November 2026
Employment taxes update
How growing compliance demands are shaping employment taxes pitcher.com.au
Contents 1 Introduction 2 Important dates Payday Super 4 How are we tracking? 5 Proposed transitional relief for concessional contribution cap issues 6 Late payment offset removed for June 2026 quarter Worker classification 7 The contractor vs employee debate Payroll tax 8 High Court confirms Uber driver payments subject to payroll tax 9 Could your subcontractor payments trigger an unexpected payroll tax bill? FBT 10 Family business benefits: an FBT win but not a tax-free pass 11 Electric vehicle FBT exemption is changing – end of the road? 12 Toowoomba: High Court refuses special leave 13 The $1,000 standard deduction: FBT trap 14 Navigating FBT this festive season About Pitcher Partners 16 How we can help you
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Introduction For employers, keeping pace with employment taxes obligations is becoming about more than meeting deadlines. Changes to superannuation, payroll tax, Fringe Benefits Tax (FBT) and worker classification increasingly intersect with workforce decisions, payroll systems and the day-to-day running of the business. That growing compliance burden matters. Our latest research into Australia’s middle market indicates that regulation, compliance and tax administration are taking up valuable management time and contributing to the complexity businesses face. While we’ll share the full findings in our next Business Radar report in mid-November, the message for employers is already clear: compliance is increasingly an efficiency issue, not simply a regulatory one. That makes staying ahead of change particularly important. Since our last Employment Taxes Update, Payday Super has commenced, bringing superannuation payment timing much closer to each pay cycle and placing greater emphasis on payroll data, processes and exception management. At the same time, employers are navigating evolving guidance, court decisions and proposed changes across payroll tax and FBT. This edition looks at the practical implications. We examine the latest Payday Super developments and transitional issues, emerging payroll tax risks associated with subcontractor arrangements, and important FBT developments affecting electric vehicles, car parking, salary-packaged work expenses and benefits provided by family businesses.
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The common thread is the need to identify issues early. Employment taxes obligations increasingly cut across payroll, finance, HR and broader workforce decisions, and seemingly routine arrangements can have wider tax consequences. Clear processes, good records and regular review can help businesses manage that complexity before it becomes an unexpected liability or absorbs more management attention than it should. Our Employment Taxes team has brought together the key developments and practical considerations to help you understand what has changed, what may affect your business and where action may be required.
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Important dates
(January – December 2027) The period from January to December 2027 includes a number of important employment tax and reporting deadlines for employers. With Payday Super now forming part of each payroll cycle, businesses also need to manage superannuation obligations on an ongoing basis alongside key FBT, payroll tax, Single Touch Payroll and Employee Share Scheme requirements. The table below outlines these critical dates to help you plan and meet your obligations with confidence. Please note that dates are correct at the time of writing but may change subject to announcements from Federal and State government departments and agencies.
Throughout 2027 Date
Description
Employer obligation type
Each payday
Payday Super: employers need to manage superannuation guarantee contributions as part of each payroll cycle
Super
Description
Employer obligation type
March Date
31 March 2027 (Wednesday) End of the 2027 FBT year
FBT
May Date
Description
Employer obligation type
21 May 2027 (Friday)
2027 FBT return and payment due, unless a later tax-agent lodgement date applies
FBT
Date
Description
Employer obligation type
25 Jun 2027 (Friday)
2027 FBT return and payment due for eligible employers lodging electronically through a registered tax agent
FBT
30 Jun 2027 (Wednesday)
End of the 2026-27 financial year
Year end
June
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July Date
Description
Employer obligation type
14 Jul 2027 (Wednesday)
Single Touch Payroll finalisation for 2026-27
STP
14 July 2027 (Wednesday) Employee Share Scheme statements due to employees
ESS
21 July 2027 (Wednesday) Annual payroll tax return due in jurisdictions using a 21 July deadline
Payroll tax
28 July 2027 (Wednesday) Annual payroll tax return due in jurisdictions using a 28 July deadline
Payroll tax
August Date
Description
Employer obligation type
16 August 2027 (Monday)
ESS annual report due to the Australian Taxation Office
ESS
30 August 2027 (Monday)
Taxable Payments Annual Report due to the Australian Taxation Office
TPAR
Date
Description
Employer obligation type
31 Dec 2027 (Friday)
Calendar year-end employer compliance checkpoint
Planning
December
