TITLE: Tax Compliance Alert: Alcohol Excise, Widow Tax Fix, and Key August Deadlines
Australia’s tax compliance landscape is moving quickly this week. The ATO is increasing scrutiny of alcohol excise remission claims, Parliament has passed the so-called widow tax fix, and several important reporting obligations fall due on 28 August 2026.
Whether your business operates in Sydney, Melbourne, Brisbane, Perth, Canberra or Adelaide, use today to review your records, confirm your obligations and prepare before the next deadline arrives.
Alcohol manufacturers: strengthen your remission records now
The ATO has announced a targeted crackdown on misuse of the Alcohol Manufacturers Remission Scheme. The scheme provides eligible manufacturers with a 100% remission of excise duty, subject to an annual cap.
From 1 July 2026, the cap increased from $350,000 to $400,000 per financial year. The change applies to eligible alcoholic beverages entered for home consumption from that date. You can review the current requirements in the ATO’s remission scheme guidance.
The ATO is now focusing on arrangements that may improperly multiply access to the cap. Its compliance activity includes:
- Business aggregation involving related or connected entities.
- “Cap shopping” between entities to use separate or remaining caps.
- Shared premises, equipment or production facilities.
- Common directors, employees, distillers, brewers or other key personnel.
- Contract manufacturing structures where responsibility for production is unclear.
- Claims involving products that were diluted rather than genuinely brewed or distilled.
- Businesses claiming remission without satisfying the still ownership or manufacturing requirements.
The ATO has indicated that enhanced checks for new licence applications will begin from September 2026. Businesses new to the excise system can also expect greater scrutiny during their first two years of operation from October.
Complete this alcohol excise compliance check
If you manufacture alcohol in NSW, Victoria, Queensland, Western Australia, South Australia or another Australian jurisdiction, review the following:
-
Reconcile your remission claims to production records.
This will help you identify errors before the ATO requests supporting evidence. -
Track the $400,000 cap throughout the financial year.
Once the cap is reached, stop applying the automatic remission and select “No” at Label F on later excise returns. -
Document legal and economic independence.
Keep ownership charts, financing records, lease agreements, staff arrangements and equipment registers. -
Review contract manufacturing agreements.
Clearly identify who manufactures the product, who holds the relevant licence and who is entitled to claim the remission. -
Retain evidence of genuine manufacturing activity.
Production logs, fermentation or distillation records, invoices and stock movements may be important during an ATO review.
Strong documentation will help you support valid claims and reduce the risk of unpaid excise, penalties and disruption.
Widow tax fix: preserve the correct CGT and gearing records
The Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 passed Parliament on 19 August 2026, addressing an unintended outcome affecting surviving spouses and people experiencing relationship breakdown.
The fix preserves existing negative gearing and capital gains tax entitlements where a person acquires an interest in an investment property because of:
- The death of a spouse.
- A transfer from a deceased estate.
- A change in ownership following relationship breakdown.
The issue arose because a transfer of a previously protected investment property interest could otherwise be treated as a new acquisition. That could have affected access to existing negative gearing treatment and capital gains tax concessions.
This is not an inheritance tax. Australia does not impose a general inheritance tax. The compliance issue is how the transfer is recorded and reported for income tax and CGT purposes.
Record every ownership change carefully
If your business, trust or personal tax affairs involve an investment property affected by death or relationship breakdown, do not rely only on the new policy announcement. Keep:
- The original purchase contract and settlement statement.
- Ownership and title records.
- Probate or estate documentation.
- Relationship breakdown or court documents, where relevant.
- Loan statements and interest schedules.
- Evidence supporting the property’s main residence or investment use.
- Records of capital improvements and other cost-base items.
You must still consider whether a CGT event occurred, how the main residence exemption applies and whether the property was used to produce rental income. The fix protects the intended tax treatment in qualifying circumstances, but accurate reporting remains essential.
Check the Australian Parliament bills and legislation register and final ATO guidance for commencement dates, transitional rules and any retrospective operation before amending a lodged return.
Bendel decision: review UPE and Division 7A arrangements
Following the High Court decision in Commissioner of Taxation v Bendel, the ATO has clarified that an unpaid present entitlement, or UPE, owed to a corporate beneficiary is not automatically a Division 7A loan.
In practical terms, where a private company becomes presently entitled to trust income and simply leaves that entitlement unpaid, the UPE itself does not automatically create a loan under Division 7A.
However, this does not remove all compliance risk. The ATO’s Division 7A and trusts guidance confirms that other rules may still apply, including:
- Subdivision EA, where a trust with an unpaid corporate entitlement provides a payment, loan or other benefit to a shareholder or associate.
- Section 100A arrangements involving reimbursement agreements.
- Actual loans, payments or financial accommodation by a private company.
- Existing arrangements that contain additional steps beyond a passive UPE.
The Division 7A benchmark interest rate for the 2026–27 income year is 8.77%. Where a complying Division 7A loan exists, use the correct benchmark rate when calculating interest and minimum yearly repayments.
Reconcile trust accounts before lodgment
For each corporate beneficiary, confirm:
- The amount of the present entitlement.
- Whether the entitlement remains passive or has been used to fund benefits.
- Whether Subdivision EA could apply.
- Whether any written loan agreement is required.
- Whether the 8.77% benchmark rate has been used correctly.
- Whether the trust resolutions and company accounts agree.
