If you are considering using your Self-Managed Superannuation Fund (SMSF) to acquire property, the rules are now more restrictive following changes negotiated by the Greens as part of the Government’s broader housing tax reform package.

From 10 August 2026, SMSFs have fewer options for using a Limited Recourse Borrowing Arrangement (LRBA) to fund a property purchase, particularly where the property is residential or does not qualify as Business Real Property (BRP).

While LRBAs have not been banned, the type of real property that can be acquired using one has narrowed. The change is less relevant if you already had an LRBA in place prior to 10 August 2026 or exchanged a binding contract to acquire property in your SMSF before 10 August 2026. However, it is very relevant where you are planning to use SMSF borrowing as part of your property or retirement strategy.

What is an LRBA?

There is a general prohibition against superannuation funds borrowing. However, there are exceptions to this prohibition. The exception of the LRBA was introduced in 2007, allowing superannuation funds to borrow to acquire assets.

An LRBA is, as the name implies, limited recourse. This means the lender’s recourse is limited to the asset purchased using the borrowing. LRBAs have commonly been used by SMSFs to purchase property, including both residential and commercial property. In more limited circumstances, they have also been used to acquire shares in companies and units in unit trusts.

An LRBA is different to the ordinary property ownership structures outside superannuation, where borrowing is generally not subject to the same strict limited recourse and asset eligibility requirements that apply to SMSFs.

The legislation requires the following conditions to be met for an SMSF borrowing arrangement to fall within the LRBA exception:

1. The asset being acquired under the LRBA must be a single acquirable asset
2. The asset is held on trust on behalf of the SMSF until the LRBA is paid in full.  At that time, the legal ownership can be transferred to the SMSF trustee. This is referred to as a “bare trust” arrangement.
3. The lender’s rights are restricted to the asset being acquired only.  This means that the lender is only able to recover their loan amount against the asset purchased under the borrowing, and not any other assets within the SMSF.
4. No other charge can be put over the asset.

LRBAs have assisted SMSFs to acquire higher-value assets where the fund would not otherwise have sufficient capital to purchase the asset outright. As noted above, this has been weighted towards commercial and residential property. This reflects the nature of an LRBA as a limited recourse arrangement, as well as the limited appetite of lenders to provide finance for non-real property investments. The March 2026 ATO SMSF quarterly statistical report states that the estimated value of SMSF LRBAs is in excess of $80 billion (assets held under LRBAs), or approximately 7-8% of total SMSF assets, across multiple asset classes (property, shares, unit trusts), but is expected to be heavily weighted in property.

Have LRBAs been banned?

Despite heavy media attention, LRBAs have not been banned. However, the eligible assets available for an SMSF to acquire under an LRBA have become more limited.

For LRBA arrangements entered into on or after 10 August 2026, where an SMSF wishes to acquire ‘real property’ (being bricks and mortar) under an LRBA, that property must meet the existing definition in the superannuation legislation of Business Real Property (BRP).

This does not prevent a superannuation fund from investing in property that is not BRP. However, the fund cannot acquire that property using an LRBA.

An important clarification is that the removal of the LRBA is not just on residential property, but on any property that is not BRP.

What is Business Real Property?

BRP is defined in subsection 66(5) of the Superannuation Industry (Supervision) Act 1993 as any freehold or leasehold interest in real property that is used wholly and exclusively in one or more businesses.

This definition needs to be applied carefully. While some property may appear to be commercial or BRP, mixed-use properties, such as buildings with both commercial and residential use, will not satisfy the requirements. The ATO has provided guidance on the definition of BRP in a 2009 ruling (SMSFR 2009/1), which will likely remain the reference point where the classification of a property is contentious. Practically, this may arise where there is mixed use, or where the asset appears residential but is in fact zoned commercial and used as commercial premises for one or more businesses, such as allied health practices operating out of an old re-purposed house.

When do the new limitations apply?

The ATO’s guidance, published 29 July 2026, confirms that the new rules do not apply where an SMSF exchanged a binding contract to acquire real property before 10 August 2026, even if the LRBA is entered into, or settlement occurs, on or after that date. This means the property acquired under that contract does not need to be BRP. Later variations to the contract will generally not change this outcome, unless the variation is significant enough that the fundamental terms of the original contract no longer exist, in which case the ATO may treat this as a new arrangement.

As the changes have now commenced, it is highly unlikely that a bank will approve a new non-BRP LRBA. Where a binding contract was exchanged before 10 August 2026 to preserve the previous eligibility, it remains important that appropriate due diligence has been undertaken on the underlying asset, rather than “panic buying” an asset that may not stack up against the relevant return metrics as intended.

What about existing LRBAs?

All existing LRBAs relating to the acquisition of residential property, or any other real property that is not BRP, are able to remain in place. The ATO’s 29 July 2026 guidance confirms that an SMSF maintaining or refinancing an existing LRBA on or after 10 August 2026 does not need the underlying property to become BRP, provided the arrangement relates to the same asset already financed under that LRBA. The ATO treats refinancing as entering into a new loan contract for the same asset, whether with the same or a different lender. It remains to be seen whether financial institutions will tighten their own lending criteria for refinancing where the property is not BRP.

Is buying residential property in my SMSF now prohibited?

Residential property can still be purchased by an SMSF, but it must be acquired without an LRBA.

Single acquirable assets that are still able to be purchased under an LRBA are:

1. Business Real Property (or commercial property meeting the BRP test),
2. Shares or units in managed investments (which have additional specific rules to adhere to), subject to the availability of lenders.

It is worth noting that residential-style property can itself meet the definition of BRP where it is used wholly and exclusively in a business, such as a former residential dwelling used solely as commercial premises (as outlined above). Where that is the case at the time the LRBA is entered into, and throughout the period that the LRBA is in place, the property remains an eligible asset for LRBA financing despite its residential appearance.  This is an important consideration – for a new LRBA where the asset is BRP on acquisition, for the duration of the LRBA with respect to that asset, it must remain BRP and can’t change its use without falling foul of the LRBA provisions.  Such a change could be inadvertent, where it is important to consider the application of SMSFR 2009/1 to the property to ensure that it would still meet the BRP criteria. 

There may also be alternative structures for the acquisition of property, whether residential or commercial, in an SMSF. However, whether these structures are suitable will depend on your specific circumstances, so professional advice should be obtained before proceeding.

Key takeaways

• LRBAs have not been banned. For LRBA arrangements entered into on or after 10 August 2026, an SMSF can only use an LRBA to acquire real property that meets the definition of business real property (BRP).
• Existing LRBAs over residential (or other non-BRP) property are grandfathered and can continue to be maintained and refinanced on or after 10 August 2026, per the ATO’s 29 July 2026 guidance.
• A binding contract to acquire real property exchanged before 10 August 2026 preserves the previous eligibility, even if the LRBA is entered into or settlement occurs after that date.
• Residential property can still be purchased by an SMSF without an LRBA, and residential-style property that genuinely meets the BRP definition remains LRBA-eligible.

Next steps

1. If you are part-way through acquiring property in your SMSF, confirm whether a binding contract was exchanged before 10 August 2026 and, if not, whether the property will meet the BRP definition.
2. If you hold an existing LRBA over residential or other non-BRP property, no action is required. Speak to your lender in good time if you are considering refinancing, as some lenders may tighten their own criteria.
3. If you are considering acquiring residential property in your SMSF going forward, discuss the available structures and their tax and superannuation implications with your Cooper Partners adviser before proceeding.

Contact the Team

Please contact your Cooper Partners adviser if you would like to discuss how these changes may apply to your SMSF or broader superannuation strategy.

This newsletter is current as at 26 August 2026. Tax and superannuation announcements may continue to evolve. Before acting on the content of this newsletter, please contact us to discuss how it applies to your specific circumstances.

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The information and opinions in this presentation were prepared by Cooper Partners Financial Services (“CPFS”) for general information purposes only. Case studies and examples are included for illustrative purposes only.

In preparing this newsletter CPFS has not taken into account the investment objectives, financial situation and particular needs of any particular investor. The information contained herein does not constitute advice nor the promotion of any particular course of action or strategy and you should not rely on any material in this presentation to make (or refrain from making) any decision or take (or refrain from making) any action. The financial instruments, services or strategies discussed in this publication may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
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19 June 2026

From 1 July 2026, super contributions must align with your pay cycle.

From 1 July 2026, the new “Payday Super” rules will require employers to pay employees’ superannuation guarantee contributions in line with their pay cycle.

Contributions will need to be received by the employee’s super fund within 7 business days after each payday, rather than being paid quarterly.

