While the ruling sets out the ATO’s interpretation of the law, the draft Practical Compliance Guideline is arguably the more important document for many taxpayers because it provides a roadmap for understanding how the ATO intends to allocate its compliance resources. In simple terms, taxpayers can self-assess their arrangements into a risk zone ranging from white (lowest compliance risk) to red (highest compliance risk).

For CFOs, financial controllers, and technology businesses, the key question is often not whether software payments exist, but whether the ATO might consider part of those payments to be royalties that should be subject to royalty withholding tax. The new framework is intended to provide greater certainty around that issue.

Why has the ATO released this guidance?

The framework follows the High Court’s decision in PepsiCo and reflects the ATO’s view that economic substance and examining the totality of the arrangement may be relevant in identifying an embedded royalty, even where no royalty is expressly stated in the contract.

The guidance currently applies to software intermediation and distribution arrangements, with further schedules expected for other industries and transaction types.

Understanding the risk zones

Particular focus on restructures

The draft guidance includes a clear ATO warning on restructures.

The ATO may review changes to contractual or operating structures that reduce or eliminate Australian royalty withholding tax, even where the arrangement otherwise falls within a lower-risk zone. Transfer pricing, MAAL, DPT, and Part IVA may also be relevant.

Multinational groups undertaking software licensing or distribution restructures should therefore consider royalty withholding tax alongside transfer pricing.

Amber Zone example

A foreign software provider licenses ERP software to AU Software Co, an Australian related-party distributor, for supply to Australian customers. The agreement with the software owner grants AU Software Co the exclusive right to market and distribute the ERP software to Australian customers. However, it does not grant AU Software Co the right to make copies of, or modify, the ERP software. AU Software Co enters into customer contracts and receives payments from those customers, while the offshore supplier owns the software and provides the underlying platform and support. AU Software Co does not recognise any part of its payment to the offshore supplier as a royalty for Australian tax purposes.

On the facts in Example 8, the ATO would treat the arrangement as falling within the amber zone. The key risk indicators are that the Australian distributor is selling software-related products or services to Australian customers, the software and associated intellectual property are held offshore, and no Australian royalty has been recognised or subjected to royalty withholding tax.

The example illustrates that, where the relevant software rights and economic value sit offshore but Australian customer-facing activities are carried on locally, the ATO may expect taxpayers to undertake and document a more detailed royalty risk assessment.

By contrast, the risk assessment changes to the red zone where AU Software Co is also granted rights to make copies of, or modify, the ERP software. A red zone outcome may also arise where the software owner is located in a specified jurisdiction, or, generally speaking, is otherwise shielded from tax on the relevant income.

How SW can help

Businesses with cross-border software, SaaS, platform or technology distribution arrangements should review their existing arrangements against the framework. Even where no royalty has historically been recognised, the ATO expects taxpayers to be able to explain and support that position.

SW can assist in the following assessment:

• assessing where your arrangement is likely to sit within the ATO’s risk framework
• whether the undissected payments contain a royalty component
• whether sufficient documentation exists to support your position
• identifying whether practical steps are available to mitigate the relevant royalty withholding tax risk.

The release of TR 2026/2 and PCG 2026/D4 signals that software royalty arrangements will remain an area of significant ATO focus. Early assessment of risk positions and supporting documentation may help reduce the likelihood of future disputes and compliance costs.

The post What the ATO’s finalised software royalties ruling & draft guidance means for businesses appeared first on SW Accountants & Advisors.

Year 2 is different.

For groups with a 31 December 2025 year end, the first substantive Pillar Two returns will generally be due by 31 March 2027, being 15 months after year end. Accordingly, MNE groups should already be considering their year 2 compliance strategy and data requirements.

The ‘no charging mechanism’ position no longer applies

One of the unique features of the first year of Pillar Two compliance was that many jurisdictions were not yet subject to any qualifying charging mechanism, being the Income Inclusion Rule (IIR), Domestic Minimum Tax (DMT) or Undertaxed Profits Rule (UTPR).

As a result, for the year ended 31 December 2024, some jurisdictions could effectively be excluded from substantive Pillar Two consideration because no jurisdiction had a charging mechanism to impose top-up tax in relation to those jurisdictions.

For the fiscal year ended 31 December 2025, this position changes significantly.

From fiscal years beginning on or after 1 January 2025, Australia’s UTPR commences. At the same time, many jurisdictions that did not previously apply an IIR or DMT have now introduced one or both charging mechanisms.

Consequently, jurisdictions that attracted limited Pillar Two attention during year 1 may now require a more detailed assessment. Finance teams should avoid assuming that conclusions reached during the 2024 compliance cycle remain valid for 2025.

More jurisdictions will require safe harbour analysis

For many groups, the 2024 exercise focused only on (a limited number of) jurisdictions where a charging mechanism existed and therefore where a potential top-up tax exposure could arise.

