TITLE: ATO Property CGT Crackdown, SMSF Borrowing Changes & Tax Reform No. 2: Daily Update
Australia’s tax compliance environment is becoming more data-driven. The ATO is comparing tax returns with property, banking and government records to identify missing income and capital gains.
This daily update covers the ATO’s investment property CGT crackdown, new SMSF borrowing restrictions, the latest Tax Reform No. 2 status, cyber security controls, lost superannuation and expanded real property transfer reporting.
Important legislative update: The Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 passed the Senate on 19 August 2026 and, based on the latest official reporting, awaits Royal Assent. Businesses should monitor the enactment date and rely on current ATO guidance once the law commences.
Review investment property sales before the ATO contacts you
The ATO is investigating approximately 6,000 investment property sales made across Australia between 1 July 2020 and 30 June 2025.
The investigation followed data matching between tax returns and state and territory property records. As reported by the Australian Financial Review, the potential unpaid tax across the identified transactions could be approximately $66 million.
The ATO can receive property information from:
- State and territory revenue offices.
- Land titles offices.
- Banks and lenders.
- Property managers.
- Rental bond authorities.
- Settlement and conveyancing records.
The ATO then compares this information with income tax returns. A discrepancy may arise where a taxpayer sold an investment property but did not report the capital gain or loss.
You must generally report a capital gain or capital loss in the income year when the contract of sale is entered into, rather than waiting until settlement. A capital gain may still need to be reported even where an exemption or concession reduces the final tax payable.
The ATO’s guidance on CGT when selling a rental property explains the records you should retain and the main calculation stages.
Complete this property CGT checklist
If you sold an investment property in Sydney, Melbourne, Brisbane, Perth, Canberra or elsewhere in Australia during the review period:
-
Identify the contract date.
This confirms the income year in which the CGT event should have been reported. -
Locate the original purchase records.
Keep the contract, settlement statement, stamp duty records and eligible acquisition costs. -
Gather improvement and ownership records.
Renovation invoices, legal costs and other eligible cost-base items may affect the calculation. -
Review rental history.
Confirm when the property was first rented, whether it was ever your main residence and whether the property had mixed use. -
Check the tax return.
Confirm that the sale, capital gain or capital loss was included in the correct year. -
Respond promptly to an ATO letter.
The reported campaign gives affected taxpayers an opportunity to review their position and respond, with letters reportedly requesting action by 31 October 2026.
Do not ignore a notice. If the ATO issues a default assessment, it may calculate the tax using its own information. The taxpayer may then need to prove both that the ATO’s figure is wrong and what the correct figure should be. Penalties and interest may also apply.
If you identify an error before the ATO takes formal action, consider correcting the return through a voluntary disclosure. Penalties are generally lower where taxpayers come forward promptly and provide complete information, although interest may still apply.
Apply the new SMSF borrowing rules from 10 August
New restrictions now apply to limited recourse borrowing arrangements, commonly known as LRBAs, used by self-managed super funds.
For a new LRBA entered into from 10 August 2026, the real property generally needs to qualify as business real property. This means ordinary residential property held as a private rental investment can no longer generally be purchased through a new SMSF LRBA.
Business real property usually involves land and buildings used wholly and exclusively in one or more businesses. Examples may include:
- A warehouse used by a trading business.
- A commercial office leased to an operating business.
- A retail premises used for genuine business activity.
- Certain primary production land, subject to specific conditions.
The restriction is not a total ban on all SMSF borrowing. SMSFs may still use LRBAs for other permitted assets, subject to the superannuation rules.
Existing arrangements generally continue under transitional rules. This may include an existing residential property LRBA entered into before 10 August 2026, as well as certain purchases supported by a binding contract exchanged before that date.
Review your position if your SMSF has:
- An existing residential property LRBA.
- A proposed property purchase.
- A contract exchanged before 10 August 2026.
- A refinancing arrangement.
- A commercial property acquisition under consideration.
- A related-party loan or holding trust structure.
Keep the loan documents, contract, settlement records, trust documents and evidence of property use together. These records will help establish whether the arrangement falls within the transitional rules.
Read the ATO’s guidance on changes to limited recourse borrowing arrangements.
The government is also progressing a proposed SMSF reform package. The proposals include giving the ATO greater power to prevent rollovers into new SMSFs where fraud or misconduct is being investigated, requiring trustee education before SMSF registration and introducing uniquely identifiable SMSF bank accounts. Treat these proposals separately from the LRBA restrictions already in force.
Use the new Tax Reform No. 2 measures in your 2025–26 planning
The Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 passed the Senate on 19 August 2026 and, based on the latest official reporting, awaits Royal Assent.
Two measures are particularly relevant to Australian small and growing businesses once the Bill is enacted.
$20,000 instant asset write-off
Once enacted, the legislation will make the $20,000 instant asset write-off permanent from 1 July 2026 for eligible small businesses.
The measure is expected to apply to businesses with aggregated annual turnover below $10 million. Eligible assets costing less than $20,000 may be immediately deducted on a per-asset basis. Assets costing $20,000 or more may generally be placed into the simplified depreciation pool.
Maintain clear records for every asset. Keep the purchase invoice, date first used or installed, business-use percentage and payment evidence. This will help you prepare for the measure taking effect and make year-end accounts easier to complete.
