1 September 2026

In Evolution Mining Limited v Commissioner of Taxation [2026] FCA 935, the Federal Court held that a head company’s choice to cancel the transfer of losses from a joining subsidiary must be made in relation to the joining year, and that a purported choice made in a later year is ineffective.

When lodging its 2012 tax return, which was the income year in which the entity that had the losses joined the tax consolidated group, the taxpayer did not exercise any choice under section 707-145 of the Income Tax Assessment Act 1997 to cancel the transfer of the loss. The taxpayer took the same approach in its 2013 tax return. However, when lodging its 2014 tax return, the taxpayer recorded the cancellation of the transfer of losses. Subsequently, the taxpayer sought to utilise some of those losses in the income year ending 30 June 2017 on the basis that its choice to cancel the losses in 2014 was ineffective. The Commissioner, however, argued that the choice was effective (i.e. the taxpayer could not utilise the losses).

The Court rejected the Commissioner’s submission that wherever a choice is made under section 707-145, it is always directed to the subject matter of the provision, which is the transfer of the loss that occurred at the joining time, such that the choice purportedly made in the 2014 income year was in relation to the 2012 income year and every year thereafter.

On construction, the Court observed that losses transfer automatically at the joining time under section 707-120(1), unless the transfer is cancelled. Section 707-145 cancels the transfer, not the loss itself, and the consequences of cancellation arise in the joining year. The Court considered that the absence of a mechanism to address the potentially problematic consequences of cancelling a transfer in a later income year strongly indicated that the choice must be made by reference to the head company’s tax profile in the joining year. A key purpose of the legislation is to require the head company to choose between using the joining entity’s transferred losses and cancelling the transfer to avoid adjustments to the allocable cost amount and available fraction—it is not intended to permit both outcomes.

Accordingly, in the Federal Court’s view, the construction advanced by the taxpayer was correct. This meant that the taxpayer’s purported choice to cancel the transfer of the losses in its income tax return for the 2014 income year, contrary to the absence of such a choice in relation to the 2012 income year, was too late to be effective under section 707-145.

Following this decision, the Commissioner has since appealed to the Full Federal Court.

The ATO has released an interim decision impact statement, which outlines its response to the recent Federal Court decision in Department of Education v Commissioner of Taxation [2026] FCA 898.

In that case, the Federal Court set aside superannuation guarantee (SG) charge assessments issued to the Department of Education (Vic) by the ATO after finding that the annual “salary loading allowance” paid to teachers in Victorian Government schools did not form part of either the “notional earnings base” for the period prior to 1 July 2008 or the “ordinary time earnings” (OTE) for the period from 1 July 2008. Refer to our Tax Alert for more information on this case.

The ATO has since appealed to the Full Federal Court on both issues.

In the meantime, according to the interim decision impact statement, the Commissioner’s existing views on OTE as reflected in Law Companion Ruling LCR 2026/1 on Payday Superannuation qualifying earnings remain unchanged. However, until the appeal process concludes, the ATO will not finalise requests for advice, compliance activity, or objection decisions that turn on whether a particular amount is OTE.

In Cerisewin Pty Ltd atf Mastercare Administrative Services Trust v Chief Commissioner of State Revenue [2026] NSWSC 877, the NSW Supreme Court dismissed a challenge to payroll tax assessments totalling approximately $2 million (including penalty tax and interest) for the years ended 30 June 2017 to 2020. The plaintiff was the designated group employer of the taxpayer group, a national provider of commercial and industrial cleaning services to retail, logistics, and healthcare clients. The Chief Commissioner had assessed payments made by the taxpayer group entities to a number of corporate contractors as deemed wages under the employment agency provisions in Part 3, Division 8 of the Payroll Tax Act 2007 (NSW) on the basis that those entities were employment agents procuring services “in and for” their clients’ businesses.

The taxpayer sought to advance three main arguments in this case. First, it contended that the client contracts were not “employment agency contracts” because the individual cleaners were not “integrated into” the clients’ workforces. Second, it argued that the value-adding role in designing, implementing, and managing customised cleaning systems meant it was providing substantive services beyond the mere procurement of labour. Third, in relation to deemed wages, it submitted that section 40(1)(a) should not capture the corporate contractors’ profit margins and overhead costs, as this would expand the traditional payroll tax base beyond amounts attributable to the workers themselves.

