10 March 2026 to 13 March 2026
Weekly Bulletin Contents
TAX
Tuesday 10 march 2026
Post-CGT leases subject to CGT, but not building on land
The Federal Court has ruled that a taxpayer who acquired pre-CGT land was not liable for CGT in respect of a building constructed on the land on the sale of the land for $32m in 2021. In doing so, the Court found that the relevant contract for the construction of the building, properly construed, was entered into pre-CGT and therefore the building was not a “separate” post-CGT asset under s 108-55(2) of the ITAA 1997. However, the Court found that the accompanying sale of two subleases in the building owned by the taxpayer were subject to CGT as it found that the leases had been acquired post-CGT and not pre-CGT as claimed by the taxpayer. (Brisbane Club v FCT [2026] FCA 220 (6 March 2026)
Forestry managed investment scheme; taxpayer loses appeal
The Full Federal Court has unanimously dismissed the taxpayer’s appeal from the decision at first instance in Aitken v FCT [2025] FCA 372. In doing so the Full Court effectively agreed with the Court at first instance which found that the effect of the exercise of a put option and the execution of novation deed by the taxpayer in relation to his forestry interest had the effect of giving rise to an assessable amount of $4.7m pursuant to s 394-25 of the ITAA 1997. The Court had also found that the taxpayer had not shown that the correct valuation principles were applied for the purposes of determining the decrease in the market value of the cost base of his interest. Aitken v FCT [2026] FCAFC 18,6 March 2026)
PAYG Withholding Variation for Company Directors
The Taxation Administration (PAYG Withholding Variation for Company Directors and Certain Office Holders) Legislative Instrument 2026v has been made. It reduces the amount required to be withheld by an entity to nil, where the amount is from payments to an individual who is appointed as a director, member of a committee of management, or as an office holder and the individual is required to remit the full amount of payments they receive in that capacity to another entity (a second entity) of which they are a director, partner or employee. This instrument also removes the requirement to provide payment summaries or report through the Single Touch Payroll (STP) reporting framework in relation to those payments.
PAYG Withholding Variation for Insurance and Compensation Payments
The Taxation Administration (PAYG Withholding Variation for Certain Insurance and Compensation Payments when an ABN is not Quoted) Legislative Instrument 2026. It varies the amount a payer must withhold from certain insurance and compensation payments to nil, where the payee has not quoted their Australian business number.
Wednesday 11 march 2026
Div 296 tax Bill passes Parliament
The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 has passed Parliament, and now awaits Royal Assent. Among other things, the Bill (the “Div 296 tax Bill”) imposes 30% tax on earnings based where total superannuation balances (TSB) exceeds $3m, and 40% tax where the TSB exceeds $10m.
ATO: Foreign investor vacancy fee
The ATO has released information on the vacancy fee return for foreign investors. The information required in the return includes how many days in a vacancy year your property was occupied, that is: occupied by the owner living in the property; rented by a tenant; and made genuinely available for rent. The ATO said that the vacancy fee return must be lodged within 30 days from the end of each vacancy year using Online services for foreign investors. The ATO also said that the vacancy fee is a fee that a foreign investor pays when their residential property is vacant for 183 days (6 months) or more in one vacancy year More information on residential land and the vacancy fee are available at the Foreign Investment website.
Thursday 12 march 2026
ATO: FBT – Providing perks to employees
The ATO has advised that if you provide work vehicles or other perks to employees – even if they’re provided occasionally – you may be providing a fringe benefit. This means you could have FBT obligations for the FBT year. It also said that many businesses provide fringe benefits without realising it – and that the most common example is providing a work vehicle that’s used for personal purposes, which includes when it’s garaged at an employee’s home. If your employees use work vehicles privately, the ATO says you need to take the time to understand your obligations so you can lodge correctly and stay compliant.
Addendum to Ruling: Deductions for mining etc exploration expenditure
The ATO has issued an addendum to TR 2017/1 Income tax: deductions for mining and petroleum exploration expenditure. It amends the Ruling to clarify the Commissioner’s view on the ordinary meaning of ‘exploration or prospecting’ in the context of Div 40 of the ITAA 1997.
