Global Employer Services update

Global Employer Tax Update for March 2026

In this Global Employer Services update, RSM’s Global Employer Services team unpacks the latest developments reshaping employer compliance across Australia. 

This month’s focus is on emerging ATO and Fair Work priorities, including Payday Super readiness, concessional cap risks, wage underpayment penalties, key Fair Work Commission decisions, and the continuing ATO spotlight on Fringe Benefits Tax.

Watch the full discussion in our latest video update, then explore the key insights below to help your organisation prepare, comply and stay ahead of change. 

Key developments shaping employer compliance 

Employers continue to face sustained regulatory focus across superannuation, payroll and workplace compliance. In 2026, attention is concentrated on three priority areas that carry significant operational and governance implications for Australian organisations.

• Payday Super preparation remains critical
  From 1 July 2026, employers must pay superannuation with wages, with contributions reaching funds within seven days. The ATO has confirmed a risk based, educative first year approach. Employers should now focus on system readiness, payroll testing and cash flow planning.
• Payroll and wage compliance remains an enforcement priority
  Payroll compliance remains a key enforcement priority following wage theft reforms. Regulators continue to focus on award interpretation, record keeping, superannuation, leave entitlements and payroll governance. Employers are expected to demonstrate systems, controls and oversight, not rely solely on remediation.
• WHS obligations extend to AI and digital work systems
  New NSW legislation introduces explicit WHS duties for AI and digital work systems used to allocate work, monitor performance and manage productivity. Employers may need to review digital systems, assess safety risks and prepare for scrutiny of automated decision making.

Global Employer Services update - Transcript

Welcome to RSM’s latest Global Employer Services update. 

 Payday Super: ATO First Year Approach (PCG 2026/1)  

The Australian Government has released regulations to support the transition to Payday Super, with the ATO issuing Practical Compliance Guideline PCG 2026/1.
This guidance outlines how the ATO will allocate compliance resources during the first year of Payday Super, particularly when reviewing superannuation guarantee shortfalls. The PCG confirms that the ATO will adopt an educative, behaviour focused approach in the initial year. Employers acting in good faith who promptly rectify issues will not be the focus of compliance activity.

The ATO has also released transition checklists and guidance for employers exiting the Small Business Superannuation Clearing House, which closes at midnight on 30 June 2026.

Employers should treat 1 July 2026 as a hard start date for Payday Super, begin implementing cash flow and governance changes now, and test end to end payroll processes before year end.

 FBT Case Study: No “FBT Free Joyride”  

In February, a director of a Perth based accounting firm lost an appeal to the Administrative Review Tribunal after arguing that a Ferrari purchased through his firm should not attract fringe benefits tax.

The firm purchased the second hand Ferrari in 2013, claiming it was used by the director to travel to and from work, visit clients, and move between the firm’s offices across metropolitan Perth. During an ATO audit in 2021, the Commissioner determined that the car’s private use, or availability for private use, triggered FBT obligations.

The director argued that his personal use was negligible. However, he later admitted that he used the Ferrari for annual trips to Margaret River, during which he visited wineries and travelled with his partner. These trips were not recorded in the logbooks provided.

The Tribunal found that:

• The Ferrari was used privately.
• The trips were private in nature, not minor or infrequent, and therefore did not qualify for an exemption.
• The logbooks were likely fabricated and created after the ATO requested them, and were described as “complete fabrications”.
• The Ferrari was a passenger vehicle. An expert witness argued otherwise, but the Tribunal rejected this, citing Ferrari’s own marketing materials promoting everyday comfort driving.

The cost base of the vehicle was amended by agreement, with approximately $21,000 in on road costs removed, reducing the taxable value. The matter was remitted for recalculation of the FBT liability.

 Payroll Compliance Pressures Remain High 

Payroll compliance enforcement remains a top priority for regulators in 2026. The Fair Work Ombudsman recovered $358 million for more than 249,000 workers in the 2024–25 financial year.

Many organisations are strengthening controls across modern awards, enterprise agreements, payroll tax and superannuation compliance. However, The Yellow Canary’s 2026 State of Payroll Compliance Report found that despite 89% of organisations introducing new compliance measures following the January 2025 reforms, payroll errors remain widespread.

More than a third of organisations remain unsure whether they are paying employees correctly, particularly with respect to flow on impacts to superannuation, leave entitlements and payroll tax. Strengthening governance frameworks and modernising payroll systems remain critical to improving accuracy and reducing risk.

Payroll compliance continues to be challenging in a post–wage theft reform environment. Complex awards and system limitations contribute to errors, highlighting the importance of strong award interpretation capability, system configuration and thorough testing.
 

Transport Workers Union Targets Boral Under New Workplace Laws 

The Transport Workers Union has commenced proceedings in the Fair Work Commission seeking to introduce minimum contract standards for concrete truck drivers across the entire transport supply chain.