For 2025, safe harbour analysis may need to be performed for jurisdictions that did not require assessment in the prior year because no charging mechanism applied.

Where a jurisdiction satisfies one of the Transitional CbCR Safe Harbour tests, no full Pillar Two calculation will generally be required for that jurisdiction.

However, where none of the available safe harbour tests are satisfied, the MNE group may be required to undertake full GloBE calculations for that jurisdiction.

Accordingly, even where the underlying business has not changed materially, the number of jurisdictions requiring analysis may increase significantly from year 1 to year 2.

The transitional CbCR safe harbour ‘once-out, always-out’ rule becomes more relevant

As groups move into their second year of compliance, greater attention should be given to the operation of the TCSH rules.

Broadly, where a jurisdiction ceases to qualify for the TCSH for one year, that jurisdiction is unable to subsequently re-enter the safe harbour regime in a later year.

This ‘once-out, always-out’ concept means that safe harbour assessments should be undertaken carefully and supported with appropriate documentation.

The year 2 assessment therefore should not simply be viewed as a rollover of the year 1 position.

Jurisdictions not assessed in 2024 should not automatically lose access to TCSH

A practical issue likely to arise for many MNE groups concerns jurisdictions that were not required to be analysed in 2024 because no charging mechanism applied.

In our view, the fact that a jurisdiction was not required to consider the TCSH in 2024 should not, by itself, prevent that jurisdiction from relying on the TCSH when a charging mechanism first becomes applicable in 2025.

This situation should be distinguished from a jurisdiction that was assessed in 2024 and failed the TCSH requirements.

In other words, the fact that the TCSH was not relevant to a particular jurisdiction in year 1 should not necessarily preclude that jurisdiction from accessing the TCSH in year 2 when a charging mechanism becomes applicable.

Given the potential compliance savings that can arise from the TCSH, this distinction may be important for many MNE groups.

Group restructures may create additional Pillar Two compliance obligations

MNE groups that undertake restructures during the year should carefully consider the Pillar Two implications, even where the restructure appears relatively straightforward.

In particular, changes involving the identity of the Ultimate Parent Entity (UPE), the insertion of a new holding company, mergers, demergers, acquisitions, disposals, or changes to ownership chains can give rise to additional Pillar Two compliance requirements. In some cases, a single accounting period may involve multiple reporting obligations, separate filing positions, or different safe harbour assessments before and after the restructure.

Importantly, transactions that may appear routine from a legal or commercial perspective can have consequences for Pillar Two group composition, filing obligations, and the application of safe harbours. Accordingly, MNE groups should consider reviewing any restructuring activity undertaken during the year to determine whether it affects their Pillar Two compliance position, reporting obligations or filing approach. Early identification of these issues can help avoid unexpected compliance obligations and reduce the risk of errors when lodgement deadlines approach.

Governance & readiness remain critical

While many MNE groups may continue to benefit from the TCSH for the year ended 31 December 2025, this relief is temporary. Accordingly, organisations should use the transitional period to prepare for the point at which full GloBE calculations are required.

In our experience, groups that use the transitional years to enhance data collection processes, identify information gaps, and establish governance frameworks will be significantly better positioned when safe harbours cease to be available.

Management should therefore consider:

• whether the group currently captures all data that may be required to perform full GloBE calculations in future years
• whether roles and responsibilities between tax, finance, and accounting teams remain appropriate
• whether assumptions adopted during year 1 remain valid
• whether local advisors are required in newly implementing jurisdictions
• whether documentation supporting safe harbour positions is being maintained
• whether reporting to senior management and audit committees remains fit for purpose.

Revenue authorities around the world are increasingly focused on Pillar Two implementation, and MNE groups should expect greater scrutiny as the first substantive returns begin to be lodged. MNE groups that invest in preparing for full calculations during the transition period are likely to experience a more efficient and lower-risk compliance process when the TCSH is no longer available.

Don’t forget the tax provision process

For many MNE groups, Pillar Two was initially viewed as a future compliance exercise.

As year 2 approaches, Pillar Two considerations are becoming increasingly relevant to the annual tax reporting cycle. Finance teams should consider whether any Pillar Two developments may affect tax accounting positions, disclosures, governance processes, and audit discussions.

Early engagement between tax teams, finance teams, and auditors will generally result in a more efficient compliance process.

Looking ahead

The year ended 31 December 2024 was largely about understanding the new rules and determining whether transitional relief was available.

The year ended 31 December 2025 represents the next phase of the regime.
The commencement of Australia’s UTPR, the broader rollout of IIR and DMT regimes globally, and the need to assess additional jurisdictions under the Transitional CbCR Safe Harbour rules mean that many MNE groups will find year 2 materially different from year 1.

For MNE groups with a 31 December 2025 year end, the Pillar Two lodgement deadline is 31 March 2027. While this may appear some time away, experience suggests that MNE groups that commence planning early are better positioned to manage data collection, governance requirements, and filing obligations efficiently.

