From the Regulators
PSI compliance focus
The ATO has made it clear that it is focusing on compliance situations where profits relating to an individual’s personal services are split with others or retained in a company.
PCG 2025/5 was released late last year and sets out the ATO’s compliance approach in terms of whether the general anti-avoidance rules in Part IVA can apply to trusts or companies that derive personal services income (PSI) and are able to pass the PSI tests. While the PSI attribution rules don’t apply to these entities, this doesn’t necessarily mean that Part IVA can’t apply.
The ATO continues to focus on higher-risk arrangements, particularly where significant amounts of PSI are diverted away from the individual who generated the income. The ATO is encouraging personal services businesses (PSBs) to review their arrangements and address any PSI alienation risks as soon as possible.
Where a genuine effort is made to move an arrangement to a low-risk position by 30 June 2027, the ATO has indicated it will generally not seek to apply Part IVA if the arrangement is reviewed during the transition period.
The ATO has clarified that its compliance approach under PCG 2025/5 is not an amnesty or safe harbour, but a targeted initiative encouraging PSBs to review and address higher-risk PSI alienation arrangements. The ATO has indicated it will continue to scrutinise high-risk cases, but voluntary corrective action taken by taxpayers will be considered when determining whether to pursue Part IVA compliance action.
Where a PSI review commences between 28 November 2025 and 30 June 2027, the ATO has stated it will generally not seek to apply Part IVA if a PSB can demonstrate a genuine attempt to move an alienation arrangement to a low-risk position. This includes self-assessing whether PSI has been inappropriately diverted, taking meaningful steps to address higher-risk behaviours, and ensuring current year tax returns are compliant. In cases involving significant PSI diversion, prior year returns may also need to be amended.
For reviews or audits already underway, the ATO has indicated it will work with taxpayers to identify any further action required to address historical non-compliance. However, where a review or audit has been finalised and an assessment or Part IVA determination issued, the decision will generally stand, subject to normal objection rights.
The ATO has also clarified how PCG 2025/5 interacts with PCG 2021/4 on professional firm profit allocation. PCG 2025/5 applies where income is primarily generated from an individual’s personal services and there is a risk of PSI alienation, while PCG 2021/4 applies to broader professional practices supported by systems, staff and capital, where the income is generated from a business structure. The ATO emphasises that as businesses evolve, alienation risk is not removed entirely but assessed under a different compliance framework.
Foreign persons buying property in Australia
The Government has extended the ban which prevents foreign persons from purchasing established dwellings in Australia (limited exceptions apply). While the ban was meant to expire on 31 March 2027, it has been extended to 30 June 2029.
You are classified as a foreign person if you intend to buy Australian residential or commercial property and you are not one of the following:
A citizen of Australia,
A permanent resident of Australia, or
A New Zealand citizen with a special category visa.
A permanent resident who is not ordinarily a resident in Australia may also be treated as a foreign person in some circumstances.
A ‘foreign person’ includes temporary residents and NZ citizens who are non-residents. A temporary resident is an individual who:
Holds a temporary visa that allows them to stay in Australia for a continuous period of 12 months or more (regardless of the time remaining on the visa), or
Resides in Australia, has submitted an application for a permanent visa and holds a bridging visa that allows them to stay in Australia until their application is finalised.
The Government also announced that it would strengthen and streamline Australia's foreign investment framework, including reforms to foreign investment laws and the Register of Foreign Ownership of Australian Assets. Existing obligations remain in place until these reforms have been implemented.
Faster super payments with the NPP
The New Payments Platform (NPP) allows for super contributions to reach SMSF accounts faster, by facilitating new real-time payments between participating financial institutions 24 hours a day.
The ATO is reminding SMSFs that, under Payday Super, funds receiving contributions from unrelated employers will need to be capable of accepting payments through the NPP. Trustees are encouraged to review their systems and processes now to ensure they are prepared.
SMSFs should confirm with their financial institution whether their bank account supports NPP payments and understand any conditions or payment processing limitations that may apply. Trustees should also consider how incoming and outgoing payments will appear in bank records to ensure contributions can be accurately identified and reconciled.
While NPP payments may include additional transaction information, SMSFs remain responsible for maintaining adequate records and ensuring contributions are correctly identified, allocated and reported. The ATO notes that contribution allocation rules are unchanged under Payday Super, with SMSFs still having up to 28 calendar days after the end of the month in which a contribution is received to allocate or return the contribution.
The ATO also encourages SMSFs to engage with banks, administrators and gateways to understand how NPP payments will operate within existing fund processes and to test payment workflows early to minimise future processing issues.
Payday Super for contractors
The ATO has confirmed that employers already required to make superannuation contributions for independent contractors will continue to have those obligations under Payday Super from 1 July 2026. The rules determining when contractors are entitled to super guarantee contributions are unchanged.
Certain contractors may be treated as employees for super purposes under the extended definition of employee, particularly where they are engaged mainly for their labour, skills or personal effort rather than to achieve a specific result. This may apply even where the contractor has an ABN, invoices for services, or is described as an independent contractor in a written agreement.
From 1 July 2026, where super is payable for an eligible contractor, contributions must be made on each payday and received by the relevant super fund within 7 business days. For contractors paid on issuing an invoice, the payday is generally the date the invoice is paid, meaning super contributions must reach the fund within 7 business days of payment.
The ATO has also clarified that employers not currently reporting contractors through single touch payroll (STP) are not required to change their reporting approach as a result of Payday Super. However, employers who do report contractors through STP will need to ensure qualifying earnings and super liabilities are reported from 1 July 2026.
Employers are encouraged to review contractor arrangements and payment processes now to confirm which contractors are entitled to super and ensure systems are ready for the new requirements.
The ATO has also issued some website guidance on common myths relating to Payday Super.
Zone or overseas forces tax offset calculator
The ATO has made improvements to the remote zone component of the zone or overseas forces tax offset calculator.
The updates include:
Automatic zone recognition through searchable locations
Flexible data entry to support more complex living arrangements
Simplified adjusted taxable income (ATI) inputs for users with dependants, whether their income is above or below the relevant thresholds.
For the 2026 income tax return, where a taxpayer’s residential address points to a potential remote zone location, it will trigger a prompt in Online services for agents.