Daily Australia Tax Update: 10 September 2026 : Software Royalty Guidance Open for Consultation, STP Finalisation Deadline & Payday Super Myths Busted

by Ariful | Sep 10, 2026 | Australia Updates

TITLE: Australian Tax and Payroll Checklist: Key Actions for Businesses After 1 July 2026

Australian Tax and Payroll Checklist: Key Actions After 1 July 2026

Australia’s tax and payroll environment has changed significantly since 1 July 2026. Cross-border software payments, Payday Super, Single Touch Payroll, GST reporting and trust tax rules all require attention.

Use this checklist to identify the actions your business should take today.

1. Review offshore software payments before 2 October

The ATO finalised Taxation Ruling TR 2026/2 on 4 September 2026. It explains when payments under software distribution and intermediation arrangements may be treated as royalties for Australian tax purposes.

If a payment is a royalty, Australian royalty withholding tax may apply when you pay an offshore provider. This can affect:

• SaaS businesses paying overseas software owners.
• Digital agencies using international platforms.
• Software resellers and distributors.
• App developers and marketplace operators.
• E-commerce businesses paying offshore technology or platform providers.
• Businesses making payments for software licences, embedded intellectual property or know-how.

The ATO’s view focuses on the substance of the arrangement. A contract calling a party a “distributor” or describing payments as “royalty-free” will not necessarily determine the tax treatment.

You should examine whether your payments relate to:

• The right to use copyright or other intellectual property.
• The use of software rights.
• Access to know-how.
• Software embedded in physical products.
• Ancillary support connected to intellectual property rights.

The relevant point for withholding tax is generally the date you make the payment. This means you should review current payment processes, not only new contracts.

Assess your risk under PCG 2026/D4

The ATO also released draft Practical Compliance Guideline PCG 2026/D4. It proposes a risk-based framework for software-related royalty payments to non-residents.

Public consultation remains open until 2 October 2026. The draft guideline includes lower-risk zones and indicators of higher-risk arrangements. It also seeks feedback on the risk criteria, residual risk calculations and practical examples.

Action checklist:

1. List all payments made to offshore software and platform providers.
2. Separate ordinary access fees from payments that provide rights to use intellectual property.
3. Review contracts, invoices and payment descriptions.
4. Check whether a tax treaty changes the withholding outcome.
5. Keep evidence supporting your treatment.
6. Escalate uncertain arrangements before making further payments.

Read the ATO’s software royalties ruling and draft guidance and note the consultation deadline.

2. Treat missed June quarter super payments as overdue

The final quarterly Superannuation Guarantee payment for the June 2026 quarter was due to reach employees’ funds by 28 July 2026.

Where an employer missed that date, the shortfall is overdue. Any required Superannuation Guarantee Charge statement and payment were generally due by 28 August 2026.

Do not assume that making a late contribution removes the problem. The late payment offset is no longer available. Employers must address the shortfall and any applicable SGC obligations under the rules applying to the June quarter.

Payday Super myths to avoid

Payday Super applies to paydays from 1 July 2026. Contributions must reach the employee’s fund within 7 business days of payday, unless a specific exception applies.

The ATO has highlighted several common misunderstandings:

• Myth: Seven days means calendar days.
  The standard period is seven business days. Weekends and national public holidays are excluded.

• Myth: Sending the payment is enough.
  The contribution must reach the fund with sufficient information for allocation. The date you initiate the payment is not always the date the fund receives it.

• Myth: The old quarterly system still applies to new paydays.
  Paydays from 1 July 2026 are subject to the Payday Super framework.

• Myth: The Small Business Superannuation Clearing House is still available.
  The Small Business Superannuation Clearing House closed from 1 July 2026. You need another SuperStream-compliant payment solution.

• Myth: The ATO will immediately penalise every transition error.
  The ATO has stated that it is prioritising support during the first transition year. That does not remove the obligation to calculate, report and pay super correctly.

Check your payroll software, payment provider and fund data now. A failed payment can create a timing problem even when the original instruction was submitted on time.

The ATO’s Payday Super guidance provides the current employer requirements.

3. Complete STP finalisation for closely held payees by 30 September

Small employers with 19 or fewer employees may have different STP finalisation dates depending on their workforce.

For the 2025–26 income year:

• Arm’s-length employees generally required finalisation by 14 July 2026.
• Closely held payees generally require finalisation by 30 September 2026 where the business has a mix of arm’s-length and closely held payees.
• Small employers with only closely held payees may have a different deadline linked to the payee’s tax return due date.

If your business has both regular employees and closely held payees, review the 30 September deadline now. Closely held payees may include directors, owners or family members paid by a private company.

From 1 July 2026, Payday Super also expands the information required through STP. Each pay run must report qualifying earnings and superannuation liability amounts, alongside wages and PAYG withholding.

Complete these checks:

• Confirm every pay event has been lodged.
• Review employee and closely held payee classifications.
• Reconcile year-to-date wages and PAYG withholding.
• Confirm qualifying earnings are mapped correctly.
• Check year-to-date super liability amounts.
• Finalise closely held payees by the correct deadline.

The ATO explains the requirements for STP end-of-year finalisation and STP reporting under Payday Super.

4. Keep defensible valuations for Division 296

Division 296 commenced on 1 July 2026 for individuals with total super balances above the $3 million threshold.

The ATO has identified market valuations and audit evidence as key risk areas. This is particularly important for SMSF trustees holding:

• Unlisted company shares.
• Units in private trusts.