How SW can help

SW’s Pillar Two specialists can assist with:

• transitional CbCR Safe Harbour assessments
• review of year 1 positions and implications for year 2
• jurisdictional charging mechanism analysis
• governance frameworks and documentation for Pillar Two
• preparation and review of GloBE calculations
• lodgement obligations for Australian Pillar Two.

If you would like to discuss the implications of year 2 Pillar Two compliance for your group, please contact your usual SW advisor.

Contributors

Antony Cheung | Associate Director, Tax

The post Pillar Two in year 2 & what’s different from year 1 appeared first on SW Accountants & Advisors.

Following the success of our established Emerging Property Fund Managers series, SW is launching a new three-part Masterclass series in Sydney, developed specifically for Sydney’s aspiring and emerging leaders in the property and funds management sectors.

More than a technical seminar, the series is designed in collaboration with industry leaders to encourage open discussion and provide direct access to experienced fund managers, advisors, lenders, and specialists who have successfully navigated the challenges of building and growing property investment businesses.

Facilitated by SW’s dedicated property funds specialists and featuring presentations from leading industry experts, each session combines technical knowledge, practical case studies, and real life examples of challenges shaping today’s property funds landscape.

Who should attend?

• Emerging and aspiring leaders in property and real estate credit funds management.
• Professionals working within the property investment and funds management sector seeking broader commercial, strategic, and technical knowledge.
• Property developers exploring opportunities to establish or transition into a funds management business.
• Senior professionals looking to deepen their understanding of the full investment lifecycle, from acquisition and structuring through to capital management and investor exits.

Key benefits

• Learn directly from experienced industry leaders and successful fund managers.
• Build valuable relationships with peers and senior professionals across the property funds industry.
• Gain insights into current market conditions and emerging opportunities across asset classes.
• Understand how to structure investment vehicles to meet commercial and investor objectives.
• Explore effective debt and equity capital raising strategies.
• Identify taxation considerations that can impact fund performance and investor outcomes.
• Understand key legal, regulatory, and compliance obligations.
• Learn strategies to protect both business and personal assets.
• Develop practical approaches to investor management and exit planning.
• Stay informed on regulatory developments and their impact on the funds management sector.

Agenda

Session 1 | Fundamentals for success

15 October 2026

The introductory session provides a brief overview of the series structure before hearing first-hand from industry specialists the key lessons they have learnt, what challenged them the most, what worked, what didn’t, and tips on building the right team.

Session 2 | Valuation, due diligence & fund structuring​

12 November 2026

Explore key valuation methods and the essentials of property due diligence, while gaining a practical understanding of the fund structures available to support your strategy. Learn how to identify risks early and navigate key structuring considerations, including local and international equity, fee structures to help you make informed decisions.

Session 3 | Debt/equity & legal, regulatory & compliance

11 February 2027

Understand the key considerations of modern-day financing, from traditional and alternative funding options to raising debt and equity and working effectively with lenders. Industry experts will also guide you through the legal, regulatory, and compliance requirements involved in setting up and managing a fund, with practical insights on documentation, common pitfalls, and staying compliant.

Event details

Location

SW Sydney Office, Level 7, Aurora Place, 88 Phillip Street, Sydney NSW

(Please note that this masterclass series will only be facilitated in-person)

Time

12pm arrival, session time 12.30pm – 3.00pm

Cost (inc. GST)

• $550 per person for the series
• $1,100 group booking for up to 3 people

Industry speakers

• Grant Atchison | Alceon
• Greg Preston | Preston Rowe Paterson
• Brendan Ivers | Ivers Legal
• Enda Stankard | MA Financial
• Yehuda Gottlieb | Centuria Capital Limited
• Daniel Wise | Aliro
• Billy Dawes | CDC Property Consultancy

SW speakers

René Muller
Partner, Audit & Assurance Services
SW 

Luke Fernandes
Director, Tax
SW

Simon Tucker
Director, Tax 
SW

Rami Eltchelebi
Partner, Audit & Assurance Services
SW 

Stephen O’Flynn
Director, Tax
SW

Abi Chellapen
Director, Tax 
SW

Sejla Kadric
Director, Business & Private Client Advisory 
SW

Contact us

If you have any queries or would like more information, please contact the Marketing team via marketing@sw-au.com.

The post 2026 Emerging Property Fund Managers Masterclass appeared first on SW Accountants & Advisors.

The package includes three interconnected measures:

• a new 30% minimum tax on certain discretionary trusts from 1 July 2028
• a transitional roll-over relief regime available from 1 July 2027 to 30 June 2030
• an optional election regime allowing existing trusts to avoid the minimum tax without restructuring.

The draft provisions represent one of the most significant trust taxation reforms in decades and will require many family groups to assess whether their existing structures remain appropriate.

