23 October 2026

19 October 2026 to 23 October 2026 Weekly Bulletin Contents TAX MONDAY 19 OCTOBER 2026

TAX · Monday 19 October 2026

ATO issues draft ruling: carrying on a business by an individual

The ATO has released Draft TR 2026/D2: Income tax: carrying on a business by an individual. It sets out the indicators the Commissioner considers relevant to determine whether an activity you have undertaken, as an individual, is a business as opposed to an investment or a hobby. The Ruling also states that the indicators in this Ruling are well established and are consistent with the indicators set out in TR 97/11 Income tax: am I carrying on a business of primary production? which are relevant to determining whether a taxpayer carries on a business of primary production for tax purposes. This Ruling does not replace the more specific advice provided in TR 97/11 and other rulings on this topic and should be read in conjunction with them. Comments due: 27 November 2026.

ATO: Expectation for managing disputed debts

The ATO has issued a reminder that its longstanding expectation of large business and privately owned and wealthy taxpayers with a disputed debt is that they either pay their debt in full or enter into a 50:50 arrangement. This expectation is detailed in Practice Statement Law Administration PS LA 2011/4 Collection and recovery of disputed debts. The ATO said it will be engaging more actively with privately owned and wealthy groups about this expectation. The ATO also said that a disputed tax debt is one that’s being challenged through objection, review, or appeal – and that you have the right to dispute a tax decision. However, disputing a decision does not remove the obligation to manage and pay the debt while you’re resolving the dispute.

TUESDAY · Tuesday 20 October 2026

ATO updates: SMSFs, limited recourse borrowing and non-arm’s length income

The ATO has issued an addendum to TD 2016/16: Income tax: Will the ordinary or statutory income of a self-managed superannuation fund be non-arm's length income under subsection 295-550(1) of the Income Tax Assessment Act 1997 (ITAA 1997) when the parties to a scheme have entered into a limited recourse borrowing arrangement on terms which are not at arm's length? The Addendum reflects the recent amendments that limits SMSF LRBAs on real property to business real property. In addition, it outlines when a non-arm’s length limited recourse borrowing arrangement could result in non-arm’s length income. The Addendum applies to relevant arrangements entered into on or after 10 August 2026.

The ATO has also released an addendum to Self Managed Superannuation Funds Ruling SMSFR 2009/2 and updated Practical Compliance Guideline PCG 2016/5: Income tax – arm's length terms for limited recourse borrowing arrangements established by self-managed superannuation funds and PS LA 2023/1: Self-managed superannuation funds – rectification directions for contraventions of the Superannuation Industry (Supervision) Act 1993. These updates reflect changes to limited recourse borrowing arrangement rules.

Draft consolidated ruling: Business real property for purposes of SIS Act

The ATO has released a Draft consolidation for Self-Managed Superannuation Funds Ruling SMSFR 2009/1DC: Self Managed Superannuation Funds: business real property for the purposes of the Superannuation Industry (Supervision) Act 1993. The consolidation outlines proposed changes to the Ruling to reflect the amendment made to s 67A of the Superannuation Industry (Supervision) Act 1993 by the Treasury Laws Amendment (Tax Reform No. 1) Act 2026. In particular, the ruling explains the meaning and application of the term “business real property” in relation to SMSFs for these purposes. Comments due 27 November 2026.

ATO: Payday Super – SMSFs need updated ESA

The ATO has issued a reminder that SMSFs need to have an active ESA to comply with Payday Super and SuperStream – and that you must act now to check your digital details are up to date. The ATO said that if you receive super guarantee contributions from unrelated employers, you must have an active electronic service address (ESA) – and that this is even more important with Payday Super. The ATO emphasised that if your SMSF receives contributions from unrelated employers, you need to act now to ensure: your bank account is reachable via the New Payments Platform (NPP); and you’re registered for, and continue to maintain, an active ESA.

WEDNESDAY · Wednesday 21 October 2026

ATO reminds taxpayers to lodge now

The ATO has reminded taxpayers who are yet to lodge their 2025–26 individual income tax returns that now is the time to do it. With just over 2 weeks until the deadline, the ATO has received around 9 million income tax returns, with around 2 million self-preparers yet to lodge. The ATO said taxpayers who are lodging their own return have until 11:59 pm local time on Monday 2 November to submit on time.

