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“Mayday. It’s Payday” – Employers urged to be 1 July ready for historic payday super rules
Major changes to the timing and administration of superannuation will apply from 1 July 2026. As an employer, you must ensure your payroll and finance processes are updated to reflect the new rules. The ATO is only granting a limited 12-month administrative reprieve to be fully compliant and there's a lot to do.
Our team has prepared a briefing note setting out the new rules, the main changes, the opportunities, and the risks that require employers' attention. Read more by following the link.
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Market insights - HWLE Lawyers
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Profits from property sales assessable as income and subject to GST
The Administrative Review Tribunal (ART) has held that profits from the sale of three residential units were assessable as ordinary income where the taxpayer was carrying on a property business, and that the sales were made in furtherance of an enterprise for GST purposes.
In RRKC v FC of T [2026] ARTA 95, the taxpayer, who owned or part-owned approximately 33 properties and was registered for GST, argued that the units were held as long-term investments and sold due to personal circumstances. The Commissioner contended that the taxpayer’s activities had the hallmarks of a business, pointing to repeated property sales and development activities. The ART accepted the Commissioner’s position, finding that the units were trading stock and that the profits were assessable under section 6-5 of the Income Tax Assessment Act 1997 (Cth) (ITAA97). For GST, the Tribunal held that the sales were taxable supplies, but found that only one unit was correctly assessed in the relevant BAS period. One GST assessment was set aside, and another was remitted for further consideration. This decision reinforces that repeated property development and sales may constitute a business, with resulting income tax and GST consequences.
Repeated property acquisitions, development or renovation activities, and sales may amount to the carrying on of a property business, even where properties are rented for periods and the taxpayer characterises themselves as an investor. Where a property business is established, sale proceeds are likely to be ordinary income under section 6-5 of the ITAA97, and the properties may constitute trading stock.
Property sales made in the course of such activities may also be taxable supplies for GST purposes, subject to correct attribution to the relevant BAS period. Personal circumstances motivating a sale, such as financial pressure or relationship breakdown, will not necessarily prevent the sale from being characterised as business income. Accordingly, careful analysis of a client’s overall pattern of activities, including prior and subsequent transactions, is critical when advising on income tax and GST treatment of property disposals.
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RRKC and Commissioner of Taxation (Taxation and business) [2026] ARTA 95 (28 January 2026)
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ATO updates process for interest and failure to lodge penalty remissions
The ATO has implemented interim changes to how requests for remission of interest charges and failure to lodge (FTL) penalties are made, as part of efforts to address issues in the existing remission process.
From 22 January 2026, registered tax and BAS agents are required to lodge remission requests for the general interest charge, shortfall interest charge, and FTL penalties using newly introduced application forms. These forms must be submitted through ATO Online services or, alternatively, by post. Each request must be made on a standalone basis, meaning separate forms are required for each taxpayer and for each type of interest or penalty.
Where an agent does not have access to ATO Online services, the remission request can still be initiated by contacting the registered agent phone line, with the ATO completing the relevant form on the agent’s behalf. If a remission is only partly allowed or refused, the ATO will issue written reasons and outline the taxpayer’s rights to review the decision.
Requests lodged before 22 January 2026 will continue to be dealt with under the previous arrangements. The ATO has cautioned that processing times may be extended while the new system is embedded. The changes are intended to improve consistency in decision-making by centralising remission requests within a dedicated team. The ATO has also refreshed its public guidance to better explain the circumstances in which remission is more likely to be granted. Further adjustments may be made as part of the ATO’s ongoing review of taxpayer relief measures.
As such, new mandatory remission forms apply to requests for GIC, SIC and FTL penalties from 22 January 2026. Requests must be lodged separately for each taxpayer and for each type of charge or penalty. Tax agents without online access can still lodge via the registered agent phone line. However, delays in ATO processing times are likely during the transition period.
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Changes to interest and FTL penalty remission requests | Australian Taxation Office
How to request a remission of interest and failure to lodge penalties | Australian Taxation Office
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TPB updates guidance to clarify practitioner obligations
The Tax Practitioners Board (TPB) has updated a number of its guidance products to make it easier for tax practitioners to understand and comply with their professional obligations under the Tax Agent Services (Code of Professional Conduct) Determination 2024. The updates follow practitioner feedback and are intended to provide greater clarity and consistency in how key Code requirements are applied in practice.
The revised guidance focuses on three key areas:
- false or misleading statements,
- managing conflicts of interest when undertaking activities for government, and
- breach reporting obligations.
In relation to false or misleading statements, the TPB has clarified when a practitioner is required to take corrective action, as distinct from when “further action” may be required, and how these obligations interact with duties such as acting in a client’s best interests and maintaining client confidentiality. Additional guidance has also been provided on how whistleblower protections may apply in this context.