Taxpayers claim for costs on an indemnity basis rejected
The Federal Court has rejected the taxpayers’ claim for costs on an indemnity basis in respect of the Commissioner’s losing appeal in FCT v Hicks [2025] FCAFC 171. In that case, the Court held that s 45B and Pt IVA of the ITAA 1936 did not apply to a capital distribution scheme involving a selective buy-back of a company’s shares. In this costs matter, the Court found that contrary to the taxpayers’ claim, the Commissioner did not unreasonably fail to accept their settlement offer. Accordingly, the Court found that the taxpayers were entitled to recover their costs of the appeal only on the usual standard basis. (FCT v Hicks (No 2) [2026] FCAFC 14, 2 March 2026)
Friday 13 march 2026
Draft Rulings: Penalties for failure to comply with super and STP reporting
The ATO has released PS LA 2026/D1 Administration of penalties for failure to comply with superannuation member account reporting obligations and PS LA 2026/D2 Administration of penalties for failure to comply with Single Touch Payroll reporting obligations. They will (when finalised) provide guidance to ATO staff on the administration of administrative penalties that may apply when entities fail to meet their event-based reporting obligations through the Member Account Attribute & Member Account Transaction Services (relating to superannuation member accounts) and Single Touch Payroll (relating to employment-based payments) accurately and on time. They outline considerations relevant to identifying and imposing administrative penalties and penalty remission.
ATO reminder: SMSFs must meet strict investment rules
The ATO has issued a reminder that SMSFs must meet strict investment rules before committing funds. It said that among other things, that an SMSF must not do the following: lend money or provide financial assistance to members or their relatives; acquire assets from related parties, unless specific exceptions apply; exceed the in-house asset limits; and enter into arrangements that do not follow arm’s length rules. The ATO also said transactions with related parties must reflect market value – and that if an investment involves a related party or business activity, you should make sure you understand how the rules apply before proceeding.
SUPER & FINANCIAL SERVICES
$3m Division 296 tax awaits Royal Assent
The Bill proposing the $3m Division 296 tax has passed both Houses and awaits Royal Assent before becoming law. The new legislation introduces an additional tax on earnings attributable to total superannuation balances (TSBs) exceeding $3m.
Specifically, from the 2026-27 income year onwards, the tax rates applying to superannuation earnings will be:
- for superannuation balances up to the $3m large superannuation balance threshold – up to 15% on earnings (unchanged from current tax arrangements)
- for superannuation balances between the $3m ‘large superannuation balance threshold’ and the $10m ‘very large superannuation balance threshold’ – up to an overall 30% on a percentage of earnings; and
- for superannuation balances above the $10m ‘very large superannuation balance threshold’ – up to an overall 40% on a percentage of earnings
These thresholds will be indexed to the Consumer Price Index.
Draft Rulings: Penalties for failure to comply with super and STP reporting
The ATO has released PS LA 2026/D1 Administration of penalties for failure to comply with superannuation member account reporting obligations and PS LA 2026/D2 Administration of penalties for failure to comply with Single Touch Payroll reporting obligations. They will (when finalised) provide guidance to ATO staff on the administration of administrative penalties that may apply when entities fail to meet their event-based reporting obligations through the Member Account Attribute & Member Account Transaction Services (relating to superannuation member accounts) and Single Touch Payroll (relating to employment-based payments) accurately and on time. They outline considerations relevant to identifying and imposing administrative penalties and penalty remission.
ATO ruling confirms delayed property sales can satisfy retirement nexus
In a recent private ruling the ATO confirmed that the sale of two premises occurred in connection with retirement for the purposes small business CGT 15-year exemption. The ruling is notable because it accepts that a CGT event can still be sufficiently connected with retirement even where the asset is sold after the individual has ceased gainful employment, provided the sale remains part of a documented and continuing retirement plan.
Institute of Financial Professionals Australia (IFPA) comment
This outcome is consistent with the ATO’s public guidance on the small business 15-year exemption. The ATO says whether a CGT event happens “in connection with” retirement depends on the facts of each case, but generally looks for a significant reduction in hours worked or a significant change in the individual’s activities. The ATO also says the timing of the CGT event can be before or after actual retirement, and that later disposals may still qualify where they are integral to the taxpayer’s retirement plan and the connection is maintained on the facts.