The action relies on new federal workplace laws introduced in 2024 that allow supply chain wide minimum conditions to be imposed from major clients through to subcontractors. The case arises amid tense contract negotiations with Boral, where the Union alleges the company is pressuring owner drivers to accept reduced pay and conditions under threat of termination.

Boral maintains that it is attempting to modernise outdated contract structures and implement productivity based models.

Denita Wawn, CEO of the Master Builders Association, has warned that supply chain standards could increase costs, cause delays and negatively impact housing affordability. The Union argues that major builders should support “fair pay only” concrete contracts to ensure long term industry sustainability.
This case sits within a broader shift in industrial relations under the Federal Government’s new laws, with other unions, including the Electrical Trades Union, pursuing industry wide bargaining initiatives. A statutory review of the legislation is scheduled later this year.
 

 NSW Work Health and Safety: Regulating AI and Digital Work Systems 

New South Wales has become the first Australian state to specifically regulate safety risks arising from artificial intelligence and digital work systems through the Work Health and Safety Amendment (Digital Work Systems) Bill 2026.

The amendments introduce a specific safety duty covering technologies used to allocate work, monitor performance and conduct assessments. They also expand WHS entry permit holder rights to access and inspect digital work systems where safety concerns are raised.

While these changes currently apply only in NSW, other jurisdictions may follow.
Employers may benefit from developing an inventory of AI and algorithmic systems used for rostering, productivity monitoring and performance management, as well as undertaking risk assessments addressing transparency and explainability of system outputs. Increased scrutiny from unions and WHS representatives is expected.

Work Related Deductions: $50,000 Claim Denied

The Administrative Review Tribunal recently upheld the ATO’s decision to reduce a taxpayer’s claim for more than $50,000 in work related car, travel, clothing, self education and interest expenses to effectively nil.
The taxpayer failed to demonstrate that the assessment was excessive, largely due to a lack of accurate, reliable and contemporaneous records.

Where employees seek employer records or letters to support deductions, employers should ensure information provided is accurate and contemporaneous. Substantiation remains a key ATO compliance focus.

Material Job Changes Deemed Redundancy
Baya Casal v Deputy Commissioner of Taxation [2025] FCA 87

A recent Federal Court decision has confirmed that material changes to hours or pay can give rise to a genuine redundancy, even where similar duties continue to exist.

A part time early learning centre assistant at Ivanhoe Grammar School was advised that a restructure would result in a 20–40% reduction in hours, reduced pay, and different working days. While redeployment into remodelled roles was offered, the employee elected redundancy and received just over $15,000, which the school treated as an employment termination payment rather than a genuine redundancy payment.

The Court held that the role was genuinely redundant, as the significant reduction in hours and remuneration meant the original job no longer existed. The focus was on whether the job continued in its original form, not whether some duties remained. The payment was therefore a genuine redundancy payment.
Employers should carefully assess restructures, as misclassifying redundancy payments can create tax and employee relations risks.

Roofer Found to Be an Employee Despite ABN
Pascoe v Roof Crew Pty Ltd [2026] NSWPIC 25

In a recent decision, a roofer who suffered a knee injury was found to be an employee for workers compensation purposes, despite operating under an ABN.

The Personal Injury Commission found that although the worker was required to hold an ABN, the reality of the arrangement reflected employment. He worked exclusively for the business, wore branded uniforms, followed directions, and did not seek work elsewhere.

Arguments that he was an independent contractor due to supplying his own tools and transport were rejected. The Commission found the arrangement was effectively a sham designed to avoid obligations such as workers compensation and payroll tax.

The employer was ordered to refund the cost of knee surgery and pay weekly compensation.

Fair Work Ombudsman Enforceable Undertaking – Cairns Restaurant

The Fair Work Ombudsman has entered into an Enforceable Undertaking with the trustees of a Cairns restaurant trading as Villa Romana, which back paid nearly $87,000 to 76 employees, including vulnerable visa holders.

The undertaking followed a 2023 snap inspection that identified underpayments arising from failures to pay weekend penalties, overtime, split shift allowances and correct base rates.

Under the Enforceable Undertaking, Villa Romana agreed to:
 

• Commission two compliance audits
• Require payroll and management staff to undertake workplace relations training
• Survey employees to identify workplace issues
• Make a $40,000 contrition payment to the Commonwealth

Sydney Restaurateur Allegedly Underpaying Migrant Workers

The Fair Work Ombudsman has commenced legal proceedings against a Sydney restaurant owner, alleging the knowing underpayment of migrant workers at Miso World Square.

It is alleged that 82 workers were underpaid more than $162,000 between June 2020 and September 2022 through unlawful flat hourly rates, incorrect overtime and penalty rates, unpaid leave entitlements, and record keeping breaches.

The Ombudsman alleges the conduct constitutes serious contraventions under the Fair Work Act, attracting significantly higher penalties. Court orders are also being sought to recover underpayments, interest and superannuation.