Compliance
Staying Compliant in a Changing Landscape: Superannuation, Trusts & Foreign Investors
New obligations around super contribution caps, outsourced trusts, and foreign investment are on the rise—here’s how to stay ahead and avoid penalties.
By NomadicTax Research Team • 5-8 min read • July 1, 2026
## The Rise in Regulatory Scrutiny for Key Structures
The May 2026 Budget not only delivers rate cuts and offsets, it also brings significant compliance burdens, particularly for **superannuation funds**, **discretionary trusts**, and **foreign investment frameworks**. The ATO and Treasury are rolling out new rules, oversight mechanisms, and legislation aimed at closing perceived loopholes. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/may-2026.html?utm_source=openai))
## Major Changes in Superannuation and Trust Law
- **Division 296 tax on large super balances**: From 1 July 2026, superannuation earnings on balances above **AU$3 million** will be taxed at 30%, and above **AU$10 million** at 40%. First assessment of this tax occurs after the year ending 30 June 2027. ([dentons.com](https://www.dentons.com/en/insights/alerts/2026/march/26/ato-crackdown-on-smsfs-tops-superannuation-priorities-for-2026-and-division-296-tax-introduced?utm_source=openai))
- **PAYG and small business instalment upgrades**: Small and medium businesses will have the option to use **monthly PAYG instalments** via ATO-approved software. This aims to smooth cash flow and improve compliance. ([pwc.com.au](https://www.pwc.com.au/insights/federal-budget-tax-analysis-and-insights.html?utm_source=openai))
- **Stricter foreign investment approvals & reporting**: Starting 1 January 2027, low-risk foreign investment applications must be decided within **30 days**. Ineffective conditions on current approvals will be removed. Reforms to the **Register of Foreign Ownership of Australian Assets** also part of the package. ([pwc.com.au](https://www.pwc.com.au/insights/federal-budget-tax-analysis-and-insights/other-tax-measures.html?utm_source=openai))
## Who’s Most at Risk & What to Plan For
- SMSFs with high balances: those with TSB (Total Super Balance) nearing or exceeding AU$3 million need to reassess their fund strategy. Even funds under that threshold should check trajectories. Passive growth can push you into higher tax bands.
- Discretionary trust holders: these structures are now subject to proposals for a **30% minimum tax** from 2028–29. Review whether income allocations to beneficiaries, or trust distributions, align with future rate changes.
- Foreign resident investors: The foreign resident CGT regime is being strengthened. Proposed amendments broaden the definition of taxable Australian real property, tighten vendor notification obligations, and apply retrospective amendments to align with state severance laws. Consultation on this draft closed in April 2026. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/may-2026.html?utm_source=openai))
## Compliance Tips & Best Practices
- **Documentation is essential**: property contracts, trust deeds, beneficiary allocation schemes, valuations, and investment timeline notes will be necessary to establish grandfathering or “new-build” status.
- **Track your super balances**: use your ATO statements to project balances and forecast whether you'll cross thresholds. If so, consider balancing through contributions, investment strategy changes.
- **Be audit-ready**: The ATO is boosting funding for compliance (including counter-fraud strategy) and is likely to target R&D incentives, foreign investment disclosures, & SMSFs. If you claim these incentives or credits, ensure they are well-documented & substantiated. ([pwc.com.au](https://www.pwc.com.au/insights/federal-budget-tax-analysis-and-insights/other-tax-measures.html?utm_source=openai))
- **Monitor legislative detail**: Terms like “new build,” “real property,” vendor notification obligations, etc., will be defined in the draft legislation. Some measures aren’t yet law, so keep doing your diligence.
## Checklist: Immediate Action Items
1. Review whether your investment property meets grandfathering rules or qualifies as a new build.
2. If using discretionary trusts, model income flows and distributions under the upcoming minimum tax.
3. Assess PAYG instalment timing and whether you want to opt into monthly software-based instalments.
4. Track foreign investments and any close economic connections to Australia—especially assets, property, or land holdings.
5. Ensure your SMSF operations are fully compliant: no prohibited loans, no illegal early withdrawals, always lodge returns on time.
Staying compliant in this new era means planning ahead, getting documentation in order, and staying alert to forthcoming laws.