What Did I Miss?
Budget tax changes and new draft crypto guidance
The major development this month is the passage of a Bill through Parliament covering a range of measures, including the loss carry-back tax offset and the permanent increase in the instant asset write-off threshold to $20,000.
However, the Bill was amended to also include some key modifications to the negative gearing reforms that will apply from 1 July 2027.
We also look at some draft ATO guidance on the taxation of specific crypto asset transactions. TR 2026/D1 considers the issuing and receiving of airdropped crypto assets, while TD 2026/D2 looks at crypto wrapping contracts.
As change occurs, we’ll keep you posted through Fortis Accounting Partners’ social media accounts.
From the Regulators
Payday Super
The ATO is reminding super funds of their obligations under the new Payday Super regime.
Allocation Timeframes
Under Payday Super, super funds must now allocate or return super contributions within 3 business days. This timeframe does not include the day the contribution is received.
A business day is any day that is not a Saturday, Sunday or public holiday in the fund’s location. For example, if a contribution is received on a Monday, the fund has until Thursday to allocate or return it.
SMSFs will still have 28 calendar days after month-end to allocate or return contributions received.
Payroll Software
Taxpayers should check whether their payroll software supports Payday Super and the New Payments Platform (NPP), which enables faster payments to super funds. Businesses may need to contact their bank to update their accounts for NPP payments.
By now, many providers should offer:
- Updated Single Touch Payroll (STP) reporting of qualifying earnings and superannuation liabilities.
- The new SuperStream data requirements.
- Member Verification Requests (MVR) to validate fund details before contributions are made.
- Integrated error messaging to quickly identify and resolve rejected payments.
These features help reduce errors and ensure super is paid in full, on time and to the right fund.
Where a provider does not offer these functions or cannot confirm their availability, taxpayers should consider alternatives on the Super Product Register, noting that the register is not exhaustive.
Missed Payments
Taxpayers who did not pay their June quarter super on time should act immediately, as this may result in a Superannuation Guarantee Charge (SGC) liability.
If the employee’s fund did not receive the full contribution by 28 July, the taxpayer should have lodged an SGC statement by 28 August and paid the SGC to the ATO, not the fund.
Any payments received on or after 29 July will be automatically allocated under Payday Super, even if they were intended to cover the June quarter shortfall.
The Late Payment Offset (LPO) is not available for this final quarterly payment.
New SMSFs
The ATO is reminding new SMSFs of their lodgment obligations.
New SMSFs must lodge their first SMSF annual return (SAR) by 13 October 2026 and must appoint an approved SMSF auditor at least 45 days before the lodgment due date.
If a registered tax agent has been engaged, the due date is extended to 28 February 2027 for the first return in most cases.
If a fund had no assets during its first year, trustees must either:
- Lodge a return not necessary form; or
- Cancel the SMSF’s registration if they no longer intend to operate the fund.
Annual SMSF Obligations
Each year, SMSF trustees must:
- Prepare the fund’s accounts, including valuing its assets.
- Appoint an approved SMSF auditor at least 45 days before the lodgment due date.
- Allow the auditor sufficient time to complete their independent review.
- Address any compliance issues identified by the auditor.
- Lodge the annual return and pay any outstanding tax and the supervisory levy.
For new SMSFs, the supervisory levy is $518, covering both the establishment year and the following financial year.
Motor Vehicle Registries Data-Matching Program Protocol
The ATO has issued website guidance on its motor vehicle registries data-matching program protocol.
The ATO uses data from state and territory motor vehicle registries to identify vehicles that have been sold, transferred or newly registered with a value of $10,000 or more.
This data may be used to identify potential undeclared income, capital gains and business transactions, as well as discrepancies between information reported to the ATO and vehicle ownership or transfer records.
Practitioners should ensure clients properly account for vehicle transactions and consider the relevant income tax, CGT and GST implications, particularly where vehicles are used for business or disposed of for consideration.
The ATO’s current published protocol covers motor vehicle registry data for the 2016–17 to 2024–25 financial years.
