• 10 February, 2026

Australian Tax Updates 2026: ATO Rules, Risks and Guidance

Staying updated with the latest ATO rulings and compliance changes is essential for every Australian business. From personal services income (PSI) rules to payday super reforms, the ATO has introduced several updates that could directly impact your tax position.

In this guide, we break down the most important ATO developments for 2026 and what they mean for you.

Personal Services Businesses (PSB) & Part IVA Risks

The ATO’s PCG 2025/5 outlines when income arrangements involving personal services income (PSI) may trigger anti-avoidance rules under Part IVA.

✅ Low-Risk Arrangements

You’re generally safe if:

• Income is taxed in the individual’s hands
• Payments reflect the actual value of services
• Associates are paid fairly for genuine work
• Profits are only temporarily retained for valid business purposes
• Super contributions are made correctly

⚠️ High-Risk Arrangements

ATO scrutiny increases if:

• Income is diverted to lower-tax entities
• The individual is underpaid or not paid at all
• Profits are split to reduce tax
• Funds are retained without real commercial purpose
• Money is later accessed personally (e.g., Division 7A loans)

Payday Super: First-Year Compliance Approach

From 1 July 2026, the ATO will closely monitor Super Guarantee (SG) payments.

Risk Levels:

• Low Risk: Paid on time, minor delays corrected quickly
• Medium Risk: Errors fixed within 28 days
• High Risk: SG remains unpaid beyond deadlines

👉 Businesses must ensure timely super payments to avoid penalties.

CGT Update: Right to Occupy a Property

Under draft ruling TD 2026/D1, the ATO clarifies:

• A right to occupy must be explicitly stated in a will
• It cannot arise from trustee discretion or private agreements
• Court orders (e.g., family provision orders) may qualify

This impacts eligibility for the main residence CGT exemption.

Public Country-by-Country (CBC) Reporting

New transparency rules apply to large entities:

Who Must Report? 

• Entities with global income ≥ $1 billion
• Australian-sourced income of $10 million+

Key Requirements:

• Lodge reports within 12 months of year-end
• Reports are made publicly available

Exemptions:

• Rare and granted only in exceptional cases
• Partial exemptions preferred over full

Transfer Pricing: Inbound Distribution Changes

Updated guidance (PCG 2019/1DC) introduces:

New “White Zone”

Low-risk entities include those with:

• Advance Pricing Agreements (APA)
• ATO settlements
• Court/tribunal decisions
• Recent ATO assurance reviews

This helps businesses reduce transfer pricing risk exposure.

Mining & Energy: Deduction Clarifications

The ATO’s draft update to TR 2017/1 clarifies:

• “Exploration or prospecting” must be interpreted based on legal context and history
• This follows the Shell Energy court decision

ATO Warning: Property Development Structures

The ATO’s Taxpayer Alert TA 2026/1 targets:

• Related-party development structures
• Artificial income deferral
• Misuse of tax losses

Key Risk:

Arrangements may be treated as tax avoidance schemes under Part IVA.

SMSF Trustees: New Education Directions

Under PS LA 2026/1, the ATO may issue education directions where:

• Trustees breach SMSF rules
• Knowledge gaps are identified

This aims to improve compliance and prevent future breaches.

PAYG Withholding Updates

Indigenous Artists (Remote Areas)

Proposed change:

• Zero PAYG withholding
• Applies where no ABN is provided
• Reduces administrative burden

Religious Practitioners

ATO proposes:

• Nil withholding on certain payments
• Applies where deductions offset income

What These ATO Updates Mean for You

These updates highlight one key message:

👉 ATO compliance is becoming stricter, smarter, and more transparent.

Businesses must:

• Review income structures
• Ensure super is paid on time
• Monitor GST, PAYG, and reporting obligations
• Avoid aggressive tax strategies

How Workpaper Can Help

At Workpaper Accounting Services, we help businesses stay ahead of ATO changes by:

• Advising on PSI and tax structuring
• Ensuring BAS, PAYG & super compliance
• Managing transfer pricing and reporting
• Supporting SMSF compliance
• Reducing audit and penalty risks

Get Expert Advice Today

Stay compliant and confident with expert guidance.

Workpaper Accounting Services
🌐 Website: https://workpaper.com.au/

📞 Phone: 0485 825 915
📧 Email: info@workpaper.com.au

📍 Address: 7 Bridge St, Werribee, Victoria 3030, Australia