Overview of the proposed minimum tax

From income years commencing on or after 1 July 2028, trustees of certain discretionary trusts will be subject to a minimum tax rate of 30% on relevant trust income. Where applicable, the tax is imposed at the trustee level and is designed to ensure a minimum effective tax rate of 30%, applicable to trust income. Non-corporate beneficiaries will generally be entitled to a corresponding non-refundable tax offset in respect of the tax paid at the trust level.

In some good news, a broader range of trusts than previously announced will be excluded from the measures, including:

• fixed trusts as per a new broader definition of such trusts (see below)
• widely held trusts including managed funds
• genuine testamentary trusts
• trusts that distribute to exempt entities or deductible gift recipients (DGRs).

Unfortunately, the testamentary trust exclusion only applies where the beneficiaries of the testamentary trusts are individuals or exempt entities. In the earlier submission by SW, we asked Treasury to limit the application of the minimum trust on testamentary trusts to scenarios where the trustee had exercised a discretion in favour of a precluded entity. This would save significant resources from taxpayers that would need to amend wills to comply with the new rules, but this has not been taken into account by Treasury. We intend to make further submissions to Treasury on this issue.

New fixed trust definition

One of the more significant aspects of the exposure draft is the introduction of a new tax law definition of ‘fixed trust’.

Rather than relying solely on traditional fixed entitlement concepts, a trust may qualify as a fixed trust where there are no ‘material discretionary elements’ affecting beneficiaries’ rights or entitlements. The definition is intended to provide broader recognition for modern commercial trust structures and to ensure arrangements such as managed investment trusts, employee share trusts, and bare trusts are not inadvertently captured.

The proposed definition will apply more broadly across the tax law and will have implications beyond the minimum tax regime.

Concessions provided

To provide taxpayers some ability to bypass the impact of the new minimum tax trust rules, the exposure draft legislation provides some rollover relief for restructures and an alternative Excluded Election Trust (EET) regime. The draft legislation confirms that trustees of the same trust cannot access both the roll-over relief and the EET concession. Taxpayers must choose one pathway or remain within the minimum tax system. We have provided a summary for each of the items below.

Alternative 1: Electable regime for existing trusts

Rather than undertaking a restructure that may trigger duty costs, certain discretionary trusts existing on 1 July 2028 may elect into a new EET regime.

Under this regime:

• trustees nominate beneficiaries and fixed percentages of trust income and capital (which are required to be the same – that is, each nominated beneficiary must have the same percentage in relation to income and capital)
• the nominated percentages must total 100%
• the specified proportions must be maintained each year
• nominated beneficiaries generally cannot be changed, except in limited circumstances such as death or relationship breakdown
• the 30% minimum tax will not apply while the election remains effective.

However, the regime comes with significant rigidity.

If distributions are made inconsistently with the nomination, the election is automatically revoked. In the revocation year, beneficiaries are treated as though they were never presently entitled and the trustee becomes liable to tax on all trust income at the top marginal rate plus Medicare levy under section 99A. The trust then becomes subject to the minimum tax regime in future years. There is also a once-only opportunity for a trustee to voluntarily revoke the election, with similar results.

This election may be attractive for family groups seeking certainty and wishing to avoid the legal, commercial, and duty implications that can accompany restructures. However, it requires careful consideration of long-term succession and distribution objectives.

Alternative 2: Transitional roll-over relief

For groups wishing to move assets out of discretionary trusts, the Government has proposed a dedicated transitional roll-over regime available for three years from 1 July 2027 to 30 June 2030.

The relief is considerably broader than existing small business restructure provisions and is available irrespective of whether the trust carries on a business.

To qualify:

• the transferring trust must be within the scope of the minimum tax regime
• assets must be transferred to a single eligible transferee (individuals and company with single class shares, fixed trust, partnerships that are ultimately owned by individuals that are part of the family group)
• all required assets (there is an exclusion for primary production assets) must be transferred during the transitional period
• residency and continuity requirements must be satisfied
• the transferee must not contain material discretionary elements affecting members’ rights.

How SW can help

SW is actively advising clients on the practical implications of the proposed regime. Our team can model the impact of the minimum tax on your current structure, assess whether existing arrangements remain fit for purpose, and evaluate restructuring options ahead of the 1 July 2028 commencement, including the interaction with State duty. We will continue to keep clients informed as the consultation progresses and draft legislation is released.

Please contact your SW advisor to discuss how these proposed changes may affect you or your clients.

Contributors

Ned Galloway | Associate Director, Tax

The post Treasury releases exposure draft on the 30% minimum tax on discretionary trusts appeared first on SW Accountants & Advisors.

The draft guidance may affect crypto asset businesses, investors, and other Australian resident taxpayers. Importantly, wrapping or unwrapping a crypto asset may trigger a taxable event even where the taxpayer retains substantially equivalent economic exposure.

Airdrop arrangements

An airdrop generally involves an issuer distributing established or newly created crypto assets to a recipient. Airdrops may be used to reward the holder of another digital asset, promote a project, remunerate services, or distribute assets without the recipient’s prior knowledge.

