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

The post ATO sharpens GST focus on real property in Top 1,000 Assurance Program appeared first on SW Accountants & Advisors.

For many domestic builders, the practical impact is the introduction of a new set of financial measures that must be monitored on an ongoing basis:

• Adjusted Net Tangible Assets (ANTA)
• Maximum Construction Capacity (MCC)
• ANTA Threshold
• Total Value of Domestic Building Work (TVDW)

Key requirements

The Minimum Financial Requirements (MFRs) introduced by the Building and Plumbing Commission are centred around two core concepts: Maximum Construction Capacity (MCC) and Adjusted Net Tangible Assets (ANTA).

A registered domestic builder must ensure at all times that the Total Value of Domestic Building Work being undertaken does not exceed its MCC, and that its ANTA does not fall below the ANTA Threshold required to support that MCC.

The regime also introduces a number of financial monitoring and reporting obligations for domestic builders. These include:

• Quarterly Internal Management Accounts where the builder’s MCC is $2m or greater. These must be prepared within 30 days of each quarter-end and include a profit and loss statement, balance sheet, cash flow statement, and aged debtors and creditors report (unless waived by the BPC).
• Notification obligations to the BPC, requiring builders to notify the BPC within seven days if they become aware they are likely to breach, or have breached, the MFR requirements.
• Information requests from the BPC, with builders required to provide financial information and supporting documentation within 14 days of a request.

It is worth noting that the requirements to monitor and maintain the required MFR ratios are continuous. The quarterly reporting requirement does not mean compliance is tested quarterly. Builders must maintain MCC and ANTA requirements on an ongoing basis and as noted above notify the BPC within 7 days if they become aware they are likely to breach the MFR requirements.

Accordingly, the practical compliance requirements for most domestic builders are to understand their MCC, monitor their ANTA, ensure they remain within their approved construction capacity, prepare management accounts where required, and maintain sufficient records to demonstrate compliance if requested by the BPC.

Effective dates and transitional rules

Existing domestic builders with an active Letter of Eligibility (from their designated insurer) on 30 June 2026 automatically transitioned into the MFR framework. Their existing Total Construction Limit became their Maximum Construction Capacity and they were not required to reapply to the BPC on 1 July 2026. These builders automatically became subject to the ongoing MFR obligations administered by the BPC.

New applicants for domestic builder registration and existing builders seeking to increase their MCC must engage directly with the BPC under the MFR framework. This requires the submission of an MFR Application or Change Application, together with financial information that enables the BPC to assess the builder’s financial capacity, determine its ANTA, and establish an appropriate MCC.

Builders seeking increased capacity must apply to the BPC before entering into contracts that would cause them to exceed their approved MCC. Where the requested capacity exceeds $2m, certain financial information must be verified by an independent qualified accountant.

Maximum Construction Capacity

Maximum Construction Capacity (MCC) represents the maximum value of domestic building work a builder can have underway at any point in time.

The legislation provides the following formula with two MCC thresholds:

Worked examples of MCC calculations

Adjusted Net Tangible Assets

Adjusted Net Tangible Assets (ANTA) is calculated as:

ANTA = Assets − Liabilities − Disallowed Assets

Total Value of Domestic Building Work (TVDW)

A builder’s Total Value of Domestic Building Work (TVDW) is calculated as the sum of:

1. The Contract Price under every Insurable Domestic Building Contract entered into by the builder, excluding contracts where either:

• the Completion Date has occurred
• the contract has been terminated.

Plus

2. The market value of all Speculative Domestic Building Work carried out by the builder where Home Warranty cover has commenced, excluding speculative projects that have reached Completion Date.

What happens if a builder breaches the MFRs?

Failure to comply with the MFR requirements may result in:

• disciplinary action under the Building Act 1993
• immediate suspension of registration
• requests for further information from the BPC
• entry into an MFR Agreement with the BPC to restore compliance.

The BPC must immediately suspend a builder’s registration if it reasonably believes the builder has ceased to meet the MFRs.

Proposed requirements removed from the final framework

Several features discussed during the consultation phase were not included in the final framework. It is important for builders and advisers to distinguish between the consultation proposals and the requirements that ultimately commenced from 1 July 2026. 

In particular, the following proposed measures did not form part of the final regime:

Key takeaway

For many domestic builders, the MFR regime does not replace existing insurer, banking, or commercial reporting requirements. Instead, it introduces a new layer of financial compliance focused on:

• maintaining ANTA
• staying within MCC limits
• monitoring Total Value of Domestic Building Work
• preparing quarterly management accounts (where required)
• demonstrating ongoing compliance to the BPC.

How SW can help

The new MFR regime introduces a number of new financial concepts and compliance obligations for domestic builders, including MCC, ANTA, ANTA Thresholds, and ongoing monitoring requirements.

SW can help builders understand these requirements, calculate ANTA and MCC, prepare Internal Management Accounts, assess compliance risks, and implement practical reporting processes to monitor their position throughout the year. We can also assist with BPC information requests, capacity increase applications, and strategic planning to support future growth.

Our focus is on translating the technical requirements into practical business advice, allowing builders to focus on building while maintaining confidence in their compliance obligations.

The post Victoria’s new Minimum Financial Requirements for domestic builders appeared first on SW Accountants & Advisors.

