NewsLetters |

Aug 07

August 2026 Newsletter

RENTING OUT YOUR HOME – AND THE CGT AND NEGATIVE GEARING CHANGES

One of the many areas where the big changes to negative gearing and Capital Gains Tax may have an effect is where you use the “absence concession” to allow you to “continue to treat” your home as your CGT-free main residence during an extended absence from the home – including where you rent it out for up to 6 years during this period.

While, at this stage, there appear to have been no direct changes to this concession, some interesting consequences arise from using it under these new tax rules.

For example, if you rent it out during a period of absence, and you have a big mortgage, you may find yourself in a negatively geared position (ie where your taxable rent is less than the deductible rental expenses) – so that you end up with a deductible loss.

Moreover, if you acquired your home before 12 May 2026 (ie Budget-day) you will still be allowed to claim this negative geared loss, as the changes which now “quarantine” negative gearing losses do not apply to property acquired before that date.

In other words, such property is “grandfathered” from the negative gearing changes ie the property is carved out from the changes, but in the expectation that that property will one day cease to be a pre-12 May 2026 property when it is sold or bequeathed to beneficiaries etc.

Suffice to say the combination of this carve out from negative gearing quarantining and the CGT absence concession can provide some benefits – and even some good planning opportunities.

In relation to the CGT discount changes, where the absence concession is used, its effect is to “continue to treat” the home as your CGT-free main residence during your period of absence – so that there will be no CGT consequences on any later sale or disposal.

But this is subject to an important exception: where you rent your home for more than 6 years only a partial CGT exemption will apply – to reflect the period that it was rented for more than 6 years. But even then, that partial exemption will be calculated favourably by reference to the market value of your home when you first rent it and not its original cost.

Nevertheless, the capital gain so calculated will be subject to the new CGT rules regardless of when you acquired the property (unlike the negative gearing changes).

This will generally mean that you still get the 50% discount up to the property’s market value on 30 June 2027, but thereafter any gain that accrues will be subject to the new (less favourable) indexation rules and the minimum 30% tax rate!

And for those that are interested, the 50% CGT discount applying to a partial capital gain from the sale of a home (and other circumstances where a partial CGT exemption on a home arises) actually costs the government some $25 billion to $30 billion in foregone tax each year – and has done so for at least the last 10 years!*

So, given a person’s home is usually their most significant asset, if you think that these changes could affect (or even help) you, please make an appointment to see us about it.

*See “Mid -Year Economic and Fiscal Outlook” (MYEFO) statistics

THE WHEELS NOW IN MOTION FOR FAMILY TRUST CHANGES

With the Government set to impose a minimum 30% tax on discretionary or “family” trusts from 1 July 2028, it’s probably time to start thinking about what you should do about any existing family trust you have.

And this could include giving serious consideration to what may be involved in using the proposed concessions to roll-over assets into a different entity such as a company or fixed trust.

Although the start date is two years off (1 July 2028) it will come upon you quickly – hence the need to start thing about things now, especially as the Government has now released its first consultation paper on the matter.

And the issues the government is seeking consultation on, will affect every family trust from the “plain vanilla style” ones to the most complex of family trust structures.

And these issues include such matters as the treatment of distributions to income-tax exempt entities like charities, the proposed rollover relief to support restructuring and how excess franking credits should be treated. And of course, the ways to collect the minimum tax.

However, a couple of areas have already seen much public discussion and this has resulted in the government backing down on one of the original proposals – namely, to subject testamentary trust income to a minimum 30% tax rate.

As a result, the government will now exempt “discretionary” testamentary trusts from this rule. This will mean that trusts set up under a person’s will to hold assets of the deceased and distribute income to beneficiaries on an ongoing basis after the estate has otherwise been finalised will not be subject to the new minimum 30% tax.

But, importantly, this is subject to the “discretionary” testamentary trust being established for a “bona-fide” testamentary trust purpose (eg to cater for a disabled beneficiary). And this is likely to be an area of some debate and controversy.

Suffice to say, if you are proposing to create such a testamentary trust, then it is worthwhile to come and speak to us about it in the not too distant future.

And while on the topic of wills and estates, the big CGT changes in the Budget – and the ending of the 50% discount – may have implications for assets that are bequeathed after 30 June 2027.

So again, it may be worthwhile coming in and having a chat with us about these things – as there is some planning that can be done to avoid the possible harshness of the new rules.

