1 June 2026

The 2026–27 Federal Budget announced a significant package of reforms to the Research and Development Tax Incentive (RDTI), with changes proposed to take effect from 1 July 2028. Under the proposals:

• Core R&D offset rates will increase by 4.5 percentage points, with the intensity threshold reduced from 2% to 1.5%, so that more firms undertaking substantial core R&D qualify for the higher offset.

• Eligibility for ‘supporting’ R&D expenditure will be removed.

• The turnover threshold for the higher, refundable offset will increase from $20m to $50m.  

• Refundability will be limited to firms less than ten years old; firms below the $50m turnover threshold but older than ten years will retain access to the higher offset rate on a non-refundable basis.

• The maximum R&D expenditure cap will increase from $150m to $200m.

• The minimum expenditure threshold will increase from $20,000 to $50,000, with R&D activities below this amount only eligible if undertaken through a registered Research Service Provider or Cooperative Research Centre.

These measures form part of the first stage of the Government’s response to the Ambitious Australia: Strategic Examination of Research and Development Final Report. See PwC’s Budget analysis and insights for further details.  

Treasury has released exposure draft legislation for consultation that would establish a News Bargaining Incentive (NBI).

Under the framework, the proposed legislative package would operate such that an entity (or the entity’s group if the entity is part of a corporate group) that provides a significant social media or search service and exceeds the revenue threshold ($250 million for the financial year) must pay a news media bargaining incentive charge (NMI). The amount of NMI an entity is liable for in a financial year is calculated by applying the NMI rate (2.25%) to the entity’s consolidated revenue attributable to Australia from the third-most-recent financial year before the financial year of the NMI. An entity can offset their NMI liability in a financial year by entering into commercial agreements with Australian news media businesses to produce news content or to use their news content.

Once legislated, it is proposed that the NMI will apply from the 2025–26 financial year and later financial years, with a return for an NMI amount generally required to be given within six months after the end of the relevant financial year to which the return relates. Comments on the draft law closed 18 May 2026.

In Botella and Commissioner of Taxation (Taxation and business) [2026] ARTA 604, the Administrative Review Tribunal has considered legislative provisions, including the application of the deemed dividend (Division 7A) and dividend stripping provisions, finding on most counts for the Commissioner.

The taxpayers, an individual and related corporate entity (PPD), appealed against amended assessments, penalty assessments, and a Division 293 assessment issued by the Commissioner in respect of the 2018 and 2019 income years. Namely, the Tribunal was asked to determine four issues: 

• Whether loans drawn by the individual from a separate related corporate entity were complying Division 7A loans 

• Whether PPD’s distributable surplus for 2018 should be reduced by disputed payroll tax and defects-claim liabilities for the purpose of working out the amount of the deemed dividend 

• Whether a corporate restructure amounted to a dividend stripping scheme under section 177E of the Income Tax Assessment Act 1936 and section 207-155 of the Income Tax Assessment Act 1997

• Whether the penalties and Division 293 tax imposed on the individual taxpayer were excessive or warranted further remission

On the first issue, the Tribunal agreed with the Commissioner’s view that the deeming of the pro-forma loan agreement in the relevant company’s constitution to apply to a loan could not satisfy the requirement that the agreement that the loan was made under is in writing, in particular, since the deeming clause operated in relation to advances of money already made. This ultimately meant that there was no complying Division 7A loan and accordingly a deemed dividend was taken to have been paid to the individual taxpayer. 

On the second issue, the Commissioner conceded that the relevant company’s liability for unpaid payroll tax as at 30 June 2018 constituted a ‘present legal obligation’ and ought to have been subtracted from the net assets of the company in calculating its distributable surplus for the 2018 income year. No such reduction was, however, found to be available for the penalties on the payroll tax liability and defects-claim liabilities. 

On the third issue, the Tribunal commented that the scheme displayed the well-understood characteristics common to dividend stripping schemes, with the result that the arrangement constituted a scheme ‘by way of or in the nature of dividend stripping’ under section 177E of the ITAA 1936 and a ‘dividend stripping operation’ under section 207-155 of the ITAA 1997, with the consequence that franking credits were denied under section 207-145. The Court was not persuaded that the scheme’s characteristics and the objective circumstances of its design and operation were inconsistent with a dominant purpose of tax avoidance. The scheme identified by the Commissioner extended beyond the mere interposition of PPH as a holding company for PPD, contrary to the applicants’ characterisation of the restructure, and involved a series of complex, coordinated transactions that enabled PPD’s undistributed profits to be converted into dividends payable to PPH, subsequently on‑lent to the taxpayer on favourable terms, and then purportedly applied to discharge his personal loans from PPD. The Court found this to be a carefully orchestrated scheme, not confined to the establishment of a new holding entity. 

Finally, as to the penalty matters, the ART found that the taxpayers had failed to discharge their onus of proving that the assessment of scheme penalties was excessive or otherwise incorrect. Similarly, the taxpayers did not advance any basis to show that the Commissioner’s assessment regarding Division 293 could be said to be excessive or otherwise incorrect.

The ATO has published the new Superannuation Guarantee (SG) opt-out form on its website to support the Payday Super regime for high-income earners with multiple employers. Specifically, employees with more than one employer in a financial year who expect the compulsory super guarantee contributions from these employers to exceed their concessional contributions cap for the financial year can apply to opt out of receiving some super guarantee contributions.

Importantly, if this is to apply with effect from the commencement of the Payday Super regime on 1 July 2026, the ATO generally needs the form to be lodged with it by 30 May 2026 due to the requirement for the application to be made at least 30 days before the first day of the specified period.