The Court rejected the plaintiff’s argument that the provisions only apply where individual cleaners are “integrated into” the client’s workforce or subject to the client’s direct control and direction. Applying SKG Cleaning Services Pty Ltd v Chief Commissioner of State Revenue [2026] NSWCA 122 (which has recently been appealed by the taxpayer to the High Court) and Chief Commissioner of State Revenue (NSW) v Integrated Trolley Management [2023] NSWCA 302, the Court held the correct test focuses on whether there is a close and relevant connection between the ordinary activities of the client’s business and the services provided under the contract, not the degree of control over workers. The Court also found that all amounts paid to corporate contractors (including their profit margins and overheads) were correctly deemed wages under section 40(1)(a), following Bayton Cleaning Company Pty Ltd v Chief Commissioner of State Revenue; International Hotel Services Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 657 and HRC Hotel Services v Commissioner of State Revenue [2018] NSWSC 820.

The ATO has announced that it will acquire motor vehicle registries data from state and territory motor vehicle registry authorities for 2025–26 through to 2029–30. The data collected under this program will include:

• Identification details (i.e. names, addresses, phone numbers, emails, dates of birth, Australian business numbers, etc.)
• Transaction details (i.e. date and type of transaction, vehicle sale price, market value of the vehicle, etc.)

The ATO has indicated that the data collected under this program will be used to meet a range of objectives, including:

• Helping taxpayers to meet their tax and superannuation obligations, including through education
• Identifying taxpayers who may not be meeting their registration, lodgment, reporting, and payment obligations and assisting them to comply
• Detecting and applying compliance actions to those taxpayers who may not have met their obligations across relevant taxes, including GST, fringe benefits tax (FBT), luxury car tax, fuel tax credits, and income tax
• Promoting voluntary compliance and strengthening community confidence in the integrity of the tax and superannuation systems by publicising the running of this data-matching program

The ATO has issued Draft A New Tax System (Goods and Services Tax) (Simplified Accounting Method for Restaurants, Cafes and Caterers) Determination 2026, which provides eligible retailers, such as restaurants, cafes, and caterers, with a choice of using a simplified accounting method (SAM), commonly referred to as the ‘purchases snapshot method’, for GST purposes to work out their net amount, i.e. GST liable on all taxable supplies less input tax credits, for monthly or quarterly tax periods.

By using the SAM, these businesses can work out an estimate of their input tax credits for creditable acquisitions of trading stock for a tax period using actual trading stock purchases data recorded over two four-week sample periods in a financial year. The use of the SAM may reduce compliance costs for businesses that do not have systems, software, or staff to work out whether every trading stock purchase is taxable or GST-free.

Under the draft legislative instrument, a retailer can choose to use the SAM in this instrument if:

• The retailer is registered for GST throughout the tax period
• The business that the retailer operates is a restaurant, cafe, or catering business during the tax period
• The retailer’s GST turnover does not exceed the small enterprise turnover threshold of $2 million

The draft instrument repeals and replaces Goods and Services Tax: Simplified Accounting Method Determination (No. 38) 2016 for Restaurants, Cafes and Caterers—purchases snapshot method, which would have otherwise sunset on 1 October 2026. This instrument has the same substantive effect as the 2016 instrument.

Once finalised, this instrument will commence on the day after it is registered on the Federal Register of Legislation. Comments closed 28 August 2026.

In Trustee for the Premier Aviation Holdings Unit Trust and Commissioner of Taxation (Taxation and business) [2026] ARTA 1468, the Administrative Review Tribunal has dismissed a taxpayer’s claim for input tax credits in respect of legal services, finding that such costs were incurred in its capacity as shareholder.

The taxpayer was a corporate trustee of a unit trust and a shareholder in a company, an aircraft operator whose principal business is to provide transport services to government departments. In 2019, the taxpayer commenced proceedings in the Victorian Supreme Court, alleging oppressive conduct by the majority shareholders of the company and others. Those proceedings were dismissed in July 2022 with costs ordered against the taxpayer in September 2022.

Between 2019 and 2023, the taxpayer incurred almost $4,000,000 in legal fees and claimed those services were acquired for a creditable purpose on the basis that it had been carrying on an enterprise in the form of the supply of aviation expertise and that, after the provision of aviation consulting ended in 2019, the taxpayer carried on an enterprise in the nature of litigation to focus on maximising returns or profits in the company.

