CPA Australia Tax News

This edition was current at the time of publication.

Talking Tax with Jenny

ATO addresses taxpayers’ GIC and FTL concerns

 

With the General Interest Charge (GIC) no longer tax deductible, the stakes for small businesses and individuals have never been higher. 

Following a surge in taxpayer complaints, the Tax Ombudsman launched a review into GIC remission to determine if the ATO communications clearly explain the criteria for remission and if decisions are uniform. Complainants perceived a tightening of ATO policy, a lack of transparency in decision-making, and inconsistent outcomes across different ATO channels. 

ATO responds

New ATO guidance pages address the report’s primary complaint: that taxpayers often do not understand why their requests are denied. 

The guidance provides scenarios of where the ATO is likely to accept or deny a request. Acceptance scenarios include natural disasters, sudden ill health, or domestic violence. Decline scenarios include general economic downturns or using tax funds to expand a business.

Changes have also been made to the request process. Rather than handling requests via various mail channels, there are now specific remission application forms for penalties. These forms will guide taxpayers on the information needed for a decision. 

Tax and BAS agents will experience a more structured environment. Requests should be submitted via Practice mail in Online services for agents, with the correct form attached. Separate forms and separate mail messages will ensure that GIC, Shortfall Interest Charge (SIC), and Failure to Lodge (FTL) remissions are processed correctly.

A dedicated team will now handle these requests. 

Work in progress

The ATO views these as interim changes while it completes its own broader review of taxpayer relief provisions. Taxpayers can expect continued improvements, coinciding with the expected delivery of the Tax Ombudsman’s final report in February 2026.

Jenny Wong
Tax Lead
CPA Australia 

 

ATO targets contrived related-party property development structures

The ATO has released Taxpayer Alert TA 2026/1, signalling heightened scrutiny of related-party property development arrangements that defer income recognition while accelerating deductions and exploiting tax losses across an economic group.

The ATO explicitly flags Part IVA risk, noting that these arrangements may constitute a scheme under section 177D of the ITAA 1936. Draft Practical Compliance Guideline will follow, showing the line the ATO draws between lower-risk commercial arrangements and higher-risk tax-driven structures.  

Proposed changes to tax rules risk unfairly penalising Australians’ retirement savings

CPA Australia has raised serious concerns about draft legislation that would exclude franking credits when calculating superfund earnings under proposed new super tax arrangements.

AASB 2027-2031 future Work Plan Consultation

The AASB has launched its 2027-2031 Agenda Consultation and in March, it is hosting a series of nationwide in-person roundtables to help inform its future Work Plan. 

Read the consultation document and register for a session.

 

Family Trust Election Report

The current Family Trust Election (FTE) report in Online services for agents displays the following election details:

• trust name and TFN
• specified individual and date of birth
• income year specified and election commencement date.

The known data issue where not all elections were visible in the Online Services for Agents report has been resolved. The ATO is developing a new feature to enhance this report, which will include:

• Date received
• Form type – Election made (E), Variation (V), Revocation (R)
• Election end year
• Election end date.

Enhancing PI insurance effectiveness for financial services

Treasury has released a consultation paper, Enhancing the effectiveness of financial service professional indemnity insurance, seeking feedback on proposals to enhance the effectiveness of professional indemnity insurance (PII) in responding to compensation claims for financial service providers. 

Key issues include inconsistencies in PII effectiveness due to the flexible regulatory framework, gaps between minimum requirements and available policies, and challenges when licensees enter external administration. 

Send comments to: [email protected] by 5 February 2026.

 

ATO website updates 

• Commercial deals service resources 
• Average dividend and franking credit yields

 

Superannuation and Financial Planning

Updates to guidance on financial reporting and audit relief

ASIC has released a consultation paper seeking feedback on proposed updates to Regulatory Guide 43 Financial reports and audit relief (RG 43). The consultation aims to modernise guidance on ASIC's approach to granting relief from financial record keeping, financial reporting and audit requirements under the Corporations Act 2001.