The change is designed to strengthen Australia’s superannuation system by ensuring employees receive their super more frequently and earlier, helping improve retirement savings outcomes.

Employers should review payroll systems, cash flow, clearing house arrangements and employee super fund details now, as the ATO will be able to assess SG shortfalls at any time using Single Touch Payroll, superannuation fund reporting and employer disclosure data.

Key Changes

• Currently, employers are obliged to pay SG contributions for employees on a quarterly basis. In contrast, under the Payday Super rules, employers will be required to make SG contributions within 7 business days of each employee’s payday, which for some employers could mean a weekly obligation.

Note: Some limited time extensions will be available under the Payday Super rules including for new employees and new employee funds, out-of-cycle payments (such as bonus and back payments) and other exceptional circumstances.

• The Payday Super rules introduce a new concept called “Qualifying Earnings” (QE) which replaces the current ordinary time earnings (OTE).  

• QE is broader than OTE, incorporating OTE as its core component while also including additional payments such as all commissions, salary sacrifice amounts (treated as if not sacrificed) and payments to workers captured under the expanded definition of employee, including certain independent contractors.

• New SG regulations will also provide a clearer and more comprehensive list of the inclusions and exclusions from QE which should go some way towards making compliance with SG obligations more streamlined.

• An annual maximum contribution base (MCB) will apply under the Payday Super rules instead of the quarterly MCB under the current framework, helping to ensure that SG contributions from a single employer do not exceed the concessional contributions cap per income year. Reporting will also expand: from 1 July 2026, employers must report qualifying earnings and their super liability for each pay event through Single Touch Payroll STP-enabled software, so employers should confirm their payroll software or digital service provider is ready.

Practical Considerations

Payday Super will require significant system upgrades to be in place within a relatively short period of time by employers, payment intermediaries and superannuation funds to ensure compliance from the start date of 1 July 2026. 

Employers should consider the cash flow impact of paying SG contributions for employees on a more frequent basis. Careful planning is particularly important in the first month of implementation as employers will need to meet the SG obligations for the June quarter on 28 July 2026 under the current framework in addition to pay run cycles from 1 July 2026 under the Payday Super rules.

Additionally, from 1 July 2026 the ATO’s Super Clearing House will no longer be available. Employers without an alternative payroll solution should start exploring other options now to pay their employees’ SG contributions. Importantly, do not assume you will have the full 7 business days: a contribution is only on time once it is received and able to be allocated by the fund, and processing time through a clearing house or bank counts towards the deadline. We recommend paying SG on payday itself and note that a payment rejected by the fund does not extend the 7 business day window.

TIP

We recommend that all employers trial making SG contributions for their employees in line with their pay cycles well in advance of their first pay cycle post 1 July 2026 to ensure everything runs smoothly. As part of this, validate that each employee’s super fund details are complete and correct (using the ATO stapled-fund request and fund verification tools where available), and confirm with your clearing house or digital service provider how rejected or returned payments are flagged so they can be corrected quickly.

Getting ready before 1 July 2026

With commencement only weeks away, we suggest employers focus on the following practical steps:

1. Confirm payment timing with your provider.

The 7 business day rule is measured by when the contribution is received and able to be allocated by the employee’s super fund — not simply when you send it. Ask your payroll provider or clearing house how payments are made (for example, via the New Payments Platform (NPP), BECS direct entry, or direct debit) and how long processing times and any rejections typically take, then build that lead time into your pay run.

2. Know where rejected payments show up.

An error or rejected contribution does not extend the 7 business day deadline. Make sure you know where error messages appear (your fund, clearing house or digital service provider) and who is responsible for correcting and re-sending them quickly.

3. Transition off the SBSCH now.

Access to the ATO’s Small Business Superannuation Clearing House ends at 11:59pm AEST on 30 June 2026, with no replacement service. If you use it, choose an alternative solution, switch across, and download your transaction records before that date.

4. Plan for the July cash-flow overlap.

July may involve two sets of super payments: your new payday super contributions on each pay run from 1 July, plus your final quarterly SG payment for the June 2026 quarter, which must be received by funds by 28 July 2026. Consider paying the June quarter early to ease the overlap.

5. Check your payroll and STP readiness.

From 1 July 2026 your payroll software must calculate super on qualifying earnings (QE) and report QE and your super liability for each pay event through Single Touch Payroll (STP). Confirm with your software provider that the required updates are in place.

6. Run test payments and validate fund details.

Before your first July pay run, run test contributions and validate each employee’s super fund and member details, including stapled-fund details, so payments are not rejected for incorrect information.

7. Allow for new employees.

For a new employee, or the first contribution to a new fund, you generally have up to 20 business days for that first payment to be received — but this is a limited exception, not a general extension, so all other contributions still follow the standard 7 business day rule.

Traps

Payday Super is not only a payment-timing change. It also increases the importance of payroll data, worker classification and internal communication.

1. Before 1 July, employers should check that payroll has visibility over all workers who may be entitled to SG, including contractors paid mainly for their labour, casuals and other non-standard workers.

2. Employers should also review whether employee fund details are current. Fund mergers, product changes, incorrect member numbers and SMSF bank account or electronic service address changes can cause contributions to be rejected.
   A rejected contribution does not restart the 7 business-day deadline, so employers should know where errors will appear and who is responsible for fixing them quickly.

3. Finally, HR, payroll, finance and operations should agree on how payroll will be notified about new starters, contractors, terminations, out-of-cycle payments, bonuses, commissions, back pay and fund-detail changes. These governance gaps may not have caused immediate issues under quarterly super, but under Payday Super they can become compliance problems much faster.

Impact of the Payday Super rules on SGC

• The term “salary or wages” will be removed from the legislation and any superannuation guarantee charge (SGC) payable on late SG contributions (i.e. contributions that are not received within 7 business days of payday) will be calculated using an employee’s QE for the relevant payday, creating consistency with the calculation of SG contributions.

• Under the Payday Super rules, the calculation of the SGC liability will change and will consist of the following components:
  • The total of an employer’s individual final SG shortfalls for the QE day;
  • The sum of all individual employee notional earnings components for the QE day;
  • Total of the employer’s choice loadings for the QE day; and
  • Any administrative uplift for the QE day.

• The Individual final SG shortfall amount is calculated taking into account any late contributions made after the usual or extended periods but before the ATO makes an SG assessment for the QE day.

• The notional earnings component is similar to the current notional interest component under the current framework and is intended to compensate an employee for lost earnings due to late payment of SG contributions. It is calculated by applying the general interest charge (GIC) rate on a compounding basis to the individual base SG shortfall amount until such time as a late contribution is made by the employer which reduces the final SG shortfall to zero OR until the date the ATO issues an SG charge assessment.

• A maximum administrative uplift component of 60% will be applied to the sum of the individual final SG shortfall amount and notional earnings component. The administrative uplift component can be reduced to as low as 0% where an employer lodges a voluntary disclosure statement of their SG shortfall and has not had an ATO-initiated SGC assessment in the previous 24 months.

• The current SGC statements will be replaced with voluntary disclosure statements.

• In a welcome update, the Payday Super rules will allow for the SGC to be tax deductible by an employer. Any general interest charges and late payment penalties imposed by the ATO in relation to unpaid SGC will continue to be non-deductible.

ATO’s approach for first year compliance

The ATO’s Practical Compliance Guideline (PCG 2026/1) details its compliance approach for the first 12 months of Payday Super and distinguishes between low, medium, and high-risk employers regarding their Payday Super obligations.

The ATO acknowledges in the PCG that there are concerns employers may not have enough time to implement, test, and embed changes to their payroll systems and processes before the Payday Super rules take effect on 1 July 2026.

That said, the PCG also notes that employers who make genuine efforts to meet their superannuation guarantee (SG) obligations on time, quickly correct any mistakes, and cooperate with super funds are generally considered ‘low risk’ and are unlikely to be the focus of ATO compliance activity. Conversely, repeated failure to comply with the new requirements is likely to attract regulatory attention more quickly.

Next Steps

With the 1 July 2026 start date now only weeks away, we encourage employers to finalise their readiness:

• Confirm clearing-house and software processing times,
• Validate employee fund details, and
• Note that the first contribution for a new employee or new fund has a longer 20 business day window.

If you would like further information about the contents of this newsletter, please contact your Cooper Partners engagement team on 08 6311 6900.

This newsletter is current as of  19 June 2026, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

12 June 2026

15-year battle won, but is the joy short-lived?

