Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026
Dr MULINO (Fraser—Assistant Treasurer and Minister for Financial Services) (10:54): I move: That this bill be now read a second time. This bill amends Treasury legislation to strengthen the integrity of the tax profession, make a range of improvements to our tax system, deliver targeted refinements to Australia's merger regime, and give force of law to current national competition principles.
Schedule 1 to the bill amends the Tax Agent Services Act 2009to strengthen the Tax Practitioners Board sanctions regime as part of the government's response to the PwC tax leaks matter, announced on 6 August 2023, to crack down on tax adviser misconduct and rebuild people's faith in the systems and structures that keep our tax system and capital markets strong.
The reforms also implement recommendations from the 2019 Independent Review of the Tax Practitioners Board. The reforms complement a broader suite of government reforms to strengthen integrity and accountability across the tax system and professional services sector. This includes work to progress further targeted exceptions to tax secrecy rules and enhancements to the Australian tax office's and Tax Practitioners Board's information-gathering powers outlined in the 2026-27 budget, and just yesterday we released an options paper into the regulation of accounting, auditing and consulting firms in Australia.
It builds on earlier reforms, such as: The Treasury Laws Amendment (2023 Measures No. 1) Act 2023, which strengthened the Tax Practitioners Board's powers and improved transparency within the profession. The Treasury Laws Amendment (Tax Accountability and Fairness) Act 2024, which expanded the ATO's ability to target promoters of tax exploitation schemes, increased penalties, enabled referrals of misconduct to professional bodies, and strengthened whistleblower protections.
The Tax Agent Services (Code of Professional Conduct) Determination 2024, which enhanced obligations on practitioners and lifted baseline standards for practitioner behaviour. These reforms will enable the Tax Practitioners Board to impose a suite of new and expanded regulatory sanctions, that escalate in severity in response to more serious contraventions of the law, and respond to misconduct, including poor and unlawful tax advice, in a timely way.
The changes include new criminal penalties for unregistered preparers, new civil penalty provisions and increased maximum civil penalty amounts for tax practitioners and unregistered preparers, new powers that enable the Tax Practitioners Board to issue infringement notice penalties, enter into enforceable voluntary undertakings, and impose contingent and interim suspensions of registration, and an increase in the maximum duration of terminations of registration from five to 10 years.
These reforms will improve protections for taxpayers by driving better behaviour, addressing and deterring misconduct, and maintaining community confidence in the integrity of the tax system. Schedule 2 to the bill strengthens the foreign resident capital gains tax (CGT) regime. This reform ensures foreign residents pay their fair share of tax when selling assets with a close economic connection to Australian land and our natural resources, while providing generous concessions for investments in renewable energy as set out in schedule 3.
The schedule has four elements. First, it clarifies the definition of 'real property' on which foreign residents are subject to CGT. This confirms that assets with a close economic connection to Australia—such as energy infrastructure, transport and telecommunications assets, and water entitlements—are in scope of the foreign resident CGT rules.
This responds to a longstanding area of uncertainty which has been compounded over time by the absence of a clear definition of 'real property' in the Commonwealth tax law. It also addresses the interactions with state and territory property laws, which have increasingly produced unintended outcomes, with infrastructure assets being taxed differently depending on the jurisdiction in which they are located.
From commencement, this measure will ensure the Commonwealth tax law determines which assets are subject to the foreign resident CGT regime. This will support certainty and ensure consistent tax treatment across the nation so investors can make long-term decisions with confidence. It also restores the integrity, fairness and sustainability of the tax system.
Second, the measure confirms when the Commissioner of Taxation can amend a past assessment for matters relating to the foreign resident CGT regime. The legislation limits the ability of the commissioner to amend an assessment where the taxpayer's limited amendment period has ended, except in cases of fraud or evasion or where the taxpayer objected to their assessment prior to 10 April 2026, which is the date of the exposure draft consultation for this schedule.
This effectively means that, where a foreign investor had previously paid and settled a historical CGT liability, they will be unable to have their assessment amended because the commissioner will not be able to extend the review period. This will protect existing revenue by preventing foreign investors from seeking opportunistic windfall gains by taking advantage of recent Federal Court decisions to reduce their previous tax payments.
Third, the schedule introduces a new requirement for foreign investors to notify the Australian Taxation Office, ATO, before they dispose their interests in an Australian entity, when the transaction is valued at $50 million or more. This ensures the ATO has more visibility over high-value transactions in which a foreign resident claims they are not subject to CGT, because they are disposing a non-Australian real property interest.
