Daily Australia Tax Update: 26 September 2026, 31 October Return Deadline Warning, $1bn Contractor Income Gap & ATO Refreshes GILTI Guidance

by Ariful | Sep 26, 2026 | Australia Updates

TITLE: ATO Compliance Update: 2025–26 Return Deadlines, Pre-Fill Data, Contractor Reporting and GILTI/NCTI Changes

Prepare your 2025–26 return before the 31 October deadline

If you self-lodge your 2025–26 individual income tax return, the standard deadline is 31 October 2026. Because 31 October falls on a Saturday, the ATO’s next-business-day rule generally means the practical lodgement date moves to Monday 2 November 2026.

Do not leave your return until the final weekend. You still need time to:

• Reconcile business income and expenses.
• Check GST and BAS records.
• Review platform, marketplace and payment-provider reports.
• Confirm contractor and payroll information.
• Check share, interest and dividend data.
• Investigate missing or incorrect pre-filled amounts.
• Resolve any outstanding prior-year returns.

If you use a registered tax agent, you generally receive access to the agent lodgement program and an extended due date. However, you must be engaged and on the agent’s books by 31 October 2026.

Taxpayers with overdue prior-year returns may not receive the usual extension. The ATO’s registered agent program includes specific rules for taxpayers who had returns outstanding at 30 June 2026. Treat 31 October as a hard deadline if your previous lodgements are incomplete.

Avoid failure-to-lodge penalties

The ATO can apply a failure-to-lodge penalty when a required return is lodged late. The penalty is generally:

• One penalty unit for each 28-day period, or part period, overdue.
• Capped at five penalty units for individuals and small entities.
• Based on a penalty unit value of $364 from 1 July 2026.
• Potentially as high as $1,820.

The ATO does not automatically apply the maximum penalty to every late return. Remission may be available in appropriate circumstances. However, relying on remission is not a compliance process. Lodging on time reduces penalty exposure, interest and unnecessary ATO correspondence.

Review the ATO’s October 2026 registered agent lodgement information and organise your records now.

Check every pre-filled amount before you lodge

The ATO is now pre-filling more than 100 million data items from employers, banks, health insurers, share registries, government agencies and other reporting bodies.

This makes tax returns faster to complete. It also makes discrepancies easier to identify.

Pre-fill is not a substitute for your own accounting records. You remain responsible for reporting complete and accurate income.

For an e-commerce seller or digital business, compare your tax records with:

• Shopify, Amazon, eBay, Etsy or other marketplace reports.
• Payment processor settlements.
• Business bank statements.
• Refunds, chargebacks and platform fees.
• Foreign currency receipts and exchange-rate adjustments.
• Sales recorded through separate websites or payment links.
• Income received directly from customers.
• Stock, advertising and fulfilment costs.

A platform report may show gross sales, while your bank account shows net settlements after fees, refunds or reserves. Reconcile the underlying transactions rather than copying one figure into your return. Doing this will reduce errors and give you a defensible audit trail.

The ATO’s 2026 pre-filling information explains how third-party data is used during Tax Time 2026.

Report contractor income accurately before the ATO matches it

The ATO is warning that more than $1 billion in taxable payments annual report (TPAR) income could be omitted or under-reported in tax returns this year.

At the same time, approximately $21 billion in TPAR payments is being pre-filled into eligible returns. The new pre-fill process is expected to support around 700,000 sole traders and individuals in business.

ATO Assistant Commissioner Tony Goding’s message is direct: leaving income out of a tax return does not make it invisible.

If you change a pre-filled amount, you must have a genuine reason and retain documents supporting the adjustment. For example, the amount may need correction because:

• The payer reported the wrong figure.
• The payment belongs to a different entity.
• The payment was duplicated.
• The transaction was recorded on a different accounting basis.
• The amount includes non-reportable components.
• The income was received through another reporting arrangement.

Do not remove or reduce a pre-filled figure simply because it does not match your bank deposit. First identify the difference between gross contractor payments, expenses, GST, withholding, refunds and net settlement amounts.

The ATO estimates that shadow economy behaviour costs around $25 billion in tax each year. Data matching is therefore becoming a core compliance control, not an occasional check.

Read the ATO’s Tax Time 2026 contractor pre-fill update and reconcile your TPAR information with your invoicing and bookkeeping system.

Review Australian-US structures under the refreshed NCTI guidance

On 23 September 2026, the ATO issued an addendum to Taxation Determination TD 2022/9.

The addendum reflects US changes introduced by the One Big Beautiful Bill Act 2025. The former US GILTI regime is now referred to as net CFC tested income, or NCTI.

The US changes include:

• The removal of the net deemed tangible income return.
• A reduction in the US section 250 deduction from 50% to 40%.
• An increase in the deemed paid foreign tax credit under section 960(d) from 80% to 90%.
• Application for US tax years beginning after 31 December 2025.

The important Australian point is that the ATO’s view has not changed.

For Australia’s hybrid mismatch rules, the ATO continues to consider that section 951A of the US Internal Revenue Code does not correspond to Australia’s controlled foreign company provisions in sections 456 or 457 of the ITAA 1936.

As a result, Australian businesses should not automatically treat US GILTI or NCTI inclusions as being “subject to foreign income tax” for the purposes of the hybrid mismatch rules.

Complete a cross-border compliance review

If your Australian company has a US parent, US subsidiary, related-party financing or other cross-border arrangements, review:

• Intercompany payments and deductions.
• Hybrid instruments and entity classifications.
• US tax inclusions and supporting calculations.
• Divisio

Daily Australia Tax Update: 25 September 2026, Operation Tonberry Hits Melbourne, Foreign Resident CGT Changes Start 1 October & 52,000 Community Tip-Offs

by Ariful | Sep 25, 2026 | Australia Updates

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:

1. 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.
2. 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.
3. Check payroll and PAYG withholding.
   Confirm that employee wages, PAYG withholding and reporting are complete and accurate.
4. Verify superannuation payments.
   Make sure contributions reach the employee’s fund within the required time.
5. 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.