In short, if you have any sort of trust or plan to create one (including a “discretionary” testamentary trust), then it is worthwhile to get ahead of the curve and speak to us about it – or if only just to understand what all these trust changes will mean for you.

WHAT YOU NEED TO RETIRE:

The Latest Numbers

Have you ever wondered how much superannuation you will have and need in retirement? The answer is it depends on a range of factors, such as your lifestyle goals, whether you have paid off your mortgage, your financial situation, whether you live a relatively healthy lifestyle, your likely life expectancy, and so on.

How much will I spend in retirement?

According to the government’s MoneySmart website, the amount of money you will need when you retire depends on:

Your costs in retirement – for example, paying off your mortgage, rent, renovations, travel and medical costs, and

The lifestyle you want – for example, a mod-est versus a comfortable lifestyle (discussed below).

MoneySmart suggests that if you own your home, a general rule of thumb is that you’ll need two-thirds (67%) of your current income each year to maintain the same standard of living.

The other option is to use the Retirement Standard from the Association of Super-annuation Funds of Australia (ASFA) which estimates how much the average Australian would need to retire on.

The Retirement Standard budget for individuals aged 65 to 84 who retire at age 67, who own their home (no mortgage), and are relatively healthy are as follows:

ASFA Retirement Standard	Modest lifestyle	Comfortable lifestyle
Single	$36,434 a year	$55,923 a year
Couple	$52,473 a year	$78,566 a year

Source: ASFA Retirement Standard, March quarter 2026

ASFA’s ‘modest’ standard estimates how much money is needed for the basics, which is mostly met by the Age Pension.

ASFA’s ‘comfortable’ standard estimates how much money is needed for retirees to be involved in a range of leisure activi-

ties and to have a good standard of living including:

Private health insurance

A reasonable car

Household goods, and

Holidays.

How much superannuation will I need? ASFA estimates that the lump sum need-

ed at retirement depends on a range of factors, with one major factor being your standard of living.

SALARY SACRIFICING TO SUPER

Are you an employee thinking of putting some of your pre-tax income into superannuation to boost your retirement savings? This is known as salary sacrifice, and the good news is that it can benefit you and your employer.

What is salary sacrifice?

An effective salary sacrifice agreement (SSA) involves you as an employee, agreeing in writing to forgo part of your future entitlement to salary or wages in return for your employer providing you with benefits of a similar value, such as increased employer superannuation contributions.

Contributions made through a SSA into superannuation are made with pre-tax dollars and do not form part of your assessable income.

This means salary sacrifice contributions are not taxed at your marginal tax rate (MTR) and will instead be subject to superannuation contributions tax of up to 15% when received by your superannuation fund and will count toward your concessional contributions (CC) cap.

The CC cap is a limit to how much you can contribute to superannuation. The combined total of your employer superannuation guarantee (SG) and salary sacrificed contributions must not be more than $32,500 per financial year (2026-27).

For most people, the 15% contributions tax will be lower than their MTR. You benefit because you pay less tax while boosting your retirement savings.

Your employer also benefits because salary sacrifice contributions are tax deductible to them and there is no limit to the amount of their contribution/deduction.

However, this is not the case for employees. Salary sacrifice contributions in excess of your CC cap will be included in your assessable income and taxed at your MTR. You will however be entitled to a 15% non-refundable tax offset to compensate for the tax paid by the superannuation fund on the same excess contribution.

Warning – Division 293 tax on higher income earners

If your income plus your CCs exceed $250,000 pa, you will pay an additional 15% tax on CCs (or on the amount above the $250,000 threshold if that is lower).

For many impacted people however, CCs are still worthwhile as even though they pay 30% tax on CCs, this is still less than the top MTR of 47% (including Medicare levy) that applies to high income earners who are liable for Division 293 tax.

The additional Division 293 tax is administered by the ATO who will work out if you need to pay the tax based on information in your tax return and data the ATO receives from your superannuation fund(s).

The benefits of salary sacrifice

Disciplined approach to saving – individ-uals who struggle to save may benefit from salary sacrificing as contributions are deducted directly from pre-tax income. This automatic process can help you build your superannuation over the long-term and save for retirement.
Tax saving is immediate – because contri-butions are made from pre-tax salary, the personal tax benefit is derived ‘up-front’. This means the saving goes straight to your superannuation fund and you can benefit from compounding returns on the tax saving amount (presuming the return is positive) throughout the year.
Dollar cost averaging – salary sacrifice allows you to buy into the market at regular intervals and, therefore, reduce the risk of market
Easy to administer once established – you do not need to claim a deduction in your tax return or lodge a notice of intent form with your superannuation fund when salary sacrificing, unlike personal deductible con-
Employer matching arrangements – salary sacrifice may also be attractive if your em-ployer offers generous matching arrange-ments to their employees, for example, an additional 1% employer contribution for each 1% of salary sacrificed.

