CPA Australia Tax News

This edition of Tax News was current at the time of publication on 6 August 2026. You can subscribe to the Tax News email in your comms preference centre. 

Treasury: Minimum tax on discretionary trusts

We made a submission to the Treasury’s Minimum tax on discretionary trusts consultation paper. 

We encouraged Treasury to test each element of the final design against the established principles of good tax policy: equity, efficiency, simplicity, certainty and low compliance cost. 

A measure that is fair in intent but complex in operation will not deliver fair outcomes in practice. 

Several elements of the current design — the proposed requirements to perform an actual or a fictional restructure in particular — risk failing the simplicity and certainty tests in their current form.

ASIC commence legal action against auditors

ASIC has commenced Federal Court proceedings against the lead auditor of First Guardian, alleging serious audit failures connected to the First Guardian Master Fund.  ASIC is seeking declarations of contravention, financial penalties, injunctions and other orders from the Court. 

The Originating process and Concise statement can be downloaded from the ASIC website.

ATO website updates

• Tips to meet the Payday Super timeframe 
• Claiming home-based business expenses  
• ESIC reports due 31 July
• GST registration for not-for-profits
• ATO reveals tax time "dos" and "don'ts"
• Investigation over $1.3 million GST fraud
• Operation Flint targets horticulture non-compliance

Performance audit of ATO's regulation of SMSFs

The ANAO has commenced an in-progress performance audit examining the effectiveness of ATO's regulation of SMSFs. 

The performance audits involve the independent and objective assessment of the administration of an entity's programs, policies, projects or activities, including the operation of administrative support systems.

Send your comments to [email protected] by 16 October 2026.

ASIC action against 36 SMSF auditors

ASIC has announced it took administrative action against 36 approved SMSF auditors. 

Between 1 January 2026 and 30 June 2026, ASIC:

• disqualified four SMSF auditors
• suspended three SMSF auditors
• imposed additional conditions on eight SMSF auditors
• cancelled the registration of 21 SMSF auditors.

This brings total actions against SMSF auditors in 2025-26 to 64.

AFCA guidance on Shield and First Guardian collapse

AFCA has released a new video addressing common questions from consumers impacted by the collapse of the Shield and First Guardian Master Funds. 

It provides guidance to affected consumers on the complaints process and clarifies key procedural matters. Additional guidance is available on AFCA's FAQ page.

ASIC review reveals mortgage offset account failures

ASIC has released Report 837 Offsets, out of mind: Banks fall short on mortgage offset account promises which finds that customers may have been unknowingly paying more interest on their home loans due to banks failing to properly manage mortgage offset accounts. The release highlights significant compensation liabilities for banks and signals further regulatory scrutiny.

Hydrogen Production tax offset

Income Tax Assessment (Hydrogen Production Tax Incentive - Grid Matching Requirements) Instrument 2026 was registered on the Federal Register of Legislation on 30 July 2027.

The Hydrogen Production Tax Incentive is a refundable tax offset contained in Div 421 of the ITAA 1997. It is available in respect of hydrogen produced during income years commencing on or after 1 July 2027 and ending before 1 July 2040, providing certain criteria are met. The Instrument prescribes the grid matching requirements. 

Date of effect: The instrument commenced on the day it was registered.

GST: recipient created tax invoices

The ATO issued Draft GSTR 2026/D2 on when the recipient of a taxable supply can issue a recipient created tax invoice (RCTI). Businesses and government-related entities can issue RCTIs if they meet the relevant conditions set out in the GST: Recipient Created Tax Invoice Determination 2023. 

The draft discusses the recipient's ability to set-off the value of a different supply made by it to the supplier, against the value of the supply that is the subject of the RCTI.

Proposed date of effect: 15 June 2023. 

Foreign resident capital gains withholding regime 

The ATO issued addenda to the following law companion rulings to reflect recent changes to the foreign resident capital gains withholding regime:

• LCR 2016/5 (Foreign resident capital gains withholding regime: the Commissioner's variation power)
• LCR 2016/6 (Foreign resident capital gains withholding regime: amount payable to the Commissioner)
• LCR 2016/7 (Foreign resident capital gains withholding regime: options).

Date of effect: the addenda apply from 1 January 2025.

Hybrid mismatch rules and structured arrangements

The ATO published an Addendum to LCR 2019/3 on the hybrid mismatch rules and the meaning of "structured arrangement'. Various minor amendments have been made "to address drafting and accessibility issues".

Date of effect: 1 January 2019 (when the hybrid mismatch rules commenced).

WET producer rebate for non-New Zealand participants

The ATO issued an Addendum to Wine Equalisation Tax Ruling WETR 2009/2 on the operation of the WET producer rebate for non-New Zealand participants. Extensive amendments have been made to the ruling as a result of legislative changes.

Date of effect: 

• 1 October 2019 (for changes that reference A New Tax System (Wine Equalisation Tax) Regulations 2019)
• 1 July 2026 (for changes made by the Treasury Laws Amendment (Supporting Choice in Superannuation and Other Measures) Act 2026, which increased the producer rebate from $350,000 to $400,000).