Ultimately, the Tribunal found that, during the relevant period, the taxpayer was not involved in providing aviation consulting services or carrying on an enterprise consisting of litigation. Rather, the Tribunal considered that the litigation was commenced as a shareholder, seeking relief and remedy in relation to its shareholdings. This litigation and the legal fees were not acquired in carrying on an enterprise, meaning the taxpayer was not entitled to input tax credits in respect of its payment of legal fees claimed.

The competent authorities of Australia and Canada have entered into a Memorandum of Understanding to establish the mode of application of the arbitration process provided for in Part VI of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

The OECD has issued its latest peer review results on preferential tax regimes, noting that the results highlight jurisdictions’ continued efforts to address harmful tax practices through the implementation of the BEPS Action 5 minimum standard.

The OECD Forum on Harmful Tax Practices (FHTP) reached new conclusions on 13 regimes. For seven regimes (one from Azerbaijan, four from Fiji, one from Japan, and one from Peru), a conclusion of “not harmful” was reached, and for six regimes (three from Azerbaijan, one from Malaysia, one from Peru, and one from Serbia), it was concluded that the regimes would be kept “under review”.

The total number of regimes reviewed by the FHTP since the start of the BEPS Project is now 347, with over 40% of those regimes being (or in the process of being) abolished.

New rates for excise duties relating to alcohol products apply from 3 August 2026:

• Notice of Substituted Rates of Excise Duty Notice No. 3 (2026)

The Australian Taxation Office (ATO) has released the following draft guidance in respect of crypto assets:

• Draft Taxation Ruling TR 2026/D1 addresses the income tax consequences for an Australian resident taxpayer of issuing or receiving crypto assets as the result of an airdrop. An airdrop is a distribution of a crypto asset by an issuer in a manner that requires no or minimal effort from the recipient and involves no exchange of consideration in the form of fiat currency or other crypto assets. The crypto asset may be established or newly created (minted). The draft Ruling considers:
  • The income tax consequences for both the issuer and recipient where they carry on a business of crypto asset trading
  • The CGT consequences for both the issuer and recipient
  • The consequences for a recipient who receives an airdropped crypto asset as a result of engaging in a hobby or entertainment
  • How to establish the value of a crypto asset that has been airdropped

When the final Ruling is issued, it is proposed to apply both before and after its date of issue. However, in relation to initial allocation airdrops being the first distribution of a crypto asset where there has been no trading in those crypto assets previously, the Ruling will only apply to the airdrops that occurred after the date of issue of the final Ruling. Comments close 2 October 2026.

• Draft Taxation Determination TD 2026/D2, which addresses the CGT consequences that arise when a taxpayer interacts with a wrapping contract. A wrapping contract is a type of smart contract that exchanges a crypto asset for its wrapped equivalent, often to enable compatibility with particular protocols or platforms. The Determination does not apply to all arrangements that may be described as ‘wrapping’, but only applies to wrapping arrangements facilitated by smart contracts that are programmed as set out in paragraph 2 of the draft. It does not apply to any transactions where crypto assets are sent to custodian counterparties. It uses ETH (Ether) and WETH (wrapped Ether) as examples of crypto asset A and crypto asset B, respectively.
  
  According to the draft Determination, CGT event C2 happens when crypto asset A is wrapped. This is because when crypto asset A is sent to a wrapping contract address, the taxpayer’s ownership of that CGT asset ends by abandonment because they cease to have the proprietary relationship that made the asset theirs. Similarly, according to the draft Determination, CGT event C2 also happens when crypto asset B is unwrapped. The time of that CGT event is when crypto asset B ends, which occurs when it is burnt under the wrapping contract. Where the burning of crypto asset B and the release of crypto asset A occur as part of the same smart contract execution, the market value of crypto asset A received should be determined at that time. Appendix 2 sets out alternative views on certain aspects, including consideration of other CGT events and replacement-asset rollover under Subdivision 124-B, and explains why they are not supported by the Commissioner.
  
  When the final Determination is issued, it is proposed to apply both before and after its date of issue. Comments close 18 September 2026.

The ATO has announced that it will acquire motor vehicle registries data from state and territory motor vehicle registry authorities for 2025–26 through to 2029–30, with data items including both identification and transaction details.

The ATO expects the data collected under this program will, among other matters, be used for identifying relevant cases for administrative action, and for building a tax compliance risk profile of taxpayers buying, selling, or acquiring motor vehicles.

