TPB 2026 Focus: Compliance Areas to Watch

TPB’s 2026 focus for Australian tax practitioners is expected to intensify around agent integrity, evidence-based advice, correct ATO interactions, and stronger governance over outsourcing and digital workflows, because these are the highest-risk levers affecting community confidence and tax system outcomes. In practice, that means firms should prepare for closer scrutiny of tax practitioner conduct, record keeping, disclosure, supervision, data security, and accuracy of lodgments, particularly where AI tools, offshore teams, or high-volume processing models are used.

What is the TPB focusing on in 2026, and why does it matter?

TPB’s compliance posture for 2026 should be viewed as a continuation and sharpening of its core mandate: ensuring fit and proper registration and enforcing the Tax Agent Services Act 2009 (TASA), the Tax Agent Services Regulations 2009, and the Code of Professional Conduct. This matters because TPB action can affect registration status (including conditions, suspension or termination), and because TPB activity increasingly intersects with ATO risk programs (for example, around lodgment integrity and systemic errors).

From a practical firm perspective, the “watch list” is best framed as evidence: if the TPB asked “show me how you ensure this is correct and supervised,” could you produce it quickly?

Which Code of Professional Conduct obligations are most likely to be tested?

The TPB is most likely to test whether your practice can demonstrate operational compliance with the Code under TASA, including:

• Honesty and integrity: Whether representations to the ATO and clients are accurate and not misleading.
• Independence and conflicts management: Whether conflicts are identified, disclosed, and managed (including referral arrangements).
• Competence and reasonable care: Whether advice and lodgments are supportable, technically correct, and evidence-based.
• Confidentiality and data protection: Whether client information is protected and access is controlled.
• Supervision and quality control: Whether work performed by staff, contractors, or outsource teams is properly reviewed.

Practical implication: TPB reviews often become straightforward when a firm has a consistent file standard (e.g., checklists, reviewer sign-off, evidence pack, and position papers for non-routine treatments).

How will ATO and TPB integrity programs shape 2026 compliance expectations?

ATO programs increasingly rely on third-party data matching, pre-fill, and anomaly detection, and TPB expectations typically follow: practitioners are expected to lodge positions that can be substantiated and corrected promptly when errors are identified.

Key ATO-aligned pressure points likely to feed TPB scrutiny include:

• Lodgment accuracy and systemic errors: Repeated mistakes across a client base can indicate inadequate reasonable care processes.
• Timely correction and disclosure: Where errors are found, firms are expected to take prompt corrective steps and document decision-making.
• Client identity and authorisation integrity: Proof that the firm is acting with proper authority, with controlled portal access.

• Tax Agent Services Act 2009 (Cth): Establishes registration and the Code of Professional Conduct.
• ATO guidance on record keeping: The ATO expects taxpayers (and, in practice, agents supporting them) to maintain records that explain transactions and support claims (see ATO “Record keeping” guidance).
• ATO guidance on substantiation and deductions: Requirements for work-related expenses and other claims are a recurring audit driver (see ATO guidance on substantiation and deductions).

What are the highest-risk technical areas likely to attract scrutiny in 2026?

TPB does not “audit tax” like the ATO, but it will examine whether practitioners take reasonable care, apply the law competently, and maintain appropriate systems to prevent recurring non-compliance. The technical areas below are common triggers because they are high-volume, high-error, and easy to data-match.

Will GST and BAS governance be a 2026 hot spot?

Yes—BAS and GST remain perennial risk areas because errors scale quickly across many clients and quarters.

• BAS lodged without reconciliation to accounting records and bank activity.
• GST classification errors repeated quarter after quarter (e.g., mixed supplies, adjustment events, private apportionment not applied).
• Weak review controls where junior preparers lodge with minimal supervision.

• A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST law).
• ATO GST guidance on tax invoices, creditable acquisitions, adjustments, and reporting.