During May 2026, the ATO has released a number of additional updates on its websites in relation to Payday Super, as part of its final preparation guidance ahead of the 1 July 2026 go-live date:

• Payday Super: Breaking down the basics

• Making the move from quarterly super to Payday Super

• Payday Super: How to manage super during the changeover

• Where quarterly super and Payday Super meet

• Don’t delay: Act now to transition from the SBSCH

• Payday Super made simpler with SuperStream

A Senate committee has tabled its report on regulations made to support the Payday Super reforms by making consequential and supporting amendments to the SG framework and related instruments.

In brief, the Senate Economics Legislation Committee strongly supported the implementation of Payday superannuation in Australia. The committee considers that these reforms will have a clear and positive impact on the retirement outcomes for many thousands of current and future Australian workers.

On 5 May 2026, the Treasurer, the Hon Jim Chalmers MP, and the Minister for Climate Change and Energy, the Hon Chris Bowen MP, announced the Government’s intention to modify the existing fringe benefits tax (FBT) exemption for electric vehicles (EVs). The stated objectives are to promote the sale of more affordable models and create a more financially sustainable tax system as the EV market matures. This measure was adopted in the 2026–27 Federal Budget.

The changes will amend the existing FBT exemption for EVs from 1 April 2029 by introducing a 25% FBT discount on EVs up to and including the fuel-efficient luxury car tax (LCT) threshold (given effect by a 15% statutory fraction). Read more about this proposed change in our Tax Alert. 

The ATO has now published its rates and threshold guidance for the FBT year commencing 1 April 2026. 

Key changes include:  

• An increase to the EV home charging rate—from 4.2 cents per kilometre to 5.47 cents per kilometre 

• An increase of the cents-per-kilometre rate for residual vehicles, by 1 cent per kilometre (for vehicles under 2,500 cc) and 2 cents per kilometre (for vehicles over 2,500 cc)  

• An increase in the car parking threshold from $11.03 to $11.48

• Statutory interest rate decreased from 8.62% to 8.27% 

• Increases to the reasonable food and drink amounts

In Prestige Form Group NSW Pty Ltd and Commissioner of Taxation (Taxation and business) [2026] ARTA 627, the Administrative Review Tribunal considered FBT assessments on vehicles owned by a concrete formwork business. Following an ATO audit for FBT years 2018–2021, the Commissioner issued amended assessments increasing the FBT liability and imposing penalties for reckless behaviour. The key issues heard were whether the taxpayer could use the operating cost method (OCM) rather than the statutory formula method (SFM) for two vehicles, and whether recklessness penalties were appropriate. 

The Tribunal found the taxpayer had failed to make the required written OCM election by the declaration date, having lodged FBT returns up to five years late. It declined to allow a late election, citing clear legislative intent for timely elections. Even if the OCM had been available, the taxpayer’s logbooks were unreliable due to unexplained odometer discrepancies, inconsistent witness evidence, and an inability to explain operating cost calculations. On penalties, the Tribunal held that a business of this scale with access to professional accounting support demonstrated indifference to compliance risk and declined to remit penalties despite cited personal and business difficulties. 

The Tribunal set aside the objection decision, ordering that car fringe benefits for the remaining vehicles be calculated using the SFM, with recklessness penalties confirmed at 50% of the recalculated shortfall. 

This decision highlights that a formal written OCM election by the declaration date is essential. Logbooks must be contemporaneous, consistent, and explainable under cross-examination. Unfamiliarity with FBT obligations, language barriers, or reliance on an accountant not called to give evidence may not prevent recklessness penalties where, amongst other things, professional advisory support was available. 

In Commissioner of Taxation v Toowoomba Regional Council [2026] FCAFC 50, the Full Federal Court allowed the Commissioner’s appeal regarding the meaning of “commercial parking station” for FBT purposes. The taxpayer argued that the shopping centre car park, located within one kilometre of its premises, was not a “commercial parking station” because it was not operated with a profit-making purpose. 

The Full Court unanimously held that “commercial” does not require a profit-making intention—the majority held it means “engaged in or of the nature of commerce”. The statutory text does not inquire into revenue, expenses, or profitability—matters internal to the operator and not objectively ascertainable by the employer—and the taxable value is calculated by reference to the lowest fee charged, not profitability. Feutrill J concurred but construed the composite phrase as requiring that car parking be available to the public in the ordinary course of business on payment of a market-value fee.  

For employers, this means shopping centre car parks and other facilities that charge fees to the public—even where the primary purpose is to attract customers rather than generate standalone parking profits—are likely to be “commercial parking stations”. 

For more analysis on the impact of this decision on taxpayers, please refer to our Alert. 

The Treasury Legislation Amendment Bill 2026 (NT) was introduced into the Northern Territory Parliament and proposes two key measures, addressing housing and payroll tax, respectively. From a payroll tax perspective, the Bill introduces a new payroll tax rate of 6.5% (up from 5.5%), to apply from 1 July 2026 to taxable Territory wages where an employer or payroll tax group has $100 million or more in Australia-wide wages over a financial year or relevant period. This measure was first announced in the NT Budget 2026–27. 

Affected employer groups should review their Australia-wide wage forecasts for the 2026–27 year and consider the cash flow and cost-base implications of the higher rate, including any pass-through to project budgets, intercompany recharges, or labour pricing for Territory operations.

The Western Australian (WA) Government has issued a revenue ruling clarifying how paid parental leave payments made under the Commonwealth Government’s Paid Parental Leave scheme are to be treated for payroll tax purposes.

Revenue Ruling PTA 037.3 states that the Pay-roll Tax Assessment Act 2002 (WA) prescribes that wages are liable for payroll tax if they are paid or payable to an employee for or in relation to services provided by the employee (or in anticipation of future services to be provided by the employee).

Even though parental leave payments may be paid by employers, the Commissioner is of the view that they do not constitute wages under the Act. They are therefore not liable to payroll tax as they are not paid by the employer in respect of services provided by the employee (or in anticipation of future services to be provided by the employee). Rather, parental leave payments are Commonwealth Government payments that employers are asked to pay on behalf of the Commonwealth Government.