Tip – consider the carry forward rules

You may be eligible to make large CCs in a year without exceeding your CC cap under the carry forward CC rules. These rules allow certain individuals to make extra CCs in excess of the general concessional cap by utilising any unused concessional cap amounts from the previous five financial years (for 2026-27, this means unused cap amounts from 2021-22 onwards; unused amounts from 2020-21 or earlier have now expired).

To be eligible to make carry forward CCs in a year, you must have:

A total superannuation balance (TSB) of less than $500,000 at the end of 30 June in the previous financial year, and
Unused CC cap amounts for one or more of the previous five financial years.

The key issues to consider

SSA may be ineffective – where your employer offers salary sacrifice, the ar-rangement must be in place before you have actually earned the entitlement. This means only income that relates to future employment and entitlements can be salary sacrificed into superannuation. This is known as an ‘effective’ SSA. With any bonus payments, the arrangement needs to be made before a decision to pay the bonus has been made. This applies even when the bonus won’t be paid until sometime in the future.
Employers may not offer salary sacrifice to employees – although most employers will offer SSA to their employees.
Potential for excess CCs – once established, salary sacrifice should not be a ‘set and for-get’ strategy. For example, your salary may increase/decrease, or the cap may change. Therefore, it is important to track the contri-butions regularly if aiming to maximise, and also stay within, the CC cap.

SHOULD YOU SELL BEFORE 1 JULY 2027?

From 1 July 2027, the way capital gains are taxed for individuals, trusts and partnerships is set to change. The 50% CGT discount will be replaced by cost base indexation and a new 30% minimum tax on real gains.

Many people assume they must sell before the deadline to keep the discount, but this is not the case.

Your gains so far are protected

The new legislation treats assets you hold on 30 June 2027 as sold at market value on that date and bought back the next day. You do not pay any tax then. Instead, the gain built up to 1 July 2027 is locked in and keeps the 50% discount whenever you actually sell. Only the growth after that date falls under the new indexation and minimum tax rules.

In short, holding past the deadline does not cost you the discount you have already earned. This is why a number of advisers describe rushing to sell purely to beat the deadline as one of the more expensive mistakes investors make during tax reform.

Reasons to be cautious

Some assets are not affected at all. New builds can still choose the discount, and qualifying affordable housing keeps its existing discount of up to 60%. The small business CGT concessions remain. Income support recipients are exempt from the 30% minimum tax.

Also note that super is unaffected, meaning super funds continue to receive the one-third CGT discount on capital gains.

The bottom line

For most people, there is no need to sell simply because the rules are changing. The gain you have made up to 1 July 2027 stays on the old rules. The decision to sell should rest on your own plans, your asset, your income and your timeframe, not on the calendar.

This article is general information only. It does not take account of your objectives, financial situation or needs, and it is not personal financial or taxation advice.

Jul 10

July 2026 Newsletter

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Family Trusts – Time to Get Some Timely Advice

If you have a family trust there are two recent major (very major) things that have happened that will affect the way they will be taxed in the future.

The first is the announcement in the Budget that trust income will now be taxed to the trust at a minimum rate of 30% – regardless of how it is ultimately distributed to beneficiaries.

However, under the proposed measures, individual beneficiaries to whom that trust income is later distributed will get a credit for the tax paid by the trust – to prevent double taxation. But a credit will not be available where this trust income is distributed to a corporate beneficiary.

These measures are due to start on 1 July 2028 – but no doubt will be subject to tremendous scrutiny in the meantime before any final legislation is passed.

Nevertheless, it is never too early to start looking at things and making some plans.

The other major thing that happened that affects family trust was a decision of the High Court in Bendel’s case. And that decision applies immediately.

In that case the High Court ruled that where a corporate beneficiary of a trust is made entitled to trust income, but this income is not paid over to them, then the ATO cannot say that this is a taxable dividend paid back to the trust from the company.

