Bendel High Court Appeal (Div 7A)
The matter has now been heard and the High Court's decision, expected in the first half of 2026, will determine if an Unpaid Present Entitlement (UPE) from a trust to a corporate beneficiary is a Division 7A "loan".
Until the judgment, treat UPEs cautiously. The ATO has flagged it will apply other integrity rules (like s 100A) regardless of the outcome. The safest approach remains placing UPEs on complying Division 7A loan terms.
New Div 296 super tax
From 1 July 2026, a new tax applies to superannuation balances over $3 million. The thresholds are indexed and the tax applies only to realised earnings, not unrealised gains.
The 1 July 2026 start provides a window for strategic planning. Clients with high balances should seek advice on contribution timing, account structures and modelling the impact of the new tiered rates (30% for $3-10m, 40% for >$10m).
ATO tougher stance
The ATO is increasing its debt collection and compliance activities, with more director penalty notices and garnishees and a stricter stance on GIC remission. Expanded data matching is also in use.
Proactive engagement with the ATO is critical for clients with outstanding debts. The days of flexibility are over, ensure all records are reconciled and consistent to avoid automated flags. Voluntary disclosures may be appropriate to reduce/mitigate penalties.
Senate CGT Discount inquiry
A Senate Committee will report by 17 March 2026 on the future of the 50% CGT discount. Early submissions have called for it to be reduced, potentially without grandfathering existing assets (which our office strongly opposes and believes is unlikely).
The inquiry creates policy uncertainty. Clients planning significant asset disposals (especially property) should be aware of the reform risk.
Electric Car FBT Discount review
A government review is underway for the FBT exemption for electric vehicles, following a significant cost blowout. Submissions close 6 February 2026, with findings to inform future policy.
The review creates significant uncertainty to what has been a very favourable tax concession. Uncertainty now exists for businesses with arrangements in place for the private use provision of electric vehicles.
We have been addressing queries from our clients in this area recently and are able to advise on benefiting from potential transitional arrangements in event of legislative change.
Generative AI
The use of generative AI is growing, but it carries risks of producing incorrect or "hallucinated" information. Practitioners remain bound by the TASA Code of Conduct or Legal Profession Uniform Laws (or similar industry requirements) when using these tools.
Always verify AI-generated information. Do not be fooled by the AI’s seeming confidence and conviction in responses.
Tax Ombudsman reviews
The Tax Ombudsman is finalising several reviews, with reports expected in early 2026 covering the ATO's management of GIC remission, debt collection and use of DPNs.
These reviews may lead to changes in ATO processes. In the meantime, ensure any remission requests are comprehensive. From 22 January 2026, use the ATO's new standardised forms for this purpose.
Remissions are absolutely still possible, however, remission requests now require more sophistication.