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Payday Super: How are we tracking? Australia’s Payday Super reforms took effect on 1 July 2026, fundamentally changing the timing and administration of employers’ superannuation guarantee obligations. Rather than managing superannuation primarily through a quarterly cycle, employers must now align contributions much more closely with each payment of Qualifying Earnings. The change places payroll data, payment processes and exception management firmly at the centre of superannuation compliance. Since then, the ATO’s growing suite of guidance provides employers with increased certainty. Law Companion Ruling (LCR) 2026/1 addresses the application and transitional rules, including the movement from the former quarterly framework. LCR 2026/2 explains which contributions are eligible to reduce or avoid a superannuation guarantee charge and when they are treated as received. LCR 2026/3 covers the calculation and assessment of the charge, including shortfalls, notional earnings, administrative uplift and choice loading. More recently, draft Superannuation Guarantee Determination (SGD) SGD 2026/D1 addresses how Qualifying Earnings are calculated for certain contractors treated as employees under the extended definition. While increased guidance is welcomed, a key area remains unsettled, with the finalisation of draft LCR 2026/D1 deferred pending the appeal process in Department of Education v Commissioner of Taxation [2026] FCA 898. In that case, the Federal Court held that an annual salary loading allowance paid to teachers was not ordinary time earnings. The Commissioner has appealed, and the outcome may affect the treatment of allowances and other payments considered to be Ordinary Times Earnings. Further key areas subject to draft guidance relate to payments to contractors and identifying the labour-component (i.e. Qualifying Earnings) of the services provided by a contractor. Pursuant to draft SGD 2026/D1, where an invoice combines labour with equipment, materials, travel, GST or other non-labour components, the labour component should be identified. If it is not clearly identifiable, a reasonable market value of the labour may need to be used, supported by relevant industry or award rates where appropriate. This makes robust contract terms, invoice detail and supporting records increasingly important. With ATO guidance still in draft and relevant Court outcomes pending, the compliance landscape for Payday Super continues to evolve, particularly for employers and businesses engaging contractors.
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Payday Super: proposed transitional relief for concessional contribution cap issues The Federal Government has introduced legislation to provide relief from an unintended consequence of the move to Payday Super. The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 proposes a one-off transitional measure for the financial year 2026–27. Under the ordinary rules, concessional contributions generally count towards an employee’s concessional contributions cap in the financial year in which they are received by their superannuation fund. This created a transitional issue where SG contributions relating to the June 2026 quarter were paid in July 2026. Those contributions could be counted in the financial year 2026–27 alongside a full year of Payday Super contributions, potentially causing some employees to exceed their concessional contributions cap. For example, the concessional contributions cap for the financial year 2026–27 is $32,500. An employee receiving $32,500 in employer contributions under Payday Super would therefore fully utilise their cap. However, if $7,500 of SG relating to the June 2026 quarter is also received by
their fund in July 2026, $40,000 could be counted towards the employee’s 2026–27 cap, creating a $7,500 excess solely because of the timing of the transition to Payday Super. The Bill proposes to address this issue by disregarding eligible June 2026 quarter contributions paid in July 2026 when determining an individual’s concessional contributions for the financial year 2026–27. Importantly, the relief is narrowly targeted. It does not increase the concessional contributions cap generally or protect employees from exceeding their cap because of salary sacrifice, additional employer contributions or other contributions. The measure is not yet law and remains subject to passage through Parliament.
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Payday Super transition: late payment offset removed for June 2026 quarter From 1 July 2026, Payday Super requires employers to pay Superannuation Guarantee (SG) contributions alongside employee wages, with contributions generally needing to reach employees’ super funds within seven (7) business days of payday. A significant transitional issue arises for the June 2026 quarter where SG contributions were received by employees’ super funds after 28 July 2026. Such contributions are treated as “late”, requiring the employer to lodge a Superannuation Guarantee Charge (SGC) statement with the ATO and pay the resulting SGC, including applicable interest and administration charges. Critically, unlike under the previous rules, the Late Payment Offset (LPO) is not available for the June 2026 quarter. This means that a late contribution already paid to an employee’s super fund cannot be used to reduce the SGC payable to the ATO. The employer may therefore effectively pay twice: once to the employee’s super fund and again through the SGC. Importantly, the late payment and SGC are non-deductible for income tax purposes. Employers that identify June 2026 quarter SG contributions were received after 28 July 2026 should carefully assess their SGC obligations and available options. In addition to addressing any required SGC lodgement and payment, employers should consider whether late contributions already made to employees’ super funds may be applied against future SG obligations for continuing employees or recovered from the relevant super funds, where possible, to reduce the overall financial impact. Where an employer has identified a June 2026 quarter shortfall but has not yet made the outstanding contribution to the employee’s super fund, consideration should instead be given to lodging the SGC statement and remitting the liability directly to the ATO, rather than making a late contribution to the super fund that cannot be offset against the SGC.
