The Federal Government has released draft legislation that will bring cryptocurrency exchanges and custody platforms under the Australian Financial Services Licence (AFSL) regime, marking a substantial shift in how digital asset platforms are regulated in Australia.
The reforms are designed to improve investor protection within an emerging sector as some platforms have ineffective risk management as well as being largely unregulated in Australia. It aims to strengthen governance and align crypto with the standards already applied to traditional financial services.
Bringing crypto in line with AFSL is expected to create consolidation within the sector and targets crypto exchanges rather than at the token level.
Key changes
- New categories under the Corporations Act 2001 will recognise digital asset platforms (DAPs) and tokenised custody platforms (TCPs)
- These entities will be required to obtain an AFSL and meet obligations consistent with traditional financial service providers
- The draft framework sets out obligations relating to custody, settlement, tokenisation, staking, governance, disclosures and consumer protection standards
- Significant penalties will apply for operating without a licence, with some exemptions proposed for smaller operators
What the draft law proposes
The proposed changes amend the Corporations Act 2001 to introduce two new categories of financial service providers:
- Digital Asset Platforms (DAPs): Operators of trading platforms for crypto assets.
- Tokenised Custody Platforms (TCPs): Custodians of digital assets on behalf of clients.
Entities falling into these categories will be required to:
- hold an AFSL, with obligations largely aligned to those already imposed on traditional financial services providers.
- implement and maintain controls for custody and settlement of digital assets.
- comply with requirements on tokenisation, staking, governance, disclosures and consumer protection.
- submit to ASIC oversight, including reporting obligations and enforcement measures.
The regime proposes threshold exemptions for smaller operators. For example, platforms with client holdings below $5,000 per person or with annual transaction values under $10 million may not need to hold a licence. However, these exemptions are tightly defined and will not apply to most exchanges operating at scale.
Penalties for non-compliance
The penalties set out in the draft legislation are significant. Operating without an AFSL could attract fines up to $16.5 million, or a percentage of turnover or profit derived from unlicensed activities. This brings crypto regulation into line with other parts of the financial services sector where strong deterrence measures apply.
Implications for the industry
For many crypto exchanges and custodians, this will be the first time they are required to meet obligations such as:
- annual and continuous reporting to ASIC.
- preparation of audited financial statements in line with Australian Accounting Standards.
- maintenance of sufficient financial resources to comply with licence conditions.
- demonstration of effective internal processes, controls and governance frameworks.
- the draft legislation also highlights areas of focus for regulators, including consumer protection, asset segregation, valuation of digital assets, cyber security, and the robustness of custody arrangements.
Audit considerations
The changes carry significant implications for AFSL audits. Crypto entities will be required to obtain assurance over governance structures, custody processes and financial resource requirements. Auditors will need to assess the operating effectiveness of internal controls, review the accuracy of financial projections, and test compliance with both the AFSL framework and guidance such as GS003 issued by the Auditing and Assurance Standards Board.
There will also be an increased focus on digital asset risks, transparency, and the robustness of control environments. For many operators who have not previously prepared financial statements under Australian Accounting Standards, complex financial reporting matters are likely to arise which will require a high level of skill and experience in the sector to address.
How can SW help?
We recommend that organisations begin preparing now by assessing whether the regime applies to their business, reviewing current practices against the proposed obligations, and developing compliance plans well ahead of implementation. Engaging advisors early will be key to identifying gaps and reducing the risk of non-compliance, while staying across ongoing consultation and ASIC guidance will be essential as the regulatory detail develops.
SW has a dedicated financial services team that advises cryptocurrencies, banks, fund managers, superannuation providers and brokers, and we meet regularly to share insights on emerging regulatory issues and industry trends. Our focus is on conducting efficient audits that address the risks of material misstatement, ensure compliance with Australian Accounting Standards, and provide clear reporting on governance and control effectiveness in line with GS003.
With extensive experience in AFSL audits, our team is ready to help digital asset businesses understand and prepare for the new licensing environment.
