September 2026 Tax and Business Update: What You Need to Know

Australia’s tax and compliance environment continues to change. Recent developments affect the timing of superannuation payments, family trust obligations, property deductions, capital gains tax, contractor income reporting and SMSF valuations.

For business owners and investors, the message is clear: accurate records, timely action and careful advice are increasingly important. Below is a practical overview of the key developments and the actions you should consider.

Payday Super is now in effect

The Payday Super reforms commenced on 1 July 2026, changing the way employers meet their superannuation guarantee obligations. Employers must now ensure eligible super contributions are received within the required timeframe linked to an employee’s payday, rather than relying on the previous quarterly payment cycle.

The ATO has finalised guidance covering the transition to Payday Super, eligible contributions and the calculation of the superannuation guarantee charge where an employer does not meet its obligations.

What employers should do

• Review payroll and superannuation payment processes.
• Confirm that payroll software and clearing-house arrangements support Payday Super.
• Allow sufficient processing time for contributions to reach employees’ funds.
• Reconcile payroll, superannuation and general ledger records regularly.
• Investigate rejected or returned contributions immediately.

Late payment can result in additional costs, administration and potential superannuation guarantee charge liabilities. KGBM can review your payroll process and help establish reliable controls for ongoing compliance.

Family trust distribution tax: important deadline approaching

The ATO is offering eligible taxpayers up to an 80% remission of general interest charge on certain family trust distribution tax liabilities until 31 December 2026.

Family trust distribution tax may arise when a trust with a family trust election makes a distribution outside the permitted family group. These issues can remain undiscovered for years, and there is no general time limit preventing the ATO from issuing a liability notice.

Trustees should review historical elections and distributions before the concession closes. Early voluntary disclosure and payment may significantly reduce interest costs where the ATO considers remission fair and reasonable.

Recommended action

Arrange a review if your trust has:

• made or received a family trust election or interposed entity election;
• distributed income or capital to extended family members, companies or other trusts;
• changed beneficiaries, ownership arrangements or advisers; or
• uncertain or incomplete historical trust records.

Negative gearing and capital gains tax reforms

Further amendments have been proposed and enacted in connection with the Government’s negative gearing and capital gains tax reforms. The rules include important treatment for residential properties transferred through inheritance or relationship breakdown and further detail on what may qualify as a new residential dwelling.

For certain transfers between spouses or through deceased estates, existing negative gearing treatment may be preserved. The reforms also include significant CGT consequences and choices that may depend on the taxpayer, asset and acquisition circumstances.

Individuals and trusts holding CGT assets should maintain reliable ownership, acquisition and improvement records. Where valuation evidence may be required, it should be obtained from a reputable or appropriately qualified valuer at the relevant time.

These measures are complex and continue to develop. Advice should be obtained before acquiring, transferring, restructuring or selling property.

Holiday homes and rental property deductions

From 1 July 2026, updated ATO guidance applies to rental properties that are also used as holiday homes or leisure facilities.

Where a property is not used or held mainly to produce rental income, owners may be unable to claim major ownership and operating costs such as interest, council and water rates, body corporate fees, repairs and maintenance. Some directly connected expenses, including advertising, guest cleaning and booking commissions, may still be deductible.

Where the property is used mainly to earn rent but has limited private use, deductions may still be available under the ordinary rules, subject to appropriate apportionment.

Records property owners should retain

• Booking calendars and evidence of genuine availability for rent.
• Details of private use by owners, relatives and friends.
• Market rental evidence and agent correspondence.
• Advertising records and platform statements.
• Invoices for interest, rates, repairs, cleaning and commissions.

The commercial reality of how the property is used is critical. Simply listing a property for rent may not, by itself, support a full deduction claim.

ATO data matching for motor vehicles

The ATO is collecting motor vehicle registration and transfer data for the 2025/26 to 2029/30 financial years. The program covers vehicles newly registered or transferred with a purchase price or market value of at least $10,000.