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Worker classification The contractor vs employee debate When engaging workers, businesses are responsible for ensuring that they comply with the relevant laws and obligations, including employment taxes. Non-compliance can lead to fines, lawsuits, and damage to reputation. With increased scrutiny from authorities and evolving court perspectives, correct worker classification is more important than ever. Failing to meet obligations may result in costly and uncommercial outcomes if not addressed promptly. Two recent High Court decisions held that the terms of a contract should take precedent over the subsequent conduct of the parties when distinguishing whether a worker should be considered an employee or an independent contractor. Broadly, if the worker is considered an employee, the employer is responsible for meeting PAYG-Withholding (“PAYG-W”), SG, Fringe Benefits Tax (“FBT”), Payroll Tax and Workers’ Compensation Insurance. If a worker is engaged via a company, trust or partnership (provided it is not a sham arrangement), they cannot be considered an employee, for the purposes of PAYG withholding, Superannuation Guarantee and FBT. However, such workers can still be considered as deemed employees for the purposes of Payroll Tax and Workers’ Compensation and SG (if they are individuals or sole traders). A high-level summary of the obligations, depending on the worker’s classification, is below.
Independent contractor
PAYG-W
FBT
Superannuation Guarantee
Payroll Tax
Worker’s compensation
Applies where a valid ABN is not provided.
Does not apply.
May apply where the contractor is an individual or sole trader.
May apply in all States and Territories, except for Western Australia.
May apply, dependent on the State or Territory.
Employee
Applies in all instances
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High Court confirms Uber driver payments subject to payroll tax The High Court of Australia has dismissed Uber Australia Pty Ltd’s appeal, confirming that fares remitted by Uber to drivers are deemed wages for New South Wales payroll tax purposes. The Court found that the driver contracts were “relevant contracts” under the contractor provisions in the Payroll Tax Act 2007 (NSW). Although riders received the transportation services, drivers also supplied services to Uber by performing contractual obligations that were integral to its rideshare business. Once a trip commenced, drivers were required to transport riders to their destination and comply with standards relating to safety, professionalism, vehicle condition and service quality. The Court also rejected Uber’s argument that driving was ancillary to the use of the drivers’ vehicles. Both the driving work and vehicles were essential to the transportation service. Further, describing Uber as a “limited payment collection agent” did not determine the payroll tax outcome. Uber calculated fares, deducted service fees and could adjust, withhold or cancel payments. The remitted amounts were therefore paid for or in relation to the drivers’ work. The decision extends beyond rideshare businesses. Digital platforms, medical practices and other intermediaries that impose service standards and collect or control customer payments should review their contractor arrangements and payroll tax exposure.
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Payroll tax: Could your subcontractor payments trigger an unexpected payroll tax bill? Recent NSW decisions suggest that subcontractor arrangements may carry a greater payroll tax risk than many businesses realise, and an audit may be a costly way to find out. The following NSW decisions show that the employment agency provisions can apply where an intermediary procures a worker to provide services “in and for” a client’s business without the worker becoming the client’s employee. If the employment agency rules apply, the intermediary is treated as the employer and payments to the service provider are taken to be taxable wages. Contractor exemptions are then unavailable. In SKG Cleaning Services Pty Ltd v Chief Commissioner of State Revenue; Ezko Property Services (Aust) Pty Ltd atf The Ezko Unit Trust v Chief Commissioner of State Revenue [2025] NSWSC 1219, the Supreme Court upheld payroll tax assessments on payments to subcontracted cleaners. The Court of Appeal subsequently dismissed the taxpayers’ appeal in SKG Cleaning Services Pty Ltd v Chief Commissioner of State Revenue [2026] NSWCA 122. The decisions emphasise the factual connection between the services and the ordinary conduct of the client’s business. Client control remains relevant but is not essential or determinative.
Businesses using subcontractors should review both client-facing and worker-facing contracts, map who directs and supervises the work, identify whether services are regular and integral to a client’s operations, and retain complete executed agreements. The recent cases demonstrate that complexity in the employment agency provisions remains in place and an incorrect classification can produce substantial retrospective tax, interest and penalties. Early review is therefore critical not only in cleaning and security industries but in wider outsourced service industries.