The pressure is not uniform. The housing supply challenge remains national, but the conditions differ across states. The National Housing Supply and Affordability Council Quarterly Report – March 2026 reported that, on a rolling 12-month basis, building approvals were up 8% in NSW, down 1% in Victoria, up 16% in Queensland, and up 13% in Western Australia. Building completions showed a different pattern, with NSW down 3%, Victoria down 12%, Queensland up 4%, and Western Australia up 16%.

For developers and construction businesses, this creates a sharper risk environment. Where projects are under margin pressure, approval pathways are slow, contractor capacity is stretched, or funding assumptions have shifted, the risk of fraud, misconduct, and control override can increase. This does not mean fraud is inevitable. It does mean Boards, executives, and project leaders need to be more alert to the points where commercial pressure can weaken discipline.

The issue is particularly important given the scale of financial distress in the sector. Analysis of ASIC insolvency data reported that 3,435 construction companies entered external administration for the first time in 2025–26, down from 3,596 in 2024–25, but still representing around 24.5% of all company insolvencies nationally. Construction therefore remains one of the most exposed sectors in the economy, even if the rate of insolvencies has started to ease.

For property developers, fund managers, builders, and project owners, the key question is not simply whether fraud has occurred. It is whether the organisation has the fraud risk framework, procurement controls, financial crime processes, and investigation capability to identify issues early and respond appropriately.

Procurement & contractor fraud are pressure points in major projects

Procurement remains one of the highest-risk areas in property and construction because it sits at the intersection of commercial urgency, significant spend, and complex third-party relationships.

Major projects commonly involve developers, builders, subcontractors, consultants, financiers, project managers, certifiers, planners, and suppliers. When timelines are tight and margins are under pressure, the risk of shortcuts increases. This can include inadequate due diligence on contractors, poor segregation of duties, weak review of variations, or insufficient scrutiny of supplier relationships.

The IBAC ‘procurement risks in major projects’ guidance identifies fraud, bribery, undue influence, and collusion as risks that can arise at every stage of major projects, from planning through to construction. It also identifies fraudulent invoicing, false timesheets, and overcharging as vulnerabilities in high-value and complex projects.

For private sector developers, the same risk logic applies. The highest-risk areas are often not the headline construction contracts, but the cumulative areas of spend: variations, subcontractor claims, professional services, site works, consultant fees, plant and equipment, remediation, defects rectification, and project management charges.

Common red flags include:

• repeated use of the same contractors without genuine market testing
• variation claims that lack supporting evidence or are approved under time pressure
• splitting contracts or purchase orders to stay below approval thresholds
• unusually high use of urgent or retrospective approvals
• duplicate invoices, inflated quantities, or vague descriptions of services
• conflicts between project staff and contractors
• weak documentation around tender evaluation and contractor selection.

This is where data analytics can be particularly effective. SW’s Fraud & Forensics capability includes fraud investigations, fraud risk assessments, integrity programs, data analytics, and procurement-related reviews, all of which are relevant to identifying unusual spending patterns and control gaps across complex contractor environments.

Bribery, conflicts & improper influence are not just a public sector issue

Bribery and corruption risks are often associated with public sector procurement, but the underlying behaviours can occur in private sector property and construction as well.

In a constrained market, access to opportunities, land, preferred contractors, project information, or approvals can become highly valuable. That creates risk around gifts and benefits, conflicts of interest, undisclosed relationships, side arrangements, and improper influence over procurement or commercial decisions.

The IBAC ‘corruption risks in major projects’ guidance highlights bid rigging, collusion, conflicts of interest, pressure to favour specific suppliers, fraudulent invoicing, and the involvement of multiple players as factors that can obscure oversight and facilitate corruption.

For developers and construction groups, this risk can arise in several places:

• tender processes where one bidder appears to have inside information
• employees recommending contractors with whom they have a personal relationship
• consultants influencing procurement decisions without transparent evaluation criteria
• gifts, hospitality, or informal benefits offered during tender or contract negotiation
• pressure to approve claims to preserve delivery timelines
• related-party arrangements that are poorly disclosed or documented.

A practical anti-bribery and corruption program should go beyond a policy. It should include targeted training, scenario-based awareness, conflict declarations, contractor due diligence, gifts and benefits monitoring, whistleblower pathways, and periodic testing of high-risk processes.

Project feasibility, cost pressure & reporting integrity

The economic environment is also increasing pressure around project reporting. Developers and builders are being asked to make decisions in a market where approvals, construction costs, sales rates, finance costs, and delivery timeframes can shift quickly.

The Australian Bureau of Statistics Building Approvals, Australia, May 2026 reported that total dwellings approved fell 1.1% in the month of May 2026 to 17,019, while private sector dwellings approvals, excluding houses fell 10.4% to 6,034. The same release reported that the value of total residential building approvals fell 5.7% to $10.24 billion, while non-residential building rose 41.0% to $10.83 billion.

That mix matters. Detached housing, apartments, mixed-use developments, and non-residential projects are not moving in the same way. For developers, the risk is that internal reporting does not keep pace with market reality.

Areas of concern include:

• overly optimistic feasibility assumptions
• delayed recognition of cost overruns
• understated contingency risk
• pressure to maintain forecast margins
• unsupported claims about project progress
• failure to escalate contractor distress
• insufficient challenge of sales, leasing, or funding assumptions.

