Practice Updates - August 2026

$2 minimum threshold removed for tax-deductible donations 

From 1 July 2026, the minimum $2 threshold for claiming a tax deduction for eligible gifts and donations to Deductible Gift Recipients (DGRs) has been removed. Importantly, the change applies retrospectively to eligible gifts and donations made from 1 July 2024, meaning taxpayers can now claim eligible donations of less than $2 made from that date. 

The change does not apply to political donations, which remain subject to separate rules. Taxpayers must still ensure the recipient had DGR status at the time of the donation and keep appropriate records to substantiate their claim. 

Early-Stage Innovation Company reports due 31 July 

Companies that qualified as an Early-Stage Innovation Company (ESIC) and issued new shares during the 2025–26 financial year that entitled investors to access early-stage investor tax incentives were required to lodge an ESIC report by 31 July 2026. 

Accurate and timely reporting helps investors substantiate their eligibility for the relevant tax offsets. ESICs that have not yet lodged their report should complete and submit it through ATO online services as soon as possible. 

ATO strengthens action on over-claimed business expenses and GST credits 

The Australian Taxation Office (ATO) is increasing compliance action against businesses that incorrectly claim business deductions and GST credits. Common issues identified by the ATO include claiming private expenses as business costs, over-claiming deductions, claiming GST credits where GST was not included in the purchase price, and failing to maintain adequate records. 

Businesses should ensure expenses directly relate to earning business income, correctly apportion expenses that have both business and private use, and retain appropriate records to support their claims. The ATO has warned that businesses making incorrect claims may face audits, amended tax liabilities and penalties, with its data and analytics increasingly being used to identify potential non-compliance. 

Use reduced rates for fuel tax credits on your quarter 4 BAS 

From 1 April to 30 June reduced rates apply because of the reduction in fuel excise. So, it’s important to make sure you’re using the correct ones. 

When claiming fuel tax credits for the quarter 4 BAS due 28 July, remember the rates used are based on the date you purchased the fuel and the activity that was undertaken. 

Using the wrong rates can lead to overclaiming your BAS which you may need to correct later. 

The easiest way to help you get it right is by using our fuel tax credit calculator which has the correct rates. 

Remember, you should lodge your quarter 4 BAS before your tax return. If you’re worried you won’t be able to lodge and pay in full and on time, contact Lynden Group before the due date to find out what support is available to you. 

ATO clarifies Member Verification Requests under Payday Super 

The ATO has clarified an important requirement relating to Member Verification Requests (MVRs) under Payday Super. Super funds must respond to an MVR as early as possible and no later than 24 hours after receiving the request. 

MVRs allow employers to verify that an employee’s super fund details are valid, and that contributions can be accepted before payment is made. They may be used before an employer contributes to a fund for the first time, when employee details change, or following a rejected contribution. Prompt verification can help prevent payment delays, which may expose employers to superannuation compliance issues. 

Government law enforcement agency - Draft legislative instrument to waive tax invoice requirement for certain reimbursements 

The ATO has issued Draft A New Tax System (Goods and Services Tax) (Waiver of Tax Invoice Requirement—Reimbursements of Acquisitions Made Under an Assumed Name) Determination 2026, which waives the requirement for a government law enforcement agency to hold a tax invoice to attribute input tax credits for a creditable acquisition, where the acquisition relates to the reimbursement of certain expenses incurred by an employee or agent of theirs when using an assumed name. This ensures that an agency can attribute input tax credits in relation to expenses incurred by their agent or employee in performing their duties in circumstances where it may be difficult or unsafe for the agent or employee to obtain a valid tax invoice in relation to the taxable supply to which the expense relates. 

Once finalised, the draft instrument will repeal and replace the Goods and Services Tax: Waiver of Tax Invoice Requirement Determination (No. 40) 2016—Government Undercover Agents, which would otherwise be sunset on 1 October 2026. The draft instrument has the same substantive effect as the one it is replacing. Comments closed 24 July 2026. 

ATO updates decision impact statement- meal expenses 

The ATO has updated its decision impact statement (DIS) in the matter of Commissioner of Taxation v Shaw [2026] FCA 197, in which the Federal Court dismissed each of the Commissioner’s grounds of appeal in a case concerning the deductibility of meal expenses. In its updated DIS, the ATO has confirmed that it has: 

Reviewed the impact of this decision on existing advice and guidance, and determined that no updates are required at this stage 

Decided that there is no immediate need to issue a practical compliance guideline, but that it may reconsider the need for one in the future 

The ATO has also confirmed that Taxation Determination TD 2026/4, which provides reasonable travel and overtime meal allowance expense amounts for the 2026–27 income year, reflects this decision. 

Treasury’s review of conditions on foreign investment approvals 

Following reforms announced in the 2026–27 Federal Budget to further streamline and strengthen the foreign investment framework, on 1 July 2026, Treasury commenced a review of conditions on existing foreign investment approvals. Treasury will review conditions to make sure they are effective and enforceable in reducing national interest and national security risks. The outcome of the review may: 

• Remove conditions that are ineffective 

• Remove conditions that duplicate other obligations under other regulatory regimes 

• Update conditions to better manage risk 

The review will first focus on tax conditions, with other conditions to be considered following consultation, which is expected to start in August 2026. In the meantime, existing approval obligations and investor compliance with conditions attached to their approvals continue to apply.

Need help navigating these changes? 

With a number of tax, superannuation and compliance changes taking effect this financial year, now is a good time to review how the latest developments may affect you or your business. 

If you have any questions about the updates covered in this newsletter or would like assistance with your tax and compliance obligations, contact the Lynden Group team. We’re here to help you understand the changes, stay compliant, and plan with confidence. 

Email: info@lyndengroup.com.au