In what is perhaps a short-lived win for taxpayers given the recent Budget announcements, the High Court has handed down its decision in the case of Commissioner of Taxation v Bendel, confirming that an unpaid trust entitlement does not of itself constitute a loan for Division 7A purposes.

High Court findings

In a majority decision, the High Court dismissed the Commissioner’s appeal from the Full Federal Court. The key facts of the case are summarised in our previous newsletters covering Bendel. The High Court’s reasoning came down to three points:

1. No loan was made
   The mere fact that the corporate beneficiary, Gleewin Investments Pty Ltd, was made presently entitled to trust income did not mean it made a “loan” back to the trustee for the purposes of Division 7A.
2. The two essential features of a loan were missing
   For a private company to make a loan, there must be a “transaction” involving positive steps by the company to move value, and an obligation or promise to repay.
   Neither existed here. “Simply doing nothing, or acquiescing to the retention of funds, is not a transaction which in substance effects a loan. 
   Gleewin Investments Pty Ltd did nothing. Its mere inactivity cannot satisfy the language of ‘advance’, ‘provision’, ‘payment’ or ‘transaction’.”
3. Subdivision EA told the real story
   Parliament specifically enacted Subdivision EA to deal with UPEs owed to corporate beneficiaries where a trustee, rather than paying out the UPE, makes a payment or loan to (or forgives a debt of) the company’s shareholder or their associate.
   The Commissioner’s decision not to rely on it “greatly undermines the Commissioner’s case.”
   In the Court’s words, the Commissioner “has taxed the wrong taxpayer.”

Is the joy ride over?

The High Court decision is a welcome outcome for the tax profession, having long argued that such UPEs should not have been treated as a loan under Division 7A. However, despite the taxpayer’s win in this case, the joy is likely short-lived given the ATO’s previous announcements that it will continue to apply section 100A to UPEs owed to companies, and in light also of the legislation to be drafted by the Government following their recent ‘trust tax’ Budget proposal, which is expected to significantly impact distributions made by trusts to corporate beneficiaries.

It is possible the Government saw the writing on the wall in the Bendel case, and thus incorporated the ‘trust tax’ proposal into the Budget announcements as a way to discourage distributions to corporates.

Under the proposal, a minimum tax of 30% will be applied to trusts from 1 July 2028 (2029 income year onwards), with no tax credit available to corporate beneficiaries. 

What is the expected impact?

Although the ATO now arguably cannot seek to apply section 109D where trust entitlements to corporate beneficiaries remain unpaid, we expect the impact on trust distributions to companies may be as follows:

Next Steps

The Bendel decision resolves a long-running dispute in taxpayers’ favour, but the landscape remains complex.

The following actions are relevant depending on your circumstances:

1. If you have UPEs that have not been converted to Division 7A loans
   The Bendel decision confirms these are not automatically Division 7A loans. However, section 100A continues to apply where there is a reimbursement agreement, and the ATO has indicated it will pursue this avenue. Do not assume Bendel provides a clean bill of health.
2. If you have UPEs already placed on Division 7A complying loan terms
   These cannot be unwound without risk at this stage. The ATO has not yet indicated whether it will provide relief for taxpayers who took this precautionary step. Await the ATO’s Decision Impact Statement before taking any action.
3. If the ATO previously assessed a UPE as a deemed dividend under Division 7A
   There may be an opportunity to amend prior year tax returns. The standard amendment period is two years for individuals and small business entities and four years for others, running from the date of the original assessment.
4. For 2026 year-end trust distributions
   Distributions to corporate beneficiaries can still be made and considered. However, given the proposed 30% minimum tax applying to trusts from 1 July 2028 with no tax credit available to corporate beneficiaries, the long-term economics of using corporate beneficiaries in trust structures warrants review.
5. Across all trust structures
   We recommend a full review of your trust distribution strategy before 30 June 2026, taking into account the Bendel outcome, the ongoing section 100A risk, and the proposed trust tax changes.

If you would like further information about the contents of this newsletter, please contact your Cooper Partners engagement team on 08 6311 6900.

Authors:
Marissa Bechta, Director – Head of Taxation Advisory 

Maddy Watt, Principal – Technical Quality Tax Leader

This newsletter is current as of 12 June 2026, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy 

Residential and Commercial Property Under the New Tax Rules

The 2026 Federal Budget proposes major changes to how property investment is taxed, but the impact is not uniform across the market.

While much of the early attention has focused on the proposed restriction of negative gearing for established residential property, the broader overlay is the proposed rewrite of the capital gains tax (CGT) regime from 1 July 2027, including the replacement of the 50% CGT discount with cost base indexation and a 30% minimum tax on real gains.

While legislation is yet to be finalised, the policy direction is clear: established residential property is becoming less concessionally taxed, while new housing supply remains comparatively favoured.

In collaboration with Realmark Group, this newsletter also incorporates on-the-ground observations from the Perth property market, highlighting how proposed tax changes may interact with supply, demand and investor behaviour in practice.

This newsletter is current as of 21 May 2026, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
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For further information please refer to our privacy policy 

8 May 2026

With the 2026 FBT year now ended and increased scrutiny from the ATO in this area, it is a good time for employers to review the FBT treatment of employee benefits and ensure appropriate records are in place to maximise available exemptions and concessions. We provide you with the latest updates and tips to assist you in managing FBT compliance obligations and completing 2026 FBT returns.

At a glance – the 2026 FBT hot spots

Employers are facing closer ATO scrutiny in several key areas this FBT year. In particular:

• Electric Vehicles (EVs) & Plug-in Hybrid Electric Vehicles (PHEV) changes – EV salary packaging remains attractive, but the PHEV sunset date now applies for new arrangements and changes to the full EV exemption to be announced in the 2026 Federal Budget will see the full EV exemption begin to be phased out from 1 April 2027. Separately, Employers should also consider the updated ATO shortcut method for home‑charging costs and remember that exempt electric car benefits can still be reportable for employees.
• Owner‑managers and non‑cash benefits (SEPL decision) – The Full Federal Court decision in SEPL confirms that non‑cash benefits provided to business owners are not automatically outside the FBT net. You still need to consider whether benefits are provided “in respect of employment”, and maintain strong documentation to support the capacity in which benefits are received.

• Motor vehicles – exemptions, private use and logbooks – The ATO is actively reviewing car benefits, focusing on misclassification of “work vehicles” as exempt, under‑stated private use and invalid or incomplete logbooks. Reviewing vehicle types, private‑use policies and the quality of employees’ logbooks is critical to managing FBT exposure.

2026 FBT Rates & Thresholds 

Key dates

Do you need to lodge a FBT return?

Amid a heightened focus on revenue collection, the ATO has significantly expanded its FBT data-matching capabilities, allowing it to more effectively identify and target employers at higher risk of non-compliance. In particular, this includes:

• Employers who provide benefits to employees but do not lodge an FBT return (e.g. on the basis that benefits provided do not have a taxable value) are at high risk of scrutiny.
•  Employers who lodge a ‘nil’ FBT return without adequately reviewing the FBT treatment of benefits provided to employees.

If an employer provides benefits to employees and is not registered for FBT, it is essential to review the application of any available exemptions or concessions for accuracy, ensure they are properly documented, and maintain all relevant declarations.

As a reminder:

•  Employers with an FBT liability must lodge an FBT return.
•  If FBT instalments were paid during the year but no FBT liability arises, an FBT return must still be lodged to claim a refund of those instalments.

TIP

If an employer has determined that they do not have a FBT liability during an FBT year, we recommend that a ‘nil’ FBT return is lodged to ensure commencement of the three-year amendment period during which the Commissioner can generally amend returns.

Recent Developments and Focus Areas

1.     Electric Vehicles – Updates and Reminders

We have observed a steady and continuing increase in the uptake of electric vehicles among our clients since the introduction of the FBT exemption for electric vehicles on 1 July 2022. In particular, salary packaging an electric vehicle through a novated lease arrangement is becoming increasingly popular and can deliver significantly greater tax savings than doing the same with a non-electric vehicle of equivalent value.