These issues may not always involve deliberate misconduct. However, weak project reporting can mask problems until losses become significant. In a distressed environment, there is also greater risk of management override, selective disclosure, or pressure on finance and project teams to ‘make the numbers work’.

For Boards and executives, the focus should be on whether reporting is sufficiently independent, whether assumptions are challenged, and whether project governance provides early visibility of emerging issues.

Financial crime exposure for developers & property transactions

Financial crime is becoming more relevant to property and construction, particularly for developers involved in the sale or transfer of property.

AI is increasingly being used for identity fabrication and impersonation, false documents, and laundering scam proceeds. This is particularly relevant where developers, agents, or advisers are relying on identity documents, purchaser information, beneficial ownership declarations, or source of funds material.

Controls that should be considered include:

• customer and investor due diligence
• beneficial ownership checks
• source of funds and source of wealth enquiries
• monitoring for unusual transaction structures
• escalation pathways for suspicious matters
• staff training on red flags and reporting obligations.

SW’s Fraud & Forensics capability includes financial crime and risk assessments, transaction monitoring frameworks, financial crime controls, and regulatory compliance support.

Subcontractor failure & misconduct risk

The continuing pressure in construction creates a further integrity risk for developers and head contractors.

When contractors or subcontractors are financially distressed, several behaviours can emerge:

• inflated progress claims
• accelerated billing before work is complete
• substitution of lower-quality materials
• underpayment or non-payment of subcontractors
• phoenix activity or related-party transfers
• pressure to approve unsupported variations
• misrepresentation of capacity to complete works.

The reported ASIC-based analysis showing construction remained around 24.5% of all company insolvencies in 2025–26 indicates that sector distress remains material, notwithstanding a fall in construction insolvencies from the prior year.

For developers, this means contractor financial health should be treated as an active risk management issue, not a once-off prequalification exercise. Due diligence at appointment is important, but ongoing monitoring is equally important throughout the project lifecycle.

Practical steps include:

• financial health checks on key contractors
• review of subcontractor payment practices
• tighter approval of variations and claims
• site-based verification of work completed
• exception reporting for unusual payment patterns
• early-warning indicators for contractor distress
• independent review of high-risk claims.

This is where forensic and commercial disciplines intersect. The objective is not simply to investigate after a failure, but to identify patterns early enough to prevent loss, disruption, and reputational damage.

Cyber-enabled payment fraud & impersonation

Property and construction businesses remain attractive targets for cyber-enabled fraud because they regularly process large payments to multiple third parties.

The risk is heightened where project teams are dealing with urgent payment requests, changing bank account details, new suppliers, settlement flows, or multiple approval layers. Fraudsters do not need to compromise every control. They often only need to create enough urgency or credibility to bypass one step.

Typical scenarios include:

• false bank account change requests
• impersonation of executives, project managers, or suppliers
• compromised contractor email accounts
• fraudulent invoices inserted into real payment chains
• fake settlement or deposit payment instructions
• AI-enabled identity or document fraud.

AUSTRAC’s 2026 update specifically notes that AI is increasing the efficiency and sophistication of identity fraud, realistic fake documents, and impersonation used to access financial and non-financial systems.

For property and construction businesses, the response should include dual authorisation, independent call-back controls, payment change verification, supplier master file reviews, fraud awareness training, and incident response protocols.

SW’s capability in cyber and digital forensics, digital evidence collection, eDiscovery, cyber incident response, and data analytics is relevant where organisations need to investigate incidents, preserve evidence, understand what occurred, and strengthen controls.

What this means for property developers

For property developers, the key risk is not one single event. It is the accumulation of commercial pressure across the lifecycle of a project.

A development may begin with optimistic feasibility assumptions, move into a pressured approval or funding environment, face contractor cost escalation, absorb variation claims, encounter purchaser complexity, and then manage settlement, defects, and stakeholder scrutiny. Each stage creates different fraud and integrity risks.

Boards and executives should be asking:

• Have we updated our fraud risk assessment to reflect current market conditions?
• Are our procurement, contractor, and variation controls operating effectively?
• Do we have clear anti-bribery and corruption expectations for staff and third parties?
• Are conflicts of interest being actively managed rather than passively declared?
• Can we identify unusual payment patterns, supplier behaviour, or project cost anomalies?
• Are whistleblower and speak-up channels trusted and well understood?

The organisations best positioned to manage these risks will be those that treat fraud risk management as part of project governance, not as a reactive investigation process.

How SW can help

SW’s Fraud & Forensics team assists organisations to prevent, detect, and respond to fraud, misconduct, and financial crime risks through:

• fraud risk assessments and fraud control framework reviews
• fraud and corruption investigations
• anti-bribery and corruption risk assessments
• anti-bribery and corruption training and awareness programs
• procurement and supplier fraud reviews
• conflict of interest reviews and investigations
• whistleblower and speak-up program assessments
• governance and integrity reviews
• data analytics to identify unusual transactions, claims, and payment patterns.

Anthony Hodgkinson has more than 30 years’ experience in fraud and corruption risk management, forensic investigations, and governance advisory services. SW’s forensic capabilities span fraud and corruption investigations, workplace misconduct investigations, financial crime, cyber and digital forensics, fraud control frameworks, whistleblower programs, ethics and integrity reviews, risk assessments, and awareness training.

The post Fraud & integrity risks in property & construction: Why pressure in the market is increasing the risk profile appeared first on SW Accountants & Advisors.

