The report highlights a continued focus on ensuring taxpayers are correctly reporting GST and maintaining effective tax governance frameworks, while also introducing a structured three-tier model used by the ATO to identify behaviours and transactions that may present GST risk, namely real property transactions and accommodation arrangements.

Key findings from the Top 1,000 GST Assurance Program

The ATO reported that between 1 July 2019 and 30 June 2026 it completed 1,034 GST reviews covering 860 taxpayers. As of 30 June 2026, 46% of taxpayers within the Top 1,000 population had achieved a high assurance rating, 49% achieved medium assurance, and 5% remained at low assurance. The ATO noted an encouraging trend of taxpayers improving their assurance ratings over time, with governance remaining one of the most significant barriers to achieving high assurance.

The report also emphasises the importance of GST governance, data integrity, and transaction testing. The ATO observed that taxpayers with well-designed and documented GST control frameworks are significantly more likely to achieve higher assurance outcomes.

The ATO’s three-tier model

A notable feature of this year’s report is the alignment of GST assurance activities with the ATO’s Public and Multinational Business Three-Tier Model (3TM). The model is designed to identify the key behaviours, events, and focus areas that drive tax performance and compliance outcomes.

Tier 3 identifies the specific transaction type and industries that the ATO considers warrant closer attention. The ATO’s current GST focus areas include:

• treatment of significant or unusual transactions involving financial supplies (e.g. financial acquisition threshold)
• treatment applied by financial services, investment, and insurance industries (e.g. GST apportionment, reduced input tax credits, reverse charge)
• the GST classification of food and health products
• reporting of GST on low value imported goods and inbound intangible supplies by offshore entities
• treatment applied to real property transactions and accommodation.

Real estate emerges as key focus area

Of particular interest is the ATO’s identification of real property transactions and accommodation arrangements as a specific Tier 3 focus area, with 15% of issues that received a separate assurance rating for this risk area in the 2025–26 financial year obtaining a low or red flag assurance rating. These issues particularly relate to the application of the margin scheme, GST-free farmland provisions, claiming of input tax credits in relation to the supply of residential accommodation, and GST treatment of build-to-rent (BTR) developments.

While the report does not introduce new GST rules for real property, its inclusion in the ATO’s formal risk framework is a clear signal that property transactions remain a significant area of concern from a GST assurance perspective. The GST outcomes of property transactions can be a complex technical issue and involve significant value.

Property funds, developers, and real estate investment groups may face increased scrutiny of matters such as land acquisitions and disposals, leasing arrangements, development structures, going concern concessions, margin scheme eligibility, and input tax credit entitlements. Given the volume, value, and complexity of transactions undertaken across the sector, the ATO is likely to continue closely examining the GST treatment adopted by property funds for both day-to-day operations and significant transactions.

BTR draft guidance may assist property funds

Against this backdrop, the ATO’s ongoing work on GST guidance for modern BTR developments may provide welcome clarity for the property sector.

The ATO is currently developing an addendum to GSTR 2012/6 dealing with commercial residential premises. The draft update was issued following recognition that modern BTR developments often have characteristics that differ from traditional residential accommodation and can involve complex questions regarding whether premises should be characterised as residential premises or commercial residential premises for GST purposes.

For more information, see our previous alert on draft ruling GSTR 2012/6DC, available here.

For property funds investing in the growing BTR sector, the finalised ruling is expected to provide greater certainty when structuring developments and assessing GST outcomes.

How SW can help

The ATO’s latest GST assurance findings reinforce that strong GST governance and accurate transaction reporting remain critical to achieving a high assurance rating. The inclusion of real property transactions and accommodation arrangements as a specific GST focus area highlights the ATO’s continued scrutiny of the property sector, particularly property funds, developers, and real estate groups.

The ATO’s draft guidance on BTR accommodation is a welcome development, providing greater certainty in an area that has historically presented GST issues. Property funds should carefully assess and document the GST treatment of their property transactions, particularly significant acquisitions, disposals, and development arrangements, to ensure they are well positioned for future ATO reviews.

SW’s indirect tax specialists have extensive experience advising on the GST treatment of property transactions and accommodation arrangements. If you would like to review the GST treatment adopted for your property activities, please contact your SW advisor.

Contributor

Dylan Kelly | Senior Consultant, Tax

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Prior to joining SW, I was an Audit Partner at a boutique firm in Sydney. Before that, I spent several years as an Audit Principal at a top-five firm. I am a Registered Company Auditor with extensive experience providing audit and assurance services to clients ranging from single entities and growing private groups to subsidiaries of large multinationals, international groups, and publicly listed entities.

