2026/D1 are due by 2 October 2026. If finalised, the ruling is proposed to generally apply both before and after its issue, subject to a specific limitation for initial allocation airdrops.

Use of smart contract to wrap and unwrap crypto assets

Draft Taxation Determination TD 2026/D2 considers the CGT consequences where a taxpayer uses a smart contract to exchange a crypto asset for a wrapped equivalent. The draft determination applies only to specified wrapping arrangements involving the transfer and locking of one crypto asset, the minting of an equivalent wrapped asset, and the subsequent burning of the wrapped asset and release of the original type of asset.

The Commissioner’s preliminary view is that CGT event C2 occurs when the original crypto asset is wrapped, because the taxpayer’s ownership of that asset ends when it is transferred to the wrapping contract. A separate CGT event C2 occurs when the wrapped asset is unwrapped and burnt.

The draft determination also considers that the wrapped asset is a different CGT asset from the original asset, and that crypto assets received when unwrapping represent new CGT assets rather than the return of the original assets.

Comments on Draft TD 2026/D2 are due by 18 September 2026. If finalised, it is proposed to apply both before and after its date of issue.

Payday Super: ATO draft guidance on labour hire contracts

The ATO has released draft Superannuation Guarantee Determination SGD 2026/D1, providing guidance on calculating superannuation guarantee (SG) obligations for individuals engaged under labour contracts who are treated as employees under section 12(3) of the Superannuation Guarantee (Administration) Act 1992.

Under the Payday Super regime, “qualifying earnings” (QE) includes payments under a section 12(3) contract that are “in respect of the person’s labour under the contract”.

The ATO’s preliminary view is that the reference to a person’s “labour” limits the scope of payments included as QE.

Employers should identify amounts specifically paid for the individual’s physical, mental or artistic exertion.

Payments generally excluded:

• hire of equipment or machinery;
• materials used in performing the work;
• reimbursement of expenses incurred on behalf of the employer; and
• GST components.

Where a payment includes both labour and non-labour components, employers will need to apportion the amount and retain appropriate records supporting their methodology.

The ATO considers that QE under section 10A(1)(d) is not restricted by the definition of ordinary time earnings (OTE). Accordingly, payments for labour may include overtime payments and certain allowances, such as on-call allowances, even where those amounts would otherwise be excluded from OTE.

Where an amount qualifies as both QE under section 10A(1)(d) and OTE under section 10A(1)(a), it is only counted once for SG purposes.

Employers engaging individuals under labour contracts should review their arrangements to determine whether payments contain labour and non-labour components and ensure appropriate records are maintained to support any apportionment.

If finalised, SGD 2026/D1 will apply to payments of QE made on or after 1 July 2026.

The last day for comments on the draft SGD is 2 October 2026.

Following the release of SGD 2026/D1, the ATO has withdrawn SGD 96/2, effective 2 September 2026, which addressed the equivalent issue under the pre-Payday Super framework.

Currency conversion for WET New Zealand producer rebate

The ATO has issued a new WET legislative determination setting out the foreign exchange conversion methods for calculating the New Zealand producer rebate.

The A New Tax System (Wine Equalisation Tax) (New Zealand Producer Rebate Foreign Exchange Conversion) Determination 2026 provides for two methods of converting amounts in the approved selling price expressed in a foreign currency into Australian currency: the RBA rate method and the average yearly RBNZ rate method.

The determination excludes the previously available agreed-rate method, as evidence indicated that eligible New Zealand wine producers were not using it.

The determination commenced on 12 August 2026 and repeals and replaces the 2016 determination, which was due to sunset on 1 October 2026.

Share transactions data retained under revised data matching protocol

The share transactions data-matching program protocol has been amended from the version published in 2018 to align with existing business practices, including the ATO’s ability to retain the data beyond the stated retention periods, where a business need exists (due to the revocation of General Disposal Authority 24).

The ATO will not continue acquiring details of share transactions under this data matching program protocol. Data items were acquired from ASIC and Australian share registries for the period 20 September 1985 to 30 June 2018 included: 

• client identification details (names, addresses, date of birth etc)
• transaction details (transaction date and amount etc).

During the relevant period, data was collected on approximately 7.47 million entities. The ATO will retain the data as required in accordance with data governance practices, for the purpose of supporting broader ongoing compliance with CGT, including for future transactions when shares are sold. The objective of the share transactions data-matching program is to ensure that taxpayers are correctly meeting their taxation obligations, including registration, lodgment, reporting and payment responsibilities.

For further information, please refer here.

