CPA Australia Tax News

This edition was current at the time of publication.

  

Productivity crisis is no longer a slow-burn problem

Australia’s productivity crisis is serious enough to threaten economic growth, competitiveness and living standards unless governments act.

Taxpayers complain, ATO explains

With the General Interest Charge (GIC) no longer tax deductible, the stakes for small businesses and individuals have never been higher. Here’s how the ATO is responding.

 

MTAS Tax Time 2026 (TT26) changes

The following Modernisation of Tax Administrative Systems (MTAS) trust tax return form changes will be deployed in TT26: 

• Label changes to the trust tax return to improve data quality:
– Non-primary production managed investment scheme amount B1 
– Franked distribution related to investments amount U2 
– Other assessable foreign source income from a financial investment amount H1 
Note: The three labels do not need to be reported separately on the trust income schedule of a beneficiary.

• Expanded ATO data validations for electronic lodgments to strengthen data integrity:
– Valid date of death required for No Beneficiary Assessment Codes 15 and 16 
– Assessment code must align with the date of birth 
– Individual beneficiary first name, last name, and date of birth must all be completed 
– Date of birth must not be entered for a non-individual beneficiary 

• Expansion of ATO pre-fill for individual to include trust lodgment data: 
– Beneficiaries presently entitled to a share of trust income (assessment codes 12 or 30) 
– Available in tax agent software (through existing individual pre-fill services) and in myTax.

MTAS Tax Time 2027 (TT27) changes 

The following changes will be deployed for TT27:

• Label changes to the trust tax return to improve data quality (slides 11 and 12 of the attachment): 
– New labels to capture the details of the specified individual for FTEs and IEEs
– Notice of Assessment beneficiary reference for trustee assessments 
– Unpaid Present Entitlement labels 
– Rateable reduction labels for franked distributions and capital gains 
– Share of net financial benefit from capital gain 
– Expanded non-resident beneficiary labels (interest, unfranked dividends, royalties and the total tax withheld) 

• Proposed ATO data validations: 
– Type of trust, trustee name, FTE status and FTE specified individual details checked against previous return 
– FTE specified individual details missing despite existing FTE record 
– Current year losses deducted checked against losses carried forward on previous return 
– Managed Investment Trust status checked against trust type 
– Share of income must equal trust estate income where there is a net income 

• Removal of systems limitations enabling online lodgment for trusts with more than 200 beneficiaries. 

• Development and deployment of: 

• pre-fill services and nudge messaging for non-individual taxpayers
• an online simplified trust tax return via Online Services for Business.  

ATO website updates

• International related party dealings statistics 2023-24  

 

SUPERANNUATION AND FINANCIAL PLANNING

ATO confirms $2.1m 2026-27 general transfer balance cap

The ATO has confirmed that the general transfer balance cap will increase to $2.1m from 1 July 2026, as previously reported on Wednesday 1 January 2026.

ATO super updates

• Choose your SMSF trustee structure 
• SMSFs: requests to adjust concessional contributions
• General transfer balance cap indexation on 1 July 2026
• Highlights from the 2026 SMSFA National conference
• Claiming SMSF setup costs correctly 

 

PROFESSIONAL DEVELOPMENT

Meet the Tax Ombudsman Ruth Owen and share your concerns on tax administration matters – in Perth, Melbourne, Sydney, Brisbane.  Register here.

LEGISLATION

Draft LI: Requirement to lodge 2026 tax and other returns  

The ATO has issued draft instrument Taxation Laws (Requirement to Lodge a Return for the 2026 Year) Instrument 2026 (LI 2026/D2) which covers income tax returns and other lodgments for:

• franking account returns
• venture capital deficit tax returns
• ancillary fund returns
• trustees of SMSFs
• member information statements for superannuation providers.

The draft also covers use of approved forms for lodgment, lodgment deferrals, lodgment exemptions, and penalties for non-lodgment.

Child support assessment returns

The ATO issued draft instrument Income Tax Assessment (Requirement for Parents Liable for or Entitled to Child Support to Lodge a Return for the 2026 Year) Instrument 2026 (LI 2026/D1). It requires liable and recipient parents under a child support assessment to lodge an income tax return for the income year, by the due date specified in the instrument. Such persons may not otherwise be required to lodge an income tax return.

Amendments to global and domestic minimum tax rules: ED

The Treasury has issued the draft instrument Taxation (Multinational - Global and Domestic Minimum Tax) Amendment (2026 Measures No. 1) Rules 2026. The Amending Rules make administrative amendments to ensure the effective operation of the Domestic Top-up Tax. Substantive amendments include:

• clarification on how the tax applies to stateless entities and joint ventures, ensuring they are captured correctly if they operate in Australia
• ensuring that for Australian tax-consolidated groups, the "head entity" is responsible for Domestic Top-up Tax Amount liabilities
• making minor amendments to the rules for "pushing down" taxes paid by a parent company to a hybrid subsidiary so that the subsidiary's top-up tax is calculated accurately
• establishing a clear rule for converting foreign currency into Australian dollars.

Date of effect: The Amending Rules apply retrospectively from 1 January 2024.
Send your comments by 6 March to: [email protected] 

 

RULINGS AND GUIDANCE

Class rulings

Class Ruling CR 2026/8 (Department of Energy, Environment and Climate Action - Field Staff Early Retirement Scheme 2026). The ATO accepts that this scheme is an early retirement scheme for the purposes of s 83-180 of the ITAA 1997.

An Erratum to CR 2024/73 (Aristocrat Leisure Limited - Non-Executive Director Rights Plan) corrects a reference to regulations.

 

CASES 

Ferrari benefit not exempt from FBT 

A taxpayer failed to prove that the use of a Ferrari by its director was exempt from FBT. The Administrative Review Tribunal (ART) concluded that:

• the exemption in s 8(2)(a)(ii) FBTAA (for "any other road vehicle designed to carry a load of less than 1 tonne (other than a vehicle designed for the principal purpose of carrying passengers)") is confined to commercial vehicles
• the Ferrari was designed for the principal purpose of carrying passengers and not racing as the taxpayer had contended
• the taxpayer failed to establish that the director's private use was "minor, infrequent and irregular" for the purposes of the s 8(2)(b) exemption
• the reduction of the Ferrari's cost base should be remitted to the ATO to remove on-road costs
• the director did not become the beneficial owner of the Ferrari from October 2018 under a money purchase resulting trust. (MXSN and FCT [2026] ARTA 186 (ART, Thompson DP SC, 13 February 2026). 

Taxpayer fails to substantiate work-related deductions   

The ART affirmed assessments disallowing work-related deductions where the taxpayer failed to provide accurate, reliable and contemporaneous records to substantiate his claims, concluding:

• work-related car expenses - although there was the necessary nexus to Mr A's income-earning activities, logbooks did not comply with legislative requirements under Div 28 of the ITAA 1997. They contained errors as well as inconsistencies with objective records such as service records
• work-related travel expenses - there was no evidence of which expenses had been reimbursed by Mr A's employer
• other work-related expenses - utility expenses were unsubstantiated and there was insufficient evidence to apportion mobile phone and internet expenses between work and private use. 

The ART also rejected a claim for Iranian language classes. (Afshari and FCT [2026] ARTA 159, ART, Smith GM, 8 February 2026.)

 

 

 

 

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