The Federal Court of Australia, in a series of four cases involving Coles and Woolworths, ruled that both employers breached workplace laws by failing to correctly pay award entitlements to salaried managers.
The Court found that annual salaries cannot be used to offset overtime and penalties across pay periods, and that employers must meet award obligations in each pay cycle with accurate time records.
What has happened
On 5 September 2025, the Federal Court handed down its verdict in Fair Work Ombudsman v Woolworths Group Limited; Fair Work Ombudsman v Coles Supermarkets Australia Pty Ltd; Baker v Woolworths Group Limited; Pabalan v Coles Supermarkets Australia Pty Ltd [2025] FCA 1092.
The Court examined a range of issues and found both Coles and Woolworths breached workplace laws. The headline issue was clarified regarding the interaction between annual salaries and award entitlements under the Fair Work Act. It was ruled that annual salaries cannot be used to offset overtime, penalty rates, or allowances across multiple pay periods.
Instead, employers must ensure each pay cycle independently satisfies the minimum conditions set out in the relevant award. This brings the effectiveness of annualised arrangements into question, as remediation payments may be required for any pay period in which award entitlements exceed the annualised salary.
In addition to the offsetting matter, the Court considered a range of other issues, including:
- all-inclusive annual salary arrangements do not remove the requirement to keep records of entitlements. Employers must not only keep time and work records but also interpret and classify the time and work into a record of an employee’s entitlement. A breach of record-keeping requirements may shift the burden of proof to employers
- confirmation that leave and rostered public holidays not worked count as hours worked (e.g. for determining overtime based on cumulative time calculations)
- confirmation that for agreements to be effective, employees must also understand that they are forgoing rights under the Award
- approval of a methodology for calculating underpayments where records were incomplete or missing.
A further case management hearing is listed for 2 October 2025. It is also possible that Coles and Woolworths may appeal the decision.
Implications for employers
If not appealed, this decision may have significant implications for employers that rely on annual salary arrangements to cover employee entitlements arising out of industrial instruments. Retrospectively, this may mean that wage underpayments could arise even where employees are better off on an annual basis. Going forward it may mean that employers need to retain better and more sophisticated records, calculate notional Award or EBA-based salaries for record-keeping purposes, and top up employee salary on a periodic basis if necessary.
How SW can help
Given the current uncertainty surrounding the case management hearing and its potential outcomes, we recommend that employers take this opportunity to review and assess any potential gaps or areas of exposure.
SW can assist by:
- conducting gap and risk assessments across employment arrangements, payroll systems, timekeeping processes, and record-keeping practices to identify where entitlements may not be met or where obligations are unclear
- developing simple testing models to help clients estimate underpayment exposure and assess risk – whether using existing data or scenario-based assumptions
- supporting clients to reconstruct detailed entitlement records using available time and attendance data (e.g. clock-in/out logs) and identify where further tracking or classification may be needed.
Whether you have robust data or limited records, we can help you understand your exposure and take practical steps to reduce legal and financial risk.
To find out how SW can tailor a solution to your organisation’s needs and safeguard your compliance, get in touch with our team today.
Contributor
AusIndustry has made changes to the application form used for registering research and development (R&D) activities for the Research and Development Tax Incentive (R&DTI).
On 15 August 2025, AusIndustry released an updated version of the application form for registering R&D activities on the R&DTI portal. This new form must be used for all future applications. Any draft applications created before that date were deleted.
The R&D Tax Incentive is one of Australia’s key programs for driving innovation. It offers a tax offset designed to encourage companies to undertake research and development activities they might otherwise avoid due to financial risk. The incentive allows companies to invest more in innovation, boosting their competitive edge while contributing to Australia’s economic growth.
To be able to claim the R&DTI, R&D activities must be registered on the R&DTI customer portal within 10 months after the end of the relevant income year. While the program’s eligibility criteria remain unchanged, the updated application form now requires more detailed information. The updates include the addition of new questions and an increase in character limits for questions that previously had character limits of 1000 to 4000.