In Silverfern Investments (WA) Pty Ltd and Commissioner of Taxation (Taxation and business) [2026] ARTA 1619, the Administrative Review Tribunal has considered the characterisation of entry payments into a retirement village, finding that the payments were a loan, rather than a lease premium.

In 2015, the agreements governing the relationship between the residents and the owners of a retirement village in Western Australia were revised to reflect amendments to the Retirement Villages Regulations 1992 (WA) and the proposed replacement of the Fair Trading (Retirement Villages Interim Code) Regulations 2014 (WA). The Commissioner concluded that the redrafted documents, which were signed by incoming residents to the village in the period between 2015 and 2021, resulted in the characterisation of the most significant payment made by a resident upon entry to the village as a lease premium rather than a loan to the operator. On that basis, the Commissioner’s view was that certain entry payments made by incoming residents were assessable income of the taxpayers.

The sole issue for determination in these proceedings was the correctness or not of the Commissioner’s characterisation of the entry payments, which, in turn, was a contractual construction question.

A distinctive feature of the lease-loan is that the repayment amount partly depends on the future value of the lease for the resident’s unit, known as the Lease Resale Price. The Tribunal accepted that, when a resident entered into the contract, the precise repayment could not be calculated because several components were not yet known. However, this uncertainty did not make the payment a lease premium. The resident bears the risk of market fluctuations and may or may not receive an increase in the value of the lease-loan when occupancy ends. The Tribunal noted that this is inconsistent with a lease premium and is more akin to a capital sum invested by the resident until repayment through the Lease Resale Price.

In the Tribunal’s view, the lease-loan payment was not properly characterised as a lease premium but was more likely than not a loan. Accordingly, the funds paid by residents as lease-loans were capital in nature, not ordinary income, and did not form part of the assessable income of the taxpayers.

The Tax Ombudsman has released a report on its review into the ATO’s controls for bias in decision-making and disclosures. The review examined the ATO’s current controls that are intended to:

1. Promote unbiased decision-making in high-risk compliance and enforcement actions
2. Support appropriate, proportionate, and fact-based communications, including internal information sharing and external disclosures
3. Provide assurance that these controls are operating effectively in practice

Tax Ombudsman Ruth Owen noted that while the ATO has improved how it makes decisions about taxpayers in recent years, this review shows there is more to be done, particularly by explicitly recognising bias as a risk and strengthening controls so they are embedded in the ATO’s everyday processes.

The Tax Ombudsman’s review made the following two recommendations, which the ATO has accepted:

• The ATO to assure itself and the community that its controls against bias and prejudice in compliance and enforcement actions and decision-making are working effectively
• The ATO to develop and implement a plan to address identified gaps in bias controls, including strengthening explicit bias checks, training, assurance guidance, data and monitoring, and the language used in disclosures

In Hartley and Commissioner of Taxation (Taxation and business) [2026] ARTA 1590, the Administrative Review Tribunal has dismissed a taxpayer’s appeal relating to deductions for work-related expenses and capital allowances, finding that the necessary nexus to their income-earning activity as an employee was not there.

The taxpayer was employed as a Domain Sales Manager at a communications technology company that provided connectivity hardware, software, and services. In their 2022 tax return, the taxpayer claimed a variety of work-related deductions and capital allowances that became the subject of dispute.

The relevant expenditure in this case generally related to a ‘lab’ set-up in the taxpayer’s home with high-end IT and computer equipment that allowed them to undertake a variety of activities, including technical and software development and testing, self-education and research on IT systems and technology, and blogging on IT-related issues. The taxpayer contended that the claimed deductions and capital allowances all had sufficient nexus with their employment duties, and that their employment entailed that they be a thought leader and innovator in the IT sector in fulfilling their role of helping their employer bring new technologies and products to market and sell their goods and services.

Ultimately, the Tribunal was not satisfied that the taxpayer had demonstrated that the relevant expenditure had the requisite nexus with their income-earning employment in the relevant income year. The taxpayer was neither required nor asked to set up the home lab, undertake the relevant activity, or incur the relevant expenditure. Although it might have been appreciated by their employer that they did so, the essential character of such activity and expenditure went toward the taxpayer’s income-earning capacity, rather than their income-earning activity as an employee.

The ATO has published the private health insurance income thresholds and rebate percentages for the 2026–27 income year. The income thresholds are used to calculate the Medicare levy surcharge and private health insurance rebate.

