16 February 2026 to 20 February 2026
Weekly Bulletin Contents
TAX
Monday 16 February 2026
ATO: Poor compliance behaviours that attract our attention
The ATO said it will look more closely at small businesses that: knowingly operate outside of the system, like not declaring all income and over-claiming expenses; deliberately don’t report or register correctly, and don’t lodge and pay in full and on time; don’t know their tax and super obligations, including employer responsibilities; pay employees in cash and don’t declare income to avoid their tax and super obligations; use business funds and assets to support their personal lifestyle, tax-free; and have poor record keeping and/or cash flow management.
ATO: Get ready for the SBSCH closure
The ATO has advised that the Small Business Superannuation Clearing House (SBSCH) will close permanently on 1 July as part of the Payday Super reform. It said that if you’re using the SBSCH, don’t wait until 1 July to make the transition to an alternative service and that you should start planning now on how you’re going to meet your super guarantee obligations once it closes. Before 1 July, you’ll need to: choose an alternative payment method; switch to the new method as soon as possible; and download your super records from the SBSCH.
Tuesday 17 February 2026
Luxury car subject to FBT – not exempt as “commercial vehicle”
The ART has rule that a company was liable for FBT in relation to a luxury sports car (a 2010 Ferrari California) it provided to its sole director which was used primarily to drive to and from work. (The car had been bought under a 100% financed hire-purchase agreement.) In finding that the company was liable for FBT, the ART dismissed the company’s claims that the vehicle was exempt on the basis of it being either a “commercial vehicle” or a vehicle that was “not designed to carry passengers”. However, the parties agreed that the taxable value of the vehicle was its original purchase price of $325,000 and did not include additional on-road costs of $20,000. (MXSN and FCT (Taxation) [2026] ARTA 186, 13 February 2026)
ATO: SMSF’s requests to adjust concessional contributions
The ATO has advised that if you have a client who is a member of an SMSF, and they made concessional contributions in one financial year but did not allocate until the next financial year, it’s important they submit the correct form to the ATO. The ATO said to support timely and accurate processing of Request to Adjust Concessional Contribution Forms (NAT 74851), they encourage agents to lodge this form for their clients through Online Services for Agents using the Practice Mail: Topic – Superannuation; and Subject – Payment and transfer of superannuation holdings reserve.
Wednesday 18 February 2026
No deduction for inter-corporate service fees – absence of contract
The Full Federal Court has allowed the Commissioner’s appeal from the decision of the Federal Court in S.N.A Group Pty Ltd v FCT [2025] FCA 240. In that case, two taxpayers (who were operating entities within a real estate sales business group) were allowed deductions of some $19m over a 5-year period for service fees they paid to other entities within the group for use of various assets. The deductions were allowed essentially on the basis that a contract which gave rise to a liability to make the payments could be inferred from conduct of the relevant parties. However, the Full Federal Court unanimously found that there was “insufficient evidence of an objective manifestation of mutual assent to contract on certain terms between taxpayers and the related parties” and “nor was there evidence of conduct consistent with payment of ‘service fees’ in the amounts claimed as deductions in each relevant year”. (FCT v S.N.A Group Pty Ltd [2026] FCAFC 10, 17 February 2025.)
ATO: Claiming SMSF setup costs correctly
The ATO has issued a reminder that if you paid your SMSF setup costs personally, you may be able to claim reimbursement from the fund. To do this correctly: the SMSF must charge the costs against your benefits; you should seek reimbursement as soon as the fund has enough cash; and the reimbursement must relate to costs incurred in setting up the fund – not for other services. The ATO also said that when done properly, reimbursement isn’t considered a contribution, borrowing or financial assistance – but if you don’t seek reimbursement for set up costs charged to your fund, the ATO will treat your payment as a contribution.
Shortfall penalties of 50% reduced to 40% due to circumstances
The ART has reduced 50% shortfall penalties imposed for recklessness (in relation to wrongful claims for rental property deductions) to 40% in view of the circumstances of the case. These circumstances included: a computer virus that caused records to not be available; the fact that the taxpayer never intended to make false statements (and that she responded promptly to try and correct errors); financial stresses her family faced; and health issues suffered by her son and her husband (who usually prepared their tax returns). The ART was also of the view that the ATO’s objection decisions “were flawed and unfair” to the taxpayer by drawing inferences against her when other inferences in her favour could have been drawn. (RYJZ and FCT (Taxation) [2026] ARTA 182, 12 February 2026)
Thursday 19 February 2026
ATO: Transfer balance cap to increase to $2.1m
The ATO has advised that for superannuation purpose the transfer balance cap will increase from $2m to $2.1m in 2026–27. At the same time, the ATO advised that the defined benefit income cap will increase from $125,000 to $131,250 in 2026-27.