The table below sets out all the new and updated questions in the application forms:
| Section | Question | Format |
|---|---|---|
| Projects | How much did the R&D Tax Incentive influence whether you went ahead with this R&D project? | Drop down list options: • Significantly • Somewhat significantly • Not at all |
| Describe what documents you have kept, or intend to keep, in relation to the activities in your project. | Text field character limit: 4000 | |
| Is the location of majority of R&D activities the same as the main business address provided? | Radio button options: • Yes • No | |
| Briefly describe the plant and facilities to be allocated to the project (specialist equipment, facilities etc.) | Text field character limit: 4000 | |
| To establish whether the company will be a beneficiary of the proposed R&D activities, please describe whether the company will: effectively own the know-how, intellectual property, or other results arising from the project have control over the direction and conduct of the R&D activities and bear the financial burden of carrying out the activities. | Text field character limit: 4000 | |
| Core activities | Describe the core R&D activity | Text field character limit: 4000 |
| Is the entity who will conduct this core R&D activity a connected or affiliated entity? | Radio button options: • Yes • No | |
| Is the core R&D activity being conducted under an agreement the R&D entity has with a connected or affiliated entity who is located outside of Australia? | Radio button options: • Yes • No | |
| Country of residence for company performing this core R&D activity? | Drop down list | |
| Supporting activities | Is the entity who will conduct this supporting R&D activity a connected or affiliated entity? | Radio button options: • Yes • No |
| Is the supporting R&D activity being conducted under an agreement the R&D entity has with a connected or affiliated entity who is located outside of Australia? | Radio button options: • Yes • No | |
| What evidence did the company keep about this supporting R&D activity? | Text field character limit: 4000 |
The recent changes to the application form reflects a shift towards greater self-assessment and compliance at the application stage. We recommend that companies carefully review and reassess their current application preparation process.
How SW can help
SW’s R&D Tax & Government Incentives team offers practical support to help businesses navigate the updated R&DTI application process. With extensive experience in preparing and reviewing claims, we can assist with understanding new requirements, strengthening documentation, and ensuring compliance. Whether you’re new to the incentive or refining your approach, our team is here to guide you every step of the way.
Contributors
The Victorian State Revenue Office (SRO) has provided some clarity on how service fees and beneficial ownership calculations impact land transfer duty obligations.
With the rulings to take effect from 1 July 2025, the Victorian SRO issued draft revenue ruling DA-067 and final versions of revenue rulings DA-065 and DA-066 which consider the treatment of economic entitlements under the Duties Act 2000 (Vic) (Duties Act).
Economic entitlements
Under the Duties Act, an economic entitlement arises when a person gains access to the economic benefits of land such as income, capital growth, or sale proceeds, without acquiring ownership. These provisions are designed to capture arrangements that are economically equivalent to land ownership but fall outside traditional dutiable transactions.
This includes complex commercial arrangements, such as profit-sharing agreements, development partnerships, and certain retirement village structures.
Draft DA-067: Economic entitlements – key concepts and interpretation
Draft DA-067 aims to clarify key concepts and interpretations surrounding economic entitlements, particularly where arrangements do not involve a direct transfer of land but still confer financial benefits tied to land ownership. This draft ruling addresses longstanding industry concerns about the breadth and ambiguity of the provisions, particularly in property development and investment arrangements.
DA-067 outlines the Commissioner’s interpretation of key concepts that are relevant to the economic entitlement regime. These have been summarised below.
“Arrangement”
The word ‘arrangement’ is not defined in the Act but has been interpreted in various ways in different statutory contexts. In the current context, the Commissioner will not consider an arrangement to have been made unless there is at least one binding agreement. An arrangement in this context is not used to capture matters that are merely a proposed course of action.
“Is or will be entitled to”
This phrase incorporates an element of futurity about when a person will be entitled to participate or receive an amount under an arrangement. It includes both current and future rights to receive a benefit under an arrangement. It includes direct and indirect entitlements, whether the person is actively involved or passively entitled.