Vehicle transactions may be cross-checked against ATO records, making accurate reporting and appropriate documentation of vehicle acquisitions, disposals and business use important.
Government Payments Program
The ATO is reminding businesses that receive payments for providing services under Commonwealth Government programs, including those in the healthcare, disability support and childcare sectors, to ensure they are meeting their tax obligations.
Businesses receiving these payments should:
- Keep accurate records of all income received.
- Report all Government Payments Program (GPP) income at the correct label in their tax return.
- Lodge tax returns and pay any tax liabilities in full and on time.
Failure to meet these obligations may result in penalties, interest charges and firmer compliance action.
The ATO continues to strengthen payment integrity through the GPP and its collaboration with participating government agencies. It is also a member of the Fraud Fusion Taskforce, a multi-agency initiative targeting fraud and non-compliance in government payment programs, including the National Disability Insurance Scheme (NDIS).
Tax Return Due Dates
The ATO has published a quick reference guide to the five most common income tax return due dates under the lodgment program and which clients they generally apply to.
Taxpayers should note that due dates can vary depending on factors such as when the taxpayer was added to the agent’s client list, entity type, whether the taxpayer is a new registrant, whether they have overdue prior-year returns, and whether their last return was taxable or non-taxable.
31 October – Applies to entities with overdue prior-year returns; those added to the agent’s client list after 31 October; and those the ATO has separately advised of this date, such as entities prosecuted for non-lodgment or new registrant SMSFs reviewed at registration.
31 January – Applies to taxable large and medium entities (excluding individuals), based on their latest year lodged, and taxable head companies of consolidated groups (including new registrants) with a member deemed medium or large in the latest year lodged.
28 February – Applies to non-taxable large and medium entities (excluding individuals); new registrant large and medium entities (excluding individuals); non-taxable head companies of consolidated groups (including new registrants) with a member deemed large or medium; consolidated group members that exited during the income year; and new registrant SMSFs.
31 March – Excluding large and medium taxpayers, applies to individuals and trusts with a prior-year tax liability of $20,000 or more; companies and super funds with total income over $2 million in the latest year lodged; and head companies of consolidated groups with a member exceeding $2 million in total income.
15 May – Applies to all entities not required to lodge earlier and not eligible for the 5 June concession.
As due dates may change depending on a taxpayer’s circumstances, the ATO recommends that practitioners regularly check individual lodgment due dates through Online services for agents. Further detail is available on the Registered agent lodgment program page.
Rulings, Determinations & Guidance
Crypto Assets by Airdrop
The ATO has issued a draft ruling examining the income tax consequences for Australian resident taxpayers who issue or receive crypto assets as a result of an airdrop.
An airdrop generally occurs when crypto assets are distributed to a holder’s wallet at no direct cost.
The draft ruling considers three key scenarios for both the issuer and recipient of the asset.
1. Airdrops Received in the Course of a Crypto Trading Business
Where the recipient carries on a business of trading crypto assets, the market value of the airdropped asset is assessable as ordinary income under section 6-5. This applies even where the airdrop may otherwise appear to be a gift or windfall.
Where the issuer is also carrying on a business of crypto asset trading and holds the relevant assets for sale or exchange in the ordinary course of that business, the assets will generally be treated as trading stock under Division 70.
2. Airdrops Received in Exchange for Goods or Services
Where an airdropped asset is provided in return for goods or services supplied by the recipient, the money value of the asset is assessable income under section 6-5, regardless of whether the recipient is carrying on a business.
For the issuer, the costs of acquiring or creating crypto assets distributed in exchange for goods or services may be deductible under section 8-1, subject to the usual requirements.
3. Airdrops Received by Retail Investors
Where an individual is not carrying on a business of crypto trading, and the airdrop is not provided in return for services or otherwise connected with an income-producing activity, the market value of the asset will generally not be ordinary income when received.
Instead, CGT event A1 will generally occur when the taxpayer later disposes of the asset.