Similarly, superannuation contributions paid by the ATO on parental leave pay are not considered wages under the Act. Voluntary superannuation contributions paid by the employer on parental leave pay, however, are wages for the purposes of payroll tax. 

In ZBDD and Commissioner of Taxation (Taxation) [2026], ARTA 553, the Administrative Review Tribunal (ART) has partially allowed a taxpayer’s appeal concerning input tax credits, but denied claims for the majority of credits claimed as the burden of proof was not met.

The taxpayer was in the business of vocational education and training, and provided accredited online courses. Dispute in the relevant periods arose as to the availability of input tax credits for 15 quarters ended 30 June 2016 to 31 December 2019 inclusive. The impact of cyber events had resulted in a loss of some material to support the claims.  

In respect of certain invoices, the ART found that, on the balance of probabilities, they comprised taxable supplies, had a creditable purpose given the GST-free nature of the taxpayer’s supplies, and the burden of proof was satisfied by the taxpayer. Subject to additional checks by the Commissioner, input tax credits for those invoices were allowable. However, no input tax credits were ultimately allowed for expenses related to professional educator contractors, which formed the bulk of the taxpayer’s claimed input tax credits, as the taxpayer had not met its burden of proof in respect of those claims.

The High Court has refused the taxpayer’s special leave to appeal against the decision from Taxation v CPG Group Pty Ltd [2025] FCAFC 147, which involved a disputed entitlement to input tax credits under a gold refining scheme under the GST anti-avoidance provisions. In that case, the Full Federal Court by majority determined that the initial Administrative Appeals Tribunal decision be set aside, with the appeal remitted to the ART for further hearing and determination according to law.

Separately, the High Court has refused the taxpayer’s special leave to appeal from Commissioner of Taxation v ACN 154 520 199 Pty Ltd (in liquidation) [2025] FCAFC 146, a similar case in which the Full Federal Court allowed the Commissioner’s appeal, remitting the dispute back to the ART. For further details about both cases, see the December 2025 edition of Monthly Tax Update. 

The High Court has refused the Commissioner’s application for special leave to appeal from the Full Federal Court’s decision in Geocon Land Holdings No. 5 Pty Ltd v Commissioner of Taxation [2025] FCAFC 172. In that case, the Full Federal Court allowed a taxpayer’s appeal concerning windfall gains, with the matter to be remitted to the ART for redetermination. For further details, see the February 2026 edition of Monthly Tax Update.

The following measures related to excise and tariffs were included within Federal Budget 2026–27:

• From 1 July 2026, the Government will abolish a second tranche of 497 nuisance tariffs, building on the removal of 457 nuisance tariffs in July 2024. 

• Additional funding will be provided over four years from 2026–27 to boost productivity through expanding the Australian Trusted Trader program by establishing a new business development function and implementing the Approved Exporter Scheme.

• A broad-based duty exemption on Ukrainian goods has been extended for a further two years, to 3 July 2028. This measure applies a ‘free’ rate of duty to all goods that Ukraine produces or manufactures, except for excise‑equivalent goods, such as certain alcohol, fuel, tobacco, and petroleum products, which will remain subject to excise‑equivalent customs duty.    

For further information, refer to our Federal Budget 2026–27 Insights.

Following the 2026–27 Federal Budget announcement that the foreign investment framework would be further strengthened and streamlined, the Treasurer announced the release of updated ‘Australia’s Foreign Investment Policy’ and a Treasury Fact Sheet that details the package of reforms announced, which involves:

• 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 

• Amending foreign investment legislation and making consequential amendments to other legislation as relevant to further streamline and strengthen the foreign investment framework 

• Streamlining the Register of Foreign Ownership of Australian Assets

• Extending the temporary ban on foreign purchases of established dwellings by two years and three months until 30 June 2029

From a tax perspective, it was reported in the Fact Sheet that Treasury will review conditions on existing foreign investment approvals to update or remove ineffective conditions. The review will commence on 1 July 2026, with an initial focus on tax conditions.  

Furthermore, in relation to Register of Foreign Ownership of Australian Assets, for which the Commissioner of Taxation is the Registrar, it was noted that investors will no longer be required to report acquisitions of interests in commercial land, businesses, or entities to the Register. Investors will instead be required to register realised acquisitions that were approved by Treasury through Treasury’s system for investment proposals, avoiding the need to re-enter information already included in their application. Acquisitions of certain mining tenements, water interests, agricultural land, and residential land will still need to be reported to the Register. Existing reporting obligations will continue until legislative amendments implementing these changes commence.  

The Fact Sheet also confirms that Treasury will develop the details of the legislative reforms outlined, noting that the timing of legislative amendments is a matter for Government. Stakeholders will also have an opportunity to comment on the details of the reforms through consultation on exposure draft legislation, consistent with the usual legislative development process.

Treasury has released draft Rules to amend Australia’s Pillar Two Rules, introducing minor amendments that ensure consistency with the OECD rules and guidance. Namely, the purpose of the proposed Amending Rules is to ensure the effective operation of the Top-up Tax Rules and incorporate elements of the Agreed Administration Guidance released in June 2024, December 2023, and January 2026.

The Amending Rules make amendments to:  

• The Flow-through Entity income allocation rules and related definitions

• The Blended Controlled Foreign Corporation (CFC) Allocation Key ensuring that Covered Taxes under Blended CFC Tax Regimes are allocated consistently across all relevant entities and jurisdictions, including those that are not Constituent Entities, and to permanent establishments (PEs) 

• Modify the substitute loss carry forward rule

• Extend the transitional period for the Transitional CbCR Safe Harbour by 12 months to cover fiscal years that begin prior to 31 December 2027 and end before 1 July 2029 to align with the OECD agreement in January 2026 

• Ensure that for the purposes of applying the tests under the CbC Safe Harbour, the relevant calculation is adjusted as necessary so that the income and associated taxes of qualifying Investment and Insurance Investment Entities are appropriately allocated to their Constituent Entity-owner

• Ensure the Qualified Domestic Minimum Top‑up Tax (QDMTT) Safe Harbour also captures Stateless Constituent Entities created in a QDMTT jurisdiction that is also eligible for the QDMTT Safe Harbour 

Once legislated, the Amending Rules will apply from 1 January 2024 (the OECD’s Pillar 2 Two start date). Comments closed 22 May 2026.