“To participate in”
This is outlined to mean having a right to share in the economic benefits of the land, such as income, rents, profits, capital growth or proceeds from sale of the land.
“Directly or through another person”
This phrase is intended to ‘look through’ participation by a trustee or nominee acting for or on behalf of another person or beneficiary.
DA-067 has been subject to consultation and is expected to be issued in due course.
DA-065: Acquisition of economic entitlements via service fees
DA-065 focuses on when a service fee arrangement may be deemed to confer an economic entitlement, thereby triggering land transfer duty under part 4B of Chapter 2 of the Duties Act.
The economic entitlement provisions provide that a person acquires an economic entitlement if an arrangement is made in relation to land (with an unencumbered value exceeding $1 million) under which a person is or will be entitled to any of the following:
- to participate in the income, rents or profits derived from the land
- to participate in the capital growth of the land
- to participate in the proceeds of sale of the land
- to receive any amount determined by reference to any of the above matters
- to acquire any entitlement described above.
DA-065 provides that in considering whether a service fee amounts to an economic entitlement, the Commissioner will consider the following factors:
- the nature and scale of the arrangement, including the rights, obligations, risk allocation, and responsibilities of the parties to the arrangement. The assumption by a service provider of economic risks associated with the ownership and/or development of land generally indicates that this type of service fee will amount to an economic entitlement.
- the nature and magnitude of the service fee, including whether the substance of the fee is remuneration for identifiable services. For example, the percentage used to calculate the fee is at market rates and the structure of the fee is similar to ordinary fees chargeable by a comparable service provider as remuneration for the identified services. The larger the percentage of an economic benefit of land used to calculate the service fee, the more indicative the service fee will amount to an economic entitlement.
- the nature of the service provider, including whether the service provider ordinarily provides the identified services to third-party recipients within the course of its business.
Examples where the Commissioner wouldn’t consider a service fee to be an economic entitlement include:
- real estate agents commission which are determined by rents or proceeds of sale
- project managers fees which are determined by reference to the proceeds of sale or capital growth of land in exchange for providing project management services to a landowner
- trustees, fund managers, asset managers, and investment managers fees that are determined by reference to the proceeds of sale, rents, profits or capital growth of land under management of the fund.
Retirement villages
DA-065 considers specific circumstances in relation to arrangements involving retirement villages.
Under lease or licence arrangements in retirement villages, a retiree’s right to reside and share in the proceeds from the first resale of their unit is not considered an economic entitlement under Part 4B of the Duties Act, as it is part of their existing lease/licence (which is generally not dutiable). However, this exemption only applies to the first resale, meaning that if the retiree has rights to proceeds from multiple resales, it may be treated as an economic entitlement.
Similarly, payments made by outgoing residents to the retirement village owner are not considered economic entitlements, since the owner already holds full beneficial ownership of the land.
In contrast, non-owners, such as operators who have a right to share in the proceeds of unit sales, are considered to be acquiring an economic entitlement, which must be disclosed to the Commissioner.
DA-066: Calculation of economic entitlements
DA-066 acts as the companion ruling to DA-065 and provides guidance on how to calculate the percentage of beneficial ownership of land taken to be acquired under an economic entitlement.
Percentage of beneficial ownership
Where a person acquires an economic entitlement, the percentage of beneficial ownership of land taken to be acquired will be the total of all the entitlements that the person (or associated persons) is or will be entitled to receive or acquire at the time the arrangement is entered into.
As mentioned above, the relevant entitlements are:
- to participate in the income, rents or profits derived from the land
- to participate in the capital growth of the land
- to participate in the proceeds of sale of the land
- to receive any amount determined by reference to any of the above matters
- to acquire any entitlement described above.
If an arrangement grants a person only one of the above entitlements, clearly defined by a particular percentage, and no additional payments are made to that person or any associated party, the percentage of beneficial ownership deemed to be acquired will be equal to that stated percentage.
