CPA Australia Tax News

This edition was current at the time of publication.

 

Talking Tax with Jenny

$1000 Standard deduction - tax simplicity or a costly illusion?

The federal government’s plan to introduce a $1,000 instant tax deduction from 2026-27 is being pitched to make tax time "easier, faster, and better". With the promise of "six clicks" to complete a return and the end of "shoe boxes full of receipts," it is an enticing election pledge designed to provide cost-of-living relief to approximately 5.7 million taxpayers.

However, beneath this proposal  lies a recycled policy that is yet to address the underlying complexity of the Australian tax system. While this may enhance pre-filled tax returns, a closer look at this policy reveals that for many, this simplicity may come at a hidden cost.

The core selling point of the reform is that taxpayers "won’t need to collect receipts" for deductions under $1,000. Yet, the policy also allows anyone with expenses above $1,000 to continue itemising their claims to ensure they receive their full entitlement.

This creates a record keeping paradox. To know whether your legitimate work-related expenses (WRE) exceed the $1,000 threshold, you must still keep records and provide evidence of your spending throughout the year. If taxpayers stop tracking their expenses in the hope of an easy "instant" deduction, they risk missing out on the full refund they are entitled to if their actual costs such as professional equipment, home office expenses, or self-education surpass the flat $1,000 limit.

Perhaps the most concerning aspect of the proposal is its inherent inefficiency. An unknown is whether the standard deduction will be available to all eligible taxpayers, regardless of whether they have actually incurred any WRE.

This means the government is committing billions in revenue to provide tax breaks to individuals who may have zero work-related expenses. While the government estimates the average relief at $205 per person, this is not a targeted reimbursement for the costs of earning an income; if left unchecked it could become a broad-based subsidy that does nothing to encourage taxpayers to take greater responsibility for their financial obligations.

The government suggests this move will save on the costs of professional tax advice. However, Australia’s tax system is underpinned by a dense web of ATO rulings, court decisions, and legislative provisions that create "uncertainty for taxpayers".

Around two thirds of Australians currently use a tax agent, one of the highest rates in the OECD, and the burden isn't just about receipts; it's about the difficulties in correctly characterising and apportioning expenses. A flat deduction does not simplify the law; it merely bypasses it for some, while leaving the complex, overly complex  machinery of the system intact for everyone else.

CPA Australia supports a systemic and planned simplification of the tax system. Real reform would address the compliance burden at its source.

Clicking a few buttons to receive a basic deduction may be easy, but it is unlikely to be in the best long-term interests of taxpayers or the economy. Australians deserve a tax system that is genuinely simple and fair, not one that encourages them to trade away their entitlements for the sake of convenience.

The government should focus on the hard work of structural reform that actually reduces the uncertainty in the tax system. Until then, our advice to taxpayers remains the same: keep your records, stay informed, and don't settle for a standard result when you may be entitled to more.

Jenny Wong
Tax Lead
CPA Australia

AML/CTF Customer Due Diligence (CDD) Video

AUSTRAC has released an overview of CDD video, exploring the key principles behind CDD.. It will also 
be rolling out a Customer Due Diligence Essentials webinar series. to deepen the understanding of each stage of the CDD process.

Investment product labelling consultation

Treasury has released a consultation paper on a proposed Sustainable Investment Product Labelling, seeking feedback on the design of a framework to improve transparency and credibility for financial products marketed as "sustainable" or similar, including for managed funds and within the superannuation system.

Send your comments by 2 March to [email protected]

Lunch with the Tax Ombudsman in Wagga Wagga 

Ruth Owen will discuss current systemic issues under review and how these developments affect practitioners, finance professionals, and business owners. Register here. 

Meet the Tax Ombudsman 

Ruth Owen is visiting selected capital cities in the coming months  and invites you to meet with her. Register here.  

ATO website updates

• Small business ATO focus areas
• Property and construction industry – ATO key tax and super risks
• Contractors omitting income and TPAR;
• ATO Tax risks: property, construction and professional services
• ATO Small business boost measures risks
• Overlooking and misreporting FBT on private use of work vehicles;

SUPERANNUATION AND FINANCIAL PLANNING

Super switching and MIS governance

Treasury has released a consultation paper, Enhancing oversight and governance of managed investment schemes. It seeking views on proposals for enhancing Managed Investment Scheme governance and oversight by ASIC, and improving ASIC's visibility of superannuation switching.