The ATO has updated Practical Compliance Guideline PCG 2019/1, which outlines the ATO’s compliance approach to the transfer pricing outcomes for inbound distribution arrangements. Following a review of the use and application of the Guideline since its issue in 2019, the ATO has updated it to align with recent market performance, industry observations, and ATO administrative practices. Furthermore, the update also clarifies the scope of the Guideline’s application.

This OECD page lists the currently activated bilateral exchange relationships between jurisdictions for the automatic exchange under each of the Common Reporting Standard (CRS), country-by-country (CbC) reporting, the reporting of income derived through Digital Platforms (DPI), the Crypto-Asset Reporting Framework (CARF), and the Pillar Two GIR Multilateral Competent Authority Agreements (MCAA).

To support the implementation of the Pillar Two Global Minimum Tax (GMT) and mitigate the impact of any potential delays in the availability of fully operational filing portals or exchange relationships, jurisdictions implementing the GMT from 2024 have agreed on a common understanding to preserve the administrative and compliance benefits of the central filing mechanism for the GloBE Information Return (GIR). Pursuant to this common understanding, 2024 Implementing Jurisdictions have agreed to:

1. Publish a list of jurisdictions expected to have a fully operational GIR filing portal in place by 31 May 2026
2. Use mechanisms available under their respective domestic laws to waive penalties or suspend enforcement of local GIR filing obligations before the relevant GIR exchange deadline where the GIR has been centrally filed in any one of the jurisdictions identified in the published list

Separately, the OECD/G20 Inclusive Framework on BEPS has also released further administrative guidance on the application of the existing Transitional UTPR Safe Harbour to groups with 52–53-week fiscal years and has updated the Central Record for Purposes of the Global Minimum Tax.

The OECD has released a Global Minimum Tax Implementation Toolkit that clarifies key administrative aspects of the Pillar Two GMT. It provides guidance on timelines and milestones, supports jurisdictions in addressing common operational challenges, and promotes coordination through shared best practices, reducing administrative and compliance burdens for both tax administrations and taxpayers.

The OECD has released Taxing Wages 2026, an annual publication that provides details of taxes paid on wages in OECD countries. This year’s edition focuses on the progressivity of the average tax wedge across different earnings intervals and household types. Using data up to 2025, it also examines personal income taxes and social security contributions paid by employees, social security contributions and payroll taxes paid by employers, and cash benefits received by workers. Key findings include, among others: 

• The average ‘tax wedge’ (the difference between the labour costs to the employer and the corresponding net take-home pay of the employee) for a single worker earning the average wage increased in a majority of OECD countries in 2025.

• The tax wedge for households with children increased more than for single workers.

• The OECD average tax wedge for most household types is at its highest level since before the COVID-19 pandemic.

• Average wages and post-tax incomes increased in real terms across the OECD.

In addition to the Government’s announcement at the Federal Budget 2026–27 that 497 ‘nuisance’ tariffs would be removed from 1 July 2026, Treasury is consulting on the removal of a further 86 tariffs from 1 July 2027. The tariffs proposed for abolition have been selected for removal based on factors such as the low value of goods being imported, the low value of duty being collected, and other policy considerations. Comments close 11 January 2027.

The ATO has issued draft Fuel Tax (Fuel Blends) Determination 2026. The draft instrument specifies circumstances in which blends of a taxable fuel and other products do not constitute a fuel for the purposes of the fuel tax law. For blends covered by this instrument, the producer of the blend may be entitled to claim fuel tax credits on the taxable fuel used in producing the blend and, as these blends are taken not to be excisable under subsection 77G(1) of the Excise Act 1901, excise duty will not be payable.

The instrument, once registered, will repeal and replace the 2016 Determination, which would otherwise sunset on 1 October 2026. Although the draft instrument has largely the same effect as the 2016 Determination, it introduces a new requirement for blends of biodiesels that contain surfactants or oleic acid—if these blends also contain any other fuel, they will constitute a fuel for the purposes of fuel tax law. This ensures fuel tax is payable on these blends and thereby manages the associated risks to revenue of the blends being re-purposed as fuel. Once finalised, this instrument will commence on the day after it is registered on the Federal Register of Legislation. Comments close 5 June 2026. 

The following draft excise determinations have been released by the ATO:

• Draft Excise (Volume – Captive Use Recycled Oil) Determination 2026

• Draft Excise (Volume of LPG – Temperature and Pressure Correction) Determination 2026

• Draft Excise (Volume of Liquid Fuels – Temperature and Pressure Correction) Determination 2026

• Draft Excise (Mass of CNG) Determination 2026

Each draft Determination, once finalised, will repeal and replace its respective 2016 Determination, which would otherwise sunset on 1 October 2026. Each draft instrument has the same substantive effect as the one it is replacing. Comments for all draft Determinations close 5 June 2026.

The result of the US Supreme Court ruling, which struck down the tariffs imposed by the US Administration under the International Emergency Economic Powers Act (IEEPA), removed one key instrument from President Trump’s tariff toolbox. Against this backdrop, President Trump has sought to rely on new legal authorities to continue his tariff agenda. 

In particular, this includes the imposition of new 10% global tariffs under Section 122 of the Trade Act of 1974 as well as the launch of a significant number of investigations under Section 301 of the Trade Act to consider if tariffs are necessary as an outcome. For further details, see our Tax Alert.