This new notification supports tax compliance. And fourth, the schedule enhances the integrity of the principal asset test. This test determines whether the value of a foreign investor's interest is mainly from Australian land or land-like assets and therefore is subject to CGT.
Foreign investors are now required to apply this test at any time during the 365 days before the CGT event instead of just at the time of disposal. This is consistent with the Organisation for Economic Co-operation and Development's practice. The schedule includes two instrument-making powers to balance compliance costs for investors.
It is intended that these powers would be used to exempt certain foreign investors from having to notify the commissioner of certain public transactions and to provide an alternative testing approach for certain investors in how they value their interests in complying with the principal asset test. These details will be subject to consultation. Schedule 3 to the bill is a transitional concession for foreign investors in the renewable energy sector.
It provides a 50 per cent CGT discount on the disposal of eligible assets until 30 June 2030. This recognises the importance of foreign investment in the renewables sector, helping support our clean energy objectives. This concession balances ongoing government support for Australia's practical action on climate change with the need to ensure the tax treatment of these assets aligns with the treatment of other assets in the longer term.
The targeted, time limited concession will apply to grid-scale renewable assets such as battery storage systems, wind turbines and solar panels. Schedules 2 and 3 were informed by extensive consultation with stakeholders. The schedules will commence on the first quarter after royal assent.
Schedule 4 to the bill amends the Competition and Consumer Act 2010 to deliver targeted refinements to Australia's merger regime. The government has heard from businesses, advisers and regulators about how the regime is working in practice and what needs to be fine tuned. First, the amendments adjust the legal consequences when merger parties fail to notify the Australian Competition and Consumer Commission, ACCC, when they should have by making such acquisitions voidable instead of automatically void.
This minimises unintended consequences, especially for innocent third parties, where the existing voiding provisions would otherwise automatically unwind transactions, while still preserving the incentive for parties to notify when appropriate. Second, the amendments introduce a mechanism for merger parties to seek extensions from the ACCC for the period in which they can put an approved acquisition into effect.
The extensions can be up to six months each. Multiple extensions may be granted. This will also apply to transactions already approved in the 12 months prior to commencement of this bill.
Third, the amendments better target when an acquisition needs to be notified. Parties will not need to notify acquisitions that are unlikely to result in a practical ability to influence competition, as originally intended. For example, it will benefit venture capital investing in startups.
Overall, these amendments will reduce the regulatory burden on industry while preserving the integrity of the regime. They support a faster, more transparent and risk based regime. These amendments also reflect the government's commitment to listening and responding to stakeholder experiences to ensure the merger regime continues to promote competition and economic activity in the interests of Australians.
Schedule 5 to the bill amends the Competition and Consumer Act 2010 and the Productivity Commission Act 1998 to give legal force to the current national competition principles and regulatory structures, which were agreed by the Commonwealth and all states and territories in November 2024. The measure substitutes references to the Conduct Code Agreement and Competition Principles Agreement, from 1995, with references to the 2024 Intergovernmental Agreement on National Competition Policy and introduces definitions of public interest test and competitive neutrality arrangements.
To future-proof these amendments, the measure also introduces powers for the minister to specify any new agreements to be the NCP agreement and new arrangements to be the competitive neutrality arrangements. Schedule 6 to the bill amends the tax law to specifically list the Ross House Trust, Tanarra Social Purpose Ltd and the I4give Foundation Ltd as deductible gift recipients and extends the existing listing of the Australian Academy of Law and Cambridge Australia Scholarships Ltd.
Schedule 7 to the bill amends the tax law to change the name of the philanthropic funds known as ancillary funds to giving funds. This better reflects the purpose of these funds and implements a recommendation of the Productivity Commission's philanthropy inquiry. Schedule 8 to the bill makes minor and technical amendments to the tax law to give effect to the Australian Taxation Office's current administrative treatment to ensure tax credits arising from amounts withheld from the disposal of Australian real property can be claimed in an assessment for the same income year that the disposal is recognised for tax purposes.
Finally, the Legislative and Governance Forum on Corporations was notified in relation to the amendments in schedule 4 to the bill as required under the Corporations Agreement 2002. Full details of the measures are contained in the explanatory memorandum. Debate adjourned.