The changes, contained in the Revenue and Other Legislation Amendment Bill 2026 (NSW) which received assent on 29 June 2026, represent a notable shift in policy. While foreign investor surcharges were originally introduced to moderate demand from overseas purchasers of residential property, the NSW Government has acknowledged that these measures may also discourage the investment needed to increase housing supply. The reforms are intended to support the delivery of long-term rental accommodation and retirement living developments by improving project feasibility and foreign investment into the NSW housing market.

Legislative changes

The reforms are implemented through amendments to Chapter 2A of the Duties Act 1997 (NSW) (Duties Act) by expanding the existing surcharge purchaser duty relief provisions and introducing a new Part 3A – ‘refunds relating to build-to-rent properties, retirement villages and other properties’.

Part 3A introduces a number of new defined concepts including:

• Australian corporation
• build-to-rent land tax concession
• exempt transferee
• exempt transferee approval
• refund eligible transfer
  • a refund eligible transfer broadly includes a transfer of residential-related property entered into on or after 1 July 2026 that is not made pursuant to an agreement entered into before that date.

The new provisions are primarily contained in:

• section 104ZJC – refunds for qualifying BTR developments
• section 104ZJD – refunds for retirement village developments and expansions
• section 104ZJE – refunds for acquisitions of existing retirement villages
• section 104ZJF – calculation of refunds
• sections 104ZJG–104ZKC – exemptions for approved exempt transferees.

Build-to-rent acquisitions

The amendments introduce new section 104ZJC of the Duties Act, which provides a refund mechanism for surcharge purchaser duty where land transferred to a foreign purchaser subsequently becomes entitled to a BTR land tax concession under section 9E or section 9F of the Land Tax Management Act 1956 (NSW) (LTMA). In effect, the amendments further align the transfer duty and land tax regimes, ensuring that developments satisfying the State’s BTR policy objectives can benefit from both acquisition and holding cost concessions.

Importantly, the amendments are not limited to the acquisition of development sites intended to be converted into BTR projects. Relief may also be available in respect of transfers of completed and operational BTR assets, provided the land continues to qualify for the relevant BTR land tax concession requirements for the prescribed period.

This is a significant development for foreign developers, as it recognises that a BTR market relies not only on development activity, but also on an active secondary market that enables developers to recycle capital into new projects and allows long-term investors to acquire stabilised assets.

From a commercial perspective, the availability of surcharge purchaser duty relief may materially improve the attractiveness of NSW BTR investments for foreign developers. Given the current surcharge purchaser duty rate of 9%, the concession can represent a substantial reduction in upfront acquisition costs and may improve project feasibility, investment returns, and transaction activity across the sector.

SW recently examined the range of BTR duty, land tax, and foreign investor surcharge concessions available across Australia. Read our article Build-to-rent | State taxes comparison for a comparison of the current state-based tax settings and incentives available to developers and investors.

Retirement village relief

The changes also introduce new surcharge purchaser duty concessions for retirement village projects. While much of the public discussion surrounding foreign investor surcharge reform has focused on BTR projects, the retirement living sector has historically faced similar challenges in attracting institutional investment due to the application of foreign purchaser surcharges to large-scale acquisitions.

To address these concerns, the amendments insert new sections 104ZJD and 104ZJE of the Duties Act, which extend surcharge purchaser duty relief to qualifying retirement village transactions.

Under section 104ZJD, surcharge purchaser duty relief may be available where an Australian corporation acquires land and subsequently constructs a retirement village or develops at least 50 new or additional retirement village dwellings. The adoption of a minimum dwelling threshold demonstrates a policy intent to direct the concession towards larger-scale retirement living projects that are more likely to attract institutional investment and contribute meaningfully to housing supply and retirement living infrastructure.

In addition, section 104ZJE provides relief for acquisitions of existing retirement villages comprising of at least 50 dwellings. This aspect of the reform may be particularly significant for institutional investors seeking to acquire established retirement living portfolios. The concession acknowledges that the acquisition of operational retirement villages can be just as important to the ongoing development of the sector as the construction of new projects.

The legislation also introduces an exemption from surcharge purchaser duty in relation to transfers of retirement village dwellings from residents back to village operators. This amendment addresses a transaction that commonly occurs within retirement village operating structures and helps remove unnecessary tax friction that could otherwise arise in the ordinary course of village operations.

These measures also reflect a broader trend in NSW tax policy towards distinguishing between foreign investment that supports the delivery and operation of essential housing infrastructure and investment that merely increases demand for residential property. In that respect, the retirement village reforms mirror the NSW Government’s approach to the BTR sector, with both concession regimes seeking to channel institutional capital into long-term housing assets that are expected to generate broader community benefits.

Key takeaways

The NSW reforms represent a notable expansion of surcharge purchaser duty relief for foreign investors.

In particular, the amendments:

• expand the surcharge purchaser duty relief framework under Chapter 2A of the Duties Act 1997 (NSW)
• introduce new refund mechanisms under sections 104ZJC–104ZJE
• provide exemption pathways for approved exempt transferees
• further align the surcharge purchaser duty regime with existing BTR land tax concessions
• encourage investment in large-scale rental housing and retirement living developments
• support the NSW Government’s broader housing supply objectives.

How SW can help

SW’s State Taxes team can assist clients with:

• determining eligibility for surcharge purchaser duty refunds and exemptions
• reviewing acquisition and investment structures
• assessing eligibility under the BTR concession regime
• advising on retirement village acquisitions and developments
• managing Revenue NSW applications and refund claims.