The TPB has also clarified that conflict of interest disclosure obligations are not limited to a practitioner’s own conflicts, but may extend to conflicts involving employees, associates or other relevant persons. This has practical implications for firm-wide governance and internal controls, particularly for practices that undertake work for government agencies.=
In relation to breach reporting, the updated guidance emphasises that where a practitioner is uncertain whether a breach is significant, but has reasonable grounds and a reasonable basis for that view, the breach should still be reported. This reinforces a cautious approach to compliance and highlights the importance of documenting decision-making processes around breach identification and reporting.
Tax agents should review the updated guidance and consider whether existing policies, training and internal processes adequately reflect the clarified expectations, particularly around conflicts management and breach reporting. The TPB has indicated that these changes form part of a broader program of improving guidance for the profession, with further updates possible as its review of regulatory settings continues.
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Improving our guidance to make it easier for tax practitioners | Tax Practitioners Board
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ATO updates practice statement on insolvency and restructuring
The ATO has updated its internal guidance for dealing with bankruptcy, liquidation and incapacitated entities, with a particular focus on the treatment of small business restructuring (SBR) plans. The changes are set out in the revised Law Administration Practice Statement PS LA 2011/6, which applies to ATO officers administering matters under the Bankruptcy Act 1966 and Corporations Act 2001.
The updated practice statement provides new guidance on how ATO officers are to approach SBR proposals as an alternative to liquidation. In particular, it confirms that the ATO will generally vote against a restructuring plan where the entity has unpaid employee entitlements or outstanding tax lodgments, or where accepting the plan would be inconsistent with the principle that all admissible debts and claims rank equally. This clarification is relevant for advisers assisting clients considering restructuring options, as it highlights circumstances in which ATO support is unlikely.
In addition to the substantive changes, the practice statement has been restructured, with updated headings and revisions to ensure technical accuracy and currency. While the guidance is directed at ATO staff, it provides useful insight into the ATO’s current approach to insolvency and restructuring matters, and can assist tax agents in managing client expectations and advising on the viability of proposed restructuring plans.
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PS LA 2011/16 | Legal database
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ATO issues taxpayer alert on contrived property development arrangements
The ATO has issued Taxpayer Alert TA 2026/1 highlighting concerns with certain property development arrangements between related parties that it considers may be designed to defer the recognition of income and inappropriately utilise tax losses.
The alert focuses on arrangements involving the interposition of a special-purpose development entity between a landowner and a related construction entity, typically under long-term construction contracts spanning more than one income year. While the contractual documents may characterise the arrangement as the provision of development services, the ATO is concerned that, in substance, the land ownership and development activities form a single integrated property development activity that has been artificially separated.
Under the arrangements outlined in the alert, income derived by the developer for managing or delivering the development is often deferred until project completion, while deductions for construction costs are claimed progressively. This can result in losses being generated by the developer and offset against other income within the group, with tax on the overall profits effectively deferred or eliminated.
The ATO notes that in some cases these arrangements are repeated across projects and timed to coincide with other group income, despite significant growth in group wealth.
The ATO has also raised concerns where there is little or no evidence that the developer entity genuinely undertakes, or has the capacity to undertake, development activities. In appropriate cases, the ATO considers that these arrangements may constitute a scheme to which Part IVA of the Income Tax Assessment Act 1936 (Cth) applies.
Tax agents advising on property development structures should be mindful that arrangements involving related parties, deferred income under long-term contracts and loss utilisation are likely to attract scrutiny where they do not reflect commercial reality. The ATO has indicated it will publish a draft practical compliance guideline to outline its proposed compliance approach, including indicators of higher-risk arrangements, and will engage directly with taxpayers involved in arrangements of concern.
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TA 2026/1 | Legal database
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Important dates in February for tax agents:
- 21 February 2026:
- Due date for medium remitters’ PAYG withholding payments for the previous month.
- Final day for monthly GST reporters to lodge BAS for reporting and payment of GST, WET and LCT.
- 28 February 2026:
- Third FBT instalment for the FBT year ending 31 March 2026 for employers that are deferred BAS payers.
- Lodgment of annual GST return or annual information report due today.
- Due date for lodgment of super guarantee statement and payment of super guarantee charge for the December 2024 quarter.
- Final day for lodgment for second quarter BAS, for taxpayers who lodge their BAS quarterly for reporting and payment of GST, WET and LCT.
- PAYG withholding payments for deferred BAS payers:
- Small withholders: PAYG amounts withheld from payments made October to December 2024.
- Medium withholders: PAYG amounts withheld from payments made in December 2024.
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