Key changes for businesses, SMSFs and employers
A new range of tax measures and compliance changes were recently announced and are set to affect businesses, investors and trustees. Here’s a roundup of the latest tax news.
New approach for PAYG instalments
A new way of managing pay as you go (PAYG) instalments will be introduced from 1 July 2027.
Businesses will be able to use dynamic PAYG, ATO-approved calculations in their accounting software to vary their tax instalment payments in line with real-time business conditions.
The ATO says it will not apply a general interest charge (GIC) if dynamic PAYG is used as intended.
It’s important to note these measures are not yet law.
Rule change for SMSF borrowing
Self-managed Super Fund (SMSF) trustees need to be aware that more restrictive tax rules now apply to borrowing money under Limited Recourse Borrowing Arrangements (LRBA).
From 10 August 2026, LRBAs can only be used to acquire real property if it meets the definition of ‘business real property’.
Existing LRBAs that were entered into before 10 August 2026 are unaffected, as are refinancing arrangements relating to those existing borrowings.
The 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).
Luxury car tax rate change
The 2026-27 luxury car tax (LCT) threshold has been announced, with vehicle purchases over the threshold attracting the luxury car tax rate of 33 per cent.
From 1 July 2026, the LCT threshold for fuel efficient vehicles increased ever so slightly to $91,661, up from $91,387 in 2025-2026, with the threshold for other vehicles now sitting at $80,809.
Change to penalty fees
Administrative penalties for taxpayers failing to meet their tax obligations also increased from 1 July 2026.
The penalty amount for the current financial year has increased to $364 per unit, up from $330, which applied for the 1 November 2024 to 30 June 2026 period.
The ATO imposes different penalty unit amounts based on several factors including taxpayer behaviour and the amount of tax avoided.
Payday Super compliance tips
The ATO has reiterated that, during the first year of Payday Super, it will focus on helping employers transition to the new rules. From a compliance perspective, it will consider an employer’s behaviour more than genuine mistakes or unintentional errors.
The best way to minimise the risk of compliance action is to pay your super contributions every payday and fix any errors quickly.
If you make a mistake, it should be corrected as soon as possible and outstanding contributions paid to the fund immediately, rather than waiting to receive a notice of assessment.
SG payment timing for contractors
The ATO has warned employers there is no separate timing or special treatment for contractors under the Payday Super regime.
Super for eligible independent contractors must be paid each payday and must reach the contractor’s fund within seven business days after payday.
Division 296 reminders
The ATO has recommended that individuals with Total Super Balances (TSB) above the large super balance threshold ($3 million for 2026-2027) and very large super balance threshold ($10 million for 2026-2027) check the Division 296 web guidance.
Under the new tax rules, the ATO calculates your TSB based on information provided by your super fund and then uses the fund’s earnings report to calculate Division 296 tax and issue a notice of assessment.
As the new rules change the calculation of TSBs, the ATO suggests that eligible taxpayers discuss the implications with their accountant.
Updated trust reporting requirements
From 1 July 2026, trustees of closely held trusts are no longer required to lodge a quarterly beneficiary tax file number (TFN) report.
The ATO is currently reminding trustees they are now required to report beneficiary TFNs in their statement of distribution when completing the trust’s annual return.
There is no change to the existing TFN withholding and reporting obligations if a beneficiary fails to quote their TFN before distribution payments.
Source: https://.ato.gov.au
