CPA Australia Tax News

This edition of Tax News was current at the time of publication on 30 July 2026. You can subscribe to the Tax News email in your comms preference centre. 

Guidance on responsible AI use

The TPB released a new guidance statement explaining how existing professional obligations of registered tax practitioners under the Code of Professional Conduct apply when AI tools are used. It highlights key considerations including competence, record-keeping, professional judgment, and appropriate supervision.

The statement reinforces that AI is a tool to support, not replace, professional judgement. TPB makes clear that tax practitioners remain accountable for the services they provide, including reviewing AI-generated outputs and exercising professional judgment to meet their professional obligations.

The TPB will also host a webinar on AI and the Code on 25 August 2026. 

Bendel DIS submission

We made a submission to a confirmation from an ATO DIS that an unpaid present entitlement will not, without more, be treated as a Division 7A loan following the High Court’s decision in Bendel. 

The DIS does not provide equity and practical certainty for taxpayers, advisers and private groups that relied on the Commissioner’s former incorrect administrative position for over 15 years. Without clearer administrative pathways, historically compliant taxpayers remain unfairly exposed to unnecessary compliance costs, uncertainty and adverse tax outcomes. 

Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 submission

We made a submission to the Senate supporting the policy intent of the Bill. However, we recommend targeted refinements to improve certainty, fairness and practical access for small businesses. Our recommendations include providing timely tax relief to eligible businesses through the loss carry back tax offset to non-corporate businesses and an update mechanism to the $20,000 instant asset write-off. 

ATO website updates

• Early stage innovation company reports
• Pre-filling 2026
• PRRT augmentation and GDP factor rates

Registered company auditor obligations reminder

ASIC reported that it wrote to registered company auditors reminding them of their legal, ethical and professional obligations. ASIC conducted a separate surveillance of the Big 4 audit firms, examining internal complaints received by large audit firms about their practices.

ASIC's letter outlined the audit-related work it is undertaking, including its ongoing surveillance of financial reports and audit files, and reminded auditors of the findings and actions set out in Report 817 (Building trust: Auditors' compliance with independence and conflict of interest obligations).

ASIC also warns that where there is sufficient concern, it will commence investigations. In these cases it may take enforcement action, including seeking cancellation or suspension of auditor registration, issuing infringement notices, or taking civil action.

Family law amending regulations for valuing super interests

The Family Law (Superannuation) Amendment (2026 Measures No 1) Regulations 2026 will allow the Attorney-General to issue a written direction to a trustee of a superannuation plan if there is an approved methodology for valuing a superannuation interest in that plan for family law purposes.

The regulations insert a new Pt 7A into the Family Law (Superannuation) Regulations 2025 under which a direction may compel a trustee to:

• arrange an independent actuarial review of the target method/factor and receive recommendations (s 97D(2))
• confirm completion details of that review (s 97D(3))
• provide membership statistics, actuarial reports, and governing rules (s 97D(4))
• provide administrative/contact details (s 97D(5)).

The regulations also introduce six minor and technical amendments to the Principal Regulations.

Date of effect: 23 July 2026.

When shortfall interest charge is incurred

The ATO issued an Addendum to TD 2012/2 on when the shortfall interest charge (SIC) is incurred for the purposes of former s 25-5(1)(c) of the ITAA 1997. It includes the following law changes:

• The SIC (and general interest charge) are no longer deductible if incurred in income years starting from 1 July 2025 (ie s 25-5(1)(c) has been repealed)
• The SIC is now imposed on overpaid tax offsets refunds, applicable to amended assessments made from 1 April 2025.

The addendum makes it clear that the views in TD 2012/2 continue to apply to deductions for SIC incurred in relation to pre-2025-26 income years.

Date of effect: 2025-26 income year.

Private rulings: recent case law and other changes

As part of its review of TR 2006/11 on private rulings, the ATO has released an Addendum to include:

• case law development since 2017
• commentary on requesting a private ruling in relation to Pt IVA
• expanded commentary on declining to make a private ruling
• changes to the promoter penalty laws (which now apply in relation to all ATO rulings and not just product rulings).

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).

Date of effect: retrospective.

Choice to cancel transfer of tax losses ineffective

In Evolution Mining Limited v FCT (2026), the Federal Court held that a choice made under s 707-145 of the ITAA 1997 by the head company of a consolidated group to cancel the transfer of tax losses was ineffective. 

The Court accepted Evolution's submission that the choice to cancel the transfer (like the transfer itself) is contemplated as necessarily taking root in the joining year. The Court rejected the ATO's arguments that the transfer is "spent" once the head company utilises the transferred losses and that, in the alternative, the head company "waives" its right to cancel the transfer once it utilises any of the losses. 

Partial release from income tax debt on serious hardship

In Barron and FCT (2026), the ART decided that the GIC component of a tax debt should be waived, but not the actual income tax component of the debt. 

The ART was satisfied that the taxpayer was experiencing serious financial hardship and that if no part of the income tax debt were released, the taxpayer would almost certainly be unable to service his overall debts while meeting basic necessities. This justified a partial release from his tax liabilities, namely by waiving the GIC component of the debt. 