SoClean Pty Ltd v Chief Commissioner of State Revenue [2026] NSWSC 161 extended that warning to subcontracted “specialised” cleaning, including floor stripping, pressure cleaning and high-reach cleaning. Describing work as specialised or absorbing its cost, rather than separately invoicing the client, did not prevent the employment agency provisions applying where the services fulfilled the broader client arrangements. This case is currently subject to appeal to the NSW Court of Appeal. However, Chief Commissioner of State Revenue v Nova Security Group Pty Ltd [2026] NSWCATAP 99 illustrates that not every outsourced service arrangement is caught. The Appeal Panel upheld the conclusion that the security personnel were not integrated into the clients’ businesses and that operational control remained with the security provider. The contrast shows that labels alone do not decide the outcome: the contractual rights, operating model and relationship between the services and the client’s activities all matter.
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Family business benefits: an FBT win but not a tax-free pass If your family business provides cars or other private benefits to family members who work in the business, the Full Federal Court’s decision in SEPL Pty Ltd as trustee of the SFT Trust v Commissioner of Taxation [2026] FCAFC 36 deserves attention but it should not be read as a blanket exemption. The case involved three brothers who were the shareholders and directors of the corporate trustee, beneficiaries of the discretionary trust and actively involved in the substantial business conducted by the trust. They received no salary or employment entitlements but had private use of luxury vehicles owned by the trustee. The Court held that it was open to the Administrative Appeals Tribunal (AAT) to find that the brothers were not employees for FBT purposes. The common law meaning of employee remained relevant, and section 137 of the Fringe Benefits Tax Assessment Act 1986 did not independently convert non-cash benefits into salary or wages. Even if employment was assumed, the vehicles were provided through the brothers’ beneficiary and proprietorial relationship with the trust, rather than “in respect of” employment. The result turned on the particular legal relationships, trust mechanisms and evidence. Consistent with the ATO’s Decision Impact Statement, the unusual circumstances of the case mean that the outcome should not be attributed merely to the absence of written employment contracts. However, an FBT outcome does not determine the income tax treatment. The Court was not deciding those issues, and the ATO’s Decision Impact Statement expressly notes that other tax provisions may apply. Based on the facts, private-use vehicle costs require close scrutiny under the general deduction rules: expenses must be apportioned, and deductions for private or domestic use
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may be denied. Decline in value deductions and any later balancing adjustment should also reflect the vehicle’s taxable-use proportion, subject to the applicable car limit where relevant. The trust accounting is equally important. In SEPL, private-use costs were debited to the mother’s beneficiary loan account and later cleared through trust distributions. Similar arrangements should be tested against the trust deed, resolutions and beneficiary-account records to confirm who received the economic benefit, who is assessed on trust income and whether payments or account entries have been characterised consistently. Where a private company provides, funds or is otherwise connected with a relevant payment, loan or debt forgiveness, the potential application of Division 7A should also be considered. Private groups should review vehicle use, employment arrangements, trust distributions, deductions and beneficiary loan accounts as one connected tax profile not as separate compliance exercises. If your structure provides private benefits to family members who work in the business, contact your Pitcher Partners expert to assess the FBT and income tax consequences before lodging the next return or responding to an ATO review.
Electric vehicle FBT exemption is changing – end of the road? Electric Vehicles (EVs) have become increasingly popular, with the FBT exemption making them particularly attractive under salary packaging arrangements. The Federal Government has now introduced legislation to wind back the full exemption, with the proposed changes currently before Parliament. What is proposed to change? Subject to the legislation being enacted, the existing exemption will continue until 31 March 2027. For new arrangements from 1 April 2027 to 31 March 2029: • EVs valued at $75,000 or less will retain the full FBT discount • EVs above $75,000 but below the applicable fuel-efficient luxury car tax threshold will generally receive a 25% discount on FBT payable. From 1 April 2029, eligible EVs under new arrangements will generally receive a 25% FBT discount.
What about existing arrangements? The proposed transitional rules are intended to preserve the existing exemption for eligible EVs provided under a financially binding commitment entered into before 1 April 2027, while that commitment remains in place. Employers and employees alike should exercise caution when existing arrangements are renewed or varied, e.g. refinancing a lease or changing employers, as changes may affect access to the transitional treatment.