Commissioner succeeds in application for summary judgment re DPN

The Supreme Court of Western Australia has granted the Commissioner’s application for summary judgment of $1.16m in relation to director penalty notice (DPN) liabilities against a director of an NDIS Supported Independent Living provider. The company failed to meet PAYG withholding, SGC and GST obligations. The director argued that she was not made aware of the DPNs, that she had taken all reasonable steps to comply, and that the fault lay with NDIS payment delays. The Supreme Court dismissed all of these arguments. The Court reiterated that directors are expected to keep themselves informed of tax liabilities and that NDIS funding issues do not excuse statutory tax duties. (Deputy Commissioner of Taxation v Moyo [2026] WASC 434, 7 October 2026)

ATO: Work out if you need to lodge a TPAR

The ATO has issued a reminder that some businesses and government entities need to lodge a Taxable payments annual report (TPAR) for payments made to contractors or subcontractors for certain services during the financial year, and that a TPAR must be lodged by 28 August each year. The services that come under the Taxable payment reporting system (TPRS) are: building and construction; cleaning; courier and road freight; information technology (IT); and security, investigation or surveillance. The ATO said businesses that provide these services and pay contractors to deliver them may need to lodge a TPAR.

THURSDAY · Thursday 22 October 2026

Minimum 30% trust tax bills referred to Senate Committee

The Treasury Laws Amendment (Tax Reform No 3) Bill 2026 and Income Tax Rates Amendment (Minimum Tax on Discretionary Trusts) Bill 2026, which establish a minimum 30% tax on the net income of discretionary trusts commencing from 1 July 2028, have been referred to the Senate Economics Legislation Committee. It is due to report by 13 November 2026.

ATO: Interim impact statement on Hilton hotel Pt IVA case

The ATO has released an interim decision impact statement outlining its response to the Federal Court decision in Hilton International Australia Pty Ltd v FCT [2026] FCA 1325. The case involved the application of Pt IVA to a scheme consisting of a pre-sale restructure within the Hilton Group immediately before a sale of shares in a related company that owned the Hilton Hotel Sydney. The Federal Court found that the sale comprised a scheme, that the taxpayer obtained a tax benefit by virtue of not including $173m in its assessable income and that the dominant purpose of carrying out the scheme was to obtain a tax. Among other things, the ATO said the decision provides significant guidance on the analysis required by s 177CB as to the identification of “reasonable alternatives” to a scheme, for the purposes of establishing a tax benefit. Note: The taxpayer has appealed to the Full Federal Court of Australia.

ATO: Decision impact statement on Hicks Pt IVA case

The ATO has released a decision impact statement on the decision in FCT v Hicks [2025] FCAFC 171 relating to a corporate restructure. In that case, the Full Federal Court dismissed the Commissioner’s appeal from the decision at first instance: the taxpayers successfully appealed against amended assessments that had treated payments under the restructure as dividends pursuant to s 45B of ITAA 1936 or as a tax benefit arising under Pt IVA. The Full Court confirmed that s 45B and Pt IVA did not apply in the circumstances. The ATO said it accepted that it was open to the Court to conclude, on the facts at issue, and in respect of the scheme identified by the ATO, that s 45B did not apply, but that it was uncomfortable with the finding regarding the standard required for an alternative postulate. The ATO also said that it is reviewing the impact of this decision on related advice or guidance, including PS LA 2005/24 (Application of general anti-avoidance rules) and PS LA 2008/10 (Application of s 45B to share capital reductions).

FRIDAY · Friday 23 October 2026

Full Court: Taxpayer’s appeal dismissed re re-raised tax debt

The Full Federal Court has dismissed the taxpayer’s appeal from the decision in Zhang v FCT [2025] FCA 1230. In that case, the taxpayer unsuccessfully applied under the Administrative Decisions (Judicial Review) Act 1977 for review of the Commissioner’s decision to “re-raise” his tax liability (some $2m) and then to issue a garnishee notice to a bank in respect of the debt. In unanimously dismissing his appeal, the Full Court found his appeal faced “the insurmountable hurdle” that his new allegations of fraud and misconduct by the ATO were not raised by his original application for review – and for that reason alone, he could not succeed. The Court also found that the appeal remained unsustainable as there was no arguable case of misconduct on the part of the Commissioner and that the taxpayer had not demonstrated any error in the ATO’s decision to issue the garnishee notice. (Zhang v FCT [2026] FCAFC 137, 22 October 2026)

ATO targets promoters of early release of super schemes

The ATO has released data showing the number of applications approved for compassionate release of super has decreased by 5%. The ATO said that while the latest data is promising, the ATO remains concerned that health practitioners and third-party facilitators continue to utilise predatory practices to get individuals to inappropriately access their super for financial gain – and that there are strict and limited situations where people need to access their super early to pay for critical medical procedures. The ATO also said that compassionate release of super should only be considered as a last resort, where all other options of paying for the eligible expenses have been exhausted. The ATO has also been working with the Australian Health Practitioner Regulation Agency to ensure applications to pay for health-related expenses are appropriate and do not take advantage of vulnerable people.