We have summarised below some recent updates in the electric vehicle space:

• This week, the government has released a joint media statement regarding changes to be included in the 2026 Federal Budget, whereby a phased decrease to the FBT subsidy on EVs will be introduced from 1 April 2027.
  • Phase 1 – Until 31 March 2027:  The existing FBT exemption in relation to EVs will continue in full. 
  • Phase 2 – Between 1 April 2027 and 31 March 2029:
    • For EVs costing $75,000 or less – The existing FBT exemption in relation to EVs will continue in full. 
    • For EVs costing more than $75,000 but below the luxury car tax (LCT) threshold – a 25% discount will apply to FBT payable.
  • Phase 3 – From 1 April 2029 onwards: All EVs below the LCT will receive the 25% discount on FBT payable.  
• Under the Free Trade Agreement Australia has with the European Union, it is expected that the Luxury Car Threshold (LCT) for electric vehicles will be raised to $120,000 (up from $91,387 for fuel-efficient vehicles). This will exempt most European cars sold in Australia from LCT.
• The sunset clause for PHEVs is now in effect. From 1 April 2025, any new arrangements providing a PHEV car benefit to an employee will no longer qualify for the electric vehicle FBT exemption. For existing financial arrangements entered into before 1 April 2025, it is important to note that any changes to the arrangement – such as an optional extension or a change of employer under a novated lease – may result in an employer no longer qualifying for the FBT exemption.
• The ATO has updated PCG 2024/2 to allow the shortcut method to be utilised to calculate the taxable value of PHEV electricity costs where the vehicle is charged at an employee’s home. Alternatively, an employer can continue to calculate actual electricity costs used instead of using the new shortcut method.

TIP

If you are an employer considering implementing a policy to enable employees to salary sacrifice a vehicle (electric or otherwise) under a novated lease arrangement, Cooper Partners can assist in helping you understand the FBT implications and key considerations.

Reminder

Electric cars which are exempt from FBT must still be disclosed as a reportable fringe benefit if the taxable value of an employee’s fringe benefits amount for the FBT year (including the exempt car benefit) exceeds $2,000.

2.   Taxpayer wins appeal – non-cash benefits not subject to FBT as not in relation to employment

The Full Federal Court (FCT v SEPL Pty Ltd ATF SFT Trust [2026] FCAFC 36) has provided welcome clarity that non-cash benefits provided to business owners are not subject to FBT where those benefits are not received in respect of employment.

SEPL involved a discretionary family trust with a corporate trustee operating a successful intergenerational family business (the taxpayer).

•  Three brothers (the ‘brothers’) were the only directors of the taxpayer.
• The brothers were involved in the business but were not paid a salary from the trust and did not receive any director fees.
• The brothers were among many eligible beneficiaries of the family trust but were the only beneficiaries who were actively involved in the day-to-day running of the business.
• The family trust purchased multiple luxury, high-performance vehicles which were provided to the brothers for both business and private use.
• The vehicle-related expenses were charged to the beneficiary loan account of the brothers’ mother.

The ATO issued an amended FBT assessment to SEPL on the basis that the taxpayer had provided car benefits to the brothers that were subject to FBT. When applying for a review with the Administrative Appeals Review Tribunal (the AAT), SEPL argued that the brothers were not employees of the family trust and that the vehicles were provided to them in their capacity as owners/beneficiaries, and not ‘in respect of employment’.

While the AAT initially found in favour of SEPL and set aside the Commissioner’s assessments, the Commissioner appealed to the Federal Court, which subsequently overturned the AAT’s decision, instead finding that SEPL was liable for FBT on the car benefits on the basis that the brothers were in fact ‘employees’ of the family trust for FBT purposes and that the benefits were provided ‘in respect of employment’.

SEPL subsequently appealed to the Full Federal Court which has recently found in favour of the taxpayer, reinstating the AAT’s original decision that the non-cash benefits – namely the cars – were provided to the brothers in their capacity as owners and beneficiaries of the family trust, and not in respect of employment.

The decision of the Full Federal Court highlighted the following:

• The definition of an ‘employee’ contained in section 137 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) is limited and cannot automatically convert non-cash benefits into ‘salary or wages’. A benefit is only relevant for FBT purposes if it is provided ‘in respect of employment’ and not in relation to benefits provided in an individual’s capacity as an owner.

Section 137 relies on whether a ‘hypothetical’ cash payment would constitute salary or wages paid to an individual (i.e. is it not a free-standing deeming provision) and requires consideration of the common law meaning of ‘employee’.  

Key takeaway:

SEPL provides valuable guidance on the application of the FBT rules in family business settings and illustrates how fact-sensitive these matters can be, highlighting the importance of maintaining thorough documentation (including formal resolutions). It is also important to note that the common law definition of ‘employee’ remains relevant when considering provisions in the FBTAA and that non-cash benefits provided to owner-beneficiaries are not automatically excluded from FBT.

Early expert advice and careful record-keeping can reduce FBT exposure and avoid prolonged disputes.

3.    Crackdown on Motor vehicles

The ATO has announced increased scrutiny of motor vehicle benefits which remain one of the most popular ways for employers to provide non-cash benefits to employees.

The ATO is now utilising sophisticated data analytics to detect non-compliance and is actively reviewing businesses in this area, specifically in relation to the following:

• Incorrectly treating “work vehicles” as exempt from FBT;
• Misclassifying private use of vehicles as business use; and
• Employees not maintaining valid logbooks.

Misclassification of “work vehicles” as exempt

Where employers treat work vehicles as exempt from FBT (such as utility vehicles and other commercial vehicles), it is important to review the vehicle specifications to confirm they meet the exemption criteria and to also ensure any private use by employees remains minor, infrequent and irregular. This is particularly important in relation to dual cab vehicles which do not automatically qualify for an FBT exemption.

If you are considering purchasing a new vehicle for your business, Cooper Partners can assist in assessing any potential FBT implications and identifying practical steps to help minimise your FBT exposure.

TIP

We recommend that employers implement a Motor Vehicle Use Policy to ensure that private use of a vehicle by an employee complies with the requirements to qualify for FBT exemption.

Private Use of Vehicles & Logbooks

A common issue identified by the ATO is employers incorrectly treating an employee’s private use of a motor vehicle as business use.

Private use includes home-to-work travel as well as any travel not related to performing employment duties – for example, using a motor vehicle for personal errands or leisure activities.

As a timely reminder, employers make a motor vehicle available for the private use of an employee on any day that the motor vehicle:

• is actually used for private purposes by the employee, or
• is ‘taken to be available’ for the private use of the employee.

Employers should ensure employees maintain valid logbooks, enabling the use of the operating cost method to calculate the taxable value of car fringe benefits based on the vehicle’s private use.

A key risk is that without a valid logbook (and a 0% business use percentage recorded), the operating cost method may result in a higher taxable value and by default the statutory method may apply – often leading to a higher FBT liability.

This was recently tested by the ATO in a hearing before the Administrative Review Tribunal (Prestige Form Group NSW Pty Ltd and FCT [2026] ARTA 627) where the taxpayer was unable to demonstrate that valid operating cost method elections were made within the required timeframe and failed to maintain adequate substantiation to support the business use percentage. In particular, the logbook and odometer records were either unreliable or not maintained, resulting in the Commissioner denying access to the operating cost method.

Practical considerations when applying the logbook method:

We have outlined below some of the key risk areas faced by employers when applying the logbook method:

• Incorrect business use: Can occur where an employee’s vehicle usage changes from the initial business use established by a logbook, requiring the employer to adjust the business use percentage in a subsequent (non-logbook year) to reflect the change in business use. As a conservative approach, we recommend maintaining a new logbook during an FBT year where the existing logbook no longer accurately reflects the vehicle’s current business use.
• Incomplete logbook entries: There is a risk that business journeys recorded in a logbook may be disregarded by the ATO when the logbook is deemed to be incomplete, resulting in a reduced business use %. We recommend that employers review logbooks prepared by employees to ensure they meet the ATO’s requirements to be considered a valid logbook.

What is a valid logbook?

Logbooks are valid for up to 5 years. At a minimum, a valid logbook should contain the following information:

•  Start and end dates of each journey.
•  Odometer readings at the beginning and end of each trip.
•  Total kilometres travelled.
•  Purpose of the journey – description should be detailed, noting that purpose of the trip was “business” related is not sufficient.
• Odometer records at the start and at the end of FBT year should also be recorded.

When recording entries, employees should be careful to not combine business and private trips in a single entry. E.g. Home to work travel should always be recorded separately.

TIP

Odometer readings at the start and end of an FBT year should still be recorded during a non-logbook year to enable the use of the operating cost method for calculating the taxable value of car fringe benefits.

Next Steps

If you would like further information on FBT, assistance with your FBT obligations or with employment taxes in general, please reach out to a member of our employment taxes team.