The Government announced in the 2026–27 Federal Budget that it will introduce a 30% minimum tax on discretionary trusts. Under the proposal, from 1 July 2028, the trustee will pay a minimum tax of 30% on the taxable income of discretionary trusts. Beneficiaries, other than corporate beneficiaries, will receive non-refundable credits for the tax payable by the trustee. 

The minimum tax will not apply to fixed and widely held trusts, complying superannuation funds, special disability trusts, deceased estates, and charitable trusts. Some types of income such as primary production income, certain income relating to vulnerable minors, amounts to which non-resident withholding tax applies, and income from assets of discretionary testamentary trusts existing at announcement will also be excluded.

To assist taxpayers who decide that a discretionary trust is no longer the most appropriate vehicle for their affairs, the Government will provide expanded rollover relief for three years from 1 July 2027 to support small businesses and others that wish to restructure out of a discretionary trust into another entity type, such as a company or a fixed trust. 

For further analysis of this change, refer to PwC’s Budget commentary. 

In the 2026–27 Federal Budget, it was announced that, from 1 July 2026, the $20,000 instant asset write‑off will be permanently extended for small businesses with turnover up to $10 million. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool. The provisions that prevent small businesses from re‑entering the simplified depreciation regime for five years after opting out will continue to be suspended until 30 June 2027.

For further analysis of this change, refer to PwC’s Budget commentary.

The 2026–27 Federal Budget also announced that it would expand the venture capital tax incentives to better facilitate venture capital investment and support early-stage and growth businesses with effect from 1 July 2027:

• The venture capital limited partnership (VCLP) cap on the asset size of an investee at the time of investment will rise from $250m to $480m.

• The early stage venture capital limited partnership (ESVCLP) investee asset cap at the time of investment will rise from $50m to $80m.

• The asset size up to which ESVCLP returns can remain fully tax exempt will rise from $250m to $420m. 

• The maximum committed capital for an ESVCLP will rise from $200m to $270m.

The increases will apply to new and existing funds and to new investments (including follow-on investments in existing portfolio companies), provided the fund remains compliant with its approved investment plan or seeks a replacement plan.

Additionally, the Eligible Venture Capital Investor program will close to new applications from 7:30pm AEST 12 May 2026, which will impact foreign investors who previously sought to invest in eligible businesses outside the VCLP/ESVCLP frameworks.

Additionally, in light of the proposed CGT changes noted earlier, consultation with stakeholders in relation to the treatment of early-stage and start-up businesses is expected. 

For further analysis of this change, refer to PwC’s Budget commentary.

The following income tax-related measures, which have not been separately reported elsewhere in this edition of the Monthly Tax Update, were also announced in the 2026–27 Federal Budget:

• Expansion of the ATO’s pilot of dynamic PAYG instalment calculations and broadening of access to monthly payments from 1 July 2027, including the proposal that taxpayers with a demonstrated history of non-compliance will be required to report and pay PAYG instalments monthly 

• Removal of the ministerial declaration requirement from the community charity deductible gift recipient (DGR) process, reducing red tape for eligible community charities by removing a step in the endorsement process

For further insight into the Budget measures, refer to our in-depth analysis and insights. 

In his Budget in Reply Speech, Angus Taylor, Leader of the Opposition, outlined a commitment to repeal (if enacted) the Government’s Budget proposals to change taxes on housing, savings, and small businesses (presumably referring to the minimum 30% tax on discretionary trusts) and introduce a ‘Tax Back Guarantee’ for individual taxpayers to address bracket creep by indexing tax thresholds for inflation. The Opposition would also allow an immediate deduction for small businesses for assets of up to $50,000 on a permanent basis as well as scrap the Build-to-Rent tax breaks for multinationals.

The ATO has released Draft Taxation Administration (Third Party Reporting Exemptions for Certain Transactions by Government Related Entities) Determination 2026, which exempts government-related entities (such as Federal, State, and Territory departments, agencies, and statutory bodies) from having to include certain financial transactions in reports they must give to the Commissioner under the third-party reporting regime. However, such entities can still choose to report exempt transactions where the administrative burden of not reporting the transaction would be greater than that of reporting it. The draft instrument, once finalised, repeals and replaces the 2016 Instrument, which would otherwise sunset on 1 October 2026. The draft instrument has the same substantive effect as the one it is replacing. Comments close 12 June 2026.

In Frizelle and Commissioner of Taxation (Taxation and business) [2026] ARTA 752, the Administrative Review Tribunal considered the tax treatment of three distributions made from a non-resident trust to the taxpayer in the income years ended 30 June 2019 and 30 June 2020. Alongside issues concerning penalties, the Tribunal was asked to determine whether the distributions were assessable income of the taxpayer under section 99B(1) of the Income Tax Assessment Act 1936.

The taxpayer contended that the amounts were gifts or loans from her mother and family members, and that she was unaware of the existence of the foreign trust or of her status as a beneficiary. However, this argument did not assist the taxpayer: the Tribunal accepted that an amount is assessable under section 99B(1) where it is paid to, or applied for the benefit of, a beneficiary of a non-resident trust—the beneficiary’s awareness of the trust or of the source of the funds was irrelevant to its application.

In Brisbane Club v Commissioner of Taxation (No 2) [2026] FCA 521, the Federal Court has further considered whether an indexed amount should be included in the cost base of a pre-CGT building or a post-CGT second sublease.

This appeal was related to the decision delivered in Brisbane Club v Commissioner of Taxation [2026] FCA 220, in which the Federal Court found that while a building was a pre-CGT asset, the subleases over parts of the building were not pre-CGT assets (for further information, see the April 2026 edition of Monthly Tax Update).

