Budget offers personal tax relief but super largely untouched

The 2026–2027 Federal Budget’s headline personal tax measures will reshape financial planning strategies from 2027. A new $250 working Australians tax offset (WATO) will apply from 1 July 2027, effectively increasing the tax-free threshold for work income to $19,985. Combined with the previously announced $1,000 standard deduction for work-related expenses, workers could see substantial tax savings. The government confirmed existing modest tax rate reductions will proceed, with the 16% rate dropping to 15% in 2026–2027 and 14% in 2027–2028 for income between $18,201 and $45,000.

From 1 July 2027, the 50% capital gains tax discount will be replaced with inflation-adjusted indexation, accompanied by a minimum 30% tax rate on realised gains. This affects all assets held by individuals, trusts and partnerships for more than 12 months, including pre-1985 assets. The changes include transitional arrangements so only gains arising after 1 July 2027 face the new rules.

Complying super funds, including SMSFs, will continue receiving their existing one-third capital gains tax discount, so super funds will maintain their 10% effective tax rate on capital gains for assets held longer than 12 months. This makes superannuation even more attractive relative to personal investments, particularly given the new minimum 30% tax rate applying outside super.

From 1 July 2028, discretionary trusts will face a minimum 30% tax rate on taxable income. Beneficiaries will receive non-refundable credits for tax paid by trustees, but this could result in higher effective tax rates for lower-income beneficiaries who would normally pay less than 30%. The government will provide expanded rollover relief for three years from 1 July 2027.

Investment property strategies will change from 1 July 2027, with negative gearing limited to newly constructed dwellings. Losses from established residential properties will only be deductible against rental income or capital gains from residential properties. Properties owned at Budget time remain exempt until sold.

Business tax relief package for immediate support

The Federal Budget announcements include a comprehensive business tax relief package designed to support companies and encourage investment and innovation.

Small businesses can breathe easier with the permanent extension of the $20,000 instant asset write-off for businesses with turnover up to $10 million. This measure was set to revert to $1,000 on 30 June 2026 but now provides ongoing certainty for equipment purchases and business expansion plans.

Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool, with deductions of 15% in the first year and 30% thereafter. The provisions preventing businesses from re-entering the simplified depreciation regime for five years after opting out remain suspended until 30 June 2027.

From 1 July 2028, discretionary trusts will face a minimum 30% tax rate on taxable income. Beneficiaries will receive non-refundable credits for tax paid by trustees, but this could result in higher effective tax rates for lower-income beneficiaries who would normally pay less than 30%. The government will provide expanded rollover relief for three years from 1 July 2027 to help restructure discretionary trusts into companies or fixed trusts.

From 1 July 2026, companies with aggregated annual global turnover below $1 billion will again be able to carry back tax losses and offset them against tax paid up to two years earlier. This applies to revenue losses only and remains limited by a company’s franking account balance.

The Budget confirmed the proposed changes to the FBT exemption for electric vehicles (EVs). The changes will be phased in over the next three years until a permanent 25% discount is operating from 1 April 2029 for all eligible EVs. There will be no changes in the current FBT year. Further, for EVs costing less than $75,000, there will be no changes until 1 April 2029.

The Research and Development Tax Incentive faces major reforms from 1 July 2028. Core research and development offset rates will increase by 4.5 percentage points, while the intensity threshold drops from 2% to 1.5%.

The turnover threshold for the highest offset rate increases from $20 million to $50 million, and the maximum expenditure threshold rises from $150 million to $200 million. However, supporting research and development expenditure will lose eligibility, and the minimum expenditure threshold increases from $20,000 to $50,000.

From 1 July 2027, small and medium businesses can opt into monthly PAYG instalment reporting and payments. This system will use ATO-approved calculations embedded in accounting software to better reflect real-time business activity.

What’s the difference between tax deductions and tax offsets?

With the 2026–2027 Federal Budget announcing a new $1,000 standard work-related expenses deduction and a $250 working Australians tax offset (WATO) for future financial years, you might be wondering about the difference between these two types of tax benefits. Both deductions and offsets can reduce how much tax you pay, but they work in quite different ways. Tax deductions reduce your taxable income before your tax is calculated. Common deductions you might already claim include:

• work-related expenses like uniforms or tools;
• gifts and donations to registered charities;
• investment property expenses; and
• costs of managing your tax affairs, such as tax agent fees.

For example, if you earn $60,000 and claim $2,000 in work-related deductions, your taxable income becomes $58,000. You then pay tax on this reduced amount.

The value of a deduction depends on your marginal tax rate. For example, a $1,000 deduction may save a resident taxpayer around $300 if their marginal tax rate is 30%, or $160 if their marginal tax rate is 16%, ignoring Medicare levy and other factors.

Tax offsets work differently: they directly reduce the actual tax you owe, dollar for dollar. They’re applied after your tax has been calculated on your taxable income. You might already receive offsets such as the:

• low income tax offset (LITO) of up to $700 for those with taxable income under $66,667;
• seniors and pensioners tax offset (SAPTO) for eligible pensioners;
• private health insurance rebate (a rebate is the same as an offset); or
• spouse superannuation contribution offset.

So, if you have taxable income of $30,000 and owe $1,888 in tax, then receive a $700 LITO, your final tax bill becomes $1,188.

Understanding this distinction can help you prioritise your tax planning strategies. A $1,000 offset is always worth exactly $1,000 off your tax bill (if you have at least $1,000 of income to absorb it). A $1,000 deduction might save you anywhere from $160 to $450 in income tax, depending on your tax bracket.

This is why the government’s Budget announcement of both types of measure is significant.

There’s another important point to note: most tax offsets can only reduce your tax to zero, not below. If you don’t owe any tax, you typically won’t receive the offset as a cash payment. However, some offsets like the private health insurance rebate are refundable.