For the issuer, CGT event A1 occurs when the asset is distributed. Where there are no capital proceeds, as is generally the case with an airdrop, the issuer is taken to have received the market value of the asset at the time of the event.
The draft ruling also considers situations where an individual receives an airdrop without their knowledge or consent. Even where the recipient does not carry on a crypto trading business, a capital gain may arise when the asset is subsequently disposed of. Where costs are incurred to remove or rectify unwanted assets in a wallet, those costs may form part of the asset’s cost base when determining the resulting capital gain or loss.
The ruling also provides guidance on valuing airdropped assets, distinguishing a crypto trading business from a hobby, and applying the rules to practical examples.
Crypto Wrapping Contracts
The ATO has also issued a draft Determination (TD 2026/D2) examining the CGT consequences of certain crypto wrapping contracts.
Wrapping contracts are a type of smart contract that involves exchanging a crypto asset for its wrapped equivalent, often to enable compatibility with particular DeFi protocols or platforms.
The determination applies to wrapping and unwrapping arrangements that follow a specified seven-step pattern:
- Transferring crypto asset A to a wrapping contract.
- Wrapping contract locks crypto asset A.
- Minting crypto asset B on a 1:1 basis with the locked units of crypto asset A.
- Using crypto asset B in decentralised finance (DeFi) protocols or trading it.
- Unwrapping crypto asset B by calling the withdraw function on the wrapping contract.
- Burning crypto asset B when the withdraw call executes.
- Releasing crypto asset A, with the contract sending the corresponding amount back to the taxpayer’s wallet address.
The ATO’s view is that CGT event C2, rather than CGT event A1, applies when a crypto asset is wrapped. This is because the ATO considers that transferring the asset to a smart contract does not involve a transfer of ownership to another legal entity, which is required for CGT event A1.
The ATO considers that two separate CGT event C2 events can arise:
- Wrapping: CGT event C2 occurs when the original crypto asset is transferred to the smart contract and the taxpayer’s ownership of that asset ends. The capital proceeds are generally the market value of the wrapped asset received, while its cost base is generally the market value of the original asset at the time of wrapping.
- Unwrapping: A second CGT event C2 occurs when the wrapped asset is burned by the smart contract. The crypto asset released back to the taxpayer is treated as a new CGT asset, rather than a continuation of the original asset. The capital proceeds are generally the market value of the asset received, with its cost base based on the market value of the wrapped asset at the time it is burned.
This means each wrapping and unwrapping transaction may give rise to a separate CGT event, potentially resulting in significantly more CGT events for taxpayers actively using wrapped assets in DeFi arrangements.
The draft determination also confirms the ATO’s view that CGT rollover relief under Subdivision 124-B is not available. The wrapping of an asset is not considered an involuntary loss or destruction, while the asset received on unwrapping does not constitute compensation for the purposes of the rollover provisions.
Taxpayers using wrapped crypto assets should consider whether historical transactions have been treated consistently with the ATO’s proposed position.
Standard $1,000 Deduction for Work-Related Expenses
The ATO has issued a draft Law Companion Ruling (LCR 2026/5) explaining how the standard deduction of up to $1,000 for work-related expenses under section 25-130 of the ITAA 1997 operates.
Section 25-130 allows individuals who derive assessable labour income to claim a standard deduction of up to $1,000 for work-related expenses without substantiation. Individuals do not need to incur or substantiate expenses to be entitled to the standard deduction; they only need to record their assessable income at the correct labels when lodging their tax return.
Taxpayers with more than $1,000 of work-related expenses who do not want to limit their deduction to $1,000 will need to substantiate their deductible expenses.
The ruling explains:
- Who is eligible for the standard deduction.
- How the standard deduction is calculated.
- Which specific deductions reduce the standard deduction.
- Which deductions can still be claimed separately.
- How the standard deduction interacts with capital allowance rules and fringe benefits tax (FBT).
Certain expenses are not included in the standard deduction and require written evidence, including:
- Income protection insurance premiums.