In this appeal, the Federal Court was to resolve whether an indexed amount of $928,378 (being a payment of $600,000 under clause 27(b) of a deed to the developer) should be included in the cost base of the building or the second sublease. Ultimately, the Federal Court determined on two separate bases that the amount should be included in the cost base of the pre-CGT building: the payment of money was firstly not in respect of the second sublease, it being a payment to the developer. Secondly, on the proper construction of the deed to the developer, the payment of money was a payment for the construction of the building, which the Club could occupy.

In Shell Energy Holdings Australia Limited v Commissioner of Taxation [2026] FCA 577, the Federal Court has allowed a taxpayer’s appeal against amended assessments concerning the calculation of the taxpayer’s cost base in certain shares that was established by reason of former section 160ZZSC(1) of the Income Tax Assessment Act 1936 that required the pre-CGT assets to have been acquired on 20 January 1997 at market value since there was no continuity of majority underlying interests in the assets it held on 19 September 1985.

The legal question that divided the parties was whether the taxpayer was entitled to claim as part of the cost base under former section 160ZZSC(1) a premium over the volume weighted average price (VWAP) of the disposed shares on 20 January 1997, reflecting the significant influence that the shareholding conferred. The case turned on whether market value was to be assessed by reference to a single share being traded on the ASX (as the Commissioner contended) or by reference to the deemed acquisition of the entire parcel by a single entity (the taxpayer’s view); and, if the latter, what premium over the VWAP should be applied to reflect the significant influence the parcel conferred.

Ultimately, the Federal Court found for the taxpayer on both issues. Specifically, it agreed that the deemed market value consideration is that of a deemed simultaneous acquisition of each share comprised in the entirety of the shareholding by a single purchaser on 20 January 1997. The statutory task is not to determine the market value of a single share being traded in isolation from any other deemed acquisition of shares that day.

Accordingly, the Court found that the taxpayer had discharged its burden of proof and accepted the taxpayer’s market valuation.

The Tax Ombudsman has announced a review into the ATO’s engagement with First Nations taxpayers. The review will examine the following topics.

• How the ATO identifies and engages with:
  • First Nations taxpayers, including individuals and businesses, to support understanding of and engagement in managing their tax and super obligations and entitlements
  • Third parties and external partners who support First Nations taxpayers to manage tax and super affairs, including access to appropriate assistance to reduce the risk and impact of predatory agent or business behaviour against First Nations taxpayers
• How ATO staff are supported, trained, and resourced to appropriately manage interactions with First Nations taxpayers
• Whether the ATO has a robust process for identifying the needs of First Nations taxpayers and applying those insights to improve its services, communications, and staff capability

The review will lead to a set of recommendations for the ATO about practical improvements it could make to the way it works with First Nations taxpayers. Feedback for this review closes 4 September 2026, with the review expected to be completed by December 2026.

The Australian Taxation Office (ATO) has finalised the following Taxation Ruling and Practical Compliance Guidelines concerning various aspects of rental property income and deductions for individuals who are not in business:

• Taxation Ruling TR 2026/1, which provides guidance for individuals relating to declaring income and claiming deductions for rental properties, including holiday homes. It also covers situations where a property is rented to family and friends as well as apportionment for non-income-producing use. Further, the Ruling provides the ATO’s view on the application of section 26-50 of the Income Tax Assessment Act 1997, which is an integrity rule relating to the use of holiday homes. The Ruling applies to years of income commencing both before and after its date of issue, subject to the transitional compliance approach relating to section 26-50 set out in Appendix 2. Under the compliance approach, the Commissioner will not devote compliance resources to reviewing whether section 26-50 will apply to expenses incurred in relation to holiday homes that are rental properties, if the expenses are incurred before 1 July 2026.

• Practical Compliance Guideline PCG 2026/2, which explains the ATO’s compliance approach regarding the apportionment of rental property deductions on a ‘fair and reasonable’ basis. It also sets out apportionment methodologies the ATO will accept as fair and reasonable in common situations, and for taxpayers who are eligible to use the Guideline and work out apportionment using the most appropriate methodology as detailed, the Commissioner would not have cause to apply compliance resources to investigate a claim. Importantly, affected taxpayers will still need to keep records to support a view that the Guideline applies and how apportionment calculations have been made. The Guideline applies to years of income commencing both before and after its date of issue.

• Practical Compliance Guideline PCG 2026/3, which explains the ATO’s compliance approach regarding the integrity rule relating to holiday homes, and 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 such rental property arrangements. The Guideline applies both before and after its date of issue. 

The repayment incomes and repayment rates for the Higher Education Loan Program (HELP) for the 2026–27 income year have been released, with the minimum repayment income for the 2026–27 income year set at $69,528. For full rates and thresholds, refer to the Gazette Notice.

The 2026–27 Northern Territory Budget was delivered on 5 May 2026. Revenue from Territory taxes and royalties is estimated to total $1.29bn in 2025–26 and $1.28bn in 2026–27, before growing modestly across the forward estimates. Targeted revenue measures were announced, including:

• An increase in the payroll tax rate to 6.5% for large employers with annual Australia-wide wages of at least $100m

• A 12-month extension of the HomeGrown Territory grant scheme through to 30 September 2027

• Cessation of the stamp duty concession for certificates of registration for plug-in electric vehicles on 30 June 2027, consistent with the previously announced five-year sunset 

The Treasury Legislation Amendment Bill 2026 (NT), which was introduced into the Northern Territory (NT) Legislative Assembly on 5 May 2026, contained the measures to extend the HomeGrown Territory grant ($50,000 for first home buyers building or purchasing a new home) through to 30 September 2027. It also introduced the higher payroll tax rate for large employers from 1 July 2026.

For further information on the 2026–27 Northern Territory Budget, see our Tax Alert.