However, a full release would not be appropriate as a matter of administrative justice and fairness, having regard to the taxpayer’s previous non-compliance and fairness to other taxpayers who met their obligations in difficult circumstances.

Taxpayer fails to establish deposits were not assessable

In Hadzic v FCT (2026), the Federal Court dismissed an appeal from an AAT decision that the taxpayer had failed to show that various deposits were not assessable income. The Federal Court found the AAT had not made any errors of law. The Court found, among other things, that: 

• it was open to the AAT to conclude that the taxpayer had not established various deposits were loans
• it was open to the AAT to give little weight to the evidence of three accountants, who were not engaged until 2019 and could not give contemporaneous evidence of the 2017 income year
• the AAT lacked jurisdiction to determine the taxpayer’s entitlement to PAYG withholding credits.

The Court also rejected a submission that there was apprehended bias, based on audio recordings made during adjournments of the AAT hearing.

Extension of time requested for family trust case

The taxpayer has filed an application for an extension of time to appeal against the Federal Court decision in Cameron v FCT (2026). The Federal Court had held that interest payments by a family trust on sub-trust loans were not deductible and that the taxpayers had failed to establish that a valid family trust election had not been made in respect of the trust.

Technology under-investment key to New Zealand’s small business productivity rut

NZ SMEs need to step up and invest in digitisation and AI. They also need business advice. Here’s how practitioners can help.

Income tax cash incentives for banking customers

Inland Revenue has issued the draft Is a cash incentive payment income for a borrower who is a cash basis person?. It explains:

• the income tax treatment of a cash incentive payment (also known as a cashback payment) that a bank pays to a borrower who is a cash basis person under the financial arrangements rules 
• when a cash incentive payment will not be taxable and will not give rise to any tax obligations for the borrower who receives it 
• when a cash incentive payment will be taxable and the time at which it must be accounted for.

Send your comments by 24 August 2026 to: [email protected]

Bare trustee where property is under mortgage

IR considers whether a bare trust can exist where the property held has a mortgage over it. IR issued QB 26/04 where under s YB 21, if a person holds something or does something as a nominee (including as a bare trustee) for another person, the other person is treated as if they hold or do that thing, and the nominee is ignored for tax purposes. Where a bare trust exists, the trustee’s only duties are to transfer the trust property as the beneficiary directs and, in the meantime, to take reasonable care of the trust property. The item replaces IS 23/02.  

DIA responsible for AML/CFT Act

On 1 July 2026 the Department of Internal Affairs took over responsibility for supervising and providing guidance to businesses and industries who are required to comply with the AML/CFT Act. 

Other government agencies involved in the AML/CFT regime include:

• The Ministry of Justice, responsible for policy development and administration of the law. It also handles all matters related to exemptions from the Act.
• The NZ Police Financial Intelligence Unit, which receives and analyses suspicious transaction reports. It issues guidance to reporting agencies and supervisors about compliance under the Act and provides information on money laundering and terrorism trends and methods. 
• The NZ Customs Service which enforces the Act’s cross-border cash reporting scheme. 

GST for services in relation to retirement schemes 

IR issued revised exposure draft of the IS entitled GST financial services - Services supplied in relation to retirement schemes for further consultation. The statement considers the GST treatment of services that the manager of a retirement scheme supplies to the scheme and that third-party outsourced providers supply to the manager of a retirement scheme. In both cases the key issue is whether the supplies are exempt supplies of financial services.

The original exposure draft was released for consultation from 11 December 2025 to 13 March 2026. As a result of submissions received, there have been material changes to the item which the Commissioner considers sufficient to require the reconsultation. 

Send your comments by 7 August 2026 to: [email protected]

Disposal of property and shortfall penalties

IR issued summary TDS 26/08. The issues considered in this dispute were whether:

• the taxpayer had a purpose or intention to dispose of the section (a part of the property) (which is the subject of the dispute) at the time of acquisition of the property
• either of the following shortfall penalties applied: (i) gross carelessness; or (ii) an unacceptable tax position.

The TCO concluded the taxpayer had a purpose to dispose of the Section under s CB 6 and issued a shortfall penalty for taking an unacceptable tax position. 

Excepted financial arrangement

IR issued summary TDS 26/09 of a private ruling that considered whether an agreement for the supply of products is a “short-term agreement for sale and purchase” and therefore an excepted financial arrangement. 

Under s EW 5(22), a short-term agreement for sale and purchase is an excepted financial arrangement unless the party makes an election under s EW 8. 

Since the company did not take that action, the TCO decided that the agreement is an excepted financial arrangement under s EW 5(22). Therefore, the agreement is not a financial arrangement.

Capital works are not repairs and maintenance

In Podium Investments Limited V The Commissioner Of Inland Revenue (2026), Podium disputes and appeals the decision of the Commissioner of IIR to deny an income tax deduction for costs incurred in relation to work done on a commercial building.  

The High Court held that the Authority did not err that Podium failed to prove that the work was R&M:    

1. The seismic and glass façade works were an integral part of the overall capital project and could not sensibly be separated from the overall capital project. 
2. On a stand-alone basis, the seismic and glass façade work went beyond repairs and maintenance and was capital in nature. The construction changed a seismically sub-standard, unsafe building into one that exceeded acceptable standards. This was a significant change to the character of the building.

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