Planning ahead

While the newly announced measures won’t apply to 2025–2026 tax returns, it’s worth reviewing your current deductions and offsets. Are you claiming all the deductions you’re entitled to? Are you receiving all available offsets? The ATO automatically calculates some offsets like LITO when you lodge, but others need to be claimed in the offsets section of your tax return.

Navigating financial advice in the social media age

Social media has transformed how we access information, including financial guidance. With the Australian Securities and Investments Commission (ASIC) recently taking regulatory action to warn “finfluencers” against acting illegally, it’s worth understanding how to evaluate the financial content you encounter online, so you can protect yourself against acting on unlicensed advice that could risk your money.

Research shows 63% of Gen Z Australians use social media for financial information, with over half expressing trust in content from financial influencers. In April, ASIC issued warning notices to four social media influencers suspected of providing unlicensed financial advice, including making claims about guaranteed returns.

Understanding the difference between general information and personal advice helps you evaluate online content appropriately. Licensed financial advisers can provide recommendations tailored to your specific circumstances, goals and risk tolerance. They’re required to act in your best interests and maintain professional standards.

Social media content creators can share factual information about financial products and general educational content. They can’t legally provide specific recommendations about what you should buy, sell or invest in unless they hold appropriate licences or operate under the supervision of a licensed entity.

Certain content characteristics should prompt you to stop and evaluate carefully, including:

• promises of guaranteed returns for your money, or risk-free investments;
• pressure to act quickly on investment opportunities;
• claims about easy money or get-rich-quick schemes;
• specific product recommendations given without understanding your circumstances; and
• content that downplays or ignores investment risks.

Legitimate investments carry risk, and higher potential returns typically involve higher risk levels. Anyone promising otherwise may be providing misleading information.

Social media algorithms prioritise content engagement over accuracy. Content designed to generate views, comments and active sharing may not represent balanced or comprehensive financial guidance. Sensational claims often perform better algorithmically than measured, educational content, so the financial content you see may be skewed toward attention-grabbing rather than genuinely helpful information.

Financial strategies can’t be one-size-fits-all. Your age, income, family situation, risk tolerance, existing assets and future goals all influence what approaches might work for your circumstances. What works brilliantly for one person could be entirely inappropriate for another.

Before acting on financial guidance from any source, verify the person’s qualifications and licensing status using ASIC’s professional registers. Licensed professionals are subject to ongoing education requirements, professional standards and regulatory oversight. They have professional indemnity insurance and must operate within established complaint resolution frameworks.

Why your super insurance might not cover what you expect

If you have a superannuation account, there’s a reasonable chance you also hold life insurance through it, possibly without realising. Almost 10 million super accounts have insurance attached to them, but many people can’t say what they’re covered for, how much it costs or whether it suits their needs. Before assuming your default cover has you sorted, it’s worth unpacking some common misconceptions.

“Everyone gets cover automatically”

Insurance through super doesn’t start automatically if you’re a new member aged under 25 or your balance is under $6,000, unless you contact your fund and ask for it, or you work in a dangerous job where your fund gives you automatic cover. If you’re younger or just starting out, you may have no safety net at all unless you opt in.

“Default cover will be enough”

Default cover is a starting point, not a tailored solution. Default cover may be lower than, or different from, cover available outside super; eligibility rules and exclusions can apply; and cover can stop if your account becomes inactive, your balance is too low, you change funds (unless arrangements are made to transfer or replace it) or you reach an age limit.

When reviewing your insurance, check whether there are exclusions or whether you’re paying a loading – this is a percentage increase on the standard premium, charged to higher-risk people who have high-risk jobs, pre-existing medical conditions, or classified as smokers. If your fund has classified you incorrectly, you may be paying more than necessary.

“My cover follows me when I switch funds”

Often, cover won’t follow you. If you switch superannuation funds, your insurance policy may not be portable, meaning the cover you had can lapse once you’re no longer a member. Some funds allow you to transfer your policy to personal ownership, but this may require health checks and the insurer could charge more to continue the cover. Consolidating accounts can also unintentionally cancel valuable cover, so always check before you act.

“If I stop contributing, nothing changes”

Cover can change if your account isn’t active. By law, super funds cancel insurance on accounts with no contributions for at least 16 months. Some funds have their own rules and cancel insurance if your balance is too low. Your fund will typically attempt to notify you before changes happen, so it’s important to keep your contact details updated.

“More accounts means more protection”

Holding multiple super accounts may simply mean multiple premiums quietly draining your retirement savings. If you have more than one super account, you may be paying premiums on more than one insurance policy, which reduces your retirement savings. Claim outcomes can vary between policies, and benefits aren’t always cumulative. Consider whether you need more than one policy, or whether you can get cover through one fund.

“It’s always the cheapest option”

Premiums may be lower because super funds buy cover in bulk, but that doesn’t always translate to the best value. Cover may not be enough, or may change over time, and it also may not be cheaper than insurance you can buy elsewhere.

Where to from here?

Superannuation and insurance can be complex. Before you assume your default cover’s doing the job, speak with your professional adviser to review your policy, premiums and any gaps, so you know exactly what you’re paying for and whether it still fits your circumstances.

Will the proposed $1,000 instant tax deduction benefit you?

The Federal Government has released draft legislation for a new “instant” standard tax deduction that would allow eligible taxpayers to claim work-related expenses at tax time without receipts. This would replace the current $300 no-receipt immediate deduction limit.

However, this is still just a proposal. The draft legislation’s been released for comment, so isn’t before Parliament yet. If passed in its current form, the changes would apply from the 2026–2027 financial year. This means it won’t help with your 2025–2026 return, but could be available next year.

It’s important to understand that a tax deduction doesn’t simply put a cash amount back in your pocket. Instead, deducting it offsets the tax you pay, so the actual benefit depends on your tax rate. For someone on the 32.5% tax rate, a $1,000 deduction would reduce their tax by about $325. Higher income earners could save up to $450 (or $470 including Medicare levy).