Authors:
Rachel Pritchard, Associate Director

Annie Barrett, Senior ManagerMikaella Alfaro, Manager- Business Development Support

This newsletter is current as of 8 May 2026, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy 

11 March 2026

The new legislation for the controversial Division 296 has passed through the Senate overnight and awaits Royal Assent.  This legislation was released initially for consultation in December 2025, and provided some relief with respect to the taxation of unrealised gains being excluded, with taxable income now the benchmark.  However, there are now some new complexities to consider.

For the most part, the legislation is consistent with the Treasurer’s announcement in October 2025 of a revision to the previously outlined policy, as detailed in our newsletter published 14 October 2025. The passage of the legislation now provides a framework for a deeper analysis of how the tax will affect in-scope individuals.

Key Takeaways

• There are now two Total Superannuation Balance (TSB) thresholds with different applicable tax rates:
  •  Above $3 million (the Large Superannuation Balance Threshold (LSBT)) – a 15% tax rate on the proportion in excess of $3 million, and
  • Above $10 million (the Very Large Superannuation Balance Threshold (VLSBT)) – a 10% tax rate on the proportion in excess of $10 million (in addition to any tax on with respect to the LSBT
• The caps will now be indexed, each at the Consumer Price Index (CPI) in $150,000 and $500,000 increments respectively.
• Determining whether an individual is in-scope will no longer be based on their closing TSB, but the greater of their opening TSB and closing TSB.  This will only apply from 1 July 2027 however, so the 2026/2027 year will still be based on the closing TSB only as a transitional year.
•  Unrealised capital gains are no longer captured (save for with respect to defined benefit schemes), instead realised earnings will be subject to Division 296 tax.
•  Realised earnings will largely be based on the Taxable Income of the Fund attributable to each in-scope individual, with adjustments for Exempt Current Pension Income (ECPI) and adjusted realised capital gains.
• To ensure capital gains that accrued before the new rules commence are not taxed, SMSFs will be able to elect to carry an adjusted cost base, where Division 296 tax will only apply to realised gains since 1 July 2026.
• The commencement date of the provisions will be 1 July 2026, which means there will be no assessments until the 2028 financial year.
• The tax will still be levied on the individual, and they will be able to choose whether to pay the tax from their own resources or from their superannuation account.
• Unlike previous draft legislation, negative Division 296 earnings will no longer be allowed to be carried forward. That is, a bad year won’t bank credits for future years.
• Individuals who have had a structured settlement contribution made and children receiving a superannuation income stream will not be liable to pay Division 296 Tax.

What’s New

The intention of the legislation remains the same, to reduce the concessions within superannuation to individuals with larger superannuation balances, allowing the concessional treatment of superannuation to be more sustainable into the future.

1.    Formulas

With two new thresholds applying, there are now updated formulas to consider:

The amount that is subject to the 15% tax rate is calculated as follows:

The amount that is subject to the 10% tax rate is then calculated as follows:

Those amounts as calculated then have the relevant tax rate applied to determine the Division 296 tax amount:

As an example:

Peter has the following superannuation balances at the beginning and the end of the 2027/2028 financial year:

The Taxable Income for the 2027/2028 year is $381,250, with net ECPI of $118,750.  This includes $50,000 in franking credits.  So, the Division 296 earnings is $500,000, and the TSB ref amt is the greater of $10.95 million and $12 million, so would be $12 million. 

The calculation for Peter would be as follows:

The amount subject to 15% tax:

The amount subject to 10% tax:

The tax itself is then:

This would be levied on Peter himself, and he could nominate that it is paid from his superannuation fund. 

The Fund itself would be paying tax of $7,187 being $381,250  x  15%, less the franking credits of $50,000. 

So, overall between the Fund and Peter, the tax payable is $71,770 on Taxable Income of $381,250, which equates to an 18.82% effective tax rate. 

2.    Total Superannuation Balance (TSB) used in calculations

As outlined above, the legislation captures the greater of an individual’s TSB at either the start or the end of the financial year, which will then determine whether they are an in-scope person.  This was a new concept from what was announced in October 2025, and has been stated to be an integrity measure, to prevent individuals from making large withdrawals from their superannuation to reduce the tax incidence in that relevant year.  However, as already noted above, in the first year of operation (2026/2027), an in-scope person will only be deemed in-scope based on their TSB at 30 June 2027.

This concept (and outlined in the above formulas as the TSB Reference Amount (TSB ref amt) means that when an in-scope individual’s portion above the two thresholds is calculated, it will be based on the higher TSB of the two, resulting in the portion of earnings to be taxed being the highest possible for the financial year.  This will also capture individuals who may withdraw benefits to fall entirely under the LSBT or VLSBT by the end of the year – they may still be in-scope based on their opening TSB. 

This concept will therefore capture scenarios such as:

• Individuals with superannuation withdrawals within the year and
• Where an individual dies and their balance is paid to beneficiaries / estate during the year.  In this regard, it is only the opening TSB in the year of death that is relevant, as once the individual has died, for Division 296 purposes they will no longer have a TSB, so their closing TSB for the year will be nil. 

This adjustment to the TSB rules accounts for the fact that the new formula no longer adds withdrawals back to the calculation of Division 296 earnings, unlike the previous provisions.

There has also been a change the definition of TSB, which for many SMSFs won’t make a difference, as it is the market value of superannuation benefits at year end.  However, for those individuals with a defined benefit interest, or a defined benefit pension, this calculation has changed and needs to be considered.

3.    Capital Gains accrued prior to 30 June 2026

As the Treasurer announced in October 2025, the provisions will only capture realised capital gains from 1 July 2026.  So, unrealised capital gains are now not captured in the earnings calculation (although still factor into the closing TSB, which then determines how much of the realised earnings are taxable).  The mechanism for this is by allowing SMSFs to effectively have an adjusted cost base for directly held assets for Division 296 purposes. 

For SMSFs, this will require the Trustee to make an election by the due date of their 2027 SMSF annual return to carry this adjusted cost base.  The cost base election will be the market value of all investments held by the relevant fund at 30 June 2026. The trustee will not be able to select particular assets to carry an adjusted cost base – it is all or nothing.

This will require careful consideration by fund trustees of the position at 30 June 2026 with respect to making any election.  Where a fund at that time might be in an unrealised loss situation for capital gains tax purposes, it may be appropriate not to make the election.

The election can also be made by any SMSF – regardless of whether the members might be in-scope now or not. It is not a requirement to be “in-scope” now (that is, have a TSB greater than the LSBT) to make the election.  Any SMSF can make it, provided it is made within the time limit and in the approved form (which we are yet to see).

The capital adjustment for large funds will operate differently to SMSFs. An appropriate factor will be determined by the Regulations and the funds realised Division 296 superannuation earnings will be reduced by this factor. This will be done for four consecutive financial years from the commencement of the provisions, as it has been generalised that larger funds tend to only hold investments for this period of time. After the four years has elapsed, there will be no further adjustments for these types of funds with regards to realised capital gains.

Further guidance for how these adjustments will be factored into the superannuation earnings amount will be outlined in Regulations that at the time of writing are yet to be released.

As an example, Paul’s SMSF has the following investments at 30 June 2026:

The Fund elects for a cost base adjustment for Division 296 purposes, which means that all Division 296 realised capital gains (or losses) will be calculated based on the market value of the investments at 30 June 2026. The adjusted cost base will not affect the Fund’s taxable capital gains, which will remain as being calculated using the tax cost base (purchase price), but will affect the Division 296 realised earnings. 

Where the ABC shares and 123 Units (which have been held for longer than 12 months) are sold in the 2026/2027 financial year for $1,400,000 and $400,000 respectively:

In the above example, for tax purposes the assessable income with respect to the asset sales is $350,000 ($600,000 less $250,000), but for Division 296 purposes, the amount that would be factored into the superannuation earnings calculation will instead be $66,666.

It is important to note that the adjusted cost base is only for the assets that a fund owns directly, and not with respect to the underlying assets within an entity that a fund may own.

If for example the Unlisted Property Trust owned property that was acquired at the Trust level for $10 million and was worth $30 million at 30 June 2026, when that property is sold then the full $20 million realised gain in the Trust will be distributed to the unitholders as a taxable capital gain.  That WON’T have an adjustment made to that amount distributed.

4.    Exempt Current Pension Income (ECPI) and Expenditure

Based on the Treasurer’s announcements in October 2025, it was clear that ECPI for funds supporting accounts in pension phase would need to be added back to Taxable Income for the Division 296 calculations. However, it was not clear what would happen to the expenses relating to this ECPI. The legislation clarifies that it will only be the net ECPI that is added back. Allowing a fund to reduce the Division 296 earnings by expenditure that relates to the pension phase, which would not be deductible for tax purposes.

