TITLE: Australia Tax Update: ATO Operation Tonberry, Foreign Resident CGT Changes and Key Compliance Dates
Australia tax update at a glance
- The ATO conducted more than 25 unannounced visits to Melbourne CBD fast-food outlets, restaurants and cafés on 22 and 23 September under Operation Tonberry.
- The ATO received more than 52,000 community tip-offs about suspected tax evasion and related non-compliance during FY2025–26.
- Foreign resident CGT changes start on 1 October 2026, including a new notification requirement for certain transactions valued at AU$50 million or more.
- The foreign resident principal asset test will move from a point-in-time test to a 365-day testing period.
- Payday Super contributions must reach an employee’s nominated fund within seven business days of payday, subject to specific exceptions.
- Consultation on the ATO’s draft software royalty compliance guideline, PCG 2026/D4, closes on 2 October 2026.
- The proposed 30% minimum tax on discretionary trusts from 1 July 2028 is not law.
Australia’s tax compliance environment is becoming more active and more data-driven.
Today’s key developments affect hospitality businesses, ecommerce sellers, digital companies, growing SMEs and Australian entities within international groups. The main message is simple: maintain accurate records, pay employees and superannuation correctly, and prepare early for changes taking effect on 1 October 2026.
Strengthen your records as Operation Tonberry targets Melbourne businesses
The ATO has announced that it conducted more than 25 unannounced visits to fast-food outlets, restaurants and cafés in Melbourne’s CBD.
The visits took place on 22 and 23 September 2026. The ATO is investigating suspected:
- Cash-in-hand payments.
- Unpaid superannuation.
- Undeclared or under-reported income.
- Reporting failures.
- Record-keeping breaches.
The operation follows more than 52,000 community tip-offs received during FY2025–26. Around 83% were considered suitable for further review. More than 360,000 tip-offs have been received since July 2019.
Building and construction, cafés and restaurants, and hairdressing and beauty services were among the most reported industries. Hospitality businesses accounted for more than 2,500 tip-offs.
The ATO has said that non-compliance gives an unfair advantage to businesses that do the right thing. Tip-offs can be made anonymously through the ATO’s official tax evasion reporting channels.
Use this compliance checklist
Whether you operate in Melbourne, Sydney, Brisbane, Perth or elsewhere in Australia, review your records now:
- Reconcile every sales channel.
Match point-of-sale receipts, ecommerce platforms, payment processors and bank deposits. This helps prevent unexplained differences in your BAS and income tax records. - Record all cash sales.
Cash payments must be recorded in the same way as card and online payments. This supports accurate GST reporting and reduces audit risk. - Check payroll and PAYG withholding.
Confirm that employee wages, PAYG withholding and reporting are complete and accurate. - Verify superannuation payments.
Make sure contributions reach the employee’s fund within the required time. - Keep source documents.
Retain invoices, receipts, payroll records, bank statements and platform reports. Clear records help you respond quickly if the ATO asks questions.
The enforcement message applies beyond hospitality. Australian ecommerce sellers, SaaS businesses, agencies and other digital companies should also ensure that sales from Shopify, Amazon, eBay, Etsy, WooCommerce and other platforms flow correctly into their accounting records.
Prepare for foreign resident CGT changes before 1 October
Foreign resident CGT changes begin on 1 October 2026 following Royal Assent of the Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Act 2026.
The changes are important for international groups, foreign investors and Australian entities involved in reorganisations, acquisitions or disposals.
Under the new rules, a foreign vendor providing a declaration that an asset is not an indirect Australian real property interest must notify the ATO where the disposal, including related transactions, has a value of AU$50 million or more.
Purchasers must also consider whether they reasonably believe the declaration is false at any time between receiving the declaration and settlement. A declaration should not be treated as automatically conclusive if later information raises concerns.
The ATO’s foreign resident CGT update explains the main changes.
Track asset values across the full 365-day period
The principal asset test will change from a point-in-time test to a 365-day testing period before the relevant CGT event.
This means foreign resident sellers may need evidence showing the entity’s asset composition and values throughout the previous year. A last-minute change to the balance sheet may not be enough to change the tax outcome.
The legislation also introduces a Commonwealth definition of real property that covers:
- Land.
- Rights and interests relating to land.
- Assets fixed to land.
- Certain leases and licences.
- Relevant water rights and infrastructure interests.
The reforms do not apply retrospectively to disposals that settled before 1 October 2026. However, transactions settling on or after that date require careful review of the new rules.
A temporary 50% CGT discount will also apply to eligible non-individual foreign residents disposing of certain renewable energy assets. This is a specific concession and should not be treated as a general return of the CGT discount for foreign residents.
The ATO has indicated that additional guidance will be published before 1 October. The ATO has also registered a consolidated PAYG withholding variation legislative instrument for foreign resident capital gains withholding.
Take these steps before settlement
If your Australian entity is part of a UK, US, Canadian, European or other international group:
- Identify disposals or restructures that may settle on or after 1 October.
- Review whether the transaction involves Australian real property or an indirect interest.
- Check whether related transactions could take the total consideration to AU$50 million or more.
- Preserve valuation evidence covering the previous 365 days.
- Document the basis for any vendor declaration.
- Build ATO notification steps into the transaction timetable.
Review home-based business arrangements before 1 July 2027
Running a business from home can create uncertainty around the main residence exemption, deductible expenses and future capital gains tax treatment.
Commentators have highlighted additional valuation issues ahead of changes scheduled to begin on 1 July 2027. Business owners operating from a home may need to establish the portion used for business and maintain evidence supporting the relevant valuation.
Do not assume that every home office creates the same CGT outcome. The treatment depends on how the space is used, whether it is set aside exclusively for business and the facts of each arrangement.