The data may be compared with tax returns, activity statements and other records to identify potential discrepancies involving income tax, GST, fringe benefits tax, luxury car tax and fuel tax credits.

Businesses should ensure that vehicle purchases, disposals, finance arrangements, private use and employee benefits are correctly recorded. Business owners should also be able to explain significant vehicle acquisitions that appear inconsistent with their reported financial position.

Contractor income will increasingly be pre-filled

For Tax Time 2026, the ATO is pre-filling contractor payments reported through taxable payments annual reports into the tax returns of many sole traders and individuals in business.

This information is intended to improve reporting accuracy, but it is not necessarily a complete record of business income. Contractors remain responsible for declaring all income and maintaining evidence for legitimate business expenses.

Before lodging, contractors should reconcile:

• customer invoices and receipts;
• bank deposits;
• payment platform records;
• taxable payments annual report information; and
• GST reported through business activity statements.

Differences should be investigated and documented before the return is lodged.

SMSF valuations are under increased scrutiny

Market valuations are a priority area in the ATO’s 2026/27 SMSF auditor compliance program. Particular attention is expected for real property, unlisted shares and units in private trusts.

SMSF trustees must report fund assets at market value and provide the auditor with sufficient objective evidence. Repeating a prior-year figure or relying on an unsupported estimate may not meet the required standard.

Reliable 30 June 2026 valuations may also be important for Division 296 planning and any available cost-base election. Trustees with difficult-to-value assets should agree on a defensible valuation process early and collect supporting evidence while it is readily available.

Strong records remain your best protection

Recent tax cases reinforce a consistent lesson: a claim must be supported by both the law and reliable evidence.

Expenses are not automatically deductible merely because they help a person maintain professional knowledge or capability. Similarly, GST credits may be denied where legal or other costs relate to holding or realising an investment rather than carrying on an enterprise. Taxpayers seeking protection through the tax agent safe-harbour rules must also provide their adviser with complete and accurate information.

Good tax outcomes begin with clear documentation, correct accounting treatment and advice obtained before a transaction is completed.

How KGBM can help

KGBM supports businesses, employers, investors and trustees with practical accounting and tax compliance services, including:

• bookkeeping and reconciliations;
• payroll and superannuation compliance;
• BAS preparation and lodgement;
• company and individual tax returns;
• trust and entity accounting support;
• management reporting; and
• Virtual CFO services.

If any of these changes may affect you, contact KGBM to arrange a review. Early action can help reduce compliance risk, avoid unnecessary interest and penalties, and give you greater confidence in your financial position.

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Tracking the top trends in fraud

The threat landscape for fraud has evolved significantly, and Accountants play a crucial role in helping businesses mitigate these risks.  Here’s a summary of the key fraud schemes highlighted and the steps Accountants can take to help their clients:

Trending Fraud Schemes in 2024

1. Vendor Fraud: Skimming Off the Top
   • Nature of the Fraud: Includes invoices for undelivered services, kick-back schemes, and padded invoices.
   • Increased Risk: The rise of remote work has led to less oversight of purchasing processes.
   • Expert Insights: Fred Kohm emphasized the importance of reviewing accounts payable to ensure payments are made to legitimate vendors. Jonathan T. Marks noted the necessity of updating controls to reflect remote work realities.
   • Accountant Actions:
     • Urge clients to tighten controls and increase audits.
     • Train accounts payable departments to recognize suspicious transactions.
     • Use data analytics to flag discrepancies, such as vendors with the same address.
2. Revenue Recognition Fraud: Too Good to Be True
   • Nature of the Fraud: Involves exaggerating or falsifying revenue to meet targets, receive bonuses, or improve corporate appearance.
   • Increased Risk: Often seen in growing companies that haven’t updated their controls.
   • Expert Insights: Marks highlighted the role of compensation incentives in driving fraudulent behavior and the increased enforcement.
   • Accountant Actions:
     • Educate clients on maintaining accurate reporting and robust checks.
     • Encourage transparency and accountability in corporate culture.
3. Ransomware: Networks Under Attack
   • Nature of the Fraud: Hackers hold company networks hostage, demanding ransom payments.
   • Increased Risk: The frequency and severity of attacks are rising, though not always widely publicized.
   • Expert Insights: Kohm stressed the importance of vigilance, especially for rapidly growing companies lacking technical sophistication.
   • Accountants Actions:
     • Advise clients on penetration testing and vulnerability assessments.
     • Train employees to recognize phishing schemes and other attack vectors.
4. Disaster Relief Fraud: Taking Advantage in Uncertain Times
   • Nature of the Fraud: Includes contractor scams, fake charities, and inflated insurance claims following disasters.
   • Increased Risk: The chaotic post-disaster environment is ripe for fraud.
   • Expert Insights: Woodward pointed out the need for diligence and thorough research during disaster recovery.
   • Accountants Actions:
     • Educate clients on verifying charities and contractors through platforms like GuideStar.
     • Encourage strong oversight and frequent audits post-disaster.

How Accountants Can Help Mitigate Fraud Risks

1. Fraud Risk Assessment:
   • Conduct comprehensive fraud risk assessments to identify potential vulnerabilities.
   • Encourage clients to brainstorm around how fraud could occur within their operations.
2. Use of Technology:
   • Implement data analytics tools to detect anomalies and patterns indicative of fraud.
   • Leverage AI and machine learning to enhance fraud detection capabilities.
3. Employee Training:
   • Regularly train employees on recognizing fraud indicators and following proper procedures.
   • Foster a culture of vigilance and ethical behavior within the organization.
4. Strengthening Internal Controls:
   • Update internal controls to reflect changes in work environments, such as increased remote work.
   • Ensure segregation of duties and robust approval processes for financial transactions.
5. Regular Audits and Reviews:
   • Perform regular audits and reviews of financial statements and processes.
   • Encourage clients to have open conversations about vulnerabilities and risk mitigation strategies.

By staying informed about current fraud trends and employing these preventive measures, Accountants can significantly reduce the risk of their clients becoming victims of sophisticated fraud schemes. This proactive approach not only protects the financial health of businesses but also safeguards their reputation in an increasingly complex threat landscape.

AI and fraud: Should Know

The threat landscape of fraud has significantly evolved with the advent of AI, heightening the complexity and efficiency of fraudulent schemes. Here’s how AI has reshaped these threats, particularly in the context of executive impersonation scams and other fraud types:

Executive Impersonation Scams

Traditional Approach: These scams typically involved emails where fraudsters impersonated CEOs, requesting urgent fund transfers. Employees were trained to identify red flags such as unusual requests, poor grammar, and inconsistencies in email addresses.

AI-Driven Evolution: AI has introduced deepfake technology, allowing fraudsters to create convincing voicemail or video messages that mimic a CEO’s voice and appearance. This next-level threat means employees might receive seemingly authentic video calls or voice messages, making detection much harder.

Automation and Efficiency in Fraud Schemes

Traditional Fraud Schemes: Historically, executing fraud required significant manual effort, including creating fake documents and planning phishing attacks, which limited the scale and speed of operations.

AI-Driven Efficiency: AI can automate these processes, allowing fraudsters to execute a high volume of attacks quickly and with minimal human intervention. For instance, AI can generate large quantities of phishing emails or fake documents, significantly increasing the reach and impact of fraudulent activities.

Generation of Convincing False Documents

Traditional Document Fraud: Fraudsters created fake documents that often contained detectable errors such as poor formatting or incorrect details, which could be identified by vigilant employees.

AI-Enhanced Document Fraud: AI can produce high-quality, realistic documents such as invoices, contracts, and bank statements. By analyzing numerous legitimate examples, AI systems generate fakes that are nearly indistinguishable from authentic documents, reducing the likelihood of detection.