Decision impact statement – Oracle

The ATO has released a decision impact statement following the Full Federal Court’s decision in Oracle Corporation Australia Pty Ltd & Ors v FC of T [2025] FCAFC 145 (Oracle).

The case concerned royalty withholding tax on payments made by Oracle Australia to Oracle Ireland under software distribution arrangements. The taxpayers sought a stay of their Federal Court proceedings to allow mutual agreement procedures (MAPs) under the Australia-Ireland double tax agreement to be concluded.

The Full Court allowed the taxpayers’ appeal and granted the stay. It found that the evidence relied upon by the Commissioner was insufficient to establish a public interest in allowing the domestic proceedings to continue. In particular, there was inadequate evidence that a judicial decision concerning Oracle’s specific arrangements would provide meaningful guidance for other taxpayers or resolve broader differences between Australia and the United States concerning the meaning of “royalties”.

The Court also emphasised the importance of the MAP process and considered that refusing the stay could effectively deprive the taxpayers of the opportunity to have the MAPs concluded.

The ATO accepts that MAPs are an important mechanism for resolving potential double taxation under Australia’s tax treaties. However, it maintains that judicial consideration remains appropriate where administrative or bilateral processes do not provide sufficient clarity on treaty interpretation.

The ATO also maintains its position that payments should be characterised as royalties where consideration is paid for the use of, or right to use, intellectual property rights. However, it acknowledges the complexity of applying these principles to modern software arrangements and the feedback received on its position in TR 2026/2.

The ATO will continue to seek appropriate opportunities for judicial clarification of the royalty provisions and their application to contemporary software arrangements.

Decision impact statement – Alcoa of Australia Ltd

The ATO has released a decision impact statement following the ART’s decision in Alcoa of Australia Ltd v FC of T 2025 ATC; [2025] ARTA 482.

The ART had set aside transfer pricing assessments issued to Alcoa, finding that although Alcoa had not established that it was dealing at arm’s length with an intermediary involved in the supply of alumina, it had established that the consideration it received was not less than arm’s length consideration.

The dispute concerned sales of smelter-grade alumina by Alcoa to an intermediary associated with Mr Dahdaleh for supply to Aluminium Bahrain. The Commissioner had made determinations under former Div 13 of the ITAA 1936 for the 1993–2009 income years, resulting in an aggregate increase in taxable income of approximately $644 million and a tax shortfall of approximately $214 million.

The ART found that, for the earlier years, the relevant consideration had to be assessed in the context of both Formula Tonnage and Market Tonnage supplies. Although the prices for Market Tonnage were low when considered separately, the total consideration received by Alcoa was not less than the arm’s length amount when the supplies were considered together.

The ATO accepts the ART’s findings that:

• the burden of proving arm’s length dealing rests with the taxpayer;
• parties can be dealing otherwise than at arm’s length even where there is no common ownership or directorship;
• arrangements designed to facilitate bribery and corruption are inconsistent with arm’s length dealing; and
• the transfer pricing rules can apply where profits are shifted overseas even if the recipient of those profits is not an entity associated with the taxpayer through ownership or directorship.

However, the ATO considers that the ART’s conclusions concerning the identification of the relevant international agreement, the degree of depersonalisation and the calculation of arm’s length consideration have limited application beyond the case, given the highly unusual facts and arrangements involved.

The ATO will continue to apply the existing principles from Chevron, Glencore and Singapore Telecom when determining the characteristics of a hypothetical arm’s length transaction. It considers that the Alcoa decision does not require any change to its existing transfer pricing guidance or general approach.

Passenger movements data-matching program

The ATO will acquire passenger movements data from the Department of Home Affairs for selected taxpayers for the 2026–27 to 2028–29 financial years.

The data will include information such as a passenger’s name, date of birth, arrival and departure dates, passport details, and visa, residency, lawful status and Australian citizenship status.

The ATO will electronically match the data against its existing records to identify taxpayers who may require assistance in meeting their tax and superannuation obligations or who may present compliance risks.

The program aims to identify emerging forms of non-compliance and ineligible claims, improve risk-detection systems, assess identity and residency compliance risks, and develop targeted educational and compliance strategies. It is also intended to encourage voluntary compliance and maintain confidence in the integrity of the tax and superannuation systems.

For further information, please refer here.

Real property transactions data-matching program

The ATO has amended its real property transactions data-matching program protocol, originally published in 2017, to reflect current business practices and the impact of the revocation of General Disposal Authority 24 on the retention of data where there is an ongoing business need.