The government estimates about 6.2 million taxpayers could benefit, with average savings of around $205.

Here’s a key point, though: if you already claim more than $1,000 in work-related expenses, you may be better off sticking with keeping receipts and claiming your actual expenses. The ATO says the average Australian claims $2,739 in work-related expenses, and the median claim is $1,338. This means many taxpayers already claim more than the proposed $1,000 and wouldn’t financially benefit from the change.

However, people whose claims are usually close to $1,000 or who like the idea of a predictable deduction may find it saves some record-keeping effort.

The standard deduction would cover typical work expenses like:

• home office costs;
• work clothing and uniforms;
• tools and equipment;
• car expenses for work travel; and
• stationery and work supplies.

Certain deductions would be claimable on top of the $1,000, including charitable donations, union fees, income protection insurance, and investment-related expenses.

From 2026–2027, you also wouldn’t be able to add new work equipment costing between $300 and $1,000 to a “low-value pool” for depreciation purposes. This could slow down tax deductions for items like computers or tools, reducing the benefit you receive in earlier years.

What should you do?

First, remember this is still just a proposed change to the law. Second, consider whether you typically claim more or less than $1,000 in work-related expenses. If you claim more, the change likely won’t help you.

However, changes like this can have unexpected consequences, so third, consider seeking professional advice at tax time. If you want to optimise your deduction strategy, contact our office to discuss your circumstances and ensure you’re maximising your legitimate tax benefits.

ASIC launches new range of tools and resources for retirement planning

National research carried out by the Australian Securities and Investments Commission (ASIC) has shown that many pre-retirees are worried that they won’t have enough money in retirement, report low financial literacy and have low confidence in managing their retirement finances.

ASIC commissioned research that surveyed 2,065 Australians aged 45–75 to understand retirement planning and any readiness gaps. Focusing on the 50–66 age group, covering a range of retirement stages including respondents with retirement over 10 years away, nearing retirement (within nine years), and fully retired, the research showed that 48% of respondents were worried they’d run out of money in retirement; 32% felt they were already behind in retirement planning; and only 18% had a clear retirement plan in place.

Only a third of the pre-retirees in the age group felt confident that they would be financially comfortable in retirement, with female pre-retirees and renters in particular reporting low confidence in their ability to manage their finances or live comfortably in retirement.

Financial literacy and low confidence in managing retirement income was also a concern for 46% of the age group. Nearly 60% reported that they wanted to learn more about super and retirement.

In response, ASIC has developed practical tools, calculators and guidance to support financial literacy and retirement planning in a new Retirement Hub on Moneysmart. The launch offers a great opportunity to review your understanding before seeking advice about what will suit your circumstances.

The resources are available in segments reflecting the key questions uncovered in the research:

• How much will I need? – covers retirement costs, retiring with debt, planning retirement goals and lifestyle and working out your living expenses.
• How can I make my money last? – budgeting, understanding different sources of income (eg super, Age Pension, account-based pensions or annuities), government benefits and how to decide what to do with your super.
• How do I stay on track? – how to check and keep track of your super and insurance, tackle debt, and stay aware of scams.

An upgraded Retirement Planner is designed to walk you through where your super is at, project how much income you could have in retirement, work out how much you’ll need based on your goals or lifestyle choices, and allow you to review your options and test different scenarios to assess if you’re on track to reach your financial goals.

Young adult workers win equal pay rights

The Fair Work Commission has delivered a landmark decision that will significantly impact junior wage rates across three major industries, with changes set to begin in December 2026.

On 31 March 2026, a Full Bench of the Fair Work Commission handed down its decision in response to an application by the Shop, Distributive and Allied Employees’ Association. The decision affects junior employees under the General Retail Industry Award 2020, Fast Food Industry Award 2020 and Pharmacy Industry Award 2020.

The key change is that junior employees aged 18 and over who have been employed by their current employer for more than six months will eventually receive the full adult minimum wage rate. This represents a significant departure from the current system, where these employees receive between 70% and 90% of the adult rate depending on their age.

The changes will apply to employees in general retail, fast food and community pharmacy industries. However, the decision creates different outcomes for different age groups:

• employees aged under 18 will see no changes to their current rates;
• employees aged 18–20 with less than six months’ experience with their current employer will continue to receive their current percentage rates; and
• employees aged 18–20 with more than six months’ experience will gradually move to full adult rates through a phased implementation.

The provisional implementation schedule begins 1 December 2026, phasing the changes in across two and a half years:

• 18-year-olds will move from 70% to full adult rates by July 2029;
• 19-year-olds will reach full adult rates by July 2028; and
• 20-year-olds will achieve full adult rates by July 2027.

The rates will increase incrementally every six months during this transition period.

The Commission considered extensive evidence from 87 witnesses, including witnesses who shared their workplace experiences and expert economists who analysed potential impacts. The Commission found that for adult junior employees, the variation was justified for work value reasons, considering the nature of work, skills, responsibility and working conditions.

Fairness to junior employees weighed heavily in the decision. The Commission took into account factors such as the value of junior employees’ work and young people’s labour market disadvantage. However, it also considered fairness to employers and likely business impacts.

Importantly, the Commission maintained current rates for employees under 18, recognising factors such as employment restrictions, availability constraints, and differences in maturity and work experience.

This decision will have significant cost implications for businesses in the affected industries. The phased implementation provides time to adjust business models and budgets, but employers should begin planning now for the increased wage costs.

The Commission will issue further directions soon, providing additional opportunities for parties to be heard regarding the implementation details.

Next steps

If your business employs junior staff in retail, fast food or pharmacy industries, this decision will likely affect your wage costs and workforce planning. The complexity of the new age- and experience-based criteria means careful attention to payroll systems and employee records will be essential. Given the significant financial implications and implementation complexities, consider seeking our advice to understand how these changes will specifically impact your business and ensure your compliance with the new requirements.