AFCA reports continued rise in complaints

The Australian Financial Complaints Authority (AFCA) has advised that it has received the highest number of complaints in its history during the 2025–26 financial year, with almost 120,000 complaints lodged by consumers and small businesses. AFCA said the record number of complaints indicates many Australians continue to face financial pressures, and that more needs to be done at industry level. It also said that the data reinforces the need for firms to resolve issues early where they can – and that internal dispute resolution is an opportunity for financial firms to put things right, and stop the complaint from escalating to AFCA.

SUPER & FINANCIAL SERVICES · Monday 19 October 2026

ATO plans Division 296 draft rulings for November and December

The ATO's advice under development program gives expected dates for its draft rulings on Division 296 tax.

Three drafts are due in November 2026:

• Taxation Ruling on total superannuation balance
• Law Companion Ruling on total superannuation balance value
• Law Companion Ruling on relevant superannuation earnings for interests other than prescribed interests.

A fourth, a draft Law Companion Ruling on relevant superannuation earnings for prescribed interests, is due in December 2026.

By way of background, for 2026–27 the large superannuation balance threshold is $3 million and the very large threshold is $10 million. An additional 15% tax applies to the proportion of earnings relating to the part of the balance above $3 million, and an additional 10% to the proportion relating to the part above $10 million. Both thresholds are indexed in line with CPI.

ASIC finds ongoing problems with super fund valuations

ASIC has released Report 841 (REP 841) on large super fund financial reporting and audit for 2025–26. In its media release of 14 October 2026, ASIC says its review of 42 registrable superannuation entity (RSE) financial reports and 6 audits found persistent concerns about how unlisted investments are valued.

On the financial reports, ASIC found that:

• trustees often relied on external fund managers for the fair value of externally managed unlisted investments, which may limit their ability to challenge significant assumptions and estimates
• some trustees did not adjust member liabilities promptly after significant investment write-downs
• fair value hierarchy disclosures gave only high-level descriptions, with little on the valuation techniques, inputs and judgements used.

On the audits, some auditors did not adequately test prices supplied by external fund managers, or the methods, assumptions and data behind them. For internally managed investments, some did not obtain sufficient appropriate audit evidence.

PS LA 2026/D4: ATO explains how it will make its own SG assessments

The ATO has released draft practice statement PS LA 2026/D4.

Under Payday Super, the Commissioner can assess an employer's superannuation guarantee (SG) shortfall and the resulting SG charge for a qualifying earnings (QE) day. The draft sets out the factors ATO staff should consider before making an assessment, the information they may rely on and when an assessment may be amended.

FSCP acts on fees for no service and a bring-forward error

ASIC's outcomes register for the Financial Services and Credit Panel (FSCP) was updated on 16 October 2026 with two new decisions.

The FSCP required an adviser to complete at least 5 hours of continuing professional education within 6 months: 2 hours on ongoing fee arrangements and 3 hours on ethics and professionalism. The client had ended an ongoing fee agreement by email in October 2023. The adviser kept receiving fees until August 2025 without providing a financial advice service. The panel found a breach of Standards 2 (Integrity and Best Interests) and 7 (Consent to Fees and Value) of the Financial Planners and Advisers Code of Ethics.

In a separate decision dated 6 October 2026, the FSCP found an adviser miscalculated the contributions a client could make in the 2024 financial year. That triggered the bring-forward arrangement from the 2024 financial year and subsequent excess contribution. The advice had planned for it to start in the 2025 financial year. The panel found breaches of Standard 5 (Client Care) of the Code of Ethics. That adviser must engage an independent compliance professional to audit the next 10 pieces of advice that include contribution and recontribution strategies.

Government responds to financial abuse inquiry and opens consultation

On 14 October 2026 the Government tabled its response to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into financial abuse. It supports, or supports in principle, 58 of the committee's 61 recommendations.

Treasury has also released a consultation paper, Tackling fraud and financial abuse. Submissions close on 27 November 2026. The paper seeks views on new ATO powers to:

• collect debts from tax agents who commit fraud
• pause or cancel debts for taxpayers who are victims of fraud by tax agents
• issue garnishee notices to collect tax debts from jointly held assets, with safeguards.

It also asks whether those powers could be adapted to collect a victim-survivor's tax debt from the perpetrator in certain situations. In addition, the Government says it will consult on an option giving the courts more flexibility to transfer a tax or social security debt to the spouse responsible for financial abuse in family law proceedings.

The media release lists two super measures among the work already underway:

• draft legislation, due for release later this year, to stop perpetrators of family and domestic violence receiving their victims' superannuation death benefits
• power for the ATO to stop rollovers into newly established SMSFs where there are concerns about fraud, financial abuse, misconduct or potential consumer harm.

---