The ATO will cease acquiring real property transaction data under the existing program covering transactions from 20 September 1985 to 30 June 2017. Data previously obtained from state and territory revenue and land title agencies included taxpayer identification details, property information and transaction details. Approximately 2 million individuals were covered each financial year during the relevant period.

The program’s objective is to ensure taxpayers correctly meet their tax obligations arising from property transactions, including registration, lodgment, reporting and payment requirements.

For further information, please refer here.

Tax professionals targeted by cyber criminals

The ATO has warned that tax professionals are being targeted by cyber criminals, primarily through malicious links, attachments and other communications that can install malware or unauthorised software.

A compromised tax agent system may allow third parties to access client information and interact with the ATO through Online Services for Agents. The ATO is supporting a small number of tax professionals affected by fraudulent activity.

Tax professionals are encouraged to:

• keep anti-virus software up to date;
• exercise caution with unexpected links, attachments and downloads;
• independently verify suspicious communications using trusted contact details;
• use multi-factor authentication; and
• keep devices, applications and software updated.

Anyone who has received suspicious communications, clicked a potentially malicious link or suspects their system has been compromised should report the incident to the ATO, including through its Client Identity Support Centre.

Tax professionals should also consider their obligations under the Privacy Act 1988 and Notifiable Data Breaches scheme, and review relevant guidance from the Tax Practitioners Board.

The ATO has confirmed that its own systems remain secure and have not been compromised.

For further information, please refer here.

Class Rulings Issued:

• Class Ruling CR 2026/49 WAM Capital Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/50 Future Generation Australia Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/51 WAM Global Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/52 WAM Research Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/53 WAM Active Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/54 WAM Income Maximiser Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/55 Future Generation Global Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/56 WAM Leaders Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/57 WAM Alternative Assets Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/58 WAM Strategic Value Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/59 WAM Microcap Limited – bonus shares issued under Dividend Substitution Share Plan. This ruling applies from 1 July 2026 to 30 June 2031.
  
• Class Ruling CR 2026/60 Qoria Limited – scrip for scrip roll-over. This ruling applies from 1 July 2026 to 30 June 2027 to certain shareholders of Qoria Limited.
  
• Class Ruling CR 2026/61 Qoria Limited – employee share scheme – replacement of performance rights. This ruling applies from 1 July 2026 to 30 June 2027. 
  
• Class Ruling CR 2026/62 Amaero Ltd – scheme of arrangement. This ruling applies from 1 July 2025 to 30 June 2026. 
  
• Class Ruling CR 2026/63 Amaero Ltd – employee share scheme – scheme of arrangement. This ruling applies from 1 July 2025 to 30 June 2026. 
  
• Class Ruling CR 2026/64 Qube Holdings Limited – scheme of arrangement and dividends. This ruling applies from 1 July 2025 to 30 June 2027.
  
• Class Ruling CR 2026/65 ClearView Wealth Limited – scheme of arrangement and special dividend.  This ruling applies from 1 July 2026 to 30 June 2027.
  
• Class Ruling CR 2026/66 Brazilian Rare Earths Limited – in specie distribution of Alurion Resources Limited shares. This ruling applies from 1 July 2026 to 30 June 2027.
  
• Addendum to Class Ruling CR 2025/2 DBG Global Enterprises Pty Ltd – customer equity scheme. The addendum reflects changes to the terms of the customer equity scheme issued by DBG Global Enterprises Pty Ltd and applies from 1 July 2026. 
  
• Addendum issued to Class Ruling CR 2013/14 Goods and services tax: goods and services supplied by dental practitioners. The addendum applies from 26 August 2026 and amends the ruling primarily to update the list of goods and services in Attachment A to the ruling and address other minor issues. 
  
• Erratum issued for Class Ruling CR 2026/61 Qoria Limited – employee share scheme – replacement of performance rights.
  
• Erratum issued for Class Ruling CR 2013/14 Goods and services tax: goods and services supplied by dental practitioners. The erratum substitutes “dentist” with “dental practitioner” in para 78 and applies from 26 August 2026.

Other Rulings Issued:

• Product Ruling PR 2026/13 Fringe benefits tax consequences for employers under an EMobility electric vehicle subscription agreement. This ruling applies from 1 April 2026 to the employers specified in para 4 of the ruling that enter into the scheme from 1 April 2026 until 31 March 2029.
  
• Product Ruling PR 2026/14 Mortgage House Blended Plus Loan Facility. The product ruling applies from 1 July 2026 until 30 June 2029 to tax resident borrowers that entered into the relevant scheme on or after 1 July 2026 and on or before 30 June 2029.
  
