Changes to CGT discount and its potential impact
Client alertExplores proposed CGT discount and negative gearing reforms and what they could mean for investors.
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Over the past two years the SRO has been more active in this space, especially in Victoria, New South Wales and Queensland. The rise in the SRO’s data matching efforts has led to an increased amount of employment tax compliance audits, addressing issues like incorrect grouping and underreporting of wage components. In the lead up to Christmas, we also saw the ATO ramp up their efforts to ensure governance around employers meeting their employment tax obligations.
Over the past few months the ATO has increased their activity on their Random Enquiry Program (REP), and SRO Victoria released an alert encouraging employers to voluntarily report any underpayment of wages.
Additionally, we have seen reporting from Fair Work Australia on the underpayment of wages (i.e., Wage Theft). This can simply be triggered by the misinterpretation of the Enterprise Agreements and Awards or a payroll processing error due to system inefficiencies. A simple error can lead to a large amount of back payments having to be made and reputational damage. Unpaid wages also mean extra employment tax obligations, which is an additional cost.
The purpose of the REP is to audit the entire employment tax obligations of a business for a set review period – typically a single financial year. There has been focus on Pay-As-You-Go (PAYG) withholding, Superannuation Guarantee and Fringe Benefits Tax (FBT) obligations. Businesses who are audited are typically selected by the ATO on a random basis, regardless of size or turnover.
The ATO will typically request several documents to substantiate that a business is meeting their employment tax obligations. As such, this is a timely reminder for businesses to ensure their records are accurate, and that they are confident PAYG withholding, Superannuation Guarantee and FBT obligations were met during a particular financial year.
The Victorian State Revenue Office has recently announced an increased focus on payroll tax audits for businesses who may have under disclosed wage payments in applicable payroll tax returns. The State Revenue Office is therefore actively encouraging self-reviews by businesses, for them to self-disclose any potential underpayments by way of a Voluntary Disclosure. Submission of Voluntary Disclosures to notify the State Revenue Office of wage under disclosures prior to a payroll tax audit being enacted can result in reduced penalty interest and tax rates being applied.
When looking at tax governance, it’s important to include employment taxes as part of this process. Businesses can start off with an employment tax health check to help identify any compliance errors or process improvements. This will help with making any voluntary disclosures if there are errors and omissions and identify process improvements from a go forward basis.
Should you wish to discuss any of the above further, please reach out to any of our Employment Solutions Team.
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