For example, an SMSF utilising the unsegregated method has Taxable Income of $100,000 and deductible expenses of $20,000. The Fund obtains an actuarial certificate to determine the percentage of the total fund income that would be considered ECPI. The actuarial determines the Fund has a tax exempt percentage of 20%. Reducing the Fund’s Taxable Income to $80,000 and the deductions to $16,000, making the net Taxable Income $64,000.  For Division 296 purposes, the net ECPI of $16,000 (the ECPI less exempt component of the deductible expenses) is added back to the Taxable Income to determine the Division 296 earnings of $80,000.

5.    Attribution of Fund Earnings

Each type of fund (SMSF, large or defined benefit) will have a different method with respect to the attribution of earnings for Division 296 purposes.  The three attribution methods are:

1. Fair and Reasonable attribution (to apply to large funds)
2. Small Super Fund attribution (to apply to SMSFs)
3. TSB attribution (to apply to funds that are not linked to market – so are defined benefit schemes).

Clearly the above different methods do not achieve the initial representations of sector neutrality when Division 296 was first announced in February 2023. 

For SMSFs, the attribution of fund earnings to each member will be based on the member’s weighted daily share of the fund balance.  This is similar to the method already utilised within an SMSF to calculate ECPI, where an actuary undertakes the relevant calculation.  This will be clarified in the yet to be released Regulations, with the expectation that an SMSF will be required to obtain an actuarial certificate for this purpose, which may or may not end up with a different approach than an actuarial certificate that might already be issued for ECPI purposes. 

This approach may not be aligned to how profits / losses are attributed on an accounting basis to members, particularly where assets may be segregated or designated particularly to a member’s account. 

6.    Treatment on Death

The draft legislation released in December of the changed approach had a nasty quirk that could mean that a deceased member had ongoing Division 296 liabilities until their superannuation benefits were dealt with.  Many deceased member superannuation benefits are able to be dealt with within a 12 to 24 month period.  However, there are instances where this can take a much longer period of time, and under the previous draft Division 296 obligations would not cease when a member died. 

This has been partly resolved, where an individual’s TSB for Division 296 purposes is nil when they have died.  They may still have an opening TSB for the year of death, and therefore there may still be a Division 296 liability for that year, however there will be no closing TSB for that year.  This brings with it complexity from an estate planning perspective, as the tax liability is for the individual and therefore their estate, which needs to be factored in by the Executor when dealing with the Estate, yet the deceased’s superannuation benefits may have different designated beneficiaries, and so the release of the tax may not be able to be achieved.  

As with the previous version of these provisions in February 2023, the estate planning implications of superannuation and more widely has become a more important consideration for many Australians.  This is particularly relevant for superannuation, where the decision regarding pensions being reversionary or not can have a substantial impact on the Division 296 obligations of individuals

Next Steps

We recommend members who expect to exceed the $3 million threshold by 30 June 2027 seek personalised modelling and advice well before 30 June 2026. 

There are many factors to consider in your particular circumstances, including:

• It is the closing TSB only in 2026/2027 that will determine the Division 296 liability – therefore if a decision is made to make any substantial withdrawals from superannuation, this could occur in the 2026/2027 year without an adverse impact
•  If an asset is sold in 2026/2027 rather than before 30 June 2026, for Division 296 purposes with a cost base adjustment, it would only be an increase since 1 July 2026 that would be subject to the tax
• Updating your estate plan to take into account potential Division 296 liabilities in the year of death 
• Reviewing your investment strategy and return profiles of investments, and whether they are still suited to superannuation
• Where a lump-sum, or the transfer of an asset out of superannuation is desirable, consider what alternative structure any money may be invested in
• Whether to elect for the cost base adjustment to apply (it is for all assets or none of them – not the ability to pick and choose).

If you would like further information about the contents of this newsletter, please contact your Cooper Partners engagement team on 08 6311 6900.

Authors:
Jemma Sanderson, Director
Lindzee-Kate Tagliaferri, Senior Manager

This newsletter is current as of 11 March 2026, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

Cooper Partners Financial Services Pty Ltd AFSL 000 327 033

The information and opinions in this presentation were prepared by Cooper Partners Financial Services (“CPFS”) for general information purposes only. Case studies and examples are included for illustrative purposes only.

In preparing this newsletter CPFS has not taken into account the investment objectives, financial situation and particular needs of any particular investor. The information contained herein does not constitute advice nor the promotion of any particular course of action or strategy and you should not rely on any material in this presentation to make (or refrain from making) any decision or take (or refrain from making) any action. The financial instruments, services or strategies discussed in this publication may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy 

23 April 2026

Draft legislation released on non-resident CGT changes

Treasury has released exposure draft legislation proposing significant changes to Australia’s foreign resident capital gains tax (CGT) regime. If enacted, the reforms would materially broaden the circumstances in which foreign investors are taxed on disposals connected to Australian assets.

The proposals would expand the definition of taxable Australian real property (TARP), tighten the principal asset test (PAT), strengthen withholding and notification rules and, most controversially, apply some changes retrospectively to CGT events occurring on or after 12 December 2006.

For foreign investors, fund managers, mining and resources groups, infrastructure owners and corporate investors involved in inbound investment, divestments or M&A, the implications extend well beyond direct land ownership. The clear policy message is that assets with a close economic connection to Australian land and natural resources are increasingly likely to fall within the Australian tax net.

Alongside these measures, Treasury has also released a separate exposure draft proposing a targeted 50% CGT discount for certain foreign investments in Australian renewable energy projects until 30 June 2030. While potentially valuable for eligible investors, that concession sits within a broader integrity‑driven package that expands the effective reach of the foreign resident CGT rules.

Why this matters

These proposals are significant because they may affect both future transactions and long‑settled historical positions.

Foreign investors selling shares, units or other indirect interests may be subject to Australian CGT more frequently, while Australian counterparties may face increased diligence, declaration and withholding risk when acquiring interests from foreign sellers.

Importantly, the impact is not limited to traditional property or resources businesses. Any group with substantial Australian land‑connected assets such as installed infrastructure, processing facilities, renewable projects, ports, pipelines or land‑heavy operating businesses, may need to reconsider whether an exit could now give rise to an indirect Australian real property interest. This is equally relevant for foreign managed funds, custodial arrangements and other investment structures holding Australian assets on behalf of offshore investors.

The retrospective element is particularly contentious. If enacted in its current form, aspects of the expanded TARP definition would apply back to December 2006, potentially reopening historic transactions and tax positions that were previously regarded as settled.

A broader concept of taxable Australian real property

At the centre of the reforms is a new statutory definition of “real property” . The intention is to move beyond narrow legal concepts of land and capture assets that have a strong economic connection to Australian land or natural resources.

Under the draft, TARP would explicitly include:

• rights and interests in land, regardless of how they are characterised under State or Territory law
• assets fixed to or installed on land, even where general law might otherwise treat them differently
• leases, licences and similar rights relating to land‑connected assets

For mining and resources groups in particular, this is a meaningful shift. Project value often sits across a combination of land tenure, fixed plant, installed infrastructure, processing facilities, export interfaces and information assets, rather than bare land alone. The draft legislation is intended to reduce the scope for arguments that economically land‑linked assets fall outside TARP due to legal characterisation or historical assumptions.

Tightening the principal asset test

The principal asset test is also proposed to be broadened.

Rather than testing land richness at a single point in time, the draft would apply the test at the time of disposal or at any time during the preceding 365 days. An entity could therefore be treated as land‑rich even if its asset mix has changed by completion, provided more than 50% of its value was attributable to TARP at some point in the prior year.

This change increases the relevance of historic valuations, internal restructures and pre‑sale asset movements when assessing tax exposure.

The draft would also include mining, quarrying and prospecting information on the TARP side of the PAT calculation, increasing the likelihood that shares or units in mining and resource groups satisfy the test where value is heavily driven by resource‑related information and land‑connected exploitation rights.

Sector impacts for mining, infrastructure and corporates

The mining sector is likely to be among the most affected, reflecting the integrated nature of project structures that combine tenements, infrastructure, processing assets, logistics arrangements and valuable geological or mining information.

Key practical implications include:

• a higher likelihood that share sales will fall within the indirect Australian real property rules
• the need to revisit historical assumptions about installed assets or information assets not being TARP
• more complex PAT modelling across a rolling 12‑month period
• increased purchaser focus on tax diligence, declarations and withholding protections

For broader corporate groups, the reforms affect transaction structuring, deal execution and post‑completion risk allocation. Groups considering inbound investment, divestments, IPOs, restructures or private sale processes will need to test TARP and PAT positions earlier and with greater evidentiary rigour than under current practice.

