October 2026 Round Up | Budget reforms and draft guidance on individuals carrying on a business

​ Legislation for trust minimum tax and other Budget measures

This month, the Government introduced legislation into Parliament on the proposed 30% minimum tax for discretionary trusts, further changes to the CGT rules and how the exemption from the negative gearing reforms will work for new residential dwellings.

The Government has now also introduced the Bill which contains various innovation and investment measures, including the innovative business CGT concession, changes to the R&D tax incentive, venture capital tax incentives, and changes to the FBT treatment of electric cars.

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Inside this month, Ann Dai (Tax Adviser) and Michael Carruthers (Tax Director) bring you:

Amending reporting threshold for large proprietary companies

Treasury has released draft regulations for consultation to update the reporting thresholds for proprietary companies. In particular, the reporting threshold for large proprietary companies will be increased.

The Government is proposing to increase the revenue threshold to $100 million (from $50 million) and the asset threshold to $50 million (from $25 million).

This will reduce the number of smaller proprietary companies that are required to prepare annual audited financial, directors’ and sustainability reports by raising the relevant monetary thresholds.

The changes are proposed to apply to income years commencing on or after 1 July 2027.

• Raising the reporting threshold for large proprietary companies

• Raising reporting thresholds for proprietary companies 

ATO accepting credit card payments until 30 June 2027

The ATO has confirmed it will continue accepting credit card payments for tax obligations until 30 June 2027.

Taxpayers who wish to continue using a credit card to meet their tax obligations after 30 June 2027 may continue to use third-party payment providers. For taxpayers who use these other payment options, the ATO encourages them to consider relevant fees, charges and processing timeframes carefully.

• ATO extends transition period for taxpayers using credit cards until 30 June 2027

• Paying with credit card - easier to read 

CGT reforms and market valuations

The ATO has published some guidance on the recent CGT reforms announced in the Budget.

For capital gains that accrue on or after 1 July 2027, the 50% CGT discount for resident individuals, trusts and partnerships is generally replaced by cost base indexation, which adjusts the cost base for inflation. Individuals will also face a minimum 30% tax on capital gains that accrue from 1 July 2027 (with some exceptions). Assets acquired before 20 September 1985 become subject to CGT for gains accruing from 1 July 2027.

How an asset is treated depends on when it was acquired:

• Assets acquired and sold before 1 July 2027 are not affected.
• Assets acquired on or after 1 July 2027 are subject to the new rules in full.
• For assets owned before 1 July 2027 and sold on or after that date, gains up to 1 July 2027 are taxed under the current rules, including the 50% discount where eligible. Gains from that date are taxed under the new rules.
• For pre-CGT assets, gains accrued before 1 July 2027 remain exempt. The new rules apply to later gains.
• Taxpayers can elect to apply the current rules and the 50% discount for new residential dwellings, and for certain properties used to provide affordable housing.

For most assets, including real estate, the transitional rules treat an asset held just before 1 July 2027 as having been disposed of immediately before that date and reacquired on 1 July 2027 for their market value. This means taxpayers will often need to establish the market value of assets immediately before 1 July 2027. That value is treated as the capital proceeds for the deemed disposal and as the first element of cost base for the later gain. The gain or loss on the deemed disposal is deferred and is only reported when the asset is actually disposed of, or another CGT event occurs.

The ATO highlights that a valuation cannot be forward-looking, so taxpayers should not obtain one before 1 July 2027. A valuation also doesn’t need to exist on that date. For most taxpayers, the earliest return that needs a valuation is the 2027-28 return, and only if they dispose of the asset in that year.

An alternative apportionment method may be available to avoid the need for a formal valuation. The Government is still developing it, and the ATO will issue guidance once it is enacted. In the meantime, the ATO refers to its existing market valuation guidance, which covers its expectations, the evidence needed to support a valuation and how it assesses accuracy. 

• Capital gains tax reform

• CGT reform – guidance and market valuations 

Changes to foreign resident CGT rules

The ATO has issued guidance on the notification requirements for the recent changes that have been made to strengthen the foreign resident CGT regime from 1 October 2026.

From 1 October, foreign vendors who give a purchaser a non-Indirect Australian Real Property Interest (IARPI) vendor declaration for a disposal of $50 million or more must now notify the ATO using the approved form. This must usually be done at least 28 days before settlement. The vendor must then tell the purchaser in writing that the ATO has been notified.

The ATO has published the Notice of non-IARPI declaration form and instructions.

If the vendor does not use the approved form to notify the ATO and notify the purchaser in writing, the purchaser cannot rely on the non-IARPI declaration. Foreign resident capital gains withholding may apply.

• Changes to foreign resident CGT rules have started

• Notice of non-IARPI declaration: form and instructions 

GST on supplies of breakfast cereals

The ATO has issued a draft update to the GST Determination GSTD 2024/1, setting out the ATO's compliance approach for certain breakfast cereal products.

Under section 38-3(1)(c) of the GST Act, a supply of “combination food” is not GST-free. “Combination food” is a combination of one or more foods, at least one of which is a taxable food of a kind specified in the third column of the table in clause 1 of Schedule 1.

The draft update proposes a practical administration approach for working out whether a breakfast cereal product is a combination food. It applies to products that:

• Are a loose mix of different dry ingredients (for example, cereal, muesli and granola), even if some of those ingredients are clustered together; and
• Contain separately identifiable taxable food that makes up 15% or less of the total product by weight (excluding packaging).

Businesses relying on this approach must keep records sufficient  

•  GSTD 2024/1DC