March 2026 Round Up | 31 March FBT Deadline & Div 296 developments: Are You Prepared?

As the 2026 FBT year comes to end, the ATO is focusing on employers that provide vehicles to employees. In particular, from 1 April 2025, PHEVs are no longer treated as zero or low emissions vehicles and therefore no longer qualify for the FBT exemption. For employers that provide plug-in hybrid vehicles (PHEVs), it is important to remember there is a new shortcut method available for calculating electricity costs set out in PCG 2024/2.

This month, the Bills that set out Division 296 and other super reforms passed through Parliament and received Royal Assent. The operation of Division 296 tax will start from 1 July 2026.

Change is a constant for the profession. The Knowledge Shop membership can help you and your team keep ahead of change with an advisers' help desk, workpaper knowledge base, quarterly PD, and more - wherever you are and however you are working. Book in a time for a tour or call the Knowledge Shop team on 1300 378 950.

Inside this month, Jason Hurst (Technical Superannuation Adviser), Michael Carruthers (Tax Director), and Amy Yan (Associate Tax Director) bring you:

Draft Regulations for super reforms

The Government has now released the exposure draft regulations to support the super reforms for Division 296 under the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 and the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026, which have now passed Senate and received Royal Assent.

The draft regulations:

• Explain how super funds will attribute fund earnings to individuals
• Set out how to calculate earnings for defined benefit interests
• Specify the super interests that are excluded from the policy
• Explain how the tax applies in a person’s final year
• Set the adjustment factors for capital gains tax for large super funds.

The Treasury is seeking feedback on the draft Regulations until 7 April 2026.

• The government’s super reforms pass the parliament

• Building a Stronger and Fairer Super System Act 2026 – Draft Regulations 

Anti-money laundering (AML) and counter-terrorism financing (CTF) starter kit

In accordance with amendments implemented by the Anti-Money Laundering and Counter-Terrorism Financing (Amendment) Act 2024 (Cth), entities that are classified as tranche 2 entities can commence the process of enrolling and registering with the Australian Transaction Reports and Analysis Centre (AUSTRAC) from 31 March 2026.

AUSTRAC have released their accounting program starter kit which provides guidance on the anti-money laundering and counter-terrorism financing (AML/CTF) program for small accounting firms.

The new AML/CTF rules will apply to a range of new businesses from 1 July 2026. Accounting firms that fall within the scope of the rules must have an AML/CTF program in place before they provide certain professional services to a client.

To make the process simpler, AUSTRAC has released a detailed starter kit for accounting firms, which aims to provide a practical starting point to help manage this area.

The starter kit is designed for ‘small’ accounting practices that will be regulated under Australia’s AML/CTF laws, with the following characteristics:

• Only provide designated services that qualify as professional services (including services relating to body corporates and legal arrangements).
• Have 15 or fewer personnel, including administrative staff and accountants.
• Operate as an accounting practice (membership with bodies such as ACCA, CPA Australia or CA ANZ may support this, but is not required).
• Primarily serve individual Australian resident clients, with less frequent dealings with body corporates, legal arrangements or overseas residents.
• Do not regularly deal with high-risk clients.
• Do not assist with the purchase, transfer or sale of overseas property.
• Do not offer fully remote, self-service options without interaction with personnel.
• Are not acquiring another practice or transferring clients from another practice (separate rules apply for transitions).
• Are not part of a large reporting group, foreign branch or subsidiary.

•  Accounting program starter kit 

Key updates for FBT time

The ATO is reminding tax practitioners of some key updates for the 2026 FBT year.

Plug-in hybrid electric vehicles

Employers that provide plug-in hybrid electric vehicles (PHEVs) to employees, their families, or associates for private use, should be aware of changes affecting home-charging costs and FBT treatment.

The ATO has updated the PCG 2024/2 Electric vehicle home charging rate to introduce a new shortcut method for calculating electricity costs where a PHEV is charged at an employee’s home. Employers can use this optional shortcut rate where the eligibility requirements are satisfied, or alternatively continue to calculate the actual electricity costs.

From an FBT perspective, PHEVs are no longer treated as zero or low emissions vehicles from 1 April 2025 and therefore no longer qualify for the FBT exemption (unless a pre-existing arrangement was in place before this date). Where employers provide PHEVs for private use, or where they are available for private use, FBT obligations may arise from the 2025–26 FBT year. Employers may still be eligible for the electric car FBT exemption where all relevant requirements are met.

Common mistakes

The ATO has also highlighted some common errors which may attract ATO scrutiny. These include:

• Lodging a nil FBT return when fringe benefits were provided;
• Treating private use of work vehicles as business use or failing to report it;
• Incomplete or invalid records to support exemptions or concessions used, or to show how the taxable value of benefits was calculated; and
• Incorrect reporting of employee contributions to reduce FBT liabilities or reporting at the incorrect label in the income tax return.

•  Key updates for FBT tax time