Strengthened withholding and notification rules

The draft legislation also tightens the foreign resident CGT withholding regime. Purchasers would face more limited circumstances in which they can rely on vendor declarations, while vendors may be subject to additional notification obligations for certain high‑value disposals.

In practice, this is likely to push more tax analysis into the transaction phase. Buyers may adopt more conservative withholding positions unless a seller can clearly substantiate their residency status and TARP position, increasing the importance of upfront analysis, documentation and deal protection.

Retrospective operation and consultation

The retrospective operation of parts of the package has drawn strong criticism from professional bodies and advisers, who have raised concerns about uncertainty, investor confidence and the need to revisit closed transactions.

While the ATO has indicated the proposals broadly reflect its longstanding administrative view, the draft goes beyond clarification and may materially change outcomes for taxpayers who relied on narrower interpretations of TARP.

Consultation on the exposure draft closes on 24 April 2026.

The Bottom Line

Although the measures remain in draft form, the pathway is clear. Given the proposed retrospective reach and the expanded 12‑month PAT window, affected groups should consider assessing exposure

Taxpayers  with exposure to Australian mining, energy, infrastructure or other land‑connected businesses should consider obtaining advice now on both prospective transactions and historical structures to identify and manage potential tax risks early.

If enacted substantially in its current form, the reforms would represent a significant widening of Australia’s foreign resident CGT regime. The key pressure points are the broader TARP definition, the extended PAT testing window, the treatment of mining information and the retrospective reach to 2006 all of which have the potential to affect transaction pricing and compliance expectations.

Next Steps

Practical next steps include:

• reviewing asset profiles to identify land‑connected assets, fixed installations, resource rights and information that may fall within an expanded TARP definition,
• re‑running land‑rich and valuation analyses on a preceding 365 day basis,
• revisiting historical transactions or restructures where outcomes depended on a narrower determination of real property,
• updating sale processes and diligence scopes of work and transaction documents to reflect increased withholding and declaration risk.

In the meantime, please visit our website for more information and contact our team for tailored advice on how this proposal might affect your business.

Authors

Michelle Saunders, Managing Director April Sacco, Associate Director

This newsletter is current as of 23 April 2026, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy 

14 October 2025

While certainly not a joy ride, the progression of the proposed Division 296 tax on superannuation balances above $3 million has taken a few sharp turns – now featuring a re-engineered structure, new thresholds and a delayed start.

What’s changed

Following industry feedback, the federal Treasurer has responded with several key changes:

1. A two-tier threshold approach;
2. Indexation of the thresholds;
3. Earnings to be calculated on a realised basis (not unrealised); and
4. Delayed commencement of the provisions for 12 months to 1 July 2026.

There will be a consultation period which will invite stakeholders to weigh in on:

1. The calculation of realised earnings;
2. The extension of exemptions for some judges – to improve consistency across jurisdictions; and
3. Any additional changes to ensure that treatment is fair and equitable for defined benefit members.

What’s not changed

Despite the above announcement, there are elements of the provisions that have not changed:

1. The ultimate objective of the Division 296 proposal remains the same – “maintain the concessional tax treatment of superannuation for all members but make these concessions more sustainable”;
2. The tax will still be levied on the individual, who can choose to pay the tax from their superannuation or personal sources;
3. The  member’s Total Superannuation Balance (TSB) remains the measure for determining the additional tax liability; and
4. The ability to carry forward any losses and offset against future year’s earnings to reduce the tax.

Changes in detail

Two-tier threshold

Where previously the proposal was focussed on individuals with a TSB of more than $3 million, the adjustments now alter this focus to two tiers. The provisions will now include:

Noting that the above 15% and 25% are in addition to the 15% income tax that superannuation funds already pay on taxable income (although this may be reduced by long-term capital gains discounts or as low as nil where the Fund is wholly in pension phase).  

Indexation of thresholds

The previously proposed legislation recorded a fixed $3 million threshold, with no option for indexation. Refreshingly,  thresholds will now be indexed using the Consumer Price Index (CPI). These changes will align the indexation approach with other measures such as the indexation of the Transfer Balance Cap (TBC). 

However, similar to the indexation of TBC, the indexation to the thresholds will only occur where the CPI increases by a certain amount, and the application of that amount results in the increase of the threshold reaching the stated increment. The indexation rules for the thresholds will be:

Importantly, this indexation ensures that the number of individuals captured by the new tax remains consistent with the original policy intent, rather than growing disproportionately over time.

Calculation of earnings

Due to the inclusion of unrealised capital gains, the previous calculation of earnings was the most contentious part of the original proposed legislation. The most significant feedback with regards to this was that the taxing of unrealised capital gains was unconstitutional, and that any passing of the law would lead to a constitutional challenge.

The original proposal suggested that the Earnings would be calculated as:

The adjustments indicate that while a member’s Total Superannuation Balance (TSB) will remain the key reporting measure, the ATO will obtain realised earnings information directly from the member’s superannuation fund where the TSB exceeds the relevant thresholds.

According to Treasury, these realised earnings will generally reflect the fund’s taxable income, adjusted for member contributions and exempt current pension income (with detailed rules still to be confirmed).

For SMSFs, this information is expected to be reported through the SMSF Annual Return, with each member attributed a fair and reasonable proportion of the fund’s realised earnings.

While this is a positive outcome where only realised income and gains are taxed, it may create practical challenges for large APRA-regulated funds, which will need systems capable of attributing realised gains, losses, and income to individual members. The intention, however, is for the calculation to align with existing tax concepts and use current reporting mechanisms wherever possible to minimise additional compliance burdens.

Practical application

The methodology for calculating an individual’s liability has not been finalised or confirmed. However, Treasury have provided five broad steps detailing how to arrive at the liability.

1. The ATO will determine whether an individual is “in scope” (has a TSB of $3 million or more) and will notify the applicable superannuation funds;
2. The applicable funds will calculate the realised earnings attributable to the individual and report the amount back to the ATO (as above, this is expected to be reported on the SMSF annual return, so this step would occur in conjunction with step 1, once the Fund’s relevant return has been lodged);
3. The ATO will calculate the proportion of TSB above the $3 million threshold, utilising the original proportion calculations:

4. ATO will calculate the proportion of the TSB exceeding the $10 million threshold

5. ATO will calculate the tax liability for the individual’s TSB interests:

Examples

The below examples are based on a SMSF having total earnings of 10% (including unrealised capital gains), on their TSB at 30 June 2026 (which are $8 million and $15 million respectively), where the realised earnings is 10% of the total earnings.  There are two examples – one within the upper threshold, and one above the upper threshold. 

Note, we have not considered contributions in the realised earnings figure, as there is currently no drafted formula for this figure.  We note that taxable income of a Fund would include assessable contributions, so the below examples assume no such contributions for any adjustment required to be made. 

$8 million TSB at 30 June 2026

$15 million TSB at 30 June 2026

Challenges

While the latest changes are broadly welcomed (short of the tax being abolished altogether), several practical and policy issues remain to be resolved through consultation and the legislative process:

• Reporting complexity
  SMSFs will be able to calculate and report realised earnings through their annual return with relatively minor adjustments, even though member level reporting isn’t currently required. However, large industry and retail (APRA-regulated) funds may face significant challenges in adapting systems to attribute realised gains, losses and income to individual members.
• Higher-tier tax impact
  The introduction of the additional 10% tax for balances above $10 million is unlikely to be well received by those with substantial superannuation holdings.
• Legislative consultation required
  These updates represent a major redesign of the original Division 296 proposal. As the changes were announced without prior stakeholder consultation, the next phase will involve detailed consultation and Parliamentary debate before any legislation is finalised.

Key takeaways

1. Commencement has been delayed until 1 July 2026.  This means the first assessments for the 2026/2027 year will be issued in the 2027/2028 financial year, so effectively two years from now.
2. Changes have made the earnings calculation fairer, by ensuring only realised earnings will be taxed (not unrealised capital gains).
3. There will be a two-tiered threshold system, being:
   1. $3 million – where up to an additional 15% tax will be payable on earnings
   2. $10 million – where up to an additional 10% tax will be payable on earnings (in addition to the amount payable as a result of the $3 million threshold)
4. The two thresholds will be indexed by CPI in different increments:
   1. $3 million threshold – at $150,000 increments
   2. $10 million threshold – at $500,000 increments
5. Superannuation will remain a tax efficient structure for the accumulation of wealth for retirement and over the longer term, despite these changes.  It will be important to seek specialist advice prior to making any investment or withdrawal decisions to ensure that all qualitative and quantitative elements are considered. 

