2026 – What Every Business Owner and Property Investor Must Prepare For

As we move toward 2026, the regulatory landscape for Australian businesses and investors is tightening significantly. A series of new ATO rulings, legislative reforms, and compliance expectations will reshape how employers manage payroll, how property deductions are claimed, and how private groups structure their affairs.

This edition of BPTAX Insights highlights the developments that matter most to SMEs, property investors, and advisers, and outlines the actions you should take ahead of the 2026 changes.

1. Payday super is now law – Starting 1 July 2026

The new Payday Super regime has officially passed Parliament. From 1 July 2026, employers must pay superannuation within seven business days of each payroll cycle, replacing the quarterly contribution model.

What this means for employers

• Cash flow pressure will increase as SG liabilities move from quarterly to near-real-time.

• ATO will match SG liabilities through enhanced STP + SuperStream v3 data.

• Errors will be flagged immediately, and late payments will trigger Superannuation Guarantee Charge (SGC).

  
  

What employers should do now

• Confirm payroll software readiness for SuperStream v3 and Member Verification Requests (MVR).

• Review employee data (TFNs, ABNs, super fund details).

• Plan for new cash-flow cycles well ahead of FY2026–2027.

  
  

The upcoming closure of the Small Business Superannuation Clearing House (SBSCH) on 1 July 2026 adds urgency—transition planning should begin early next year.

2. Rental property deductions under tightened ATO scrutiny

The ATO has released new draft rulings (TR 2025/D1, PCG 2025/D6, PCG 2025/D7) targeting apportionment, private use, and holiday homes.

Key implications for investors

• Deductions must be apportioned on a fair and reasonable basis, using time-based, area-based, or hybrid methods.

• The ATO will now actively apply s 26-50 (leisure facility rules) to holiday homes from 1 July 2026.

  
  

If a holiday home is not mainly held to earn assessable income, the following may be non-deductible—even if income is earned:

• Interest

• Council rates

• Land tax

• Maintenance

  
  

ATO risk framework

• Green zone: High occupancy, minimal private use → low audit risk.

• Amber zone: Some private use, limited income focus → moderate risk.

• Red zone: Blocked for personal use in peak periods, unreasonable rental restrictions → high audit risk and likely denial of deductions.

  
  

This represents a significant shift in compliance expectations. Clients with coastal, regional, or short-term accommodation properties should review their arrangements well before 2026.

3. ATO focus on payroll governance

The ATO is intensifying reviews of payroll systems across SMEs. Core obligations include:

• PAYG withholding

• STP accuracy

• FBT

• Super guarantee

• Cyber-secure record-keeping

Businesses relying on manual processes or outdated payroll systems should expect increased scrutiny.

4. Thin capitalisation & DDCR now affect more private groups

Recent changes mean more groups fall within the thin capitalisation or Debt Deduction Creation Rules (DDCR) framework.

Common risks include:

• Incorrectly claiming exemptions without considering associates.

• Loans between related parties (including Div 7A) used for asset acquisition or distributions.

• Failure to complete the International Dealings Schedule when required.

  
  

Private groups should undertake a 2024–2025 review to avoid inadvertent breaches.

5. GST developments: What’s new

Key updates include:

• Only formula marketed for infants up to 12 months qualifies for GST-free treatment.

• Build-to-Rent developments generally treated as input-taxed residential, not commercial residential premises.

• Sunscreen products are GST-free only if SPF 15+, ARTG-listed, and marketed principally as sunscreen.

• Updated GST-free determinations for residential aged-care services.

  
  

6. End-of-year celebrations – FBT Reminder

As businesses plan festive events:

• On-premises food and drink for employees → FBT-exempt.

• Gifts or off-premises events under $300 per person may qualify as minor benefits.

• Benefits to clients remain outside FBT.

  
  

A quick review before your Christmas party can prevent unintended FBT exposure.

7. Property & Employment cases to note

Two recent decisions reinforce long-standing principles:

• ElectraNet: Infrastructure assets may be personal property under state law, influencing whether foreign shareholders have “taxable Australian property”.

• Uddin: Lump-sum payments are assessable when received, even if related to earlier years—relevant for Div 293 calculations.

Positioning for a stronger 2026

The regulatory changes coming into effect over the next 18 months will reshape how businesses manage payroll, how investors substantiate deductions, and how private groups structure their financial affairs. The ATO is clearly moving toward real-time reporting, greater transparency, and stricter integrity rules across all sectors.

For business owners and property investors, early preparation is no longer optional—it is strategic. Reviewing compliance settings now will reduce disruption, protect cash flow, and prevent costly errors as the new rules take effect.

BPTAX is ready to support you through this transition with:

• detailed property and holiday-home deduction reviews

• payroll and superannuation readiness checks

• governance and STP accuracy assessments

• private group structuring and DDCR reviews

  
  

Please contact our office if you would like tailored advice for your circumstances.