The proposal would require superannuation trustees to report suspicious or anomalous patterns of behaviour. The consultation paper follows the collapses of Shield Master Fund and First Guardian Master Fund. 

Send your comments by 20 February to [email protected]

 

LEGISLATION

Single entity for accounting, audit and sustainability standards Bill 

The government introduced the Treasury Laws Amendment (Financial Reporting System Reform) Bill 2026.

The Bill proposes to combine the core functions and powers of the Australian Accounting Standards Board (AASB), Auditing and Assurance Standards Board (AUASB) and Financial Reporting Council (the FRC) relating to standard setting into a single entity to be known as External Reporting Australia.

External Reporting Australia's responsibilities will include making and formulating accounting, auditing and assurance, and sustainability standards. A Governing Council will be the accountable authority of External Reporting Australia, with members of the Governing Council including the Council Chair to be appointed by the Minister.

The Bill was released in draft form in October 2025. It will take effect on the first day of the calendar month after a period of 4 months beginning on the day of assent.

 

RULINGS AND GUIDANCE

Practice Statements updated

The ATO has re-issued two Practice Statements. In both cases, they have been updated in line with current ATO style and "accessibility requirements". 

• PS LA 2005/16 deals with the period in which an entity can obtain an approved valuation for the purposes of the GST margin scheme (under Div 75 of the GST Act).
• PS LA 2011/14 outlines the broad principles about how the ATO collects tax debts.

Private rulings: Draft update to TR 2006/11

As part of its review of TR 2006/11 on private rulings, the ATO has released a draft update to include case law development since 2017 and changes to the promoter penalty laws. Also, a recent Addendum to TR 2006/11 contained updates for other legislative changes (on declining to rule in relation to Australian IIR, UTPR or DMT tax).

Proposed date of effect: retrospective.

Class rulings issued

• CR 2026/3 and CR 2026/4 (Aurumin Limited - scrip for scrip roll-over for shareholders and option holders);
• CR 2026/5 (Oceania Capital Partners Limited - return of capital and special dividend);
• CR 2026/6 (Charter Hall Limited - capital reallocation); and
• CR 2026/7 (Symal Group Limited - employee share scheme - entitlement to franking credit tax offset).

 

CASES 

Construction expenditure on temporary display homes deductible 

The ART has ruled that construction costs for temporary display homes used by residential home building company (the taxpayer) were deductible marketing expenses on revenue account under s 8-1 of the ITAA 1997, rather than capital expenditure, holding that:

• the expenditure's purpose was to advertise and market the taxpayer's existing business and increase general residential home sales
• the case was analogous to National Australia Bank Ltd v FCT(1997) 80 FCR 352, where marketing expenses were held to be on revenue account, even if large and one-off
• the expenditure didn't enlarge the taxpayer's business structure nor was it made "once and for all"
• the expenditure met a continuous demand and was recurrent, repeated and continual
• the business should be viewed as a whole. (Masterton Corporation Holding Company Pty Limited and Commissioner of Taxation (2026)ARTA 160, Lazanas, G, 9 February 2026)

Qld transfer duty: taxpayer entitled to refund of duty  

The Queensland Court of Appeal has dismissed the Commissioner of State Revenue's appeal against a decision that a company was entitled to a refund of transfer duty paid on a contract to purchase property that was cancelled by consent, as the replacement contract was not a "resale agreement".

The Court of Appeal upheld the primary judge's decision, rejecting an argument that the $50,000 purchase price adjustment constituted a disqualifying financial benefit. The adjustment simply placed 122Marg in the same position FKG01 would have been in had the original contract settled as originally envisaged. The court also concluded that the indemnities provided by Jeteld to FKG01 did not constitute a financial benefit. The indemnities merely ensured FKG01 suffered no detriment from the cancellation. (Commissioner of State Revenue v FKG01 Pty Ltd[2026] QCA 12, Qld Court of Appeal, Bowskill CJ, Doyle JA, Wilson J, 6 February 2026.)

 

 

 

 

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