18 May 2026 to 22 May 2026
Weekly Bulletin Contents
TAX
monday 18 May 2026
Coalition Budget Reply
Opposition Leader Angus Taylor delivered his Budget in Reply speech on 14 May.
Two notable proposals include:
- Tax Back Guarantee – indexing the bottom two income tax thresholds to inflation from 2028-29, extending to all four thresholds from 2031-32.
- Permanent instant asset write-off – businesses with turnover under $10 million could immediately deduct assets up to $50,000 on an ongoing basis.
- End FBT exemption for electric vehicles
- Simplify the “legislative rule book”
A transcript of the speech can be found here.
Director ID amendments Bill introduced
The Treasury Laws Amendment (Business Registries Stabilisation and Uplift) Bill 2026 was introduced to Parliament on 14 May 2026. It contains amendments to enhance the Director ID regime. The amendments strengthen requirements and enforcement to ensure greater protections against unlawful activities such as illegal phoenix behaviour by linking the Director ID to ASIC’s Companies Register. Among other things, the amendments will: require that Director IDs are provided to ASIC as part of the company registration processes; require the directors provide their Director IDs to companies; give ASIC information publication powers; and give ASIC the power to disqualify directors who fail to apply for a Director ID. The Bill has been referred to a Senate Economics Legislation Committee for report by 17 June 2026.
ATO: Payday Super – myth vs fact
The ATO has issued some information to clear up some common myths about Payday Super and what SMSFs need to do now. The ATO states that employers will be making super contributions more frequently and will rely on super funds, including SMSFs to be set up correctly to receive them – so that it was important to set out some common misconceptions.
tuesday 19 May 2026
Applicant not entitled to registration – insufficient experience
The ART has affirmed the decision of the Tax Practitioners Board to deny the applicant registration as a tax agent on the basis that he did not satisfy the relevant experience criteria. The applicant who worked full time in a non-tax agent services role, claimed that his part-time contract work for 5 hours a week providing various tax services satisfied the criteria. However, the ART concluded that the applicant had not established that he worked an equivalent number of required hours to meet the condition of “undertaking at least 2 years of full-time relevant experience [or part-time equivalent] in the last 5 years”. The ART also queried whether the requisite supervision requirement had been met. (Hakim and Tax Practitioners Board [2026] ARTA 804, 15 May 2026)
ATO: Payday Super for contractors
The ATO has issued a reminder that with Payday Super approaching fast, now’s the time to look at how you pay super for independent contractors. The ATO said that while Payday Super doesn’t change who’s eligible for super as the existing rules on eligibility remain the same, what does change is when you must pay super. Accordingly, the ATO emphasised that if you’re currently required to pay super for an independent contractor, you’ll continue to do so under Payday Super.
wednesday 20 may 2026
Interest on UPE loans placed on sub-trust not deductible
The Federal Court has dismissed several taxpayers’ appeals in a matter involving unpaid present entitlements (UPEs) of some $7m from a family trust being placed on separate sub-trusts as loans. The issue was whether interest on these sub-trust loans was deductible to the family trust under s 8-1 of the ITAA 1997. However, the Court ruled that the interest was not deductible as the sub-trust loans were not “directly productive of income for the family trust”. The Court also ruled that the taxpayers carried the burden of establishing that a family trust election was not made in respect of the family trust and that they had not done so – and that, as a result, they were liable for family trust distribution tax. (Cameron v FCT [2026] FCA 609, 19 May 2026)
Foreign investment Budget measures – fact sheet released
Treasury has released the Further streamlining and strengthening the foreign investment framework, Overview of reforms fact sheet which details the reforms that were announced in the 2026-27 Budget to streamline and strengthen Australia’s foreign investment framework. These reforms announced in the 2026-27 Budget included: setting a new performance target of deciding all low-risk applications within 30 days (to be implemented from 1 January 2027); updating or removing ineffective conditions on existing foreign investment approvals; streamlining the Register of Foreign Ownership of Australian Assets; and extending the temporary ban on foreign purchases of established dwellings until 30 June 2029.
Third party reporting exemptions for government related entities
The ATO has released Draft Legislative Instrument LI 2026/D10 – Taxation Administration (Third Party Reporting Exemptions for Certain Transactions by Government Related Entities) Determination 2026. It exempts government related entities (eg federal and state agencies and statutory bodies) from including some classes of transactions in third party reports they would otherwise be required to be given to the Commissioner. Comments due by 12 June 2026.
thusday 21 may 2026
Apportionment of rental property deductions – final rulings released
The ATO has released the final ruling and guidance documents dealing with the apportionment of rental property deductions, as follows:
- TR 2026/1 Income tax: rental property income and deductions for individuals who are not in business. It provides guidance for individuals relating to declaring income and claiming deductions for rental properties, including holiday homes. It covers situations where a property is rented to family and friends as well as apportionment for non-income producing use. It provides the ATO view on the application of s 26-50 of the ITAA 1997, which is an integrity rule relating to the use of holiday homes.
- PCG 2026/2 Apportionment of rental property deductions – ATO compliance approach. It explains the ATO’s compliance approach regarding apportionment of deductions on a ‘fair and reasonable’ basis where the integrity rule relating to holiday homes does not apply. It sets out apportionment methodologies the ATO will accept as fair and reasonable in common situations.