Ruling on RCTIs withdrawn

The ATO has withdrawn GSTR 2000/10 with effect from 29 July 2026. The ruling deals with recipient created tax invoices. It will continue to apply to RCTIs issued on or before 14 June 2023 but does not apply to those issued on or after 15 June 2023 (when it was effectively replaced by the A New Tax System (Goods and Services Tax): Recipient Created Tax Invoice Determination 2023).

Penalty for GST shortfall partially remitted

In BHZD and FCT (2026), the ART decided that a shortfall penalty for making a false or misleading statement in a BAS should be reduced from 50 per cent to 35 per cent. The ART concluded that the safe harbour provision in s 284-75(6) of Sch to the TAA 1953 did not apply as it was not satisfied that the taxpayers had provided all relevant taxation information to the tax agent. 

The ART commented that inaccurate information cannot be "relevant" information for these purposes of the provision. However, the ART decided to remit the shortfall penalty as the ATO had wrongly applied an "exceptional circumstances" test to the remission power and had failed to take into account the significant health and financial difficulties faced by the taxpayers. 

Cleaning company liable for payroll tax for subcontractors

In SKG Cleaning Services Pty Ltd v Chief Comr of State Revenue (2026) the taxpayers have lodged applications for special leave to appeal to the High Court from the decision of the NSW Court of Appeal. 

The Court of Appeal dismissed the taxpayers' appeal against a finding that contracts for the provision of cleaning services were "employment agency contracts" under the Payroll Tax Act 2007 (NSW), with the result that the appellants were liable for payroll tax on amounts paid to subcontractors.

Salary sacrifice may have GST implications

IR has noticed some tax agents are providing advice on salary sacrifice that does not address potential GST implications. 

Where an employee salary sacrifices an amount to buy a bicycle or other low-powered vehicle, the employer may be required to account for GST on the supply, even if the vehicle is provided by a third party. 

IR do not approve or endorse specific arrangements. However, IR do issue product rulings when requested. IR will review all relevant documents to confirm that the tax consequences, as requested by the product owner, are correct. The Tax Technical website includes product rulings relating to bicycles and other low powered vehicles. 

Financial support for gas transition projects

The Gas Transition Loan Guarantee Scheme is now open for businesses making the investment to reduce their reliance on gas. Businesses seeking new financing for gas transition projects can express their interest with participating banks ANZ, ASB, BNZ, Kiwibank and Westpac. 

Under the scheme, the Crown will guarantee 80 per cent of the default risk for eligible loans. It also sees the launch of a suite of Energy Efficiency and Conservation Authority-led support for businesses. The support is independent and designed to help businesses understand their energy options and identify a practical pathway, to give confidence before making significant investment decisions. 

New IR Tax Information Bulletin

The Tax Information Bulletin for August 2026 has been published.

Manufacturing training programme expands

More young New Zealanders will be paid to train for manufacturing careers, with the Earn as You Learn programme expanding into the Hutt Valley, Bay of Plenty, Christchurch and Auckland. Students experience different manufacturing environments and career pathways, combining paid workplace learning with formal training and industry mentoring.

The programme, developed by manufacturers and driven by Advancing Manufacturing Aotearoa, builds on the Waikato pilot, where students combined classroom-based learning with paid workplace experience while completing a Level 3 New Zealand Certificate in Manufacturing.

New cohorts of around 20 students will be established in each of the four regions in 2027. 

IR website updates

• myIR now available for new business tax accounts 

Working for Families fraud ends in home detention

An Auckland mother of six has been sentenced to home detention for claiming Working for Families Tax Credits she wasn’t entitled to. She pled guilty to a representative charge of tax fraud and appeared for sentencing in the Manukau District Court on July 28. 

The Court noted that 20 overseas trips by Filoa and her family over eight years indicates a comfortable financial position, so the offending was “motivated by greed rather than necessity”. Just under $190,000 was paid to Filoa, money she was not entitled to. She is currently repaying the amount at $300 per week. The final sentence was eight months home detention and a further six months post detention conditions. 

Gisborne couple sentenced for tax fraud

A Gisborne couple has been sentenced for tax fraud. The couple faced charges of knowingly not providing information to IR in order to get WFTC payments they were not entitled to. One of them was also charged with failing to register for GST and failing to file tax returns with the intent to evade income tax and GST. 

In the Gisborne District Court on 29 July, the Court noted onr taxpayer’s offending was straight theft from the community and that it was done solely out of greed to fund his gambling habit. Both people had earlier pleaded guilty to the charges and were given a discount for doing so. The Court sentenced one taxpayer to seven months home detention and the other taxpayer to five and a half months community detention.

Commissioner’s denial of deductions was correct

In L v Commissioner of Inland Revenue (2026), a taxpayer sought deductions for education expenses, motor vehicle expenses and home office expenses. The taxpayer also challenged the Commissioner’s imposition of a shortfall penalty for not taking reasonable care.

The Authority denied the deductions sought on the basis that the deductions were not incurred as part of the taxpayer’s business or prior to the taxpayer’s registration for GST. The taxpayer also had failed to keep adequate records or otherwise show the deductions had been incurred. 

The Authority agreed that the taxpayer had failed to take reasonable care in taking the tax positions. The decision confirms that preparatory activities undertaken before the commencement of a business do not constitute the carrying on of a business for deduction purposes. It also reinforces the importance of proving both the existence and amount of deductible expenditure, and keeping adequate records to support business-use apportionments.

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