Deeming provision
DA-066 also provides a deeming provision that operates to deem the beneficial ownership taken to be acquired to be 100% where the arrangement is entered into:
- does not specify the percentage of the entitlement that the person is or will be entitled to receive or acquire
- in addition to specifying a percentage of the economic entitlement, also includes any other economic entitlement, or amount payable to, the person or an associated person or
- entitles the person or an associated person to 2 or more of the entitlements referred to in section 32XC(1)(b) of the Duties Act.
The deeming provision is subject to the Commissioner’s exercise of discretion, which allows the Commissioner to determine a percentage less than 100% if it is appropriate in the circumstances.
When deciding whether to exercise discretion, the Commissioner will consider all relevant circumstances, including the total economic entitlements held by the person and their associates at the time the arrangement was made.
If the person accurately identifies and quantifies all economic entitlements as less than 100%, the Commissioner may reduce the deemed beneficial ownership from 100% to the actual percentage of entitlements acquired.
Calculation
Once the percentage of beneficial ownership is established, duty is assessed based on that percentage of the land’s unencumbered value at the time the economic entitlement is acquired, not when the associated benefits are eventually received. If the land’s unencumbered value falls between $1 million and $2 million, the duty is gradually phased in using the following formula:
[(A – $1,000,000)/$1,000,000] x B
Where:
- A is the unencumbered value of the relevant land and
- B is the duty that, apart from this section, would be chargeable on the acquisition of the economic entitlement.
How SW can help
These rulings provide greater clarity for developers, investors, and retirement village operators, ensuring compliance with duty obligations and reducing ambiguity around complex land-related arrangements.
Stakeholders should review existing and future arrangements considering the new rulings to ensure compliance and mitigate any risks for duty being imposed.
Please reach out to our dedicated tax specialists to help you interpret the changes, assess your exposure, and ensure your arrangements remain compliant.
Contributors
Uber submits application to appeal the decision in Chief Commissioner of State Revenue v Uber Australia Pty Ltd [2025] NSWCA 172 which confirmed driver payments (2015–2020) were taxable wages, leaving Uber with over $81 million in payroll tax liabilities.
What has happened
On 1 August 2025, the Court of Appeal unanimously held that Uber’s payments to its drivers were subject to NSW payroll tax, reversing an earlier Supreme Court ruling in Uber’s favour.
The Court of Appeal agreed that relevant contracts were established under the driving arrangements as drivers provided driving, referral, and rating services to Uber. The decisive issue was that the payments to drivers were found to be “for or in relation to” the work performed in contrast to the Supreme Court view. While the Court of Appeal considered the “relevant contract” framework and the statutory exclusions under the Payroll Tax Act 2007 (NSW), Uber was largely unsuccessful in substantiating that any exclusion applied.
Uber’s argument that it merely acted as an agent for rider payments was rejected, with the Court noting the driving service is fundamental to Uber’s business, reinforcing the connection between drivers’ work and the payments.
On 29 August 2025, Uber filed its special leave application to challenge the Court of Appeal’s reasoning.
Implications for other companies
This decision fits within a progression of cases in which revenue authorities have tested and broadened the application of payroll tax provisions to contractor models and new industries. The trend has been towards expansive interpretations, particularly the types of payments that can be considered “for or in relation to work”.
If the decision stands, exposure may not be limited to the gig economy which includes rideshare, food delivery, and freelance platforms. Revenue-share arrangements in other sectors such as sales and content platforms, may also be scrutinised. Authorities may additionally question distributions described as “profit,” particularly where amounts can be traced to the performance of work.
How SW can help
Although this is a watch-and-see period, at-risk businesses should begin reviewing contracting arrangements and payment flows for similar exposure. Practical levers include the structure of payment arrangements and the design and implementation of processes, controls, and evidence to substantiate any available exemptions.
Contact SW today to assess the payroll tax risk in your current contracts and payment practices and safeguard your business against potential payroll tax risks. Don’t wait, proactive steps now can save significant costs later.