The base tier income thresholds for which the maximum rebate applies have increased to $105,000 for singles (up from $101,000) and $210,000 for families (up from $202,000). The thresholds above which no rebate applies have also increased to $164,001 for singles and $328,001 for families. Whether the single or family thresholds apply is determined by family status on 30 June.

Rebate rates will be adjusted from 1 April 2027, with the updated rates available in March 2027.

The New South Wales Government has published the Treasurer’s guidelines for the Chief Commissioner of State Revenue in forming a view on whether a particular property is being used and occupied as a build-to-rent property (under sections 9E and 9F of the Land Tax Management Act 1956 (NSW)) for land tax purposes. This is relevant to ascertaining whether land tax concessions can be granted, such as the 50% reduction in land value for land tax purposes available to eligible build-to-rent properties. These guidelines will also assist in determining whether a building is taken to be build-to-rent property for the purposes of the surcharge land tax concession under section 5CA of the Land Tax Act 1956 and surcharge purchaser duty concessions under sections 104ZJB and 104ZJC of the Duties Act 1997 applicable to a foreign owner. The guidelines cover, among other things:

• Requirements for buildings used and occupied for a build-to-rent property under sections 9E and 9F, covering planning requirements, building requirements, ownership structure requirements, management structure requirements, lease condition requirements, and other factors
• Requirements for proportionate reductions in land value when only part of the parcel or building is used for build-to-rent
• Requirements for construction of buildings under section 9F, covering the classes of workers requirement and proportion of labour force hours requirement
• Restrictions on subdivision, including the 15-year unified ownership condition, and scenarios illustrating subdivision, sale, and reassessment

The guidelines also state that the Chief Commissioner may provide further guidance material, including examples of the operational effect of these provisions.

In ISPT Pty Ltd as trustee for ISPT Retail Australia Property Trust v Commissioner of State Revenue [2026] VSC 480, the Victorian Supreme Court has found for the Commissioner, determining that a second acquisition of an interest in a landholder triggered a significantly higher charge to landholder duty than would have applied had the interests been acquired in a single transaction.

The taxpayer was the trustee of a property trust that acquired interests in a Landholder trust that had indirect interests in land in Victoria in two transactions—the first being an acquisition of 75.8% of the units in February 2022 (February Acquisition) and a second acquisition of 19.46% of the units in July 2022 (July Acquisition). Immediately before the February Acquisition, the Landholder was a public unit trust scheme within the meaning of the Duties Act 2000 (Vic), so the significant interest threshold was 90% and, as the parties agreed, the February Acquisition was not a relevant acquisition. However, as a result of the February Acquisition, the Landholder became a private unit trust scheme, because it was no longer widely held.

The Commissioner assessed the July Acquisition to duty on the basis that it was to be aggregated with the February Acquisition under section 78(1)(a)(ii) of the Duties Act, with duty charged on the aggregated interest being 95.26%.

The Supreme Court held that the Commissioner was correct to aggregate the July Acquisition with the February Acquisition and impose duty on the aggregated interest under sections 77 and 78(1)(a)(ii). In relation to section 78(1)(a)(ii), the Court observed that the provision applies where a series of transactions causes a person’s interest to exceed the acquisition threshold. The July Acquisition, therefore, when combined with the February Acquisition, resulted in a significant interest that was dutiable under section 86(3).

The taxpayer’s argument that a single acquisition of 95.26% in February 2022 would have been a significant interest in a public unit trust scheme, concessionally taxed under section 87, was rejected. The Supreme Court noted that there was no apparent policy in the Duties Act to ‘undo’ the deliberate choice by the legislature to tax acquisitions of units in public landholders in a particular way.

Amendments made by the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, enacted on 26 June 2026, changed the Limited Recourse Borrowing Arrangements (LRBA) provisions for self-managed super funds (SMSFs). Under the new rules, from 10 August 2026, an LRBA can only be used by an SMSF to acquire real property if the property is business real property.

In response to these changes, the ATO has updated its guidance to confirm the LRBA position for arrangements entered into on or after 10 August 2026 by SMSFs. Importantly, the ATO guidance confirms that these changes do not apply where a binding contract for the acquisition of a property is exchanged before 10 August 2026 (even if the contract is settled or the LRBA is entered into after this date). Similarly, existing LRBAs entered into before 10 August 2026 and refinancing of existing LRBAs entered into before 10 August 2026 are unaffected by these changes. For further information regarding the definition of business real property, refer to Self Managed Superannuation Funds Ruling SMSFR 2009/1.