Mandating Cash Acceptance

The ATO has advised that it will acquire child support data from Services Australia for the 2025 to 2027 income years, including the following: client identification details (names, addresses, phone numbers, and dates of birth); and child support details (child support identification reference number, child support role type, and child support category). The ATO estimates that records relating to up to 300,000 individuals will be obtained each financial year, which will be matched against ATO records. The objectives of this program are to (among other things): allow Services Australia to more accurately assess child support obligations, and maximise opportunities to collect child support debts; and  identify and educate individuals who may be failing to meet their lodgment obligations and help them to finalise their lodgment obligations, or notify the ATO that an income tax return is not required. Please contact our office for more information.

The ATO is warning the community to steer clear of an emerging tax scheme involving barter credits — a type of alternative currency used in some business networks. A tax scheme that involves artificially inflating deductions for donations of barter credits to deductible gift recipients ('DGRs') is on the rise. While it may seem enticing, promoters and taxpayers could face potentially significant consequences if they are involved. The ATO is concerned that such schemes are being enabled by several barter exchanges that are allowing participants to access barter credits with a nominal face value that is much more than any payments actually made to the exchange. Participants then donate these barter credits to a DGR and claim a larger tax deduction than they are entitled to.  Those involved may have to repay the tax, plus face heavy penalties, interest and legal action. Please contact our office for more information.

The ATO has announced that it will take a somewhat different approach in relation to expenses that are claimed in relation to holiday homes. Broadly, the ATO now takes the view that, if a taxpayer's rental property is also their holiday home, certain deductions relating to holding it will be completely denied (rather than being apportioned). Expenses relating to ownership and use of the holiday home (e.g., interest, rates and maintenance) will not be deductible, unless the holiday home is 'mainly' used to produce assessable income. Whether a holiday home is used 'mainly' to produce assessable income will be determined based on a consideration of a number of factors. However, this will generally not apply to expenses incurred in relation to holiday homes that are rental properties before 1 July 2026, if those expenses are incurred under an arrangement entered into prior to 12 November 2025. Please contact our office for more information.

The ATO has hit a major milestone of over 300,000 tip-offs from the community about tax avoidance and other dishonest behaviours since 1 July 2019. In the 2024/25 financial year alone, almost 50,000 red flags were raised by members of the community who spotted something suspicious. Most of the tip-offs received related to shadow economy activity, coming from customers, employees, other businesses, and even family and friends. This year, Australians reported businesses and individuals who: did not declare their income; demanded or paid for work in cash to avoid tax; lived lifestyles that did not match their known income; and failed to report all sales. The top three industries seeing a surge in 'red flags' this financial year are: building and construction; cafes and restaurants; and hairdressing and beauty services. Please contact our office for more information.

The ATO has been seeing a number of deduction claims for dental expenses this tax time. Dental expenses, including preventative and necessary dental treatment, medical expenses and other costs relating to client's personal appearance (such as teeth whitening, makeup, skin care, shaving products and haircuts) are not deductible. These expenses are generally private expenses, even if an employer expects an employee to maintain a certain appearance, or pays them an allowance to cover grooming expenses. Taxpayers should remember that they can only claim an expense that directly relates to earning their income. Private expenses cannot be claimed as a deduction.  Taxpayers should have written evidence of all their expenses, and be able to show a direct connection with those expenses to their employment income. Please contact our office for more information.

Employee super contributions for the quarter ending 31 December 2025 must be received by the relevant super funds by 28 January 2026. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. The SG rate is 12% for the 2026 income year (increased from 11.5% for the 2025 income year). Please contact our office for more information.

Employers should start preparing for the permanent closure of the Small Business Superannuation Clearing House ('SBSCH') on 1 July 2026. By acting now to find an alternative service, employers will: have an established process in place to pay super guarantee ('SG') for the March and June quarters (if they currently pay quarterly); reduce the risk of late payment of SG for the June 2026 quarter due date (28 July), as the SBSCH will be already closed; have more time to set up their business cash flow to enable frequent payments of SG; and have finalised payments and downloaded any reports from the SBSCH before it closes permanently. Employers that are still using the SBSCH should be aware of the following key dates. 10 December 2025 — Super payments, along with instructions, must be received by 5.30 pm AEDT on this date. The ATO says payments received after this time will be processed from 2 January 2026. 28 January 2026 — December 2025 SG quarterly payments due date. February to March 2026 — Employers should move to an alternative option to the SBSCH. 28 April 2026 — March 2026 SG quarterly payments due date. 30 June 2026 — Final day for employers to use the service, make any final payments and download reports. 1 July 2026 — SBSCH is no longer available. Employers may already have other options readily available so they can exit from using the SBSCH ahead of time. They should check their existing software and payroll packages, as they may already include super functions they can use to pay SG. Otherwise, employers can look for options from super funds or digital service providers offering payroll services, software or commercial clearing houses. Please contact our office for more information.

The Administrative Review Tribunal ('ART') recently held that some sales of subdivided farmland were subject to GST as they were made by the taxpayer in the course of carrying on an enterprise. The taxpayer owned farmland near Adelaide. He entered into an agreement with a developer, under which the developer sought rezoning and development approvals, carried out development works, and marketed the subdivided lots.  The taxpayer progressively gave the developer access to the property as required and signed documents where necessary, including contracts for the sale of the subdivided lots. The taxpayer received 20% of the proceeds of sale progressively as sales of the subdivided lots were completed, with the developer receiving the remaining 80%. The taxpayer argued that his role was passive, and that such rights as he had, and actions he took under the agreement with the developer, were of an administrative nature not amounting to a series of activities in the form of a business. The ART disagreed, finding that the sales of the subdivided land were subject to GST as they were made in the course of carrying on an enterprise. The ART noted that the taxpayer's activities "exhibited some of the well-known indicia of a business." Amongst other factors, the taxpayer's activities in facilitating the implementation of the development agreement "had a degree of regularity and repetition", including allowing access to the land progressively as required, an ongoing obligation not to encumber or sell the land during the project, and the continuous signing of sales contracts and monitoring of sales returns. Please contact our office for more information.

Release authorities are documents issued by the ATO to super funds, authorising the release of money from a member's super account to pay specific liabilities, including in relation to excess concessional contributions, excess non-concessional contributions, and Division 293 tax assessments. The ATO is seeing a rise in SMSFs that receive a release authority and are either: not responding within 10 business days as required; or  responding incorrectly (i.e., either not releasing the requested amount, or failing to submit a release authority statement back to the ATO, or both). Failure to meet these obligations may result in significant penalties for the fund. SMSF trustees should make sure they have effective processes in place to respond to release authorities promptly and accurately. Please contact our office for more information.