Payday super changeover requires careful cash flow planning

The transition to payday super is just months away, and employers need to prepare for a complex changeover period that could significantly impact cash flow during July 2026.

From 1 July 2026, employers must pay superannuation guarantee each payday instead of quarterly. Super payments must reach employees’ funds within seven business days after payday, marking the end of the current quarterly system that’s operated for decades.

July 2026 presents unique cash flow pressures as employers navigate dual payment obligations. You’ll need to make your final quarterly payment for the April to June period by 28 July, while simultaneously beginning payday super payments for July pay runs.

The timing is important. Super payments for July paydays may be due before the final quarterly payment deadline of 28 July.

Any contributions received on or before 28 July will first reduce amounts owing for the June quarter, with remainders then applied under payday super rules.

The final quarterly payment for the June quarter must reach employees’ super accounts by 28 July 2026. Missing this deadline triggers super guarantee charge obligations, with statements due by 28 August. Importantly, the late payment offset won’t be available for this final quarterly payment.

For tax deductibility, any superannuation guarantee contributions must be received by the fund by 30 June 2026 if you want them to be tax deductible in the 2025–2026 income year. This rule hasn’t changed under payday super.

From 1 July, super calculations change from ordinary time earnings to qualifying earnings.

Critically for the transition, the payment date is what counts: even for work performed before July, super is calculated under payday super rules when contributions are paid from 1 July onwards.

The ATO recommends reviewing expected pay cycles for July to understand cash flow impacts. Consider setting aside additional funds to meet dual obligations during the changeover.

If cash flow permits, paying your June quarter super on or before your first July payday offers a smoother transition with time to correct any rejected payments before the 28 July deadline. Additionally, all June quarter super contributions will be tax deductible in 2025–2026 if funds receive them by 30 June 2026.

AI may be handy for simple money questions, but it’s no substitute for professional advice

Artificial intelligence tools are becoming increasingly popular for answering money-related questions. While these tools can be helpful for summarising information and helping you work out what to research next, convenience doesn’t equal accuracy. Tax and super rules can be detailed, exceptions matter, and the right answer often depends on your own circumstances. If you act on incorrect information, the consequences can be serious.

Where AI can be useful

Publicly available general-purpose AI tools can be handy for broad, educational questions such as:

• “How does compound interest work?”
• “What does capital gains tax mean in simple terms?”
• “What is salary sacrifice?”
• “What’s the difference between concessional and non-concessional super contributions?”

Used this way, AI can act as a starting point to help you understand terminology and prepare for conversations with your professional adviser.

Where extra caution’s needed

The situation changes when questions shift from general information to something that sounds like personal advice. Questions like “Can I claim this expense as a tax deduction?” or “How much should I put into super this year?” depend heavily on your individual circumstances, and AI tools aren’t the place to ask them.

There are several reasons AI-generated answers can go wrong. First, AI can simply be incorrect. The ATO specifically warns that you may receive false or inaccurate information from AI tools, even while the responses sound confident and reassuring.

Secondly, AI’s likely to miss important details that affect your specific situation. AI tools can’t understand your complete financial position, objectives or risk tolerance well enough to make decisions for you.

Thirdly, AI tools aren’t designed to provide regulated personal advice. Anyone providing personal financial advice must hold an Australian financial services licence, and providers giving tax advice services to retail clients for a fee must be registered with ASIC.

You should also consider privacy when using AI tools. It’s not usually possible to know how publicly available AI tools use the information you type into them, or who might see it in future, so avoid entering your Tax File Number, myGov sign-in details, bank account details, or copies of notices of assessment and identification documents into your query.

Using AI more safely

If you choose to use AI for money-related questions, treat it as a starting point for explanation rather than for decision-making. Always check answers against official sources like the ATO, ASIC’s Moneysmart website and advice from trusted, qualified professionals. Remember that AI can sound confident even when the information it gives you is incorrect.

Keep personal information out of your chat wherever possible, and consider using AI to prepare questions for your professional adviser rather than seeking direct recommendations from the tool itself.

If your question is, “Can I claim this?”, “Does this apply to me?” or “What’s the best option in my situation?”, it’s time to consult a qualified professional. Contact us for advice tailored to your needs and circumstances.

It’s logbook check-in time

Many people assume that once they’ve completed a logbook for their car, they’re set for the next five years when it comes to work-related car expenses. However, this common misconception could mean you’re claiming more (or less) than you can at tax time.

While logbooks can remain valid for five years, certain life changes require you to start fresh with a new one. Relying on an outdated logbook that no longer reflects your actual work-related travel patterns can lead to incorrect claims.

You’ll need a new logbook if you change jobs, move to a new house or workplace or there are changes to your pattern of car use for work purposes.

If you’re claiming work-related car expenses for two or more vehicles, you must keep a separate logbook for each car, making sure these logbooks cover the same period for consistent record-keeping.

If you buy a new car during the income year and want to continue relying on your previous car’s logbook, you must make a written nomination before lodging your tax return.

TIP: If your employer provides your car or you salary sacrifice a car using a novated lease, you can’t claim work-related car expenses using the logbook or cents per kilometre methods. This is because you don’t own the car.

Electric and plug-in hybrid vehicles

If you use the EV home charging rate of 4.2 cents per kilometre (5.47 cents for 2026–2027) for a reasonable estimate based on odometer readings, you can’t claim any commercial charging costs. For plug-in hybrid vehicles, a specific formula must be used to calculate home charging expenses.

Keeping accurate logbooks and records is essential for claiming the correct amount of work-related car expenses. If you’ve experienced any changes to your work situation, living arrangements or car usage patterns, talk to us to review whether your current logbook still accurately reflects your circumstances.

Will increased deeming rates affect your Seniors Health Card?

If you hold a Commonwealth Seniors Health Card or receive Centrelink benefits, deeming rate changes could impact your assessed income and benefit eligibility without any change to your actual financial circumstances.

From 20 March 2026, social security deeming rates have increased. The lower deeming rate will rise from 0.75% to 1.25%, and the upper rate from 2.75% to 3.25%. These rates apply to full and part pensioners, as well as self-funded retirees who hold a Commonwealth Seniors Health Card. The rates will be applied automatically by Services Australia.

Deeming rates are a simplified method used by Centrelink to assess income from your financial investments. Rather than tracking the actual returns from each investment, the government assumes your financial assets earn a set percentage return (the deeming rate).

Under deeming, your financial investments are assumed to earn income at the prescribed rates, regardless of what you actually earn. The lower rate applies to financial assets up to $64,200 for singles and $106,200 for couples (combined). The upper rate applies to balances above these thresholds.

Higher deeming rates can increase your assessed income even when your financial position hasn’t changed. Rate changes may affect:

• Commonwealth Seniors Health Card eligibility if your adjusted taxable income plus deemed income exceeds the threshold;
• Age Pension payments for those subject to income testing;
• some aged care fees, as higher deemed income can lead to higher means-tested care fees; and
• other income-tested benefits or concessions.

Account-based income streams that commenced on or after 1 January 2015 are subject to deeming for social security income test purposes. Where deeming applies, your actual pension payments are ignored for assessment purposes.

This particularly affects Commonwealth Seniors Health Card holders and age pensioners who are subject to income testing.

You may want to:

• review your current Centrelink entitlements and income assessments;
• calculate how the new deeming rates might affect your benefits or fees; and
• consider whether any adjustments to your financial arrangements are appropriate.

STP penalties are under the ATO’s microscope

Single Touch Payroll (STP) and super fund member reporting are now established parts of Australia’s tax and super framework, and the ATO has signalled clearer guidance on how penalties may be applied when reporting is late, incomplete, incorrect or in the wrong format.

For employers, the key message is that STP isn’t just a payroll process. It’s now a critical data source used across the tax and super systems, including employee income statements, activity statement processes and the ATO’s compliance work on super guarantee. STP information is shared among government agencies and used in real time, which is one reason accurate reporting matters more than ever.

Employers

In practice, the ATO is setting out a firmer administrative approach to obligations that already exist.

Employers’ STP obligations are already clear. When you pay employees, you need to report payroll information through STP-enabled software, including salaries and wages, PAYG withholding and super liability information. You’re generally required to lodge a pay event on or before payday, and by 14 July each year you also need to make an end-of-year finalisation declaration through STP. Unless you’re covered by a deferral or exemption, you should now be reporting through STP Phase 2.

The ATO is explicit that penalties can apply. Employers that haven’t started STP reporting, or have not transitioned to STP Phase 2 and aren’t covered by a deferral or exemption, may be subject to failure to lodge penalties. More broadly, a failure to lodge on time penalty can apply where a required return, statement or report isn’t lodged by the due date, although the ATO also says it generally considers your circumstances and often doesn’t apply penalties in isolated cases of late lodgment.

Superannuation funds

Employer reporting and fund reporting now work together. Super funds must report member account transactions and attributes under the ATO’s reporting protocols, and penalties may apply if a fund fails to lodge required information on time, provides a false or misleading statement, omits information for a member or fails to keep adequate and correct records. Penalties won’t apply for a false or misleading statement where reasonable care was taken.

For employers, this reporting environment means mistakes are more visible. If your business’s payroll records, STP reporting and super payments don’t line up, that can create issues not only for ATO compliance activity, but also for what your employees see in myGov and in their super records.

What should you do now?

First, treat STP as a live compliance obligation, not an end-of-year tidy-up. Report on or before payday and finalise by 14 July.

Second, make sure you’re using the correct STP Phase 2 reporting format if you’re required to do so. The ATO has specifically identified incorrect format reporting as an issue that reduces the effectiveness of event-based reporting.

Third, reconcile your payroll regularly. The ATO recommends checking payroll totals, STP year-to-date figures and BAS reporting, and making sure you have strong payroll governance, documented processes and periodic reviews of controls.

Fourth, fix errors early – timely correction and early engagement matter. If you’re having difficulty meeting obligations, contact us or the ATO as soon as possible rather than waiting for the problem to grow.

Major super tax changes now law

Parliament has passed two key Bills, delivering significant changes to Australia’s superannuation system that will reshape how high-balance accounts are taxed and boost support for low-income earners.

Division 296 tax

This change will affect fewer than 0.5% of current superannuation members – approximately 80,000 Australians with extremely large super balances. For the vast majority, superannuation tax arrangements will remain unchanged.

The new Division 296 tax, commencing 1 July 2026, targets earnings on large superannuation balances through a two-tiered system for earnings on balances exceeding $3 million:

• the current 15% tax rate remains for earnings on balances up to $3 million;
• earnings on the super portion between $3 million and $10 million will be taxed at an effective 30% rate; and
• earnings on amounts above $10 million will face a 40% effective tax rate.

These thresholds will be indexed to the Consumer Price Index to keep pace with inflation. The new tax applies only to future realised earnings, not unrealised capital gains on unsold assets.

Importantly, for the first year only, liability is determined based on your total super balance at 30 June 2027, rather than at the start of the year.

Total super balance calculations

Less publicised but equally important are changes to how total superannuation balances (TSB) are calculated. The new framework introduces a “TSB value” concept, with each superannuation interest having its own TSB value. Your total TSB becomes the sum of all these values across your Australian superannuation interests.

This applies from 1 July 2026 and affects all tax purposes where TSB is relevant, not just Division 296 calculations.

LISTO increases

From 1 July 2027, the maximum LISTO increases from $500 to $810, while the eligibility threshold rises from $37,000 to $45,000. The new framework links both amounts to existing tax thresholds and rates, meaning they will automatically adjust when marginal tax rates or superannuation guarantee rates change.

These changes represent the most significant superannuation tax reforms in years. If you have a large superannuation balance, the window before 30 June 2027 provides time to consider your options. Low-income earners will benefit from enhanced LISTO support from 2027.

Investment properties: tax return errors that trigger ATO follow-up

Owning an investment property can be tax-effective, but it’s also one of the ATO’s most closely monitored areas. Here are five errors that most often trigger ATO follow-up, and the related issues to keep in mind.

Over-claiming repairs that should be capital works

Repairs and maintenance can be claimed for work that remedies or prevents defects, damage or deterioration arising from using the property to earn income. These expenses are generally deductible in the year they are incurred. By contrast, capital works are structural improvements, alterations or extensions that go beyond merely fixing wear and tear. If the work improves the function or value of the property, it’s likely to be capital in nature. Capital works are usually claimed at 2.5% over 40 years (subject to specific exceptions).

Claiming incorrect interest deductions

If a loan’s used for both private purposes and rental property expenses, the interest must be apportioned. You can only claim the portion that relates to the rental property. This applies whether the mixed use occurs when the loan is first taken out, or arises later through refinancing or redraws. Apportioning of interest must continue over the life of the loan, and interest on amounts used for private purposes is never deductible.

Claiming deductions during private use periods

You can’t claim deductions for interest or other expenses for periods when a holiday home or mixed-use property is used privately, even if the private use is brief. To legitimately claim deductions, the property must be rented or genuinely available for rent. A property may not be considered genuinely available if it’s advertised only through limited channels, offered only during periods of very low demand, or subject to unreasonable conditions such as above-market rent or overly restrictive tenant requirements.

Repeatedly refusing suitable tenants without valid reasons can also indicate the property is being held for personal use rather than income producing purposes.

Poor record keeping and lack of substantiation

You must keep records of your rental income and expenses for at least five years from the date you lodge your tax return. If a dispute with the ATO arises during that period, you must retain relevant records until the dispute is resolved.

Not reporting all rental-related income

Rental-related income includes more than just rent. It can also include bond money retained for unpaid rent or damage, letting or booking fees from cancelled reservations, and insurance payouts, whether for property damage or loss of rent. Disaster relief payments received in relation to a rental property may also be assessable. The ATO now cross-checks data from banks, state land registries, insurers, rental bond authorities and digital platforms, making errors easier to detect than ever.

Is your business misreporting FBT on work vehicles?

If your business provides work vehicles to your employees, the ATO wants to ensure you’re meeting your fringe benefits tax obligations.The ATO has identified that many businesses are failing to meet their FBT obligations when providing work vehicles for private use.

This isn’t just about paperwork. Failing to report, or incorrectly reporting, fringe benefits undermines fairness for employers and can create compliance issues for employees. Getting it right ensures a level playing field and helps your employees meet their tax obligations.

The ATO has identified several practices that can lead to audits, penalties and interest charges:

• failing to lodge an FBT return when required;
• assuming private use of a dual cab ute is automatically exempt;
• incorrectly claiming vehicle exemptions;
• avoiding apportioning private and business use; and
• not keeping adequate records, such as valid logbooks.

These mistakes can also damage your business reputation, making it crucial to stay on top of your obligations.

If you make a vehicle available to your employees, or their family members or associates, for private use, it may be subject to FBT. This means you may need to lodge an FBT return and pay FBT.

The key is understanding when a work vehicle becomes a fringe benefit. Simply providing a vehicle for work purposes doesn’t automatically trigger FBT, but allowing private use generally does.

The ATO uses sophisticated data and analytics to identify businesses that aren’t meeting their obligations. Their compliance teams are actively contacting employers who fail to comply or deliberately avoid FBT.

Time’s running out for small business super clearing house users

If you’re one of the thousands of small businesses using the Small Business Superannuation Clearing House (SBSCH), you need to act now. The service will permanently close on 1 July 2026. From that date, the SBSCH will no longer process payments or allow access to historical records. The closure is part of the government’s payday super reforms, which aim to modernise how employers pay superannuation.

The ATO recommends making the January to March 2026 quarter your last quarter using the SBSCH, giving you a buffer to establish your new process.

Your immediate priorities should be:

• Choosing your alternative payment method: Check if your existing payroll software already includes super payment functions. Many modern payroll systems offer integrated superannuation payments that meet SuperStream requirements. Alternatively, you can use commercial clearing houses or online payment services offered by some large super funds.
• Downloading your records before 1 July 2026: This is crucial, because once the service closes, your transaction history and employee details will be permanently inaccessible. You’ll need these records for future audits and employee queries.

• Switching early to avoid problems: By transitioning before the deadline, you’ll have an established process in place and reduce the risk of late payments for the April to June 2026 quarter.

The ATO’s SuperStream Product register lists certified payroll software and service providers that can handle your super payments. Many offer additional features like automated calculations, compliance reporting and integration with your existing accounting systems.Large super funds also often provide online payment portals, and commercial clearing houses offer similar services to the SBSCH but with enhanced features and ongoing support.

Choosing the right super payment solution depends on your business size, payroll complexity and existing systems. The transition also presents an opportunity to review your entire payroll and super compliance processes.

Superannuation changes proposed for high balances and low-income earners

The government has introduced legislation that proposes significant changes to Australia’s superannuation system that could reshape retirement savings for millions of Australians. It targets both ends of the income spectrum, applying higher tax for those with very large super balances while boosting support for low-income earners.

The Bill proposes a tiered Division 296 tax system for superannuation earnings on balances exceeding $3 million, commencing 1 July 2026:

• the current 15% tax rate would remain for earnings on balances up to $3 million;
• earnings on the super portion between $3 million and $10 million would be taxed at an effective 30% rate; and
• earnings on amounts above $10 million would face a 40% effective tax rate.

These thresholds will be indexed to keep pace with inflation. The new tax would apply only to future realised earnings, not unrealised capital gains on unsold assets.

This change would affect fewer than 0.5% of current superannuation members – approximately 80,000 Australians with extremely large super balances. For the vast majority, superannuation tax arrangements would remain unchanged.

The low income superannuation tax offset (LISTO) is proposed to receive a significant boost from 1 July 2027: the eligibility threshold would increase from $37,000 to $45,000; the maximum payment would rise from $500 to $810; and automatic indexation would tie future adjustments to tax thresholds and superannuation guarantee rates.

The government says these changes will benefit over 1.3 million Australians, with around 60% being women. Treasury estimates eligible workers could see an average retirement benefit equivalent to an extra $15,000.

If you have a large superannuation balance, the changes could significantly impact your retirement planning strategy. The proposed tax increases represent a substantial shift in how high-balance superannuation is treated.

For low-income earners, the enhanced LISTO could provide meaningful support. The higher threshold would mean more workers qualify for the offset, while the increased payment amount means better tax outcomes on superannuation contributions.

Remember, this is proposed legislation that must pass Parliament before becoming law. The Bill may be amended during the parliamentary process, and implementation details are still being finalised.

Choosing the right trustee structure for your SMSF

Setting up a self-managed super fund (SMSF) is an exciting step towards taking control of your retirement savings, but one of the most important decisions you’ll make is choosing your trustee structure. This choice will affect how your fund operates and your ongoing compliance obligations.

You have two main trustee structure options for your SMSF:

• individual trustees – where each member of the fund acts as a trustee; or
• corporate trustee – where a company acts as the trustee of the fund.

With individual trustees, each member of your SMSF must be a trustee. This means if you have a two-member fund, both members must be trustees.

The main advantages of individual trustees include:

• lower setup costs as you don’t need to establish a company;
• simpler initial structure; and
• no annual fees to pay to the Australian Securities and Investments Commission (ASIC) for maintaining a company.

However, there are some drawbacks:

• all trustees must sign fund documents, which can be cumbersome;
• any penalties for legal or regulatory breaches are imposed on each individual trustee (costing more in fines);

• if a trustee dies, assets may need to be transferred; and
• changes to membership require updating legal documents.

A corporate trustee structure uses a company as the trustee of your SMSF. The members of the fund become directors of the company, giving them control over fund decisions.

The benefits of a corporate trustee include:

• continuity – the company continues even if directors change;
• easier administration when members join or leave;
• assets are held in the company name, reducing paperwork when membership changes;
• any penalties for legal or regulatory breaches constitute a single fine (where directors share the cost); and
• only one signature may be required for fund documents (depending on the company’s constitution).

The main disadvantages are:

• higher setup costs to establish the company;
• annual ASIC fees; and
• additional compliance obligations for the company.

The right choice depends on your circumstances. Consider factors such as:

• the number of members in your fund;
• whether you expect membership to change over time;
• your tolerance for ongoing costs versus convenience;
• the value of assets you plan to hold in the SMSF; and
• your long-term plans for the fund.

For funds with multiple members or those planning to hold significant property investments, a corporate trustee often provides greater flexibility and easier administration over time. Single-member funds may find individual trustees simpler initially, though the benefits of corporate trustees often outweigh the costs as the fund grows.

Remember that changing trustee structures later can be complex and costly. You may need to transfer assets and update legal documents. Choosing your SMSF trustee structure is a crucial decision that will impact your fund’s operation for years to come. The choice between individual and corporate trustees involves weighing up costs, convenience and your long-term plans.

Support for rebuilding after natural disasters

If you’ve lost your home, property or business to a natural disaster, knowing what to do next can be daunting. The good news is there’s help available to help you navigate the recovery process.

The Federal Government and state and territory governments work together to provide support where natural disasters have been declared. Visit the National Emergency Management Agency website for links to state or territory disaster recovery websites.

Disaster assistance payments may be available in officially declared disaster events. The Australian Government Disaster Recovery Payment (AGDRP) is a one-off non-means tested payment of $1,000 per eligible adult and $400 per child, while the Disaster Recovery Allowance (DRA) provides short-term income support for up to 13 weeks to eligible individuals.

Contact your insurance company as soon as you can, ideally within 24 hours. Most insurers have emergency hotlines and may offer emergency cash advances within days or temporary accommodation funds if your home is uninhabitable. If you’ve lost your policy documents, the Insurance Council of Australia can help you identify them.

Major Australian banks have hardship teams that can pause loan repayments, waive fees or temporarily extend credit. Don’t wait until you’ve missed a payment – early communication protects your credit rating and opens doors to assistance.

Don’t fall prey to disaster chasers

“Disaster chasers” are individuals or companies who target areas hit by natural disasters. They typically approach through unsolicited door knocks, phone calls, text messages, letterbox drops or targeted online advertisements, claiming to offer quicker, cheaper or specialised repair services. While some offers may be legitimate, be wary of anyone who offers “today-only” deals, demands money upfront or immediate contract signing, asks you to sign anything that prevents direct communication with your insurer, or claims to be from your insurance company without prior notification.

Beware of donation scams

If you’re looking to help those affected, only make donations for disaster relief to reputable charities. For example, some state governments partner with organisations like GIVIT to support affected communities. Scammers often impersonate well-known charities through door-knocking or cold-calling, and create fake websites and social media pages to deceive you in the wake of a disaster. You can verify a charity’s registration on the Australian Charities and Not-for-profits Commission website, and report suspected scams to Scamwatch.

Student loan debts: what you need to know about the latest changes

If you’re among the more than three million Australians with a student loan, there’s welcome news that could significantly lighten your financial load. The Australian Government’s legislation to reduce student loan debt by 20% is now being applied. The ATO applies the 20% reduction to your student debt balance as at 1 June 2025, before indexation was applied, with the 2025 indexation recalculated on the reduced debt amount.

You don’t need to take any action. Most people were due to receive their reduction before the end of 2025, and more complex reductions are being processed by the ATO in early 2026. The ATO will notify you via SMS, email or your myGov inbox when your reduction has been applied.