TR 2026/D1 addresses the income tax consequences for Australian resident issuers and recipients. It does not apply where crypto assets are transferred in exchange for money or other crypto assets. The proposed treatment depends on the circumstances in which the airdrop occurs.

Crypto asset trading businesses

• Crypto assets held in the ordinary course of a crypto asset trading business may be trading stock.
• An issuer may be entitled to deduct expenditure incurred in providing an airdrop where the general deduction requirements are satisfied.
• A recipient may need to include the value of an airdropped crypto asset in assessable income.

Rewards, hobbies & other airdrops

Where a recipient receives crypto assets as a reward for services, promotional activity, or another income-producing activity, the market value of the assets when derived may be assessable as ordinary income. That value will also be relevant when determining the asset’s cost base or trading stock value for subsequent tax purposes.

An airdrop received in the course of a genuine hobby or recreational activity may not be ordinary income. However, the subsequent disposal of the asset may still have CGT consequences. Whether an activity is a business, income-producing activity, or a hobby depends on the particular facts.

Wrapping & unwrapping crypto assets

A wrapping contract is a smart contract that exchanges a crypto asset for a wrapped equivalent, usually so that it can operate on a particular protocol or platform that it would otherwise not be compatible with.

Under TD 2026/D2, the ATO’s preliminary view is that a taxpayer ceases to own the original crypto asset when it is transferred to the wrapping contract and instead receives a separate CGT asset in the form of the wrapped crypto asset. The ATO’s reasoning is as follows:

• CGT event C2 happens when the taxpayer’s ownership of the original crypto asset ends.
• The capital proceeds are generally the market value of the wrapped crypto asset received.
• The taxpayer compares those proceeds with the cost base of the original asset to calculate any capital gain or loss.
• Unwrapping may trigger a further CGT event when ownership of the wrapped asset ends and the original token is received.

This means wrapping and unwrapping may each create a tax liability despite the taxpayer maintaining broadly equivalent economic exposure before and after the transaction. The draft Determination applies only to the arrangements described in it. Other smart contracts and cross-chain arrangements may have different legal and tax consequences.

Alternative views

TD 2026/D2 acknowledges alternative views, including that the taxpayer may retain a continuing property interest in the original crypto asset or that another CGT event may be more appropriate. The ATO nevertheless concludes that CGT event C2 applies to the arrangements covered by the draft Determination and does not accept that the replacement-asset rollover in Subdivision 124-B is available merely because an economically equivalent wrapped asset is received.

The broader legal context — Poulton v Conrad

The characterisation of crypto assets under Australian property law is also before the High Court in Poulton v Conrad. The appeal was heard on 13 August 2026 and concerns whether Bitcoin can be the subject of a proprietary relationship and, if so, whether it is capable of possession for the purposes of the torts of conversion and detinue. Judgment remains reserved.

The appeal arose from Poulton v Conrad [2025] TASFC 7, in which the Full Court of the Supreme Court of Tasmania dismissed the appeal and endorsed the view that Bitcoin is intangible property capable of possession through control of the relevant private key. That reasoning contemplates a category of intangible property outside the traditional division between choses in possession and choses in action.

The High Court’s decision will not itself determine the income tax treatment of airdrops or wrapping arrangements. However, its analysis of the nature of a taxpayer’s proprietary interest in Bitcoin, and the significance of control through private keys, may be relevant to the legal assumptions underlying the ATO’s view that ownership of an original crypto asset ends when it is wrapped. This issue also goes to the heart of the ATOs position, outlined in TD 2014/26 that bitcoin is property at law and is a CGT asset.

Taxpayers should therefore monitor both the final ATO guidance and the High Court’s judgment.

What taxpayers should do

• Identify the legal and commercial terms of each transaction.
• Distinguish business, income-producing, and private or recreational activities.
• Record the date, quantity, and Australian dollar market value of assets received or disposed of.
• Retain wallet records, transaction hashes, smart contract details, and exchange data.
• Consider both ordinary income and CGT consequences.
• Review whether previous returns are consistent with the ATO’s draft views.
• Obtain advice before entering into significant or unusual arrangements.

How SW can help

SW can assist crypto asset businesses and investors in assessing the income tax and CGT consequences of airdrops, wrapping, and unwrapping, as well as determining whether activities amount to carrying on a business, reviewing valuation methods and transaction records, and identifying transactions that may have triggered previously unrecognised tax consequences.

We can also consider whether prior-year positions should be reviewed and prepare supporting analysis while the ATO guidance remains in draft.

Please contact your SW advisor if you would like to discuss how the draft guidance applies to your arrangements.

Contributors

Stephen Peries | Senior Manager, Tax

The post The ATO’s draft tax guidance on crypto airdrops & wrapping appeared first on SW Accountants & Advisors.