• A 30-client quarterly BAS book is prepared by an intermediate staff member. The practice does not require a bank-to-GST clearing reasonableness check. Over 4 quarters, the same misclassification occurs (GST claimed on financial supplies). This is not only an ATO exposure; it indicates a “systems and supervision” deficiency that the TPB can treat as a Code issue.

Is payroll, PAYGW and super compliance likely to be targeted?

Yes—PAYG withholding and super are high-consequence errors, and the ATO has significant visibility through STP (Single Touch Payroll) and super guarantee reporting ecosystems.

• PAYGW not reconciled to wages and payment records.
• Super guarantee shortfalls not identified or disclosed early.
• Director penalty consequences (particularly for SME groups) not flagged to clients when cashflow issues emerge.

• Taxation Administration Act 1953 (Cth) for administration and PAYG withholding framework.
• Superannuation Guarantee (Administration) Act 1992 (Cth) for super obligations.
• ATO guidance on PAYG withholding and super guarantee.

Will “work-related expenses” and individual tax return positions remain under pressure?

Yes—these claims are heavily data-matched and widely publicised by the ATO, and they remain an integrity focus because high error rates are often attributable to weak evidence requirements at agent level.

• Overreliance on client estimates without substantiation.
• Insufficient documentation of the connection between expense and earning assessable income.
• Lack of diary or logbook evidence where required.

• Income Tax Assessment Act 1997 (Cth) (general deduction provisions).
• ATO public guidance on substantiation and common deductions.
• Where relevant, ATO rulings on deductibility principles (ensure your advice references the correct ruling for the specific fact pattern).

Are Division 7A and private company benefits still a high-risk zone for 2026?

Yes—Division 7A is a long-standing risk area because errors often arise from poor loan account hygiene, late documentation, and incorrect repayment calculations.

• Whether Division 7A positions are identified early (not “after the tax return is drafted”).
• Whether agreements, MYR calculations, and interest are correctly evidenced.
• Whether the firm has a repeatable process across all private groups.

• Income Tax Assessment Act 1936 (Cth) (Division 7A provisions).
• ATO guidance on Division 7A benchmark interest rates and complying loan requirements.

• A shareholder loan account is “cleared” via journals at year-end without cash movement evidence. Even if an ATO audit is the immediate threat, the TPB risk is that the agent’s file does not show reasonable care, analysis, or documented advice on Division 7A consequences.

Will trust distributions and Section 100A risk stay on the agenda?

Yes—trust distribution integrity has become a major risk theme due to mismatch between resolutions, cash flows, and tax outcomes.

• Trustee resolutions that are precise, timely, and consistent with deed requirements.
• Evidence of entitlement, present entitlement calculations, and beneficiary communication.
• Documentation of commercial rationale and avoidance of “reimbursement agreement” risk indicators.

• Income Tax Assessment Act 1936 (Cth) (trust taxation framework including section 100A).
• ATO guidance and rulings on trust distributions and reimbursement arrangements (use the most current ATO materials applicable to your clients’ fact patterns).

How will outsourcing (including offshore teams) and supervision be tested?

TPB attention on outsourcing is fundamentally about supervision, confidentiality, and competence. Outsourcing is not prohibited, but it must be governed.

• Written outsourcing agreements covering confidentiality, security, and permitted tasks.
• Documented reviewer sign-off for all outsourced work before lodgment.
• Role-based access controls to client data and ATO-linked systems.
• Training records and competence checks for staff doing technical work.

• Outsourced processing is treated as “drafting,” but in reality the outsource team makes tax-character decisions (GST classification, deductible/non-deductible allocations) without documented guidance. That is a direct reasonable care and supervision problem.

How will AI and automation change TPB expectations in 2026?

AI use does not reduce a practitioner’s obligations; it increases the need to evidence review and governance. TPB’s interest will be whether AI-supported workflows still produce competent, supervised, explainable outcomes.