Next Steps

For now, keep your hands inside the ride and hold on tight. We suggest not taking any impulsive actions and to wait for the new legislation to be put forward. We will keep you abreast of when the updated draft legislation is released, at which point it may be appropriate to review your own situation to understand how this will affect you.

For more information, please refer to our previous newsletters.

• Newsletter dated 10 September 2025 
• Newsletter dated 05 May 2025 
• Newsletter dated 04 April 2025 
• Newsletter dated 10 October 2024 

If you have any questions about this new potential tax and how it might impact you, or superannuation more widely, please reach out to our superannuation team.

Authors:
Jemma Sanderson, Director
Lindzee-Kate Tagliaferri, Senior Manager

This newsletter is current as of 14 October 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

Cooper Partners Financial Services Pty Ltd AFSL 000 327 033

The information and opinions in this presentation were prepared by Cooper Partners Financial Services (“CPFS”) for general information purposes only. Case studies and examples are included for illustrative purposes only.

In preparing this newsletter CPFS has not taken into account the investment objectives, financial situation and particular needs of any particular investor. The information contained herein does not constitute advice nor the promotion of any particular course of action or strategy and you should not rely on any material in this presentation to make (or refrain from making) any decision or take (or refrain from making) any action. The financial instruments, services or strategies discussed in this publication may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
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10 September 2025

The fate of the Division 296 tax (Taxation Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023), which aims to tax earnings on superannuation balances of members greater than $3 million up to an additional 15% remains uncertain. The federal Government did not introduce the Bill, nor a modified version, during the recent sitting weeks of Parliament. The next scheduled sitting dates are 8 to 10 October 2025 for the House of Representatives and 27 to 30 October 2025 for the Senate. We will be watching closely to see if any progress is made at that time.

Growing negative media coverage and signs of internal Labor dissent are placing pressure on the government to reconsider the tax. Concerns have mounted that the measure risks political backlash and could impact Australia’s already fragile economy.

The Key Sources of Dissent

Feedback and opposition appear to be developing around several key issues:

• The unprecedented taxing of unrealised capital gains.
• The absence of indexation of the $3 million threshold.
• The timing of the first payment date in 2027, which coincides with an election campaign.

Beyond the politics, industry voices highlight deeper risks:

• A chilling effect on innovation, productivity, and aspiration.
• Discouragement of SMSF-led venture capital and start-up funding.
• The practical and technical challenges of effectively “backdating” this tax, as the first valuation date for superannuation balances is 1 July 2025 under the current proposal and previously introduced draft legislation.

New Developments in the Debate

Adding fuel to the conversation, Liberal Victorian Senator Jane Hume introduced a Private Member’s Bill on 4 September 2025. The proposal allows splitting of superannuation balances between spouses, targeting the gender super gap. Framed as a matter of fairness, equity, and recognition of unpaid work and broken career patterns – particularly affecting women – it has received attention, with consideration that it may thwart some of the intentions of the Division 296 tax where it was to pass.  Accordingly, how this proposal would co-exist with a Division 296 framework remains contentious.

Next Steps

For now, no action is required. Please refrain from making any impulsive actions, particularly withdrawing of benefits from superannuation (where you may be eligible), or making substantial changes to your investment strategy solely in response to this legislation.

• The wisest course is patience. We must await reintroduction of the legislation and see whether amendments address the clear inequities raised by multiple industry bodies and commentators.
• We continue to recommend accurate market valuations of unlisted assets (such as property and unlisted shares and trusts) held within superannuation funds at 30 June 2025, as this remains the most likely start date if introduced.

We remain on top of developments and will keep you updated.

Author:
Jemma Sanderson, Director

This newsletter is current as of 10 September 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

Cooper Partners Financial Services Pty Ltd AFSL 000 327 033

The information and opinions in this presentation were prepared by Cooper Partners Financial Services (“CPFS”) for general information purposes only. Case studies and examples are included for illustrative purposes only.

In preparing this newsletter CPFS has not taken into account the investment objectives, financial situation and particular needs of any particular investor. The information contained herein does not constitute advice nor the promotion of any particular course of action or strategy and you should not rely on any material in this presentation to make (or refrain from making) any decision or take (or refrain from making) any action. The financial instruments, services or strategies discussed in this publication may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy 

15 August 2025

From 1 July 2025, new corporate climate reporting laws have come into effect, which have been described as ‘the biggest change to corporate reporting in a generation’ by ASIC’s Chair.

World-leading changes

The world-leading legislative amendments to the Corporations Act 2001 (the Act) requires certain organisations to make detailed disclosures about climate-related risks and opportunities. This is to be carried out through a phased approach, beginning with ‘Group 1’ being the largest emitters and corporations who are equivalent in scale to the ASX 200, from the first reporting period that commenced from 1 January 2025.

Subsequently, the scope of the requirements will extend to a broader range of smaller organisations, ‘Group 2’ and Group 3’ from the first reporting period commencing on or after 1 July 2026 and 1 July 2027, respectively.

These changes require qualifying organisations to prepare detailed reporting on their climate-related risks and opportunities in a mandated ‘Sustainability Report,’ in accordance with the AASB S2.

AASB S2 is the mandatory standard for climate-related disclosures.

Who do the changes apply to?

Exempted Entities

Entities that are exempt from preparing sustainability reports include:

• Small to medium sized businesses; and
• Charities registered with the Australian Charities and Not-for-profits Commission and public authorities.

Small to medium sized businesses experiencing strong growth should be aware of whether they are approaching the Group 3 thresholds and be ready to seek the appropriate advice on their obligations.

What is required?

Qualifying Entities

Qualifying entities will be required to lodge their annual Sustainability Report with ASIC alongside their Annual Report. The Sustainability Report will be required to contain the Entity’s climate statements for the year as well as supporting notes and the directors’ declaration about the statements and notes.

The climate statements are required to address:

• Material climate related financial risks or opportunities faced by the entity;
• Climate related metrics and targets required to be disclosed under AASB S2, including the entity’s scope 1, 2 and 3 greenhouse gas emissions;
• Information about the governance of, the strategy of, or any risk management by the entity in relation to, the risks, opportunities, metrics and targets referred to above; and
• Climate-related scenario analysis assessing the Entity’s climate resilience under at least two possible future states. The two current mandated scenarios are:
  • increase in global average temperature of 1.5°C above pre-industrial levels, and
  • increase in global average temperature well exceeding 2°C above pre-industrial levels.

Consolidated Groups

Consolidated groups enjoy streamlined reporting requirements. Under the Act, where a parent entity is required to prepare consolidated financial statements it may elect to prepare a sustainability report for the consolidated group.

Directors’ Obligations and Entity Liability

Directors are obliged to oversee the preparation of the Annual Report in compliance with the Act. They must ensure that the entity’s financial statements disclose any information that will materially impact the financial position, performance and prospects of the entity, including climate-change and sustainability-related information.

Directors must make a declaration that that the Sustainability Report complies with the Climate Reporting legislation, including the AASB S2. As with their other obligations, directors must exercise due care and diligence in overseeing the reporting and assessing the materiality of climate related risks and opportunities to their organisation. Part of this may involve undertaking assessments and gap analysis on the company’s current climate risks  and what actions need to be taken to achieve compliance.

The existing liability framework under the Act will continue to apply to entity disclosures, including the director duties and misleading and deceptive conduct provisions.

However, under a modified liability regime, entities will be provided with relief for a fixed period between 1 July 2025 and 30 June 2028 for disclosures relating to specific types of emissions and certain climate related forward-looking statements. Only ASIC will be able to bring action relating to breaches of relevant provisions in relation to these disclosures and the regulator’s remedies will be limited to injunctions and declarations.

A such, reporting entities will have immunity from civil claims brought by private litigants regarding disclosures made in sustainability reports and relevant auditors’ reports as they relate to sustainability. This is designed to incentivise full disclosure from entities.

Next Steps

The team at Cooper Partners have extensive experience in advising and assisting corporate entities and their groups attend to their statutory requirements, beyond merely tax compliance. For any questions or tailored advice, contact the Cooper Partners engagement team to see how this decision might affect you.

If you would like further information about the contents of this newsletter, please contact your Cooper Partners engagement team on 08 6311 6900.

Author:
Andrew Tuckey, Principal

This newsletter is current as of  15 August 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy