TITLE: Australia Tax Compliance Update: PAYG, BAS, Payday Super and Contractor Rules
1. Review nil PAYG variations before the ATO reviews them
The ATO is contacting taxpayers and tax agents where PAYG instalments have repeatedly been varied to nil across multiple years without clear supporting evidence.
A nil variation can still be legitimate. You may vary your instalment amount or rate to nil when your expected instalment income is genuinely nil or your current forecast supports no instalment liability.
The risk arises when the variation is used to defer tax despite ongoing profits.
Your variation should be based on financial information that is:
- Reasonable, considering your current contracts, trading results and business conditions.
- Current, using up-to-date accounts and forecasts.
- Substantiated, with records that explain how you calculated the expected result.
The ATO’s 85% rule remains important. If your varied instalments are less than 85% of the relevant final tax position, a shortfall of 15% or more can expose you to the General Interest Charge (GIC) and potentially penalties.
For July to September 2026, the official GIC rate is 11.43% per year, compounded daily. It increases to 11.51% per year from 1 October 2026. GIC incurred from 1 July 2025 is also no longer deductible for income tax purposes.
The 2026–27 GDP adjustment factor is 5% for taxpayers using the instalment amount method. This may increase the standard PAYG amount even when your business income has changed.
Complete this PAYG review
- Compare your current instalments with your latest profit and loss report.
- Update your full-year revenue, margin and tax forecast.
- Reconsider any variation to nil.
- Keep working papers, forecasts, bank data and accounting reports supporting the variation.
- Check whether your instalments remain above the 85% benchmark.
- Pay each instalment by its due date.
The ATO PAYG instalment guidance and ATO GIC rates should be part of your compliance review.
Accountants Daily has also reported on the ATO’s warning about repeated nil variations, while Kalkine has highlighted the effect of the 5% GDP adjustment on 2026–27 instalment calculations.
2. Prepare for the 21 September BAS deadline
Monthly reporters must lodge and pay their August 2026 BAS by Monday, 21 September 2026.
This applies to monthly GST reporters, including many larger ecommerce sellers, digital businesses and international businesses registered for Australian GST.
Before lodging, reconcile:
- GST collected on Australian sales.
- GST paid on eligible business expenses.
- Import GST and customs documentation.
- Marketplace settlement reports.
- Payment processor fees.
- Refunds, chargebacks and credit notes.
- Currency conversions for international transactions.
- The GST treatment of cross-border digital supplies.
Do not rely only on your bank feed. Marketplace and payment processor reports may contain timing differences, fees and refunds that affect your BAS figures.
Our VAT automation and compliance systems can help businesses maintain a structured transaction process. Australian GST still requires accurate local treatment and timely BAS reporting.
3. Close the 30 September payroll and trust obligations
Two important obligations fall on 30 September 2026.
Finalise STP for closely held payees
Employers with closely held payees, such as directors, shareholders or family members, generally have until 30 September to submit their Single Touch Payroll finalisation declaration for the 2025–26 financial year.
Check that:
- Salary and wages agree with the general ledger.
- Director payments are correctly classified.
- PAYG withholding amounts reconcile to activity statements.
- Reportable fringe benefits are included where required.
- Superannuation records agree with payroll records.
- Finalisation declarations are submitted for the correct employees.
Lodge the annual TFN withholding report
Trustees that withheld TFN amounts from closely held trust beneficiaries must lodge the 2026 annual TFN withholding report by 30 September 2026.
Quarterly TFN reporting for closely held trusts ceased from 1 July 2026. Beneficiary TFNs are now reported through the annual trust return process.
Review your trust distribution records, beneficiary details and withholding calculations now. Correct records will reduce the risk of mismatches between the trust return, beneficiary reporting and ATO data.
4. Apply the correct super process under Payday Super
A crucial September point is that Payday Super changes how employers manage superannuation.
For employee earnings paid from 1 July 2026, super contributions must generally reach the employee’s fund within 7 business days of each payday. This is now the main payment rule you need to monitor.
The date of 28 October 2026 still matters. It remains the final end-of-quarter deadline for contributions relating to the quarter ending 30 September 2026. However, it is the backstop, not the target. You should not wait until quarter end if the contribution was required earlier under the 7-business-day rule.
If super remains unpaid after 28 October 2026, you must lodge a Superannuation Guarantee Charge statement and pay the SGC by 28 November 2026. The SGC includes the shortfall, nominal interest and an administration component.
This is also an important control point under Payday Super. For periods after 30 June 2026, late contributions paid directly to a fund cannot be used to offset the SGC liability. That means a late payment does not cancel the charge once the obligation has been missed.
Check your Payday Super controls
- Confirm your payroll software is configured for the new payment timetable.
- Reconcile each payday’s super liability to the fund payment confirmation.
- Track failed, rejected or returned contributions.
- Investigate clearing-house delays immediately.
- Keep evidence showing when contributions were paid and received.
- Do not wait until the end of the quarter to identify unpaid super.
The ATO Payday Super guidance provides the current framework.
5. Review contractor arrangements before regulators do
The ATO and Fair Work Ombudsman are intensifying action against sham contracting.
Sham contracting occurs when a business presents an employment relationship as an independent contractor arrangement. This can lead to PAYG withholding liabilities, superannuation guarantee obligations, penalties and back payments.
Businesses should verify that contractor arrangements reflect the true working relationship, including:
- Control over how, when and where work is performed.
- Whether the contractor operates their own business and bears financial risk.
- Whether the contractor can delegate work to others.
- Provision of tools, equipment and insurance.
- Whether the contractor invoices for services and is paid per project or deliverable.
- Whether the contractor is integrated into the business like an employee.
Written contracts alone do not determine the arrangement if the actual working relationship indicates employment.
Our global payroll outsourcing services support compliant payroll and contractor processes across multiple jurisdictions.
Key compliance dates
| Date | Obligation |
|---|---|
| 21 September 2026 | Lodge and pay August 2026 BAS (monthly reporters) |
| 30 September 2026 | STP finalisation declaration for closely held payees (2025–26); lodge 2026 annual TFN withholding report |
| 1 October 2026 | GIC rate increases to 11.51% per year |
| 28 October 2026 | End-of-quarter deadline for super contributions for the quarter ending 30 September 2026 |
| 28 November 2026 | Pay Superannuation Guarantee Charge (SGC) where super remains unpaid after 28 October 2026 |
Take a structured compliance approach
Australia’s tax compliance focus is tightening across PAYG instalments, BAS reporting, payroll and contractor classification.
If you operate an ecommerce business, SaaS company, agency or growing SME in Sydney, Melbourne, Brisbane, Perth, Adelaide or Canberra, use today’s update to check your records before the next deadlines. International businesses operating in Australia should also review their GST, payroll and contractor processes.
Structured record-keeping, current forecasts and proactive reconciliation reduce the risk of ATO scrutiny, GIC exposure and penalties.