• Product Ruling PR 2026/15 St. James’s Place International Investment Plan II. The ruling applies from 1 July 2026 to the entities specified in para 4 of the ruling. However, the ruling only applies and may be relied on to the extent that there is no change in the scheme or in the entity’s involvement in the scheme.
  
• Product Ruling PR 2026/16 St. James’s Place International Investment Bond and International Investment Account. The ruling applies from 1 July 2026 to policyholders as specified in para 4 of the ruling.
  
• Product Ruling PR 2026/17 Zurich Life Insurance (Hong Kong) Limited – Matterhorn life insurance policy. This ruling applies from 1 July 2026 to policyholders as specified in para 4 of the ruling.
  
• Erratum to Product Ruling PR 2026/10 Fringe benefits tax consequences for employers under an Origin electric vehicle subscription agreement. The erratum amends a minor typographical error and applies from 22 July 2026.
  
• Addendum to WETR 2006/1 applies from 1 October 2019 (in relation to changes that reference A New Tax System (Wine Equalisation Tax) Regulations 2019), from 1 July 2026 (in relation to changes made by the A New Tax System (Wine Equalisation Tax) Act 1999 by the Treasury Laws Amendment (Supporting Choice in Superannuation and Other Measures) Act 2026) and from 12 August 2026 (in relation to changes that reference A New Tax System (Wine Equalisation Tax) (New Zealand Foreign Exchange Conversion) Determination 2026).

Latest Australian Tax Cases

> Commissioner of Taxation v KYWNY [2026] ARTA 1551, 7 August 2026

The Administrative Review Tribunal (ART) has held that it has jurisdiction to review a tax matter involving GST refunds which the taxpayer claims were tainted with fraud. The ART’s decision confirms that suspected fraud or identity theft surrounding GST refund claims does not, by itself, prevent the ART from reviewing the resulting tax assessments. A taxpayer who claims that fraudulent BASs were lodged in their name can still have standing to seek review under s 14ZZ, even where they do not allege the assessments are excessive and have not yet established that the identity theft occurred.

> Hasan v FC of T 2026 ATC; [2026] FCA 1072, 7 August 2026

The Federal Court has allowed the taxpayers’ appeal from the ART decision reported at 2025 ATC ¶10-763; [2025] ARTA 996, finding that the ART had erred in law by mischaracterising a provision of the family assistance legislation. The Court considered that the error was not immaterial to the ART’s conclusion. Accordingly, the matter was remitted to the ART for redetermination, despite the taxpayers not establishing that the Commissioner’s decisions were incorrectly made or that the ART’s legal error would necessarily have resulted in a different outcome.

> Hartley v FC of T 2026 ATC; [2026] ARTA 1590, 12 August 2026

The ART has rejected an IT sales manager’s claims for work-related deductions and capital allowances totalling $31,870, which he claimed were incurred to satisfy an employment requirement to remain at the forefront of IT specialisation.

> Silverfern Investments (WA) Pty Ltd & Ors v FC of T 2026 ATC; [2026] ARTA 1619, 5 August 2026

The ART has set aside amended assessments issued to five taxpayers, all beneficiaries of trusts that collectively operated a retirement village. It found that Lease Loan payments made by new residents upon entering the retirement village were properly characterised as lease premiums and were therefore income in nature.

> Laureti v FC of T 2026 ATC; [2026] FCA 1086, 10 August 2026

The Federal Court has refused a taxpayer’s application for summary judgment challenging default assessments that increased his taxable income by $16 million and imposed nearly $6 million in penalties for intentional disregard of a taxation law. The Court declined to determine the “novel and important” questions concerning the imposition of penalties in connection with default assessments. However, the Commissioner was required to amend his appeal statement to identify precisely which taxation law the taxpayer was alleged to have intentionally disregarded.

> Munro v FC of T [2026] ARTA 1653, 16 June 2026

The ART has held that a taxpayer was liable for Division 293 tax after receiving a lump sum payment of employment income that included amounts relating to underpayments from earlier income years. The lump sum increased the taxpayer’s Division 293 income for the relevant year above the applicable threshold, resulting in a Division 293 tax liability. The decision confirms that the timing of the lump-sum payment can affect the year in which Division 293 tax is imposed, even where the payment relates to employment income that should have been paid in earlier years.

If you would like more information or would like to discuss this tax update, please contact our team:

Tel: +61 (0) 3 9939 4488 | Email: info@au.Andersen.com

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