- PCG 2026/3 Application of section 26-50 of the Income Tax Assessment Act 1997 to holiday homes that you also rent out – ATO compliance approach. It explains the ATO’s compliance approach regarding the integrity rule relating to holiday homes. It sets out how the ATO will assess the level of risk for a range of rental property arrangements to which the integrity rule may apply, and how the ATO may allocate compliance resources to consider the application of that rule to rental property arrangements
As a result of the issue of these rulings, Taxation Ruling IT 2167 Income Tax: rental properties – non-economic rental, holiday home, share of resident, etc. cases has now been withdrawn.
Comment: It’s been a big couple of weeks for rental property deductions!
Update of enforcement ruling for recovering tax debts
The ATO has updated PS LA 2011/18:Enforcement measures used for the collection and recovery of tax-related liabilities and other amounts to provide additional detail on the factors that are considered by the ATO when determining whether to issue a Departure Prohibition Order (DPO). The Appendix has also been restructured to align with the typical sequence of decision-making in relation to DPOs – namely, issuing a DPO, issuing a Departure Authorisation Certificate, and revocation or variation of a DPO.
Pt IVA applies to complex trust scheme – but amount of tax benefit reduced
In a Pt IVA matter remitted to the ART by the Full Federal Court for redetermination, the ART has now confirmed that the taxpayer obtained tax benefits under the relevant scheme. However, it found that the amount of the taxable tax benefit was to be reduced by available carry forward losses (of some $350,000) – which meant that the amount of trust income to be distributed to the taxpayer as a beneficiary of the relevant trust was reduced. The case was related to the decision remitted to the ART in Collie v FCT [2026] ARTA 328 – where the tribunal was originally found to have failed to give proper regard to evidence and submissions under s 43(2B) of AAT Act and to have erred in construction of the “tax benefit” requirement (in that the tribunal found that there may have been viable “non-tax benefit” reasons to structure the arrangement in the way it was structured). This current matter, like Collie, involved a complex trust structure and transactions with no pattern of income distributions. (Grant and Commissioner of Taxation (Taxation and business) [2026] ARTA 833 (19 May 2026)
friday 22 may 2026
Taxpayer fails to reinstate matter before ART
The ART has dismissed an application of a taxpayer for reinstatement of previously dismissed proceeding. In doing so, the ART said that the taxpayer had been afforded a reasonable opportunity to present his case and to provide submissions and evidence in support of the reinstatement application, but had declined to do so. In those circumstances, the ART said that granting a further adjournment would be inconsistent with the objects in s 9 of ART Act 2024 – namely that applications to the Tribunal are resolved as quickly, and with as little formality and expense, as the proper consideration of the matters before the Tribunal permits. (Dundovich and FCT (Practice and procedure) [2026] ARTA 846, 19 May 2026)
FBT Car Parking threshold for 2026-27
The ATO has released the car parking threshold for the FBT year commencing 1 April 2026. It is $11.48 (up from the amount for the year that commenced on 1 April 2025 of $11.03).
Super: Exemption from “SM officers” from compliance requirements
The Superannuation Industry (Supervision) Act Exemption No 1 of 2026 instrument has been made. Its purpose is to exempt ‘SM Officers’ (as defined) from compliance with requirement that for a person to apply to APRA for approval to hold a controlling stake in an RSE licensee and set out that a person that holds a controlling stake in an RSE licensee without approval commits an offence for which strict liability applies
Tasmanian 2026-27 State Budget
The Tasmanian 2026-27 State Budget was handed down on 21 May 2026. It contains no new state taxes and does not increase existing state tax rates. However, the development of the 5% short-stay accommodation levy is still ongoing.
SUPER & FINANCIAL SERVICES
ATO flags timing gap for indexed transfer balance caps
- On a recent update to their page Upcoming personal transfer balance cap changes the ATO confirmed proportionally indexed personal TBCs will not display in ATO online services or Online services for agents until 13 July 2026.
Background
As a background the general transfer balance cap (TBC) will be indexed up by $100,000 to $2.1 million from 1 July 2026. Members who started a pension before 1 July 2026 and have never reached or exceeded their personal cap will receive a proportional increase, calculated on their highest-ever transfer balance and unused cap space. Members commencing a pension for the first time on or after 1 July 2026 will get the full $2.1 million personal TBC.
The 1–13 July window
TBC events can still be reported during this period and the ATO will process them as usual, but updates won’t be reflected in a member’s transfer balance until 13 July. During the gap, the ATO will not issue or revoke excess transfer balance determinations or commutation authorities. Funds should continue to respond as normal to any commutation authorities already on foot.
ATO prompts new SMSF trustees to prepare for first annual return
The ATO has reminded recently established SMSFs to start preparing for their first SMSF annual return (SAR), due 31 October 2026 for trustees lodging direct.
In guidance published 18 May 2026, the Tax Office is encouraging new trustees to engage a registered tax agent early. Clients picked up under an agent’s lodgment program may receive an extended due date of 28 February 2027.
Key reminders for new trustees
- If the fund was set up before 30 June but held no assets in year one, lodge a return not necessary (RNN) or cancel the registration.
- Appoint an approved SMSF auditor at least 45 days before the SAR due date.
The supervisory levy for new SMSFs is $518, covering the establishment year and the following year.
Survivors Law Bill receives assent
The Treasury Laws Amendment (The Survivors Law) Bill 2026 received assent on 20 May 2026. The Act creates a mechanism for victims and survivors of specified child abuse offences to access a perpetrator’s superannuation to satisfy compensation orders that have remained unpaid for 12 months or more, where the perpetrator has been convicted to a criminal standard.
Applicants apply to the Commissioner for the perpetrator’s super information, then seek a court-issued perpetrator contributions release order directing the Commissioner to release funds via a new release authority added to Schedule 1 of the Taxation Administration Act 1953.