Compliance
Compliance Essentials: Meeting PAYG, Trust Tax, and Foreign Investment Changes from 2026-2028
Australia’s tax compliance framework is tightening. This article helps business owners, trusts, and foreign investors anticipate key regulatory and lodgment changes for upcoming years.
By NomadicTax Research Team • 5-8 min read • June 17, 2026
## Highlighted Compliance Changes: What You Need to Know
- **PAYG instalments modernised**: Small and medium businesses may opt in to **monthly Pay-As-You-Go instalments** calculated via ATO-approved software. More frequent payments, tighter timelines. ([pwc.com.au](https://www.pwc.com.au/insights/federal-budget-tax-analysis-and-insights/other-tax-measures.html?utm_source=openai))
- **Stricter trust and discretionary trust taxation**: From **1 July 2028**, discretionary trusts—often used in family or investment settings—must pay a **minimum 30% tax rate** on distributions. ([pm.gov.au](https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations?utm_source=openai))
- **Foreign investment review reforms**: Faster decision targets (30 days for low-risk applications from 1 January 2027), removal of ineffective conditions, improvements in laws and register obligations. ([pwc.com.au](https://www.pwc.com.au/insights/federal-budget-tax-analysis-and-insights/other-tax-measures.html?utm_source=openai))
## Trusts and Income Splitting: Staying Compliant
- Ensure **proper documentation** for distributions: amounts paid to beneficiaries, timing, trust deeds. With new minimum rates, improper distributions could lead to higher tax liabilities.
- If you operate multiple entities (trusts, companies, partnerships), map out income flow to ensure that you’re not unintentionally triggering penalties or minimum rates.
- Keep in mind that trust structures will now face greater scrutiny under the ATO’s expanded information-gathering powers. Extra record-keeping will help defend against audits.
## Dealing with PAYG, Foreign Investment, and Email Secrecy
- Businesses opting for monthly PAYG using approved software must ensure they have correct reporting systems in place for accurate instalment income estimates.
- Foreign investors or locals with foreign income/assets should monitor evolving **foreign resident CGT rules** and **foreign investment framework changes** to avoid unexpected withholding or excess tax.
- The government broadened ATO powers around taxpayer secrecy—particularly in fraud and mischaracterisation cases. Be conservative, transparent, and maintain full audit trails. ([pwc.com.au](https://www.pwc.com.au/insights/federal-budget-tax-analysis-and-insights/other-tax-measures.html?utm_source=openai))
## Example Compliance Walk-throughs
- *SME business with trust distributions*: A family-owned business uses discretionary trust to distribute income. Starting 1 July 2028, any undistributed profits or distributions to minor or non-active beneficiaries may be taxed at **30% minimum rate**, negating tax advantages. Planning distributions or changing structure ahead can help.
- *Foreign resident investor selling a residential property*: CGT discount reduced/eliminated for assets acquired after 8 May 2012 and where owner was foreign resident. Sellers must also watch whether indexes apply or if withholding obligations have changed.
## What You Should Do Now
1. **Audit trust deeds and distribution policies** to see whether structure modifications make sense before 2028 deadlines.
2. **Upgrade accounting and payroll systems** to handle monthly PAYG and reporting requirements from 2026-27.
3. Foreign investors or residents should **seek specialist advice** ahead of property buys, particularly given changes to foreign CGT discounts and foreign investment screening rules.
4. Maintain strong financial records—date of acquisition, purchase price, improvements—for all assets, trusts and foreign income sources to withstand the new compliance environment.
**In summary**: recent reforms significantly raise compliance hurdles—especially for trust structures, PAYG instalments and foreign transactions. Planning ahead is essential to manage risk and cost.