My clients represent a diverse cross-section of industries, giving me significant depth of experience across the property, manufacturing, mining, technology, financial services, retail, hospitality, entertainment, and media sectors.

I am also the APAC Regional Director of the Kreston Global Audit Group and serve as Lead Advisor and Co-Chair of Kreston Global’s APAC Steering Committee. Kreston Global is a leading international network of more than 150 independent accounting firms across over 100 countries.

I am a Partner of SW Audit and a Director of SW Accountants & Advisors Pty Ltd.

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Our Assurance and Advisory team embraces technology, including cutting edge data analytics software and other bespoke IT tools to ensure a targeted and robust approach. With relationships at the centre of what we do, our team is committed to fully understand your business resulting in a tailored solution that best meets your needs.

• financial statement audits and reviews
• compliance audits
• controls assurance reports, including GS007
• corporate governance
• data analytics
• information technology risk and security
• internal audit
• review of financial reports
• risk management and Corporate Governance systems and controls reviews
• technical IFRS, accounting advice and training
• preparation of financial reports
• other assurance engagements.

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I am Head of Audit for the national practice and have previously served as a Board Member of SW and the firm’s Quality and Risk Partner.

I lead audits for a diverse portfolio of clients, including listed companies, international groups, large private companies, and not-for-profit organisations.

I am also involved in technical matters, including financial reporting, accounting standards, assurance, and quality management. I am a member of the International Quality and Risk Committee for the SW International member firms.

My experience includes:

• 22 years of audit experience, including 13 years as a Partner with SW
• serving as Lead Engagement Partner on the audits of various ASX-listed entities and large Australian private groups
• being a highly regarded Audit Partner with a track record of acting as a consulting expert in matters involving allegations of professional auditor negligence
• serving as Head of SW’s National Assurance and Advisory Division since 1 July 2024
• serving on the SW Executive Board from 1 January 2022 and as the firm’s Quality and Risk Partner from 2022 to 2025.

I am a Partner of SW Audit and a Director of SW Accountants & Advisors Pty Ltd.

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I have led audit and advisory teams for initial public offering projects and multinational clients across a wide range of industries, including mining, industrial markets, consumer markets, and professional services.

Before joining SW, I served as Chief Financial Officer of an ASX-listed mining company, where I developed extensive experience in corporate governance, financial management, and risk management. My broader experience spans accounting, auditing, and corporate management.

My experience includes:

• understanding both Australian accounting standards (AIFRs) and PRC GAAPs. I have been qualified for Australia’s and China’s CPA for more than 10 years and 16 years respectively. I am familiar with PRC GAAPs and international financial reporting standards (IFRS)
• knowledge in managing international companies. I have led auditing and advisory engagements involving national and international companies
• understanding the financial impact and risk management perspectives of sales and purchase agreements
• liaising with ASIC and responding to ASIC’s financial reporting surveillance inspection requirements.

In 2026, I am serving my second term as a member of SW’s Executive Board. I am also a member of SW’s Quality and Risk Committee and Chair of the firm’s Energy and Resources Industry Group.

Externally, I am a council member of China Chamber of Commerce in Australia (“CCCA”) Brisbane and Perth Branch and the Chairperson of the Professional Service Committee of CCCA Perth.

I am a Partner of SW Audit and a Director of SW Accountants & Advisors Pty Ltd.

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The Australian property and construction sector’s growth has softened due to rising borrowing costs and supply chain disruptions. Commercial developments have been impacted through decreased demand for office spaces and the digitalisation of the retail market.

Infrastructure and construction sectors can be volatile, so you can rest easy knowing in some of the most important areas of your business, such as taxes, structuring, cash flow and funding, SW have the expertise to assist you to add value and drive your strategy.

Our property & infrastructure experts offer a full suite of back office support, advisory, structuring, modelling and compliance services to the property and infrastructure sector.   

Whether you’re a developer, builder, investor, financier or manager, we’ll help you navigate the challenges.

Our Property & infrastructure services

Spotlight | Property Forum #back2thefuture

Property and economics are often cyclical in nature. For this reason, experts often use the past to predict a future outlook. However, with global disruption, the level of uncertainty has increased drastically, with many experts uncertain if we can look back to predict our future.

For this reason, we brought renowned property industry experts together to take a deep dive into the changing landscape in Australia, the impact this has on the future for property and what people and businesses should be considering in order to prepare.

Emerging Developers series (EDS)

Taking the lead to support tomorrow’s leaders, our Emerging Property Developers series is now delivered virtually. This series has been tried and trusted by the industry for over 8 years and is designed to walk you through the property development process from start to finish.