Contributors

Blake Trad | Senior Consultant, Tax

Robert Parker | Consulting Director, Tax

The post NSW expands surcharge purchaser duty relief for build-to-rent and retirement villages appeared first on SW Accountants & Advisors.

What this means for you

If your business is involved in property transactions or related advisory services, you may now fall within scope of the AML/CTF regime under the Tranche 2 reforms — whether you’re a real estate agency, property developer, advisory firm, or providing transaction support.

Services most likely to be captured include:

• brokering, facilitating, or advising on the sale, purchase, or transfer of real estate
• supporting ownership structuring or restructuring for property holdings
• acting in arrangements involving companies, trusts, or nominee structures
• providing registered office or business addresses linked to property entities.

Importantly, the rules apply based on the nature of the service, not just your job title or firm type.

Why this matters

Regulators view property transactions as high-risk for money laundering, particularly where complex ownership structures or large capital flows are involved.

Recent enforcement action against non-compliant entities (outside real estate) underscores AUSTRAC’s willingness to apply significant penalties:

• up to $6.6 million for individuals
• up to $33 million for companies

Key dates to act on:

• 31 March – 29 July 2026: Enrol with AUSTRAC
• By 1 July 2026: AML/CTF program must be in place
• From 1 July 2026 onward: Ongoing compliance obligations apply

What you need to do now

Real estate and property businesses should act immediately to:

• assess whether your services are ‘designated services’
• register with AUSTRAC within the required timeframe
• develop and implement an AML/CTF program, including:
  • customer due diligence (CDD)
  • risk assessment
  • transaction monitoring and reporting
  • record keeping and governance controls
• assign clear internal responsibility for AML/CTF compliance.

Impact on your clients

You should expect increased friction in transactions:

• clients will need to provide identity verification and ownership details
• in some cases, source of funds / source of wealth information
• delays or disengagement may occur if information is not provided promptly.

This is particularly relevant for:

• high-value property transactions
• foreign investment or cross-border structures
• trust and corporate ownership arrangements.

Bottom line

This is a fundamental shift for the property sector. Many businesses that have never been regulated under AML/CTF will now face formal compliance obligations.

Early preparation will be critical — both to avoid penalties and to minimise disruption to transactions and client relationships.

How SW can help

Our AML/CTF specialists can help you understand how the Tranche 2 reforms apply to your business and develop a practical, risk-based compliance framework. We can assist with assessing whether your services are captured, preparing and implementing AML/CTF programs, conducting risk assessments, establishing customer due diligence and reporting processes, and supporting AUSTRAC enrolment requirements.

To discuss your obligations and readiness for the 1 July 2026 commencement, reach out to our AML/CTF experts.

Contributors

Lawrence Lau | Associate Director, Business and Private Client Advisory

The post AML/CTF: Immediate action required for the real estate & property sector appeared first on SW Accountants & Advisors.

Background

Mr Morton was a retired farmer who owned land in Tarneit, Victoria, known as ‘Dave’s Block’. The land had been used for farming continuously for many years before it was rezoned from rural to residential use in 2010, making farming increasingly unviable. Mr Morton and his family wanted to get the best value for their land, so they hired a developer to divide it up, prepare it, and sell it as a residential estate.

They signed contracts with the developer, who was given broad control over financing, dividing the land, earthworks, marketing, and selling the land. The developer was responsible for all the costs and activities and was paid a fee based on a percentage of sales. Critically, Mr. Morton insisted that his land not be used as security for any development finance.

The land was subdivided into residential and commercial lots, and settlements occurred between 2019 and 2021. The Commissioner issued amended assessments, treating the sale proceeds as assessable income, on the basis that Mr Morton was either carrying on a property development business or had ventured the land into a profit-making scheme.

Mr Morton disagreed, arguing that the sales represented a one-off gain from selling something he owned, not regular income from business.

Legal issues

The Commissioner argued that the proceeds were assessable income on two alternative grounds under the Income Tax Assessment Act 1997:

• Mr Morton carried on a business of residential development, deeming the land trading stock
• the proceeds arose from a profit-making scheme under section 15-15.

Mr Morton argued that he had done no more than realise a long-held capital asset, by enterprising means.

The decision

The Full Court unanimously dismissed the Commissioner’s appeal, affirming the primary judge’s conclusion that Mr Morton was merely realising a capital asset.

The Court placed weight on the following factors:

No original profit-making purpose

Mr Morton acquired the land from his father in 1980 to farm, not to develop or sell. The decision to subdivide was driven by external forces — rezoning, rising rates and land tax, and the declining viability of farming.

Limited and passive involvement

Mr Morton played little active role in the development. He did not oversee the project, contribute to planning applications, organise finance, or manage construction. He did not even read the monthly reports the developer provided under the agreement.

Developer bore the commercial risk

The developer was solely responsible for all development costs and financing. Mr Morton’s land was not used as security — a condition he had insisted on from the outset. The Court found this to be a highly significant factor distinguishing realisation from business activity.

Developer acted independently, not as Mr Morton’s agent in a general sense

While the development agreement contained agency-type and power of attorney provisions, the Court found these were facilitative only and limited to enabling the developer to fulfil Mr Morton’s legal obligations, such as executing contracts of sale. They did not convert the developer’s activities into activities carried on by Mr Morton himself.