The 2026–27 Western Australia Budget was delivered on 7 May 2026. Among the revenue measures announced was a $297m Housing Taxation Package, which:

• Extends stamp duty relief for first home buyers, lifting the exemption and concession thresholds for both established homes and vacant land

• Extends the off-the-plan transfer duty concession by two years and broadens its scope to capture additional dwelling types (such as units and villas, alongside apartments and townhouses) 

• Delinks the first home owner rate of duty from the First Home Owner Grant (FHOG), so that first home buyers acquiring vacant land within the concession thresholds receive the concession regardless of their FHOG eligibility 

• Introduces a new foreign buyers duty exemption for those who construct and sell new dwellings within two years of the original purchase

For further information on the 2026–27 Western Australian Budget, see our Tax Alert.

The 2026–27 Tasmanian Budget was delivered on 21 May 2026. No new State tax measures were announced and there are no proposed changes to existing taxes.

For further information on the 2026–27 Tasmanian Budget, see our Tax Alert.

The Short Stay Levy Bill 2026 (Tas) has been introduced into the Tasmanian Parliament, delivering on the Tasmanian Government’s election commitment to introduce a 5% levy on short stay accommodation. The levy will apply on the total booking fee for short stay accommodation in Tasmania booked through a booking platform provider where the stay is for less than 28 days, exclusive of the day on which the person is required to vacate the accommodation.

Some accommodation will be excluded from the levy, including hostels, motels, inns, bed and breakfasts, and caravan parks, as well as specialist accommodation and accommodation in a dwelling usually occupied by the owner of the dwelling.

Booking platform providers will be liable for the levy, and must register with the Commissioner for payment and lodgment of a levy return. At the time of writing, no commencement date has been set for the levy, with a proclamation date to be made in due course. The levy will only apply to bookings made after the commencement date.

Relief measures from land transfer duty, land tax, and vacant residential land tax for people affected by the January 2026 Victorian bushfires were included in the 2026–27 Victorian State Budget. Those who meet specific eligibility criteria may be entitled to:

• A land tax waiver for 2026 for properties destroyed or substantially damaged by bushfires

• A land tax waiver for 2026 for owners with properties in the bushfire-affected areas that have incurred significant financial losses as a result of the bushfires

• Land transfer duty refunds up to $55,000 for recent purchasers whose homes were destroyed by bushfires 

• Up to $55,000 in land transfer duty relief on a replacement home

• A vacant residential land tax waiver for the 2027 tax year for residential properties that cannot be used or accessed due to bushfires

Eligible taxpayers will need to apply for relief. More detail is provided on the Victorian State Revenue Office website.

The Home Ownership and Other Legislation Amendment Bill 2026 (Qld), which was introduced into the Queensland Parliament on 23 April 2026, proposes to amend legislation administered by the Commissioner of State Revenue to make a range of amendments in relation to housing and duties.

The Bill amends the Duties Act 2001 (Qld), First Home Owner Grant and Other Home Owner Grants Act 2000 (Qld), and Land Tax Act 2010 (Qld) to clarify the application of revenue and grants legislation for participants of the Queensland Boost to Buy and Commonwealth Help to Buy shared equity programs from 15 December 2025 and 5 December 2025, respectively. 

In addition, and among other changes, the Duties Act is also amended to: 

• Expand the concept of ‘vacant land’, for the purposes of the transfer duty first home vacant land concession, to include land with certain existing structures on it 

• Update the transfer duty exemption for particular vestings of dutiable property to reflect commencement of the Property Law Act 2023

• Correct a minor drafting error in the reassessment provision of the additional foreign acquirer duty concession for eligible build-to-rent developments 

• Update the vehicle registration duty exemption for primary producers and concessional vehicle registration duty rate for special vehicles to reflect the remake of the Transport Operations (Road Use Management-Vehicle Registration) Regulation 2010

• Extend availability of the vehicle registration duty exemption for particular service persons to eligible current as well as former defence force members 

Amendments are also made to the Taxation Administration Act 2001 (QLD) to ensure the taxation assessment dispute provisions operate as originally intended. Taxpayers seeking appeal or review of related tax matters can proceed to either the Supreme Court or the Queensland Civil and Administrative Tribunal (QCAT), but not to both.

The Building Legislation and Treasury Legislation (Tax Relief) Amendment Bill 2026 (Vic), which was introduced into the Victorian Parliament on 13 May 2026, proposes various amendments to numerous building laws, alongside changes to the Land Tax Act 2005 (Vic) in relation to the principal place of residence exemption. Namely, the Bill amends the Land Tax Act to:

• Make further provision in relation to the application of the principal place of residence exemption in cases where a joint owner of land ceases to use and occupy their principal place of residence and commences construction or renovation of a new principal place of residence

• Extend the application of the principal place of residence exemption to circumstances in which the construction or renovation of a principal place of residence takes longer than four years

• Amend the definition of ‘works start date’ and the provision under which the owner of land may nominate a works start date to allow the owner of land to nominate the date of issue of certain permits as the works start date for the purposes of the exemption for construction or renovation of a principal place of residence 

• Provide for the deferral of land tax, which had a works finish date for the construction or renovation of a principal place of residence on the land that occurred in the preceding year and a works end date on or after 1 July in the preceding year

In Guan v Commissioner of State Revenue [2026] VCAT 290, the Victorian Civil and Administrative Tribunal (VCAT) dismissed a taxpayer’s appeal, finding no duty exemption was available on the transfer of a residential property between spouses.

The dispute arose as to whether the taxpayer was entitled to a duty exemption under section 43 of the Duties Act 2000 (Vic), which exempts from duty some transfers of a principal place of residence between spouses. While the conditions in section 43 were met, for the exemption to apply, a person must also occupy the residence for a continuous period of at least 12 months commencing within the 12-month period immediately after the transfer. This condition was not met: neither at the time of applying for the exemption in November 2019 nor at any time after this and until the property was sold did the spouses intend to occupy the property as their principal place of residence. There were no unforeseen or unexpected events that led to them not occupying the property. Their intention at the outset was to rent the property out and then sell it. 

