PwC's presenters were joined by the ATOs’ Peta Lonergan (Assistant Commissioner) to talk through the fundamental shifts that have happened, and are expected, in the employment taxes landscape.
The past 12 months have seen significant developments across the employment taxes landscape—legislative (e.g. Payday Super), judicial (e.g. key Payroll Tax and Superannuation Guarantee cases), and regulatory (e.g. Revenue NSW reporting changes)—with further changes on the horizon.
At PwC's 2026 Annual Employment Taxes Update, the panel explored these developments and their practical implications. The session also featured the ATO's Peta Lonergan (Assistant Commissioner, Superannuation & Employment Obligations), who shared insights into the ATO's key focus areas and expectations for employers. Below is a summary of the webcast and key takeaways.
Superannuation Guarantee (SG)
The SG 24/25 compliance results show the SG gap decreasing from 6.3% to 6%—the first decline in years. This likely reflects both increased employer investment ahead of Payday Super and the ATO's evolving compliance approach (including an increase in firmer enforcement, with director penalty notices up 65%), with SG Charge liabilities rising 53% to $1.73bn.
Payday Super, commencing 1 July 2026, represents the most significant change to superannuation compliance since its inception, requiring contributions to reach funds within 7 business days of payday. As shared by Peta, the ATO will monitor compliance in real-time through enhanced Single Touch Payroll (STP) reporting of superable earnings per employee each pay day. Notwithstanding, the ATO has signalled a 'supportive' compliance approach through Practical Compliance Guideline PCG 2026/1, providing that employers who make genuine attempts to comply and promptly correct any shortfalls will be treated as 'low-risk'.
Beyond the 7-day requirement, employers should consider other key changes including entitlement calculations, the SG Charge regime (featuring a new administrative uplift amount, with reductions linked to compliance history and speed of voluntary disclosure), and reporting/systems requirements. Governance across the full superannuation lifecycle—from pre-engagement through to error escalation—will be essential.
As Peta noted in her closing remarks, 'time is running out so make sure you understand the Payday Super changes and be ready for 1 July'. See our What’s trending: Payday Super – ‘readiness’ steps employers should take and Fortifying governance for a successful transition articles for further information.
Fringe Benefits Tax (FBT)
Electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) remain a central focus in the FBT arena. From 1 April 2025, a PHEV is no longer exempt, subject to limited transitional provisions and employers should note this for their upcoming FBT returns. In addition, PCG 2024/2 provides practical guidelines on calculating electricity costs for home charging.
Car parking benefits remain an area of (potential) change. In Toowoomba Regional Council v Commissioner of Taxation [2025] FCA 161, the Federal Court found the shopping centre car park did not meet the 'commercial parking station' definition. The Commissioner of Taxation has appealed, and the ATO's position remains unchanged, with the regulator advising that employers should continue applying TR 2021/2 until resolved.
Luxury asset benefits are under increasing ATO scrutiny, as demonstrated by FCT v SEPL Pty Ltd [2025] FCA 581 and MXSN v Commissioner of Taxation [2026] ARTA 186—both involving luxury car use by directors. The Commissioner of Taxation succeeded in both matters (noting SEPL has been appealed).
Finally, Peta highlighted other key ATO focus areas: employers with potential FBT obligations who haven't lodged returns (or lodged nil returns), those amending prior year income tax returns to include employee contributions, and private use of motor vehicles—particularly commercial vehicles and dual cab utes.
Payroll Tax
The payroll tax landscape has seen incremental legislative changes across jurisdictions, including concessions for apprentice/trainee wages (Queensland, Tasmania, Northern Territory), the regional employer discount (Victoria), and annual return disclosures (New South Wales).
Notably, the 2024/25 NSW annual return introduced additional disclosure requirements, for the Contractor and Employment Agency Provisions—for example, for the Contractor Provisions, requiring employers to disclose contractor use, exemptions applied, and exempt amounts. Of relevance, inaccurate disclosures may mean the return does not constitute full and true disclosure.
This underscores the need for proactive payroll tax compliance: employers should document all contractor payments and retain evidence supporting exemptions well before the annual reconciliation deadline.
Worker Classification
The employee/contractor common law distinction and when employment taxes apply to contractors (under the extended tests) remains complex, with several significant cases heard over the year.
In Chief Commissioner of State Revenue v Uber Australia Pty Ltd [2025] NSWCA 172 (Uber), the NSW Court of Appeal found payments by Uber to drivers were 'wages' for payroll tax purposes. Special leave to appeal to the High Court has been granted—marking the first time Australia's superior court will consider the payroll tax Contractor Provisions.
The Employment Agency Provisions have also been tested, with contrasting outcomes in SKG Cleaning Services Pty Ltd v Chief Commissioner of State Revenue [2025] NSWSC 1219 and Nova Security Group Pty Ltd v Chief Commissioner of State Revenue [2025] NSWCATAD 124—both reflecting challenges in applying Chief Commissioner of State Revenue v Integrated Trolley Management Pty Ltd [2023] NSWCA 302. Both cases are on appeal.
From a superannuation perspective, Commissioner of Taxation v Hatfield Plumbing Pty Ltd (Trustee) [2025] FCA 182 found that hourly‑based payment may, depending on the facts, be for a result rather than 'wholly or principally for labour'. The matter has since been appealed to the Full Federal Court.
Each of these pending appeals could further refine the law. Organisations will need to proactively review contractor arrangements and governance frameworks to ensure that they accurately reflect current practice, comply with employment tax obligations, and remain robust in light of the recent and emerging developments.
Key takeaways
Payday Super takes effect 1 July 2026—the most significant change to SG compliance since inception. Employers should prioritise readiness, focusing on governance across the superannuation lifecycle.
Worker classification remains in flux, with several landmark decisions pending. Organisations must prioritise robust processes for identifying contractors, classifying relationships (at common law and under extended tests), and documented reviews of exemptions applied (given increasing disclosure requirements).
- Despite the ATO’s FBT focus being more targeted than expansive, there are a few important cases playing out in the Courts. Taxpayers should also take note of key changes to PHEV exemption applicable from 1 April 2025 when preparing upcoming FBT returns.
For those who missed the live session, a recording is available to watch on demand. For further discussion on your employment taxes matters, please reach out to your PwC contact.
Contact us
