TITLE: Australian Tax Compliance Update: 31 August 2026
Monday 31 August 2026 brings several important Australian tax compliance developments. The most urgent is today’s Pillar Two filing deadline for eligible multinational groups.
You should also review trust distributions after the Bendel decision, monitor proposed foreign resident capital gains tax reforms, and check historical R&D claims before the ATO publishes its next transparency report.
Lodge Pillar Two returns by today’s deadline
The ATO’s first Pillar Two lodgment deadline applies today to groups with a fiscal year ending 28 February 2025.
For these groups, the Combined Global and Domestic Minimum Tax Return (CGDMTR) and the GloBE Information Return (GIR) are due by 31 August 2026. This is the first applicable fiscal year, so the deadline falls 18 months after year-end.
The ATO’s Pillar Two lodgment guidance explains the filing requirements.
Complete this checklist now
- Confirm whether your group is within the Australian Pillar Two rules.
- Prepare and lodge the CGDMTR through the approved ATO channel.
- Lodge the GIR in Australia where Australian filing is required.
- If the GIR is filed centrally in another jurisdiction, complete the Australian foreign lodgment notification.
- Check that any GIR XML file passes ATO validation.
- Keep evidence of calculations, data sources, approvals and submission receipts.
The CGDMTR brings together the relevant domestic minimum tax, income inclusion rule or undertaxed profits rule reporting, and foreign lodgment notification obligations.
Central filing does not remove the Australian compliance requirement. Even where the GIR is filed overseas by an ultimate parent entity or designated filing entity, the Australian constituent entity may still need to lodge its CGDMTR and identify the foreign filing location.
Do not assume that an administrative deferral changes the statutory deadline. The ATO cannot extend the statutory deadline for the GIR or foreign lodgment notification. PCG 2025/4 sets out the ATO’s compliance approach to central filing and transitional issues, but you should still treat today as the required filing date.
Recheck trust cash movements after Bendel
The High Court’s decision in Commissioner of Taxation v Bendel [2026] HCA 18 has changed the treatment of unpaid present entitlements, or UPEs.
A bare UPE owed by a trust to a private company is not automatically a Division 7A loan. The ATO’s Decision Impact Statement accepts the High Court’s reasoning. The ATO has also confirmed that Taxation Determination TD 2022/11 will be withdrawn.
This is an important change. However, it does not make every trust-company arrangement safe.
Follow the money, not just the accounting entry
For each corporate beneficiary UPE, trace what happened to the underlying funds.
Ask:
- Did the company receive and retain the funds?
- Did the trust later pay or lend money to a shareholder or associate?
- Were trust assets used privately by a shareholder or related party?
- Is there a formal loan agreement separate from the UPE?
- Do the distribution records match the actual economic benefit?
Subdivision EA can still apply where trust funds connected with a corporate beneficiary’s entitlement are used to make payments, loans or debt forgiveness in favour of a shareholder or associate.
Section 100A also remains relevant. If trust income is appointed to one beneficiary while another person receives the practical benefit under a reimbursement arrangement, the trustee may face tax at the top marginal rate.
This means your post-Bendel review should be evidence-based. Reconcile trust resolutions, bank statements, loan accounts, beneficiary entitlements and private use of funds. The same process applies whether your business operates in Sydney, Melbourne, Brisbane, Perth, Adelaide or elsewhere in Australia.
Treasury is also consulting on potential changes that could bring UPEs within Division 7A. The current High Court position applies today, but future legislation may change the compliance outcome.
Track the foreign resident CGT Bill, but do not treat it as law
The Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026 passed the House of Representatives in August and is progressing through Parliament.
It is not yet law.
The proposed foreign resident CGT reforms would strengthen the rules for interests connected with Australian land and natural resources. Key measures include:
- A broader definition of “real property”.
- A 365-day look-back period for the principal asset test.
- Wider coverage of indirect Australian real property interests.
- Additional notification requirements for certain transactions worth $50 million or more.
- Changes to the foreign resident capital gains withholding framework.
- A targeted 50% CGT discount for eligible renewable energy assets.
The $50 million figure is not a general FRCGW threshold. It relates to proposed additional notification and declaration obligations for certain high-value share or membership-interest transactions.
The Bill’s renewable energy measure has also advanced in the House, with the proposed concession extended towards 30 June 2040. The final outcome depends on Senate passage, Royal Assent and the commencement provisions.
Until the Bill becomes law, apply the current rules. For transactions involving Australian land, land-rich entities, renewable infrastructure or overseas vendors, document:
- The residency of each party.
- Whether the asset is taxable Australian property.
- Whether an indirect Australian real property interest exists.
- Whether a clearance certificate or declaration is required.
- Whether foreign resident capital gains withholding applies.
- The contract and settlement dates.
This preparation will reduce settlement delays when the legislation takes effect.
Prepare for enacted 2026 tax reforms
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026.
Several measures are scheduled to apply from 1 July 2027.
The Act includes changes to the capital gains tax system. For eligible Australian resident individuals and trusts, the 50% CGT discount is replaced by cost-base indexation for relevant gains. A 30% minimum tax on certain capital gains also applies under the new framework.
The Act also restricts negative gearing for established residential dwellings acquired after the relevant 12 May 2026 cut-off. Losses from affected properties are quarantined and generally carried forward against later residential property income or r