If your loan account’s in credit after the reduction is applied, you may receive a refund – although, if you have outstanding tax or other Commonwealth debts, the ATO will apply your credit to these debts first.

Changes to repayment thresholds

From 1 July 2025, the minimum repayment income needed to make a compulsory repayment has increased to $67,000 for the 2025–2026 income year. Compulsory repayments have also moved to a marginal repayment system, meaning they’re only calculated on the part of your income above $67,000 (instead of your total repayment income). This will reduce annual repayments for most people.

If your repayment income is $179,286 or more, your compulsory repayment will continue to be 10% of your total repayment income, meaning you won’t be worse off because of the shift to marginal rates.

These changes may have important tax implications for you. Speak with your professional tax adviser to understand the full impact on your financial position.

Beware of pump and dump investment schemes

Late 2025 saw a concerning surge in “pump and dump” schemes targeting Australian investors, with ASIC reporting a notable rise in complaints to the regulator. If you’ve been active in the markets recently, particularly with small-cap stocks, you need to be aware of these increasingly clever scams that could cost you thousands.

Pump and dump operators artificially inflate share prices through false rumours and misleading information, then sell their own holdings at the peak, leaving unsuspecting investors with worthless shares. These schemes specifically target small-cap securities with low liquidity because even minor announcements can dramatically impact their share prices.

Scammers typically identify thinly traded stocks, then flood social media platforms, online forums and messaging apps with false information designed to create excitement and urgency around the investment. They might use fake celebrity endorsements, paid advertisements that appear high in search results, or coordinate multiple “finfluencer” endorsements to create the illusion of genuine market buzz.

Warning signs to watch for

Several red flags should immediately raise your suspicions:

• unsolicited marketing creating urgency around specific investments;
• sudden rushes of commentary about little-known investments across multiple forums;
• social media advertisements directing you to private chat groups;
• fake celebrity endorsements or testimonials;
• strange market behaviour, such as sudden price spikes in typically stable investments; and
• claims of “inside information” or “guaranteed returns”.

Before making any investment decision, especially in small-cap stocks, take time to verify the information independently. Check the company’s official announcements, research its financial position and be particularly wary of investments promoted through social media or unsolicited communications.

If you suspect you’ve encountered a pump and dump scheme, report it immediately to Scamwatch, the ATO or ReportCyber. Quick reporting can help protect other investors and assist authorities in their investigations.

Don’t miss out this year: GST credits, fuel tax credits and your BAS

As 2026 kicks off, it’s a good time to make sure your business isn’t missing out on valuable GST and fuel tax credits.

GST credits

GST credits (input tax credits) are GST amounts you’ve paid on business purchases that you can get back, as long as you meet the requirements. If you buy something for your business and it includes GST, you can claim a credit on your BAS for that GST to reduce the amount owed to the ATO.

Only GST-registered businesses can claim GST credits, and you can only claim credits for goods or services used in running your business (not for personal expenses). The supplier must have charged you GST as part of the purchase price, and for purchases over $82.50 (including GST) you need a valid tax invoice.

Importantly, there’s a time limit for claiming GST credits. Credits expire four years after the BAS due date for the period when you first could’ve claimed them. After that you miss out, so remember to review older expenses within the four-year window.

Fuel tax credits

Fuel tax credits are another way to put money back into your business. When your business uses eligible fuel in certain vehicles, machinery or equipment for work, you can claim a credit on your BAS for the fuel tax (excise) already built into the fuel price.

You need to register for fuel tax credits (as well as registering for GST). Fuel tax credit rates are indexed twice a year, and different activities have different rates.

Not all fuel use is eligible, and vehicle and machinery types matter. For example, fuel used in passenger cars or light vehicles on public roads doesn’t qualify for credits, because the government already reduces that excise with a road-user charge.

Fuel tax credits also have a four-year time limit from the BAS due date for the period when you could first have claimed them.

Your tax agent can help you assess whether fuel used in your business equipment or heavy vehicles is eligible for fuel tax credits, what rates apply, and whether you should claim by correcting a past BAS or including missed credits in your next BAS.

Don’t wait until the last minute to sort out credits or lodge returns. Starting the year right will save you headaches later, and you can unlock some business cash flow in the process.

The ATO’s latest playbook for SMSF education directions

Running a self managed superannuation fund (SMSF) gives you control over your retirement savings, but it also means you’re responsible for following complex rules. When things go wrong, education directions are becoming an increasingly important part of the ATO’s approach.

An education direction is essentially the ATO’s way of sending you “back to school” when you’ve broken superannuation rules. Instead of immediately hitting you with heavy penalties, the ATO can require you to complete an approved course about your trustee responsibilities.

The newly published Practice Statement PS LA 2026/1 clarifies when the ATO will use this tool.
You might receive an education direction if:

• your SMSF has breached superannuation rules;
• the ATO believes your lack of knowledge contributed to the mistake;
• the breach wasn’t malicious or fraudulent; and
• you haven’t received an education direction before.

Common contraventions that might trigger an education direction include making loans to members, accessing super early, exceeding investment limits or failing to separate your personal assets and fund assets.

If you receive an education direction, you must complete the specified course within the given timeframe, provide evidence of completion to the ATO and sign or re-sign your trustee declaration within 21 days. Failing to comply results in penalties of up to 10 penalty units (potentially thousands of dollars in fines) and could lead to more serious consequences like trustee disqualification.

The ATO won’t offer education directions in all situations. If you’re a repeat offender or an experienced professional who should know better, or if the breach is serious or deliberate, you’ll likely face harsher penalties instead.

Even if you weren’t directly involved in the breach, you can still receive an education direction if you were a trustee when it occurred. All SMSF trustees are jointly responsible for compliance.

If you’re running an SMSF, don’t wait for problems to arise. Take advantage of the ATO’s online education modules to understand your responsibilities; stay informed about rule changes; and maintain good records.