Tax News and Updates April 2026

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1.

Super reforms pass Parliament: Div 296 and LISTO changes finalised

Major superannuation reforms and expanded low-income super concessions are now law, following Royal Assent on 13 March 2026.

The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 and the related Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026 will take effect from 1 July 2026.  Together, the measures introduce Division 296, imposing additional tax on superannuation earnings linked to high balances, and expand the Low Income Superannuation Tax Offset (LISTO).

Division 296 tax

Division 296 imposes an additional tax on superannuation earnings attributable to high total superannuation balances (TSB):

• TSB of $3 million to $10 million: an additional 15% tax (bringing the total tax rate on affected earnings to 30%).
• TSB above $10m: a further 10% (bringing the total to 40%).

Division 296 tax applies from the 2026-27 income year, with liability for that first year determined by reference to the individual’s TSB at 30 June 2027.  Both thresholds will be indexed annually to CPI. The regime applies across APRA-regulated funds, SMSFs and exempt public sector schemes, including defined benefit schemes.

TSB changes

From 1 July 2026, each superannuation interest will have its own TSB value, determined using a prescribed valuation method or withdrawal benefit value, depending on the interest.  An individual’s TSB will be the sum of all such values.  This replaces the previous reliance on transfer balance account values and aligns the TSB definition with annual valuation requirements.

For Division 296 purposes only, limited recourse borrowing arrangement amounts are excluded from the TSB, ensuring the tax applies to net superannuation assets. Usual TSB rules otherwise remain unchanged.

LISTO expanded

From 1 July 2027, the maximum LISTO will increase to $810, and eligibility will extend to individuals with incomes of up to $45,000, aligned with the lowest marginal tax rate threshold.  A new statutory formula will determine the maximum offset amount, with no indexation to the LISTO cap.

Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026

Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026

2.

Payday Super: New Regulations and Draft ATO Guidance Released

The ATO has released final Payday Super Regulations and opened consultation on four draft Law Companion Rulings, ahead of the Payday Super reforms commencing on 1 July 2026.

The Regulations focus on implementation for superannuation funds, including a significant reduction in contribution allocation timeframes.  Broadly, funds will be required to allocate or return contributions within three business days of receipt, replacing the current 20day window.  The Regulations also clarify payments excluded from qualifying earnings, provide more detail on the redesigned administrative uplift under the superannuation guarantee charge, and support upcoming SuperStream enhancements, including improved verification and payment processes.

Additionally, the ATO has released four draft Law Companion Rulings outlining how the new rules will apply:

• LCR 2026/D1 Payday Super: qualifying earnings;
• LCR 2026/D2 Payday Super: eligible contributions;
• LCR 2026/D3 Payday Super: calculation and assessment of the superannuation guarantee charge; and
• LCR 2026/D4 Payday Super: application and transitional provisions.

Consultation on the draft rulings closes on 1 May 2026.  With commencement of the Payday Super regime approaching, employers, super funds and advisers should be reviewing payroll systems, contribution processes, and compliance frameworks to ensure readiness.

Payday Super draft law companion rulings open for consultation | Australian Taxation Office

Payday Super Regulations: further details for super funds | Australian Taxation Office

3.

TPB releases draft guidance on use of AI by tax practitioners

The Tax Practitioners Board (TPB) has released draft guidance on the use of AI by tax practitioners, aimed at clarifying how existing professional and ethical obligations (including under the Code of Professional Conduct) apply when AI tools are used in delivering tax agent services.

The Exposure Draft highlights practical considerations surrounding the use of AI such as competence, confidentiality, supervision, control, and the exercise of professional judgment.  The Exposure Draft emphasises that practitioners remain responsible for the services they provide, regardless of whether AI is used.

The Exposure Draft is open for consultation until 21 April 2026.

Exposure Draft TPB(I) D62/2026 The use of Artificial Intelligence and the Code of Professional Conduct | Tax Practitioners Board

4.

A stay on tax recovery proceedings is possible, but the bar remains high

In Deputy Commissioner of Taxation v Ho [2026] NSWSC 247, the NSW Supreme Court granted a rare stay of tax recovery proceedings for over $66 million in liabilities due to extreme hardship and ongoing parallel disputes. 

Justice Elkaim accepted that the tax assessments were conclusive and could not be challenged in the recovery proceedings. However, his Honour found that a stay was justified because the taxpayer had active and substantive Part IVC and judicial review proceedings on foot, recovery would cause extreme hardship beyond ordinary commercial consequences, and allowing tax recovery to proceed risked undermining the just, quick and cheap resolution of the real issues in dispute.

The Court said that while this case sits at the outer margins of established authorities, a stay may be available where truly exceptional circumstances are established.

Deputy Commissioner of Taxation v Ho [2026] NSWSC 247

5.

Full Court confirms directors not “employees” for FBT purposes

The Full Federal Court has confirmed the controlling directors of a corporate trustee were not "employees" for FBT purposes, with the result that non-cash benefits provided to them were not taxable fringe benefits.

In SEPL Pty Ltd as trustee of the SFT Trust v Commissioner of Taxation [2026] FCAFC 36, the taxpayer was the corporate trustee of a family trust operating a business.  Following the death of the family patriarch, his three sons became directors of the trustee company and beneficiaries of the trust, but received no remuneration for acting as directors.

During the relevant FBT years, the trustee provided the brothers with access to luxury motor vehicles owned by the company.  The Commissioner assessed the taxpayer to FBT on the basis that the brothers were employees.

At first instance, the AAT held that the brothers were not employees and that the benefits were therefore not subject to FBT: BQKD and FCT [2024] AATA 1796.  That decision was overturned by the Federal Court: FCT v SEPL Pty Ltd [2025] FCA 581.

On appeal, the Full Court held that it was open to the AAT to conclude that the brothers were not employees within the meaning of the Fringe Benefits Tax Assessment Act 1986.  Relevant factors included the absence of employment contracts, board resolutions indicating employment, wages or leave entitlements, the presence of employed managers who ran the business, and that the brothers’ conduct was consistent with proprietary control rather than employment.

The decision highlights that controlling directors or beneficiaries will not necessarily be employees for FBT purposes, even where they receive non-cash benefits, and confirms the evaluative fact-specific nature of the employment inquiry in closely held structures.

SEPL Pty Ltd as trustee of the SFT Trust v Commissioner of Taxation [2026] FCAFC 36