What is changing

• Minimum financial thresholds in the NTA requirement will be increased to reflect inflation between June 2013 and March 2026.
• Annual indexation will be introduced to ensure thresholds continue to reflect changes in value over time.
• The revised requirements will apply from 1 July 2027, including the first annual indexation adjustment.
• ASIC will amend ASIC Corporations (Financial Requirements for Responsible Entities, IDPS Operators and Corporate Directors of Retail CCIVs) Instrument 2023/647 and update Regulatory Guide 166 AFS Licensing: Financial requirements.
• The key NTA changes include:
  • $150,000 NTA minimum to $200,000
  • $150,000 minimum cash or cash equivalents requirement to $200,000
  • $500,000 NTA minimum to $700,000
  • $5m cap that applies to the average value of fund assets limb of the concessional NTA requirement to $7m
  • $10m NTA minimum under the non-concessional NTA requirement to $14m.

What isn’t changing

• There is no change to the NTA requirement for custody providers applying ASIC Corporations (Financial Requirements for Custodial or Depository Service Providers) Instrument 2023/648.

Other alternatives ASIC considered

Before confirming the CPI-based indexation approach, ASIC consulted on a broader range of alternatives for increasing the NTA requirement. These included increasing the $150,000 minimum under the concessional NTA requirement to a higher fixed amount of up to $1m, applying the $150,000 minimum on a per-scheme basis, and increasing the current $5m cap on the average value of fund assets limb of the concessional requirement.

Who is impacted

Why the change matters

ASIC’s stated objective is to restore the financial value of thresholds that have remained unchanged for more than a decade and support the broader purpose of the NTA requirement. The requirement is intended to align the operator’s interests with scheme members, ensure the operator can meet its operating costs, and provide resources that may assist in transitioning or winding up a scheme if the operator fails. ASIC has clarified that the NTA requirement is not designed to prevent business failure or fully compensate investors for loss from significant events.

Practical next steps

• Model the expected uplift in applicable NTA thresholds and determine whether additional capital will be required before 1 July 2027.
• Update NTA forecasts, board reporting packs, and financial resource monitoring procedures to incorporate annual indexation.
• Review whether the composition of assets continues to satisfy the cash, cash equivalent, and liquid asset components of the NTA requirement.
• Assess whether group funding, related party receivables, or support arrangements remain appropriate for regulatory capital purposes.
• Monitor ASIC’s amendments to Instrument 2023/647 and the forthcoming updates to RG 166.

How SW can help

SW brings deep financial services expertise with a strong focus on funds management, responsible entities, platform operators, and regulated investment structures. We work closely with clients to navigate financial resource requirements, licence obligations, and evolving ASIC expectations.

Our team can assist with assessing the impact of the confirmed NTA threshold increases, modelling capital requirements ahead of the 1 July 2027 commencement date, updating monitoring processes for annual indexation, and preparing Board and management reporting to support compliance readiness.

With integrated audit, assurance, risk, and advisory capabilities, we provide practical, commercially focused guidance to help fund operators respond effectively to ASIC’s revised financial resource settings.

Contributors

James Serpell | Associate Director, Assurance and Advisory Services

The post ASIC confirms indexation of the net tangible asset requirement appeared first on SW Accountants & Advisors.

The regulator has named two areas of focus for 2026–27, those being:

• your governing documents
• how you work with partners.

Neither is new territory for a well-run charity, but both are worth a proper look before the year gets away from you.

1. Governing documents

Your constitution, rules, or trust deed is the document everything else rests on, yet it’s often the one nobody has opened in years. The ACNC’s concern is that too many are out of date, no longer match how the organisation actually runs, or aren’t being followed in practice.

This matters most at the worst possible time, such as during a dispute, a leadership change, or a period of uncertainty, when the Board turns to the document only to find that it no longer meets the organisation’s needs. In some cases, this can even affect your registration.

If your charity has grown, taken on new services, changed its funding mix, or merged, there’s a fair chance the governing document hasn’t kept pace. The question for the Board is a simple one: does it still reflect how we operate today?

2. Working with partners

More charities are delivering services through partnerships, consortia, auspice arrangements, and shared services. These arrangements can help charities make the most of their resources and extend their reach. However, they can also create additional risks for the Board.

The ACNC expects charities to conduct appropriate due diligence before entering into a partnership, put the arrangement in writing, clearly define responsibilities, monitor partner performance, and establish how the arrangement will be reviewed or ended, if necessary.

The key point for Directors is that delegating an activity does not delegate accountability. The Board remains responsible for how the charity’s funds and resources are used.

How SW can help

Our not-for-profit team works with Boards and finance leaders across the sector. If it’s time to give your governing document a proper review, or tighten how you oversee partnerships and funding arrangements, we’re happy to talk it through. Get in touch with our NFP team.

The post ACNC’s 2026–27 focus areas & what Boards & CFOs should be across appeared first on SW Accountants & Advisors.

Join us for one of two practical sessions to understand what Payday Super means for your organisation and where issues may arise. We will also explore how SW can help, including through our new Payday Super tool.