• A written policy stating what AI can and cannot be used for (e.g., drafting summaries vs determining tax character).
• Mandatory human review checkpoints for material judgments.
• Audit trails showing what changed, who approved it, and why.
• Data handling controls (privacy, access, retention).

From a workflow perspective, the safest posture is: AI can accelerate preparation, but the file must still “stand on its own” with evidence and reasoning.

What documentation and evidence should firms prepare now for 2026?

A TPB-ready file is an evidence pack that demonstrates reasonable care and supervision, without needing oral explanations.

• Client authority and identity evidence (engagement, scope, and authorisations).
• Workpapers showing reconciliations (bank, GST control, PAYGW, super payable, loan accounts).
• Review sign-off evidence (who reviewed, when, what was checked).
• Position papers for non-routine matters (Division 7A decisions, trust distributions, unusual deductions, residency issues).
• Change log for adjustments, journals, and overrides.

If your practice is high-volume, consistency matters more than perfection. A standardised checklist with mandatory attachments often outperforms ad hoc “partner memory” reviews.

What is a practical 2026 compliance action plan for tax practitioners?

A defensible 2026 plan is built around repeatable controls, not one-off training.

1. Map your highest-risk work types

1. Define minimum evidence standards per work type

1. Implement mandatory supervision gates

1. Standardise position papers

1. Test data security and access

1. Run an internal “TPB readiness” file review quarterly

How does practice technology affect TPB compliance outcomes?

Technology determines whether you can produce evidence quickly and whether your process reduces manual error. In 2026, that will matter because integrity reviews often focus on whether the firm’s systems make compliance reliable at scale.

• Manual Excel-heavy workflows: Higher risk of missing audit trail, inconsistent workpapers, and weak review evidence.
• Automated reconciliation + working papers workflows: Lower risk of systemic errors because reconciliations, journals, and reports are generated consistently and can be re-run.

This is where purpose-built automation platforms can materially reduce TPB exposure by improving standardisation and traceability.

Next Steps: How Fedix and MyLedger can help

Fedix’s MyLedger is designed for Australian accounting practices that need to operationalise “reasonable care” through repeatable, reviewable workflows. If your 2026 plan includes tightening BAS governance, improving reconciliation evidence, and standardising working papers, MyLedger can support that through:

• Automated bank reconciliation (AutoRecon): Typically 10–15 minutes per client vs 3–4 hours, around 90% faster, helping reduce time pressure (a common root cause of errors).
• Automation and consistency: AI-supported categorisation and bulk operations to reduce systemic miscoding risk.
• Working papers automation: Faster, standardised workpapers for items like BAS reconciliation and Division 7A (MYR) calculations, supporting evidentiary consistency.
• ATO integration workflows: Built for ATO-facing compliance processes, with practice-grade controls.
• All-in-one economics: Designed to support scale without per-client software pricing pressure.

Learn more at home.fedix.ai and consider documenting your 2026 controls around a system that produces consistent evidence packs.

Conclusion

TPB’s 2026 focus should be treated as a governance and evidence challenge: demonstrate competence, reasonable care, proper supervision, and secure handling of client information across BAS, ITR, payroll and private group work. Firms that standardise reconciliations, implement reviewer gates, document high-risk positions, and control outsourcing/AI usage will be best placed to withstand TPB scrutiny and reduce ATO downstream risk.

Frequently Asked Questions

Q: What is the most important TPB compliance priority for 2026?

Q: Can the TPB take action if my tax positions are wrong, even if it’s an ATO audit issue?

Q: What outsourcing controls should tax agents implement before 2026?

Q: Does using AI tools increase TPB risk?

Q: How can my practice reduce BAS and GST risk quickly?

Disclaimer: This article provides general information only and does not constitute legal or tax advice. Tax laws and ATO guidance can change, and application depends on specific facts. You should consider obtaining advice from a suitably qualified professional and refer to the relevant legislation, rulings, and current ATO/TPB guidance for your circumstances.