Send comments to: [email protected] by 2 February 2026

Guidance on managing conflicts of interest in financial services

ASIC’s updated Regulatory Guide 181 AFS Licensing: Managing Conflicts of Interest (RG 181) aims to help licensees understand their obligations and implement robust conflict management strategies.

It came into effect  from 13 December 2025.

 

Professional Development

Advisory training program 
Sydney March 10-12

CPA Australia and Leaders in Business present a three-day Advisory Training Program in Melbourne and Sydney — designed to help accountants become trusted business advisors. Register now. 

Monthly tax special topic 2026 

This tax webinar series delivers up-to-date information in specialist areas of taxation. Save 5 per cent if all 11 webinars are purchased. Promotion valid until 8 February 2026. Register now.

Monthly super and SMSFs update 2026

Join this series for current intelligence on specialist areas of superannuation and SMSFs. Save 5 per cent if all 11 webinars are purchased. Promotion valid until 8 February 2026. Register now.

 

Legislation

Income apportionment resolution scheme

The government will begin accepting applications on 30 January 2026 for resolution payments to people affected by income apportionment. 

Debts are excluded if they involved fraud found in criminal proceedings, were already reviewed and found invalid, or were fully waived before 30 January 2026.

Foreign acquisition register notice time extension

The ATO has registered the Foreign Acquisitions and Takeovers (Register Notices - Extensions of Time) Instrument 2026, effective from 9 January 2026. 

The Instrument allows the Taxation Commissioner to extend the period in paragraph 130W(2)(b) of the Foreign Acquisitions and Takeovers Act 1975 where a register notice must be given to the Registrar. 

 

Rulings and guidance

SMSFs: ATO education directions for breaching SISA (PS LA 2026/1)

Where there is a contravention of the Superannuation Industry (Supervision) Act 1993 or regulation, the ATO has a range of compliance options. 

One option is giving an education direction to an SMSF trustee (if an individual) or to a director of a corporate trustee. The education notice may be given in combination with other compliance options, such as administrative penalties, a rectification direction or a written undertaking to rectify the breach.

Practice Statement PS LA 2026/1,  effective from 2 October 2025, sets out the relevant matters ATO staff should consider when deciding whether to issue an education direction. It provides that this direction will play an essential role in cases where the person's lack of knowledge or understanding of their obligations contributed to the contravention(s).

 

Class rulings

The ATO released:

• Class Ruling CR 2026/1 (Maurice Blackburn Pty Limited - Qantas aircrew settlement) – payments are not employment termination payments; and
• an Addendum to Product Ruling PR 2025/17 (Instreet Structured Investment Pty Ltd – Instreet Masti), which clarifies the date of effect. 

 

Cases

Taxpayer fails to show assessments from overseas were excessive

A taxpayer was unable to establish that unexplained deposits were loans from family members and, as a result, was unable to show default assessments totalling almost $4m were excessive.

The Administrative Review Tribunal affirmed the amended assessments. First, the tribunal was not satisfied that the deposits and cheques were loans and therefore Mr Zhou failed to prove the assessments were excessive. Secondly, by providing no evidence about his employment income, rental income from multiple properties or distributions from various companies and trusts, Mr Zhou failed to establish what his actual taxable income for the relevant years was.

The tribunal confirmed there was sufficient evidence of evasion for the purposes of s 170 ITAA 1936, thus allowing the ATO to amend the original assessments beyond the normal time limits. The tribunal also upheld the administrative penalties. (Zhou and FCT [2026] ARTA 16, ART, McBride GM, 7 January 2026.)

 

Appeals update

The Commissioner has lodged an application for special leave to appeal to the High Court against the Full Federal Court decision in FCT v Hicks [2025] FCAFC 171. The Full Federal Court had dismissed the Commissioner's appeal against a decision that anti-avoidance provisions in the ITAA 1936 (s 45B and Pt IVA) did not apply to a $52 million capital reduction that was part of restructuring a business faced with the repayment of the relevant entities' Div 7A loans.

 

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