In ISPT Pty Ltd (ACN 064 041 283) as Trustee of ISPT Retail Australia Property Trust (FSREC Fund) v Chief Commissioner of State Revenue [2026] NSWSC 424, the Supreme Court of New South Wales has dismissed the taxpayer’s appeal with costs, finding that section 155(3) of the Duties Act 1997 (NSW) operated to aggregate two separate acquisitions of interests in a landholder.

The taxpayer acquired interests in a landholder trust in two stages: a 75.8% interest in February 2022 (when the trust was a ‘public landholder’) and a further 19.46% interest in July 2022 (by which time the February acquisition had converted the landholder trust into a ‘private landholder’). 

Following the July acquisition, the taxpayer held a total interest of 95.26% in the trust. When both acquisitions occurred the trust owned land in NSW with a total market value of $380m as at 30 June 2022. It was common ground that the February acquisition by itself was not subject to landholder duty on the basis that it was an acquisition of less than 90% in a ‘public landholder’ and therefore not a ‘relevant acquisition’ under section 156 of the Duties Act. However, the taxpayer was assessed to landholder duty on the July acquisition by reference to the taxpayer’s aggregated interest of 95.26% (i.e. the sum of the interests acquired in February and July).

The taxpayer objected to the assessment on two grounds. First, that the Chief Commissioner had incorrectly applied Chapter 4 of the Duties Act on the basis that the change in the trust’s status from a ‘public landholder’ to a ‘private landholder’ did not mean that the February acquisition could be aggregated with the July acquisition for the purposes of determining the dutiable value in an assessment of the July acquisition. Alternatively, the taxpayer argued that the Chief Commissioner should have exercised his discretion to grant a partial exemption in respect of the February acquisition under section 163H of the Duties Act, on the basis that it ‘would not be just and reasonable’ to impose duty on the aggregated interest. 

The Court found that the July acquisition was a relevant acquisition under section 149(1)(c) of the Duties Act 1997 and since the taxpayer’s existing interest of 75.8% at the time of the July acquisition was a ‘significant interest’ at that time, that existing interest was required to be disclosed in the acquisition statement lodged for the July acquisition under section 152(2). In relation to the construction of the term ‘acquisitions during the statement period’ in section 155(1) and section 155(3), the Court found that it was clear that section 155(3) applies where the acquisition statement discloses acquisitions in the landholder in the statement period irrespective of whether the landholder was private or public at the date of the acquisition.

Ultimately, the Supreme Court concluded that the outcome reflected the intended operation of Chapter 4—the taxpayer had received the benefit of the higher 90% threshold (which had allowed the February acquisition to take place without immediate duty), but having lost the public landholder concession by converting the trust to a private landholder, it was neither unjust nor unreasonable for subsequent acquisitions to be taxed on the same basis as if the trust had been private from the outset. The taxpayer could have structured the transaction to acquire 90% in the first step (engaging section 156) or to leave more than three years between acquisitions (at which point aggregation would not have applied) but did neither.  

In the matter of K J Cooke ATF Cooke Investment Trust v Chief Commissioner of State Revenue [2026] NSWCATAD 130, the NSW Civil and Administrative Tribunal considered whether a trust, originally settled as a discretionary trust in 2005 and amended in late 2023, qualified as a fixed trust or a special trust under section 3A of the Land Tax Management Act 1956 (NSW). The trust deed amendments were intended to give the primary beneficiaries a present entitlement to the income of the trust to be held and paid equally each financial year as well as a present entitlement to the capital of the trust together with a right to require the trustee to wind up the trust at any time by giving notice, and to protect those entitlements from being removed, restricted, or otherwise affected by the exercise or non-exercise of any discretion under the deed. The distinction between a fixed trust and a special trust is significant because a fixed trust is entitled to the land tax-free threshold, while a special trust pays land tax on the full value of the land. The Chief Commissioner had assessed the Trust as a special trust for the 2025 land tax year on the basis that the deed amendments did not satisfy the statutory criteria for a fixed trust.

The Tribunal set aside the assessment and remitted the matter to the Chief Commissioner for redetermination, finding that the amended deed did satisfy the fixed trust criteria. The Tribunal accepted that the beneficiaries had a present entitlement to income, holding that the clause giving them an “immediate and indefeasible vested interest” in their share of income was not undermined by a separate requirement for the trustee to pay that income on 30 June each year. The Tribunal also accepted that the primary beneficiaries had a present entitlement to capital and could require the trustee to wind up the trust at any time by giving notice.

Following the release of the latest Average Weekly Ordinary Time Earnings (AWOTE) figures, a number of superannuation rates and thresholds will increase with effect from 1 July 2026.

The following key thresholds apply for the forthcoming financial year commencing 1 July 2026:

• The concessional contributions cap is $32,500 (up from $30,000).
• The non-concessional contributions cap is $130,000 (up from $120,000).
• The capital gains tax cap amount for contributions from the sale of small business assets is $1,935,000 (up from $1,865,000).
• The Division 293 tax threshold amount remains $250,000.
• The superannuation guarantee rate remains at 12%.
• The general transfer balance cap is $2.1 million (up from $2 million).
• The defined benefit income cap is $131,250 (up from $125,000).
• The employment termination payment (ETP) cap for life benefit and death benefit termination payments is $270,000 (up from $260,000).
• The tax-free part of genuine redundancy payments and early retirement scheme payments is $13,598 (up from $13,100), and for each complete year of service is $6,801 (up from $6,552).

The 2026–27 Federal Budget, handed down on 12 May 2026, contained no new tax-related superannuation announcements. For further insight into the Budget measures related to personal tax and superannuation, see our in-depth analysis.