Scale alone is not determinative

The Court affirmed the well-established principle that the magnitude and the sophistication of a realisation alone does not convert it into a business or profit-making scheme.

Importantly, the Court looked beyond the legal form of the development agreement to its commercial substance — particularly who bore risk, who controlled the project, and whose business the development truly was.

Practical implications

The Morton case is a useful reference point for landowners and advisors navigating the capital/revenue boundary where subdivision is involved. It highlights that outcomes in subdivision cases remain highly fact-dependent. In particular, advisors should focus on:

• who bears financial risk, including funding and security arrangements
• the degree of the landowner’s control and involvement
• the commercial substance of the development agreement
• the landowner’s purpose at acquisition and at the time of subdivision.

The decision sits comfortably alongside earlier cases distinguishing mere realisation from development activity. It reinforces that even modern, large-scale subdivisions can remain capital on the right facts, for example where the landowner lacks development expertise, does not assume financial exposure, and does not exercise significant control over the project. The structure and substance of development agreements should be closely scrutinised.

How SW can help

The Morton decision confirms that tax treatment of land subdivision depends heavily on the specific facts and the terms of the development arrangements. Early and careful structuring of these arrangements is essential.

SW can assist by reviewing development agreements, assessing the risk and control profile of proposed arrangements, and advising on the appropriate tax treatment before transactions are committed to. Please contact your SW advisor to discuss further.

Contributors

Rahul Sanghani

Ned Galloway

Nicolas Hodge

The post Full Federal Court confirms capital treatment for subdivided farmland appeared first on SW Accountants & Advisors.

Following public consultation and the release of Taxpayer Alert TA 2026/1, which we discussed in a previous alert here, this new draft guideline focuses on PDAs where a landowner engages a related-party developer in projects spanning more than one income year.

These structures are not uncommon in the property industry and are not inherently problematic when used for commercial reasons. However, the ATO is concerned about non-arm’s length PDAs under common ownership that are designed to defer payment of tax.

Key compliance framework: green vs red risk zones

PCG 2026/D2 divides arrangements into two risk zones – green (low risk) and red (high risk) – based on the features of the deal and how income is recognised for tax purposes. The risk categorisation will determine the ATO’s level of compliance scrutiny:

Green zone (low risk)

Characterised by profit recognition during the project. Common green zone features include instances where:

• progress payments are made by the landowner to the developer as the project progresses, and the developer correspondingly returns income progressively over the project’s life
• no progress payments are made, but the developer still recognises income in stages, similar to an estimated profits basis under Taxation Ruling TR 2018/3 for long-term construction contracts
• annual land value increases are returned as income under trading stock rules, where the landowner holds the land as trading stock for tax purposes and annually includes any increase in the land’s value due to development work, in their assessable income.

Red zone (high risk)

Characterised by arrangements that artificially defer or mismatch income and deductions. Common red zone features include all the following:

• related parties and non-arm’s length terms
• use of a separate developer entity as a ‘buffer’
• timing mismatch, with deductions upfront and income deferred
• no trading stock income recognition by the landowner
• group-wide tax benefits arising from losses.

The ATO has provided several examples of high-risk structures. One such structure is shown below.

If the ATO is successful in applying Part IVA, the structure will be disregarded from an income tax perspective. From the ATO’s perspective, the key issue is the timing of income and deduction recognition, as the overall tax cost will be the same. However, if Part IVA applies and the tax benefit is denied, a taxpayer that previously reported tax losses may instead be placed in a taxable position, with interest and penalties applying.

Implications for property developers and landowners

For property developers and landowners in development projects, the Draft PCG serves as a clear warning. The ATO’s compliance radar is trained on any arrangement where profits from property development are earned collectively but taxed selectively. The key takeaways include:

Self-assess your risk profile

Taxpayers involved in property developments should immediately benchmark their arrangements against the PCG’s green and red zone criteria.

High risk of audit and Part IVA application for red zone cases

Those identified as high risk should prepare themselves for the possibility of ATO review and potential dispute.

Existing projects are not exempt

The Draft PCG will apply to both new and existing arrangements once finalised, so property groups currently using related-party development structures must not assume they are outside the scope.

Legitimate commercial arrangements remain acceptable

The ATO is careful to clarify that not all related-party development arrangements are problematic. Standard commercial practices, such as a one-off project where a landowner partners with a developer and appropriately shares project income, or where deferred payment terms are agreed but income is still accounted for each year, are generally considered not a compliance concern.

How SW can help

We are actively assisting clients in the property and construction sector to navigate the ATO’s increased focus on property development arrangements. Our team can review existing and proposed structures against the PCG’s green and red zone criteria, identify key tax and compliance risks, and provide practical recommendations to strengthen positions and align income recognition with ATO expectations.

Please contact your SW advisor to discuss how these developments may impact your arrangements and how we can support you.

Contributors

Stephen Peries

Ned Galloway

Antony Cheung

The post PDAs in public: When your property development arrangement gets the ATO’s attention appeared first on SW Accountants & Advisors.

The decision by the full Federal Court makes clear that informal arrangements and internal accounting entries are not enough to support deductions for related-party transactions. This case has particular significance to taxpayers who enter related party transactions with specific relevance to family groups that may currently lack the requisite written documentation. This case also has potential ramifications for corporate groups that are not consolidated for income tax purposes and cross border related party transactions.

