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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