Who should attend

These sessions are designed for professionals involved in managing, overseeing, or advising on payroll and superannuation obligations, including:

• payroll and remuneration professionals
• finance and accounting teams
• tax and superannuation specialists
• human resources and people teams
• governance, risk, and compliance professionals
• technology and systems teams supporting payroll processes
• senior leaders responsible for payroll governance and compliance.

What we’ll cover

• What Payday Super means in practice.
• Where things can go wrong.
• What to do when issues arise.
• How SW can support review and remediation.
• How technology can help, including SW’s Superannuation Reviewer solution.

Session details

Session 1 | Universities & higher education providers

Session 2 | General session

29 September | 12.30pm–1.30pm

A broader session for employers across all industries, covering the practical implications of Payday Super and what organisations should now be considering.

Your presenters

Paul Hum

Director | Tax

SW

Will present the session, drawing on 15 years’ experience in payroll and employment tax, including complex payroll issues and remediation programs.

Stephen O’Flynn

Director | Tax

SW

Brings more than 25 years’ tax experience, including advising organisations across the higher education sector, and will facilitate the discussion.

The post Navigating the new requirements for Payday Super appeared first on SW Accountants & Advisors.

These updates provide further clarity on the 2026–27 Federal Budget reforms, outlining how key measures will operate in practice, as set out in the Government’s tax reform implementation announcement and legislated through the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026. The Bill and explanatory memorandum can be found here.

The latest announcements do not change the core direction of the Budget as highlighted in our FedBud 26 overview and FedBud 2026 follow-up webinar series. However, they begin to address key concerns raised during consultation, particularly in relation to targeted concessions and the treatment of testamentary trusts and capital gains tax (CGT) settings.

Key updates

Expanded access to CGT concessions

• The turnover threshold for the small business 50% active asset CGT concession is proposed to increase from $2m to $10m.
• This is expected to extend eligibility to around 98% of Australian businesses.

New support for startups and innovation

• A proposed Innovative Business CGT Concession introduces a 50% discount for early-stage investors, founders, and employee share scheme participants.
• Consultation is ongoing on how this concession will operate in practice.

Removed the power of the Minister to determine other assets that would retain the 50% CGT discount

• The types of assets that are able to access the 50% CGT discount are now locked in and can not be expanded by the Minister.

Introduction of a 30% minimum tax on discretionary trusts

• From 1 July 2028, a minimum 30% tax is proposed to apply to discretionary trust income.
• This represents a fundamental change to traditional income distribution strategies and is designed to limit income splitting.

Removing the ability for superfunds to use limited recourse borrowing

• In another blow to investors, self-managed super funds (SMSFs) will no longer be able to utilise limited recourse borrowing arrangements to acquire property.
• There are transitional arrangements that allow existing limited recourse borrowing arrangements to continue.

Removing the exemption for salary packaged work related items

• From 1 July 2027, eligible work-related items such as iPads, mobile phones, laptops, protective clothing, and tools of trade will not longer be exempt from fringe benefits tax (FBT) if salary packaged.

Testamentary trusts

• As part of the reform package, the Government confirmed in the media release that income from testamentary trusts will be exempt from the proposed 30% minimum tax, including discretionary testamentary trusts.

However, the supporting consultation materials indicate that this exemption will be subject to conditions and further clarification, as such it will be important to review the legislative detail and guidance before these measures take effect.

For a more detailed breakdown, see our alert on Proposed testamentary trust rules: Understanding the 30% minimum tax exemption.

What this means for clients

These reforms will impact businesses, investors, and families differently depending on their structure:

• Small business owners will benefit from broader CGT concessions and improved cash flow planning opportunities, particularly where business sale or succession is being considered.
• Startups and founders may gain access to new investment incentives, supporting capital raising and growth.
• Trust vehicles in family groups and private business owners will be subject to higher tax from 2028.
• Estate planning strategies will become more complex, with testamentary trusts remaining attractive but subject to new conditions and integrity measures.

Importantly, while most small businesses will continue to access CGT relief, those operating through discretionary trusts will need to reassess whether their current structures remain fit for purpose.

The impact

Overall, the reforms aim to strike a balance between supporting investment and reducing tax barriers for business, while strengthening integrity around trust taxation.

The shift toward a minimum tax regime represents a move away from flexible income splitting and toward more consistent tax outcomes across different structures. For many clients, this will mean:

• reviewing ownership and operating structures before 2028
• reconsidering succession and estate planning arrangements
• identifying opportunities to restructure, particularly during any available transitional relief period
• modelling future tax positions under the new rules.

How SW can help

SW can support you in navigating these reforms with confidence. Our team can:

• assess the impact of proposed changes on your current structure
• review your tax, succession, and estate planning strategies
• identify restructuring opportunities ahead of the 2028 commencement
• provide practical guidance as further legislation and ATO guidance is released.