- Personal sickness insurance premiums.
- Accident insurance premiums.
- Membership fees for a trade, business or professional association.
The introduction of the standard deduction also replaces the substantiation requirements for laundry expenses up to $150. However, the draft ruling outlines a proposed compliance approach for laundry expenses from the 2026–27 income year.
Under this approach, the ATO will accept a method for calculating deductible laundry expenses from 1 July 2026 of:
- $1 per full load of work-related laundry; or
- 50 cents per mixed load,
provided appropriate records are kept and the laundry expenses are otherwise deductible to the individual.
This method does not apply to dry-cleaning costs.
Payday Super Guidance
The ATO has issued a number of finalised Law Companion Rulings providing guidance on the operation of the Payday Super reforms, which commenced on 1 July 2026.
LCR 2026/1 explains how the application and savings provisions operate under the Superannuation Guarantee (Administration) Act 1992 following the introduction of Payday Super.
The ruling also covers the transitional arrangements supporting the move from the quarterly superannuation guarantee (SG) system to Payday Super. These provisions are designed to address potential timing differences, existing arrangements and overlapping obligations that may arise during the transition.
LCR 2026/2 provides guidance on the requirements for contributions to qualify as eligible contributions under the new Payday Super rules. The ruling outlines the criteria a contribution must satisfy and the relevant timeframes within which contributions must be received.
LCR 2026/3 provides an overview of how the Superannuation Guarantee Charge (SGC) is calculated and assessed following the Payday Super amendments.
Wine Equalisation Tax
The ATO has issued two Legislative Instruments covering the application of Australia’s Wine Equalisation Tax (WET) and excise regimes.
LI 2026/31 relates to the Wine Equalisation Tax Act 1999 and sets out the treatment of certain New Zealand wine for WET purposes. The instrument provides rules for determining when wine sourced from New Zealand is subject to WET, supporting the operation of Australia–New Zealand trade arrangements.
LI 2026/33 – Excise (Denatured Spirits) Determination 2026 sets out the circumstances in which spirits are treated as denatured for excise purposes. The determination is relevant to businesses using spirits for purposes where denaturation is required to prevent the spirits from being used as a beverage and supports the applicable excise treatment.
Simplified Accounting Method for Retailers
The ATO has issued a draft legislative instrument, LI 2026/D19 – A New Tax System (Goods and Services Tax) (Simplified Accounting Method for Restaurants, Cafes and Caterers) Determination 2026.
The proposed determination would allow eligible restaurants, cafes and caterers to elect to use the Simplified Accounting Method (SAM), also known as the ‘purchases snapshot method’, to calculate their net GST position.
Under the SAM, businesses can estimate their input tax credits for trading stock purchases using actual purchase data from two four-week sampling periods during the financial year.
This can provide a simpler alternative for businesses that do not have the systems, software or resources to determine whether each trading stock purchase is subject to GST or GST-free.
The draft determination is intended to replace the existing 2016 determination, which is due to sunset on 1 October 2026, with the same substantive effect.
Rulings, Determinations & Guidance
Transfer Balance Cap
The ATO has issued an addendum to LCR 2016/9 to:
- further explain the proportional indexation of the transfer balance cap and superannuation income streams subject to a commutation authority;
- clarify how the general principles apply in the context of successor fund transfers; and
- reflect the increase in the maximum allowable number of members made under the Treasury Laws Amendment (Self-Managed Superannuation Funds) Act 2021.
GST Recipient Created Tax Invoices
The ATO has issued a new draft GST ruling, GSTR 2026/D2, which sets out the ATO’s updated views on when a recipient created tax invoice (RCTI) can be issued. The draft ruling replaces GSTR 2000/10.
The GST legislation gives the Commissioner the power to determine situations where the recipient of a taxable supply can issue the tax invoice, rather than the supplier.
There were previously 51 separate legislative instruments issued by the Commissioner in connection with RCTIs, but most of these were replaced by an updated instrument issued in 2023. The new draft ruling reflects this updated position.