What should businesses do? While the legislation remains before Parliament, employers should start identifying existing EV arrangements and the dates of relevant binding commitments. Employers considering new or varied arrangements should also understand how the proposed rules may affect their FBT position. For employees considering an EV, timing and vehicle value will become increasingly important when the legislation is eventually enacted.
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Toowoomba: High Court refuses special leave In a decision that is particularly relevant for employers located near shopping centres and other paid public parking facilities, on 8 October 2026, the High Court refused Toowoomba Regional Council’s application for special leave to appeal the Full Federal Court’s decision on the meaning of a “commercial parking station” (Toowoomba Regional Council v Commissioner of Taxation [2026] HCADisp 242). Its refusal means the Full Federal Court decision remains the binding authority (Commissioner of Taxation v Toowoomba Regional Council [2026] FCAFC 50). The Full Federal Court previously held that a car parking facility does not need to operate with a profit-making objective to constitute a commercial parking station. Accordingly, a shopping centre car park may fall within the definition where it provides all-day parking to members of the public for a fee. Employers should revisit their car parking FBT position where employee parking is located near a shopping centre or other paid public parking facility. Historical positions based on the nearby car park not being operated for profit should be reassessed, together with the applicable statutory threshold and any available exemptions.
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The $1,000 standard deduction: FBT trap The introduction of the new $1,000 standard deduction for work-related expenses from 1 July 2026 brings important FBT implications for employers, particularly those offering salary packaging arrangements. Draft ATO Law Companion Ruling LCR 2026/D5 confirms that, from 1 April 2027, employers will no longer be able to apply the otherwise deductible rule to certain work-related expenses provided under salary packaging arrangements. This may result in additional FBT on salary-packaged expenses such as conferences, work-related travel, self-education costs and certain tools and equipment. The FBT exemption for certain work-related items, including portable electronic devices, computer software, protective clothing, briefcases and tools of trade, will also no longer apply where those items are salary packaged. Importantly, ordinary employer reimbursements outside salary packaging arrangements remain largely unaffected. Employers may continue to apply the otherwise deductible rule where the relevant requirements are satisfied. Reimbursed expenses also do not reduce an employee’s entitlement to the standard deduction. Employers should therefore review existing salary packaging arrangements before 1 April 2027, quantify any additional FBT exposure and consider whether traditional employer-paid or reimbursement arrangements may provide a more tax-effective alternative.
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Navigating FBT this festive season As we approach the festive season, it is important for businesses to consider their FBT position regarding entertainment provided to employees, associates, clients and suppliers. While entertainment is a popular way to reward staff, the FBT consequences are often underestimated. A common misconception is that entertainment benefits valued under $300 (including GST) are always exempt from FBT. In reality, the minor benefit exemption requires not only that each benefit is less than $300 (including GST) in value, but also that it is unreasonable to treat it as a fringe benefit, considering several legislative criteria. It is essential to note that consideration is required to be given to the frequency and regularity of ‘identical’, ‘similar’ or ‘associated’ benefits. For instance, if an employee receives multiple similar entertainment benefits (such as regular lunches), even when attended with different people and each under $300 (including GST), these may be considered frequent and regular. In such cases, the minor benefits exemption may not apply, and all benefits could be subject to FBT. When evaluating whether a benefit qualifies for the minor benefits exemption, businesses should assess both the value of individual benefits and their cumulative frequency, alongside any associated benefits. Documentation and record-keeping are critical to support your FBT position and ensure compliance. It is essential to note that consideration is required to be given to the frequency and regularity of ‘identical’, ‘similar’ or ‘associated’ benefits. For instance, if an employee receives multiple similar entertainment benefits (such as regular lunches), even when attended with different
people and each under $300 (including GST), these may be considered frequent and regular. In such cases, the minor benefits exemption may not apply, and all benefits could be subject to FBT. When evaluating whether a benefit qualifies for the minor benefits exemption, businesses should assess both the value of individual benefits and their cumulative frequency, alongside any associated benefits. Documentation and record-keeping are critical to support your FBT position and ensure compliance. Employers are encouraged to understand both the quantitative and qualitative factors of entertainment benefits. Over-reliance on the $300 threshold without attention to frequency and regularity can result in unexpected FBT liabilities. Taking a proactive approach can help mitigate risk and provide certainty for your organisation this festive season. Our experts break down the entertainment rules here.
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Anthony Kazamias Partner – Brisbane p +61 7 3222 8390 e akazamias@pitcherpartners.com.au
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