If you would like to understand what these changes mean for you or your clients, please reach out to your SW advisor.

Contributors

Julia Lee | Business Development & Marketing Executive

The post Discretion advised on the 30% trust tax, $10m CGT lifeline & startup sweeteners appeared first on SW Accountants & Advisors.

Horizon Europe works on a 7-year cycle. Framework Program 9 (FP9) is the current version, running from 2021-2027. As institutions either conclude FP9 or look to begin participating in Horizon Europe projects, many will encounter European Commission financial reporting and audit requirements that differ from the Australian grant compliance frameworks they are familiar with.

Independent audits can play an important role in demonstrating that project expenditure has been properly managed, appropriately documented, and claimed in accordance with grant requirements. Early preparation can help universities reduce compliance risk, avoid financial corrections, strengthen governance, and approach project reporting with confidence.

Horizon Europe audit quick facts

Will my university need a Horizon Europe audit?

For some Horizon Europe projects, beneficiaries are required to obtain a Certificate on the Financial Statements (CFS).

Under the general Horizon Europe requirements, a CFS is required where the total European Union contribution claimed by an individual beneficiary or affiliated entity reaches or exceeds €430,000 over the life of the project. The threshold is assessed separately for each beneficiary or affiliated entity and not at the overall consortium level. A mandatory CFS is generally submitted once at the end of the project as part of the final reporting process. The cost of a mandatory CFS is generally eligible for reimbursement under the grant, subject to the applicable grant requirements.

As university participation in Horizon Europe grows, particularly following Australia’s association arrangements, many universities may find themselves exceeding this threshold for the first time.

What does a Horizon Europe audit involve?

A Horizon Europe audit examines the financial information submitted by a beneficiary in support of grant claims.

Depending on the nature of the project, the auditor may review:

The audit focuses on whether costs have been correctly calculated, recorded in the beneficiary’s accounting records, and supported by appropriate evidence. The auditor reports their findings through the prescribed European Commission framework, while the European Commission ultimately determines cost eligibility and any financial corrections.

Why audit readiness matters

While a mandatory CFS is generally only required at the end of a project, the supporting evidence required for the audit must be generated and retained throughout the project lifecycle.

Universities that wait until final reporting often discover gaps in documentation that can be difficult, costly, or impossible to rectify years after expenditure has been incurred.

Early preparation helps institutions:

• protect valuable research funding
• identify potentially ineligible costs before submission
• strengthen time-recording and personnel cost documentation
• reduce the risk of funding clawbacks or financial corrections
• demonstrate sound governance and financial oversight
• establish repeatable processes for future Horizon Europe projects.

Audit readiness should therefore commence at project establishment rather than when a project approaches completion.

Preparing for a new compliance environment

Horizon Europe compliance is rarely the responsibility of one team. Research Offices, Finance teams, Procurement personnel, Payroll teams, Principal Investigators, and Project Managers may all contribute information that supports project expenditure claims.

Institutions should consider:

• reviewing the financial requirements contained in each grant agreement
• determining early whether a CFS is likely to be required
• assigning clear ownership for compliance activities
• mapping Horizon Europe cost categories to internal finance systems
• documenting personnel cost and time-recording methodologies
• implementing appropriate procurement and subcontracting controls
• maintaining a central repository of audit evidence
• performing periodic project reconciliations and internal compliance reviews
• budgeting for the cost and timing of independent audit requirements.

Universities that establish these disciplines from project commencement are generally better positioned to navigate both project reporting requirements and independent audit procedures.

Why this matters for universities

Many universities already manage complex assurance requirements associated with government research funding, international grants, and regulatory reporting obligations.

However, Horizon Europe introduces a distinct set of European financial compliance requirements that may be unfamiliar to research and finance teams.

As participation in Horizon Europe expands and funding levels increase, universities are likely to experience greater scrutiny over cost eligibility, documentation, personnel costs, and supporting evidence. Building capability now can help institutions scale their participation in future European research programs while protecting valuable funding outcomes.

How SW can help

SW supports universities, research institutions, and complex grant-funded organisations across Australia with assurance, compliance, and governance requirements.

Our support can include:

• audit readiness assessments for Horizon Europe
• compliance reviews and gap analyses
• review of financial systems, controls, and documentation
• guidance on eligible cost requirements
• review of personnel costs and time-recording arrangements
• procurement and subcontracting compliance reviews
• independent Horizon Europe audits and CFS engagements
• training for Research Office, Finance, and Project teams
• ongoing compliance and reporting support throughout the project lifecycle.

SW already supports universities, research institutions, and complex grant-funded organisations across Australia. Our practical experience, combined with a strong understanding of Australian and EU compliance frameworks, enables us to help you align your grant management practices with Horizon Europe requirements and ensure your projects are audit-ready from day one.

Contributors

Matthew Paull | Associate Director, Assurance and Advisory Services

The post Horizon Europe audits explained & what universities need to know appeared first on SW Accountants & Advisors.