Daily Australia Tax Update: 9 September 2026 : Software Royalty Ruling Under Fire, Trust Tax Deadline Looms & SMSF Trustee Prosecuted

by Ariful | Sep 9, 2026 | Australia Updates

TITLE: Key Tax Compliance Updates: Software Royalties, Trust Minimum Tax, SMSF Lodgments, and Due Dates

Australia’s tax compliance landscape is moving quickly. Today’s key issues affect software and cloud businesses, discretionary trusts, SMSF trustees, employers and every organisation managing annual lodgments.

Review cross-border software payments after TR 2026/2

The ATO finalised Taxation Ruling TR 2026/2 on 4 September 2026. The ruling explains when payments under software licensing, distribution, intermediation, streaming and cloud arrangements may be treated as royalties.

Where a payment is consideration for the use of, or right to use, copyright or other intellectual property rights, Australian royalty withholding tax may apply. The general domestic rate is 10%, although an applicable tax treaty may reduce the rate or affect the outcome.

The ruling can be relevant where an Australian business pays an overseas provider or group company for:

• Software licences or the right to reproduce software.
• Rights to modify, adapt, communicate or distribute software.
• Cloud or hosted software access involving intellectual property rights.
• Know-how or technical assistance connected with licensed IP.
• Software embedded in hardware.
• A combination of software rights and implementation services.

The ruling applies to payments made both before and after its issue date.

Understand the PCG risk zones before changing your process

The ATO also released draft Practical Compliance Guideline PCG 2026/D4. Consultation closes on 2 October 2026.

The draft guideline provides a risk-zone framework for software intermediation and distribution arrangements. It includes a green zone for straightforward resale of existing software copies where the reseller does not receive or exercise additional copyright rights.

It also contemplates lower-risk treatment where taxpayers recognise a reasonable part of an outbound payment as a royalty, rather than treating the entire amount as a service or distribution fee.

Do not assume that a green-zone example automatically removes your legal obligations. First, compare the commercial reality with the contract. Then document:

1. What rights are granted.
2. Which entity owns the relevant intellectual property.
3. What the Australian entity actually does.
4. How the payment has been calculated.
5. Which part relates to royalties, services, goods or distribution.

The issue has attracted international attention. The US Software & Information Industry Association has urged Australia to overturn the ruling, arguing that it departs from the OECD Model Tax Convention. The Australian Financial Review reported on 9 September that US industry groups are concerned about software, streaming and cloud payments being treated differently in Australia from other jurisdictions.

The ATO’s final ruling and draft guidance newsroom page and PCG 2026/D4 should be reviewed by businesses with international software arrangements.

The ATO has also issued a decision impact statement on Oracle Corporation Australia Pty Ltd v Commissioner of Taxation [2025] FCAFC 145, in which the Full Federal Court stayed domestic proceedings while the Mutual Agreement Procedure (MAP) continues. As reported by Accounting Times, this underlines the importance of preserving treaty dispute rights where software payments create possible double taxation.

Prepare now for the proposed 30% discretionary trust minimum tax

Treasury consultation on exposure draft legislation for a proposed 30% minimum tax on certain discretionary trusts closes on 18 September 2026.

The draft includes an Excluded Election Trust (EET) option. This would allow eligible trusts to elect into a regime involving fixed beneficiary percentages rather than remaining subject to the proposed minimum tax rules.

An election may offer an alternative to restructuring, but trustees should not treat it as simple or easily reversible.

Complete this trustee review before considering an election

Trustees should:

• Review the trust deed to confirm the scope of beneficiary and distribution powers.
• Map current and intended beneficiaries, including companies and other entities.
• Test historical and expected allocations against the proposed fixed percentages.
• Check corporate beneficiary eligibility and the consequences of distributions to each entity.
• Document governance decisions, approvals and the commercial reasons for the chosen approach.
• Model tax outcomes under both the minimum-tax rules and the proposed election.
• Consider a private ruling where the application of the draft rules is uncertain.

Businesses in Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra should begin gathering trust deeds, distribution resolutions and beneficiary records now. Waiting until legislation is finalised may leave too little time to test the practical consequences.

Read the Treasury consultation material and monitor the final legislation before making an irreversible structural decision.

An SMSF trustee’s conviction reinforces personal responsibility

A South Australian Supreme Court appeal has reinforced that an SMSF trustee remains responsible for lodging the fund’s annual returns, even when an accountant has been engaged.

The trustee failed to lodge returns for the 2021, 2022 and 2023 financial years. The trustee was prosecuted, received a criminal conviction and was fined $3,981. The appeal was dismissed.

The case, reported by SMS Magazine, demonstrates that outsourcing preparation does not transfer the trustee’s legal responsibility.

The ATO can use prosecution for repeated lodgment failures. A conviction may also create wider consequences for people holding public positions or roles involving government.

If an SMSF return is overdue, act immediately:

1. Confirm which returns and audits are outstanding.
2. Contact the fund’s accountant or tax agent.
3. Check whether the fund’s records are complete.
4. Lodge the outstanding returns and address any ATO correspondence.
5. Keep evidence of every instruction, response and lodgment.

Confirm your actual income tax due date

The ATO uses several common income tax lodgment dates:

• 31 October : often applies to self-lodgers, clients with overdue prior-year returns, clients added to an agent’s client list after the relevant cut-off, and taxpayers the ATO has specifically advised they must lodge by that date.
• 31 January : generally applies to taxable large and medium entities (other than individuals), including taxable head companies of consolidated groups that include a medium or large member.
• 28 F : applies to certain other entities and scenarios as advised by the ATO.