The draft ruling looks at key issues associated with RCTIs, including:
- the requirement that the recipient determines the value of the supply, which is often relevant in determining whether an RCTI can be issued;
- the requirements for a written agreement that must be satisfied for an RCTI to be a valid tax invoice; and
- how RCTIs operate where a recipient acts through an agent.
Cases
Claims for a Home Computer ‘Lab’ of a Senior Sales Employee Denied
In Hartley and Commissioner of Taxation [2026] AATA 1590, the Tribunal considered whether a senior IT sales employee could deduct substantial expenditure on his home computer ‘lab’.
Mr Hartley was employed as a Domain Sales Manager at Ericsson Australia. He contended that his role extended beyond sales and also encompassed acting as an innovator, including identifying and developing new product opportunities and providing thought leadership within the industry.
In this context, Mr Hartley sought to claim substantial work-related and capital allowance deductions for his home computer ‘lab’ in the 2022 income year. While these amounts were denied by the ATO at audit and objection, the issue before the Tribunal was whether he could claim deductions of $31,870, relating mostly to digital storage devices, computers and monitors, computer software and subscriptions to various computing services.
Although the claim was significant, Mr Hartley gave evidence of various projects undertaken using his home computer ‘lab’. These projects were actively encouraged by and benefited his employer, including:
- A network virtualisation project that began before he joined Ericsson, but which the company later sought to develop and market.
- Cloud infrastructure work undertaken through an industry collaboration that involved Ericsson as an industry member.
- Work on video interface technology, which was the subject of an Ericsson press release and was also deployed in its business.
While the Tribunal accepted that Mr Hartley held a high-level leadership role involving specialised expertise and contributing to the development of marketable technologies, it ultimately agreed with the ATO that the deductions should be denied in full.
The Tribunal’s rationale was largely based on its view that the activities were undertaken out of Mr Hartley’s general interest in IT and as part of maintaining his general professional standing, rather than in performing his immediate job responsibilities for Ericsson.
Citing the High Court decision in Federal Commissioner of Taxation v Hatchett [1971] HCA 47, the Tribunal noted that the fact Ericsson encouraged Mr Hartley’s activities was not, by itself, enough to establish a deduction.
The issue appeared to be two-fold. First, Ericsson neither required the activities nor permitted Mr Hartley to use Ericsson equipment to perform them. Second, there was evidence suggesting that the activities were undertaken at home so that he could retain the benefit and ownership of the developments if he left Ericsson’s employment.
Particularly where significant work-related deductions are being claimed, this decision is a reminder for practitioners to consider whether a client’s costs relate to activities that fall outside the scope of their role and duties.
The ATO has consistently identified work-related deductions as a key focus area. While an employer’s encouragement of an activity may be helpful, this Tribunal decision and the ATO’s guidance in TR 2020/1 make it clear that this will not necessarily be sufficient to support a deduction.
Retirement Village ‘Lease Loan’ Not a Lease Premium
The Tribunal in Silverfern Investments (WA) Pty Ltd and Commissioner of Taxation [2026] AATA 1619 considered whether a substantial upfront payment made by an incoming resident of a retirement village should be characterised as a lease premium.
The Belswan Partnership owned and operated a retirement village with nearly 4,000 residents. At the centre of the dispute was an upfront payment made by an incoming resident, which was referred to in the contract as a ‘lease loan’ payment.
Importantly, when the resident exited the village, they were also repaid a ‘lease resale price’, which was broadly intended to reflect the amount paid by the next incoming resident for the new lease, less various costs.
Following an audit for the 2019 to 2022 income years, the ATO treated the ‘lease loan’ as a lease premium, being a payment made to the landlord for the grant of the lease. The ATO also considered the lease premium to be assessable on revenue account, given the nature of the retirement village’s business, which involved the recurrent granting of leases.