The background

Two companies in the S.N.A Group entered into agreements with two asset-owning trusts for the use of rent rolls, trademarks, and associated assets in 2005. The agreements covered the period from 2005 until 2015, at which point they lapsed and were not renewed. Despite this, the operating companies continued to use the assets and continued to make payments after the agreements had lapsed, claiming the payments as deductible service fees.

The primary judge found in favor of the taxpayer, concluding that the taxpayers were subject to a presently existing liability and that the fees were therefore deductible under section 8-1. The primary judge held that, although there was no longer a written contract, the terms could be inferred from the parties’ conduct. The primary judge was particularly sympathetic to the commercial practice of small businesses, where related-party transactions are not always documented.

However, the Full Federal Court held that, there was no objective evidence after 2015 of communications between the parties, their bookkeeper, or their external tax accountant indicating that the companies were subject to a liability for the use of the assets. Nor were any tax invoices issued by the trusts. Furthermore, the method for calculating the payments for the use of the assets, which was based on the unitholders of the trusts receiving a specified percentage return, was inconsistent with the fees ultimately paid.

The making of payments and recording those payments in the books of related parties is not sufficient to infer a request for the provision of services or assets. Taxpayers must be able to objectively support a liability when charging fees for services and the use of assets by related entities. They should ensure that agreements between related parties are properly documented and kept up to date so as to cover the relevant period for which deductions are claimed.

Practical implications

Taxpayers who do not have written agreements, or who are unable to objectively demonstrate the existence of a contract are at risk of having deductions denied for transactions with related entities.

Contemporaneous documentation for related-party transactions should be prepared and regularly reviewed so that it covers the relevant period of any deductions and clearly details the method of calculation. Where documentation is not available, taxpayers should identify and retain other evidence to support the existence of a contract, including emails, minutes, invoices, or workpapers.

How SW can help

The decision in Commissioner of Taxation v S.N.A Group Pty Ltd [2026] FCAFC 10 makes clear that informal arrangements and internal accounting entries are not enough to support deductions for related-party transactions. Groups with inter-entity dealings should take this opportunity to review whether their agreements are properly documented and supported by objective evidence.

SW can assist by reviewing your existing related-party arrangements, assessing the robustness of your charging methodology, identifying gaps in contemporaneous documentation, and helping you update or formalise agreements to ensure they withstand scrutiny. Taking proactive steps now can significantly reduce the risk of deductions being denied in the future.

Contributors

Stephen Peries

Richard Osborn

The post Full Federal Court denies deductions for transactions between related parties appeared first on SW Accountants & Advisors.

Developers can unlock stalled or underutilised residential projects by engaging with the government-led Development Facilitation Program (DFP), which offer expedited planning pathways or waive or vary mandatory planning scheme requirements relating to building height, setbacks when affordable housing is incorporated into proposals. These initiatives present a strategic opportunity to align commercial outcomes with housing policy objectives across jurisdictions. 

Our property expert Sejla Kadric is joined by three industry experts on the topic:  

1. Michael Henderson – Michael joined Contour in 2018 and was appointed a Director in 2024. Michael has been working as a town planner in both the private and public sectors since 2009; holding senior positions within both sectors. Michael brings enthusiasm and leadership qualities, together with his detailed understanding of Victoria’s planning system and its intricacies, to a wide cross-section of development projects. His expertise includes advice during site acquisition and project design, management of applications and negotiating successful approval outcomes with planning authorities. 

2. Kate Breen – Kate leads Affordable Development Outcomes, specialising in the development of affordable housing research, policy and precinct and site-specific planning frameworks and delivery strategies. With a strong focus on developing evidence-based and commercially viable strategies that work for all parties, Kate has developed successful approaches supporting major planning scheme amendments and permit approvals, including appearing as an expert witness at Panel. She has also worked extensively with the community housing sector on bids for government land and funding. 

3. Lucy Simms – Lucy is the Chief Commercial Officer at Women’s Property Initiatives (WPI), where she leads partnerships with developers, government, and philanthropy to deliver affordable housing for vulnerable women. With over a decade of experience in development management, Lucy brings a commercial lens to community housing transactions and an understanding of developer needs, alongside the importance of creating social cohesion within projects. 

Our expert speakers will share their insights and guide you through the process from all angles: 

• Michael will set the scene by talking through the various opportunities that the DFP offers, how to engage with the DFP and potential outcomes of incorporating affordable housing into residential developments.  

• Kate will outline what social and affordable housing is, the key elements needed to plan and deliver it, the requirements for securing planning approval, and examples of effective affordable housing strategies. 

• Lucy will round out the conversation by bringing a community housing perspective, demonstrating how collaboration with developers can drive speed and social impact, and outlining WPI’s approach to integrating affordable housing within private developments. 

Walk away with clear, actionable knowledge on how to successfully integrate affordable housing into your developments while maximising both community benefit and project outcomes.  

Date

Wednesday, 25 February 2026

Industry speaker

• Michael Henderson | Contour Consultants
• Kate Breen | Affordable Development Outcomes
• Lucy Simms | Women’s Property Initiatives

SW speaker

Sejla Kadric
Director, SW

The post Unlocking Development Potential Through Affordable Housing seminar appeared first on SW Accountants & Advisors.

With 2026 land tax assessments just around the corner, these changes bring key obligations and deadlines that warrant close attention. 