Sophistication of Traditional Attacks

Traditional Phishing Attacks: Phishing often relied on generic, broadly targeted messages, which have become less effective as awareness has increased.

AI-Driven Sophistication: AI can tailor phishing attacks using publicly available information to create highly personalized messages. For example, fraudsters can use social media data to craft messages that appear to come from a distressed family member, complete with personal details and convincing media like photos and mimicked voices.

Increasing Speed and Persistence of Schemes

Traditional Limitations: Traditional schemes required significant planning and manual execution, limiting the frequency and persistence of attacks.

AI-Enhanced Persistence: AI operates tirelessly, allowing for continuous and relentless attacks. Automated AI systems can execute spearphishing, robocalls, and ransomware attacks at a scale and persistence unattainable by humans alone.

Decreasing Detectability

Traditional Cybercrime Detection: Tracing cybercrimes often relied on identifying human errors or detectable patterns in fraudulent activities.

AI’s Role in Evasion: AI can employ techniques to evade detection, such as using generative adversarial networks (GANs) to continuously improve the realism of fake data. GANs involve two neural networks that train each other: one generates false information while the other detects it, leading to progressively more convincing forgeries.

Mitigation Strategies for AI-Driven Fraud

1. Advanced Training Programs:
   • Educate employees about the capabilities of AI in generating deepfakes and the new red flags to watch for.
   • Conduct regular training sessions with updated scenarios that include AI-generated threats.
2. Enhanced Verification Processes:
   • Implement multi-factor authentication (MFA) for financial transactions and critical communications.
   • Use secure, encrypted communication channels for sensitive interactions to verify identities.
3. AI-Based Detection Tools:
   • Deploy AI systems designed to detect anomalies and inconsistencies in communications and documents.
   • Continuously update AI detection tools to counteract evolving AI-generated fraud techniques.
4. Public Awareness and Collaboration:
   • Stay informed about the latest AI-driven fraud methods through industry updates and cybersecurity reports.
   • Collaborate with other organizations and cybersecurity experts to share knowledge and develop best practices.
5. Limiting Data Exposure:
   • Control internal access to sensitive data and limit public availability of personal information to reduce the risk of deepfake generation.
   • Ensure that publicly posted data is minimal and managed securely.

By understanding the evolving capabilities of AI in perpetrating fraud and adopting proactive strategies, organizations can better protect themselves against these sophisticated threats. Embracing AI for fraud detection and prevention is crucial to staying ahead of malicious actors who leverage this technology.

TYPES OF PAYROLL FRAUD

1. This is a more sophisticated form of fraud that often involves salaries being disbursed to “employees” who do not exist in the company. These could be fictitious employees or former employees whose payroll records have not been terminated. It can also involve using the names of current casual employees to fabricate hours being worked within a business and then making payments based on those falsified casual hours into a third party’s bank account. This type of fraud is commonly linked to businesses involved in outsourced labour hire and with large casual workforces, and it normally involves people with ready access to payroll records.

2. This occurs when employees, either by manipulating time records or through deceit, claim overtime for hours not worked.

3. Employees claim benefits for fake or inflated personal expenses. This may include travel expenses, use of a company credit card, use of a company vehicle, or any extra benefit provided to an employee.

4. This occurs when commission is paid on contracts obtained, sales, or other activities directly linked to their duties. Fraud occurs when inflated sales and/or inflated performance figures are provided to obtain higher commissions.

5. Occurs when an employee (in liaison with someone in the human resources or payroll department) changes their pay rate, leading to higher salaries.

6. This is common in businesses where there is a requirement to record hours worked by clocking in and out of work physically or logging in and out of computer systems digitally. Perpetrators generally get other employees to impersonate them, so it appears they have attended work (and are paid accordingly) when they are absent

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