Daily Australia Tax Update: 12 August 2026 : CGT Tranche 1 Repeal, Negative Gearing Tranche 2 Deadline & Penalty Unit Rise

TITLE: Australian Business Tax Compliance Update: Key Changes and Deadlines

Australian businesses, online sellers and cross-border operators should review their compliance processes today. The key developments include changes to the first tranche of the capital gains tax and negative gearing package, an approaching Treasury consultation deadline, a higher Commonwealth penalty unit and updated personal income tax rates.

This update summarises the practical points for Australian companies, directors, contractors, digital businesses and ecommerce sellers.

Monitor the CGT and negative gearing reform position

The Australian Government has repealed some provisions from the first tranche of the negative gearing and capital gains tax reform package. However, the final scope and interaction of the reforms are still being settled.

You should not assume that every proposed measure has disappeared. Treasury is now consulting on the second tranche of legislation, which is intended to clarify how the broader reforms will operate in more complex situations.

The consultation covers issues connected with:

• Transitional rules.
• The definition of eligible new residential dwellings.
• Trusts and deceased estates.
• Partial Australian residency.
• Capital gains that span different tax periods.
• Exemptions and special housing arrangements.
• Interactions with existing CGT and negative gearing provisions.

Although this consultation includes residential property and SMSF/property borrowing reform matters, Australian businesses should focus on the wider compliance impact. Changes to tax legislation can affect company structures, trust reporting, asset records, distributions and year-end tax calculations.

Keep monitoring official Treasury and ATO updates before finalising future tax calculations. The proposed rules may continue to change as the consultation process progresses.

Read the Treasury Tranche 2 consultation materials and review the ATO’s current tax reform guidance.

Submit feedback by 21 August 2026

The Treasury consultation on the second tranche of the CGT and negative gearing reforms opened on 4 August 2026. Submissions close on Friday, 21 August 2026.

If your Australian business, trust, company or investment structure may be affected, review the consultation documents promptly. Submitting relevant commercial and compliance concerns will help you understand which issues Treasury is considering before the legislation is finalised.

You should:

1. Read the draft legislation and explanatory material. This will help you identify provisions that may affect your structure.
2. List any transitional concerns. Record assets, transactions or arrangements that cross the proposed commencement dates.
3. Check trust and company records. Accurate ownership and distribution records will support future tax calculations.
4. Submit through Treasury’s online consultation portal. This ensures your response reaches the correct government process before the deadline.
5. Keep a copy of your submission. This creates an internal record of the matters your business raised.

Do not wait until the deadline if your records are incomplete. Reconciling your accounting data now will make it easier to assess the potential impact of any final rules.

Apply the $364 Commonwealth penalty unit from 1 July 2026

The Commonwealth penalty unit increased to $364 from 1 July 2026, up from $313.

The new amount applies to relevant offences and infringements committed on or after 1 July 2026. Penalty units are used across Commonwealth legislation, including certain tax, reporting and regulatory penalties.

This increase makes accurate and timely compliance even more important. A late lodgement, incorrect report or missed statutory obligation may carry a higher financial consequence where the applicable penalty is calculated by reference to penalty units.

Your business should now:

• Update internal compliance checklists.
• Confirm that accounting and payroll systems use current penalty settings.
• Review outstanding ATO correspondence.
• Check that BAS, GST, PAYG and other reports are lodged by their due dates.
• Escalate unresolved compliance issues to the responsible director or finance manager.

The ATO’s penalty unit guidance confirms the current Commonwealth amount.

Use the 15% personal income tax rate correctly

Personal income tax cuts took effect on 1 July 2026. The first marginal tax rate for Australian resident individuals has reduced from 16% to 15%.

This is not a flat 15% tax rate on all personal income. For the 2026–27 income year, the 15% rate generally applies to taxable income above the tax-free threshold up to $45,000, with higher marginal rates applying above that level.

This change is relevant to Australian companies because it may affect:

• PAYG withholding calculations.
• Employee payroll settings.
• Director remuneration records.
• Owner-manager cash-flow planning.
• Year-end individual tax calculations.
• Contractor and personal services reporting.

Update your payroll software and confirm that the correct 2026–27 tax tables are being used. Doing this will reduce the risk of incorrect withholding and later adjustments.

You can check the ATO’s personal income tax rate guidance for the current details.

Wait until after 28 August to lodge TPAR-related contractor returns

Contractors should generally wait until after 28 August 2026 to lodge their individual tax returns if they want the best opportunity to receive complete pre-filled Taxable payments annual report data.

Businesses that pay eligible contractors must lodge their TPAR by 28 August. Most contractor payment data will therefore become available for pre-fill after that date.

However, pre-fill information does not replace your own records. You must still report all assessable income, even if an amount is missing or incorrect in the ATO system.

Before lodging, contractors should:

• Compare pre-filled amounts with invoices and bank records.
• Check whether payments are reported on a cash or accrual basis.
• Confirm that GST and tax withheld amounts are correct.
• Add any income that has not been pre-filled.
• Keep supporting records for future review.

The ATO explains the timing in its 2026 contractor pre-fill guidance.

Reconcile before BAS, GST and PAYG deadlines

Australian companies and sellers should reconcile their records before preparing each BAS. This is especially important for ecommerce and digital businesses with multiple payment providers, marketplaces, bank accounts and currencies.

Your monthly or quarterly checklist should include:

• R