Absentee owner surcharge – notification by 15 January 

The absentee owner surcharge (AOS) is an additional land tax imposed on properties owned by absentee individuals or entities (essentially foreign owners of Victorian land). As of 2026, the AOS is a 4% surcharge on the taxable land value, levied on top of regular land tax. It applies broadly to both residential and commercial land holdings.  

15 January 2026 was the cut-off for absentee owners to notify the SRO of their status, if they were an absentee as of 31 December 2025. Every year, foreign owners must declare their absentee status by 15 January so that the SRO can apply the surcharge in the upcoming land tax assessment. If an owner fails to notify but is later identified as foreign, the SRO will back-charge the surcharge and may impose penalties for the late notification. 

It’s worth noting that exemptions from AOS are very limited. Generally, only developers undertaking substantial development projects (which provide economic benefits to Victoria) might obtain a temporary exemption from the surcharge. Passive foreign investors or landlords are unlikely to be eligible for the exemption. Therefore, affected owners should ensure they have notified the SRO on time and factor the surcharge into their investment returns. 

If you’re an absentee owner and did not yet notify for 2026, contact the SRO immediately. Although the 15 January deadline has passed, making a late notification voluntarily may help reduce penalties. 

Short stay levy – first annual returns due 30 January 2026  

The short stay levy applies to short stays in Victoria from 1 January 2025, on bookings that are less than 28 consecutive days (not including the checkout day). The levy of 7.5% of the total booking fee is to be collected and paid by either: 

The first annual short stay levy return is due on 30 January 2026, with owners, booking platforms, and tenants being required to register before lodging their first return if they have a liability. It should be noted that booking platforms do not need to register individual properties. 

Booking platforms and property owners or tenants who accepted short-stay bookings during 2025 must register for the short stay levy and submit their first annual return by 30 January 2026, provided their total booking income did not exceed $75,000. 

Providers whose short-stay accommodation bookings generated more than $75,000 in 2025 are required to lodge quarterly returns, with the next instalment due by 30 April 2026. 

Failure to register and comply with payment obligations may result in the SRO initiating recovery action for any outstanding levy amounts, along with applicable penalties. 

Vacant residential land tax – notification by 15 February & expanded scope  

VRLT is a state tax designed to discourage empty properties and increase housing supply. Since 2018 it has applied an annual tax (1% of a property’s value, increasing to 3% for long-term vacancies) on residential homes in Melbourne that were vacant for more than 6 months in the preceding year. From 1 January 2025, residential houses in regional Victoria are also subject to VRLT.   

Owners of such properties must notify the SRO each year and then pay VRLT on their land tax bill if liable. Owners of vacant residential land in 2025 are required to notify the SRO by 15 February 2026 of the property’s vacancy status. This notification is mandatory even if you believe an exemption applies (e.g. for newly built homes, holiday homes, or other exempt categories). The SRO uses these notifications to issue VRLT assessment notices for the 2026 tax year. Failure to notify the SRO by 15 February may result in penalties being applied. Owners who have already notified that they are exempt (such as under a holiday home exemption) do not need to notify the SRO again, provided their circumstances have not changed.

Perhaps the biggest change is the expansion in the scope of VRLT. From 1 January 2026, VRLT will apply to land in Metropolitan Melbourne that is capable of residential development but has remained undeveloped for at least 5 years. This will apply to land that is vacant and land with a residence that is partly built but has not been occupied. In other words, long-term ‘land banking’ will now likely attract VRLT. 

The Commissioner of State Revenue (Commissioner) has a discretion to extend this 5-year period. Broadly, the Commissioner will consider residential land as ‘not vacant’ for a tax year if construction of a residence has not commenced after five years and the owner: 

In considering whether to exercise discretion, the Commissioner may take into account factors such as site access limitations, findings related to cultural heritage, environmental or ecological constraints, extreme weather events, delays in utility connections, and ongoing planning appeals. More information on the factors considered can be found in the Government Gazette. 

Heightened SRO compliance focus in FY2026 

The SRO has significantly ramped up its compliance efforts for the 2025–26 financial year, following a year in which more than 90% of its 13,300+ investigations uncovered non-compliance, resulting in $888 million in assessed liabilities. This year, the SRO is targeting high-risk areas across land tax, vacant residential land tax, and absentee owner declarations, with a particular focus on incorrect exemption claims, undeclared absentee ownership, and failure to notify vacant or undeveloped land. 

Property owners and investors should expect increased scrutiny, especially where land is incorrectly receiving principal place of residence or primary production exemptions, or where VRLT and absentee owner surcharge notifications have not been lodged. The SRO is also closely monitoring properties claiming the holiday home exemption and land held in a trust or by foreign owners. With advanced data-matching tools, the SRO is well-positioned to detect and penalise non-compliance. Early engagement, accurate reporting, and professional advice are essential to avoid reassessments and penalties. 

How SW can help 

Navigating Victoria’s 2026 land tax environment can be complex, with new levies, expanded obligations, and heightened SRO scrutiny. SW can assist you in navigating these obligations by assessing landholdings to determine potential liabilities under the rules, ensuring all relevant notifications are submitted on time, and implementing strategies to minimise exposure to penalties and reassessments. 

Contributor

Blake Trad

The post Navigating Victoria’s 2026 land tax environment appeared first on SW Accountants & Advisors.