ATO: Claiming SMSF setup costs correctly
The ATO has issued a reminder that if you paid your SMSF setup costs personally, you may be able to claim reimbursement from the fund. To do this correctly: the SMSF must charge the costs against your benefits; you should seek reimbursement as soon as the fund has enough cash; and the reimbursement must relate to costs incurred in setting up the fund – not for other services. The ATO also said that when done properly, reimbursement isn’t considered a contribution, borrowing or financial assistance – but if you don’t seek reimbursement for set up costs charged to your fund, the ATO will treat your payment as a contribution.
Shortfall penalties of 50% reduced to 40% due to circumstances
The ART has reduced 50% shortfall penalties imposed for recklessness (in relation to wrongful claims for rental property deductions) to 40% in view of the circumstances of the case. These circumstances included: a computer virus that caused records to not be available; the fact that the taxpayer never intended to make false statements (and that she responded promptly to try and correct errors); financial stresses her family faced; and health issues suffered by her son and her husband (who usually prepared their tax returns). The ART was also of the view that the ATO’s objection decisions “were flawed and unfair” to the taxpayer by drawing inferences against her when other inferences in her favour could have been drawn. (RYJZ and FCT (Taxation) [2026] ARTA 182, 12 February 2026)
Friday 20 february 2026
GST input tax credits denied – no enterprise carried on at relevant time
A taxpayer company who carried on an accounting and tax services business – except for a 5 year period between 2013 and 2018 when its registration as a corporation ceased temporarily – has been unsuccessful in its claim for input tax credits for legal costs (and other business expenses) it incurred in relation to a dispute with its bank. In doing so, the ART found that it was not carrying on an “enterprise” during the relevant period that it incurred the expenses. In any event, the ART said that even if it was carrying on an enterprise, it could not demonstrate that the expenditure gave rise to input tax credits – primarily because of concerns about whether the taxpayer held appropriate records to substantiate that creditable acquisition had been made. (RQA Accountants Pty Ltd and FCT (Taxation) [2026] ARTA 210, 17 February 2026)
ATO: Some donations attract GST
The ATO has issued a reminder that some donations and gifts received by Not-for-Profit (NFP) organisations may be subject to GST. The ATO said genuine donations or gifts are not subject to GST if they are given voluntarily and the donor does not receive anything of material value in return. However, the ATO said if a donor does receive something material in return, such as a ticket to a dinner, the payment is not a gift. It is treated as a normal sale and will be subject to GST if the supplier is registered or required to be registered for GST.
SUPER & FINANCIAL SERVICES
ATO: Claiming SMSF setup costs correctly
The ATO has issued a reminder that if you paid your SMSF setup costs personally, you may be able to claim reimbursement from the fund. To do this correctly the SMSF must charge the costs against your benefits; you should seek reimbursement as soon as the fund has enough cash; and the reimbursement must relate to costs incurred in setting up the fund – not for other services. The ATO also said that when done properly, reimbursement isn’t considered a contribution, borrowing or financial assistance.
Institute of Financial Professionals Australia (IFPA) comment
Many new SMSFs don’t have cash immediately while rollovers are processed, so administrators often delay issuing the setup invoice until the fund is established and has received initial funds. This reduces the need for members to pay costs personally. Where a member does pay eligible setup costs, reimbursement should be sought promptly once the fund has cash and correctly allocated against the member’s benefits, otherwise the ATO may treat the payment as a contribution.
ATO: Transfer balance cap to increase to $2.1m
The ATO has advised that the general transfer balance cap (TBC) will increase from $2 million to $2.1 million in 2026-27. At the same time, the ATO advised that the defined benefit income cap will also increase from $125,000 to $131,250 in 2026-27.
What else changes if the cap rises?
Many total super balance (TSB) thresholds are linked to the general TBC. A rise in the general TBC from 1 July 2026 would allow members with a TSB of less than $2.1 million to make non-concessional contributions (NCCs) to super.
Currently members with a TSB of $2 million or more at 30 June of the previous year cannot make NCCs without breaching their cap. TSB limits which determine eligibility to utilise the two and three year NCC bring-forward rule will also change.
Contribution caps likely to rise
The concessional contribution (CC) cap is based on AWOTE figures that have not yet been released (expected late February). That said, it is expected that the CC cap will increase from $30,000 to $32,500 on 1 July 2026.
An increase in the CC cap will flow through to an increase in the NCC cap which is set at four times the CC cap. This would translate to the NCC cap rising to $130,000 and the three-year bring forward amount would rise to $390,000. Once the contribution caps are formally confirmed, we’ll provide a further update at that time.