The Tribunal reached a different conclusion regarding the character of the payment. It considered that the upfront payment was more appropriately characterised as a loan rather than a lease premium, having regard to the following:
- The payment was repayable, which was consistent with a loan. Although the amount to be repaid was not ascertainable when the initial lease was entered into and could be repaid from a different source, such as the next incoming resident, this was not considered sufficient to characterise the payment as a lease premium.
- The resident bore the risk of market fluctuations. Through the ‘lease resale price’, the resident received the benefit or loss of any change in value on exit. As the resident ultimately received some value upon exit, the upfront payment was more akin to a capital sum that was invested than a lease premium.
- The retirement village’s financial statements were also consistent with this characterisation, although this was not determinative. Fees and various charges were recognised as income, rather than the ‘lease loan’ payments received on entry.
While ‘lease loan’ payments do not tend to occur outside specific industries, such as retirement villages, these characterisation issues can still be relevant to many clients in different forms.
Where clients make or receive upfront payments upon entering a lease, the challenge is often distinguishing whether the payment should be characterised as a lease premium or simply rent paid in advance.
This distinction is important because a lease premium will often be dealt with on capital account, with the main exception being where the client is in the business of granting leases. Rent, on the other hand, is generally dealt with on revenue account, although this does not necessarily mean it is recognised as income upfront when the amount is prepaid.
Legislation
Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026
Treasury Laws Amendment (Tax Reform No. 2) Bill 2026
The Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 has passed both Houses of Parliament without amendment and received Royal Assent on 26 August 2026. The Bill implements several tax measures announced in the 2026–27 Federal Budget, including a permanent loss carry-back regime and a permanent increase in the instant asset write-off threshold to $20,000.
Loss Carry-Back Offset
Schedule 1 introduces a permanent loss carry-back regime for corporate tax entities that are not significant global entities.
For income years commencing on or after 1 July 2026, an eligible company with a tax loss will be able to carry back that loss against tax paid in either or both of the two preceding income years, potentially generating a refundable tax offset.
The rules include limitations, including where losses have been transferred within a corporate group under the relevant tax consolidation provisions. The resulting refund is also subject to the statutory limits under the new Division 160 rules.
$20,000 Instant Asset Write-Off
Schedule 2 makes the $20,000 instant asset write-off (IAWO) threshold a permanent feature of the rules from 1 July 2026.
Eligible small businesses with aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible depreciating assets costing less than $20,000, provided the assets are first used or installed ready for use for a taxable purpose on or after 1 July 2026.
The threshold applies per asset, allowing businesses to claim immediate deductions for multiple qualifying assets in the same income year.
Assets costing $20,000 or more will generally be added to the small business simplified depreciation pool, with a 15% deduction in the first year and 30% in subsequent years. A pool balance can also be written off in full once the pool balance, ignoring current-year depreciation deductions, falls below the $20,000 threshold at year end.
PNG Rugby League Team
Schedule 3 implements an income tax exemption for amounts of ordinary or statutory income derived in respect of employment with PNG Chiefs Ltd from 1 July 2025 to 30 June 2035, inclusive.
Negative Gearing Amendments
Schedule 4 includes amendments addressing certain aspects of the new negative gearing rules that apply from 1 July 2027.
For example, the effect of the ‘home first used to produce income’ rule in section 118-192 should be disregarded when determining the acquisition date of a property.
This means a taxpayer can continue to claim negative gearing deductions for a residential rental property against other sources of income where the property was acquired before 12 May 2026, even if the taxpayer is deemed to have acquired the property again after this date as a result of the ‘home first used to produce income’ rule under the main residence exemption provisions.
New provisions have also been inserted to address situations where a residential dwelling, or a partial ownership interest in a dwelling, passes to another person following the death of the original owner, as well as certain relationship breakdown situations.
In some cases, these rules allow the property to remain grandfathered from the negative gearing reforms, even where a change in ownership occurs after 12 May 2026.
The rules are complex and each situation will need to be considered carefully, but these amendments provide some positive relief for affected taxpayers.
If you have any questions regarding the above information, please do not hesitate to contact our office to speak to one of our team.