An interactive four-part program facilitated by our property specialists is delivered to a limited group of emerging property professionals. Each session features guest industry experts who provide strategic insight into property development and key developer issues, from tax structuring to design and construction.

Industry Associations & Memberships

Our significant involvement in the property industry mandates an active involvement in current tax and accounting issues that impact your sector. We are also involved in consultative processes, making submissions to Treasury and/or the ATO. Other key involvement includes:

• Various Property Council of Australia and Victoria tax committees and forums
• The National Tax Liaison Group Trust Sub-Group, which until recently was the peak consulting
  body on which tax matters concerning trusts were discussed with senior officials at the ATO.

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On 1 July 2021 wage theft became a crime in Victoria and it is expected that other states will follow. 

The Wage Theft Bill 2020 creates new employee entitlement offences, comprising wage theft offences and new record keeping offences. It is designed to capture employers who falsify or fail to keep records for the purposes of concealing wage theft.

The key objective of the Bill is to ensure that employers who withhold employee entitlements dishonestly are held to account and protect vulnerable employees from exploitation.

The new law states that employers who dishonestly withhold wages, superannuation or other employee entitlements could be fined up to $198,264 for individuals, $991,320 for companies and be sentenced to up to 10 years’ jail.

Directors of companies / Council members have a legal responsibility to ensure the company meets its Pay As You Go (PAYG) withholding and Superannuation Guarantee Charge (SGC) obligations. If the company does not meet these obligations, Directors / Council members may become personally liable for a penalty equal to these amounts.

Payroll health check

In light of these new laws and given the number of organisations that have been publicly identified to have underpaid employees we urge all businesses to undertake a payroll health check. The health check will ensure that all entitlements, including superannuation, are accurately determined and paid in compliance with the current ATO requirements to avoid any penalties.

• Underpayments to casual and permanent staff for ordinary pay, overtime and leave loading
• Inconsistencies and incorrect interpretation and payment of payroll entitlements under various Awards
• Underpayment of Superannuation entitlements.

What is the impact?

Financial risks

• Underpayment to employees
• Payroll tax underpayment
• Superannuation underpayment
• WorkCover underpayment
• Annual leave loading underpayment
• Penalties arising from underpayments

Reputation risks

• Staff morale
• Community expectations
• Adverse media attention
• Criminal prosecution

Opportunity

• Self report to avoid potential financial and/or criminal actions
• Meet your social and legal obligations to act in the best interests of your employees
• Be able to potentially claim a corporate tax deduction for the payment of underpaid superannuation
• Receive a reduction of potential penalties that can be up to 200% of the total underpaid superannuation.

Action required – how we can help

1. Review current payroll processes to ascertain compliance with the relevant awards, enterprise agreements and identify if there are any underpayments.
2. Through the use of data analytics, quantify the underpayment in addition to the superannuation, annual leave, WorkCover and leave loading liabilities within the required timeframes.
3. Review historical superannuation guarantee payments to ensure that any shortfalls are rectified.
4. Check that payroll codes are correctly categorised as ordinary times earnings and any awards applied correctly to ensure that employers are meeting their payroll obligations going forward to avoid penalties.
5. Maintain auditable records for any external review.
6. Liaise with legal advisors re ramifications of underpayments on tax and superannuation liabilities and any provisions required.
7. Work with you to identify root causes of the issues, implement required process changes and identification of all costs requiring quantification.
8. Work with you to disclose any underreporting of payroll costs to the ATO.

Changes to treatment of casualised workforce

Employers are required to review and reassess their contracts for all casual employees.

Following the landmark decision handed down by the High Court of Australia in the Workpac Pty Ltd v Rossato case and statutory changes to the Fair Work Act 2009 (FWA) in March 2021 with retrospective effect, employers are required to review and reassess their casual labour contracts. Particularly where there is regular and systematic work provided and the employee’s contract has a commitment to future work.

Leave entitlements can be a minefield for employers, especially when relating to casual employees. To help you understand the potential risks and obligations, please read our alert and FAQs.

Get in touch

Through the use of sophisticated data analytics and a review of your current awards, enterprise agreements and payroll processes, SW can assist you to manage your organisation’s payroll and superannuation risks efficiently, as well as identifying potential savings opportunities.

We use our customised data analytics tool to review your payroll records to identify any shortfalls or disclosure concerns.

Rest assured that whilst the Government’s social distancing guidelines are in force, we are able to assist you remotely during this period and are able to provide the full benefits of these services.

Reach out to one of our SW experts below to discuss how we can support you.

 Contacts

Stephen O’Flynn

E soflynn@sw-au.com

Laura Toscano

E ltoscano@sw-au.com

Justin Batticciotto

E jbatticciotto@sw-au.com

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