Rather, in this case, where the income is “set aside” for the corporate beneficiary and retained by the trust (ie where an “unpaid present entitlement” arises) there will be no income tax consequences for the trust and the ATO cannot claim that a “deemed dividend” has arisen.

However, it seems that this decision is dependent on the corporate beneficiary not calling for this debt owed to it to be paid.

Also, in the light of this case, it may be that you are entitled to an amended assessment and a refund of tax if the ATO has now werongly applied these “deemed dividend” rules in the past few years.

It should also be emphasised that the proposed Budget changes to taxing trust income will presumably make distribution of trust income to corporate beneficiaries no longer viable or tax effective (if the Budget measures proceed in their current form).

In any event, regardless of how the Budget reforms for trust income pan out, it is the time to come and speak to us about how your family trust operates so that you can be satisfied that all bases have been covered – and all possible impacts planned for (as far as possible).

The Proposed Budget Changes – When to Realise a Capital Gain

With the first of the Budget legislation having been introduced into Parliament, perhaps it’s time to consider more closely how they may affect you, and what you can do about it – especially in relation to the CGT discount changes.

So, looking at the CGT discount first, if you already own an asset you won’t be denied whether or not you sell before or after the key changeover date of 1 July 2027.

If you sell before that date, you will continue to get the full 50% CGT discount (provided you are and have been a resident of Australia for tax purposes) .

If you sell on or after that date, you will continue to get the full 50% CGT discount up to its market value on that date – and for any gain that accrues thereafter you will be subject to the indexation method of calculating your gain (and the new minimum 30% tax rate).

In short you won’t be really penalised if you own an asset now and sell before or after that key date – you will still get the discount up to that date.

But then you will be subject Io the new indexation method of calculating any gain – and, more importantly, the new minimum 30% tax rate.

And that is where you may get penalised.

Therefore, if you are looking at realising a gain on an asset (eg shares) in an income year when you have little or no other assessable income – so that your capital gain will get taxed at less than the 30% marginal tax – then you may want to think of doing that before 1 July 2027… because after that the minimum 30% tax rate will be imposed on your “raw” capital gain.

It’s a simple bit of planning – but invaluable (assuming in the year ending 30 June 2027 you can order things in a way to reduce your normal taxable income).

So come and have discussion with us about this – before perhaps you lose the opportunity to do something advantageous.

A Foreign Resident Cannot Get a CGT Exempt Home

It is important to stress that if you are a foreign resident for tax purposes when you sell a home you own in Australia, you cannot get the CGT exemption on that home – regardless of how long you lived in it, or of the fact that you may have only been a foreign resident for a short time.

And there is no apportionment. It is an all or nothing thing.

And what’s more your capital gain will not be entitled to a full CGT 50% discount (under the current rules). Rather, you will only get an apportionment for the time you were a resident.

And to make matters worse you will be taxed on the gain at higher foreign resident tax rates.

Oh, and because the home is real property in Australia, it will be easy for the ATO to chase things up and capture the sale transaction through its data matching processes – and matching that with, say, your new foreign address.

So, its important to get things right if you are going to become a foreign resident and you intend to sell your home. And don’t forget, the time of the sale is when you make the contract of sale (ie exchange contracts) and not when you settle on the sale.

However, there are several important exceptions to this rule

The first, involve where a person has been a foreign resident for less than 6 years and they sell the home because of serious illness or a death in the immediately family (as such “life event” exceptions are strictly defined in the legislation).

There is also another important “life event” exception – and that is where there is a marriage or relationship breakdown within 6 years of becoming a foreign resident and the CGT rollover for this relationship breakdown would be available.

But even in this case, the exception operates on a narrow basis.

It only applies if one of the spouse’s interests in the home is transferred to the other spouse and, further, this transaction would be entitled to the CGT rollover under the relevant means set out in the legislation.

However, it must be stressed that this exception does not apply if there is a marriage or relationship breakdown and the former home is sold to a 3^rd party as part of the settlement of matters. This is simply because the CGT rollover would not apply in this case, as it only applies to appropriate transfer of assets between the spouses – and not to third parties!

So, it’s a big trap to be aware of – especially in circumstances where say a separating spouse leaves the country to start a new life without yet dealing with the former matrimonial home.

If you find yourself in this type of situation, please speak to us before you head overseas – so something can be arranged before you become a foreign resident. It may be too late otherwise.

Likewise, come and speak to us if you are ensure what your residency status will become – as this is the crucial variable

Borrowing in your SMSF: what is changing

Self-managed super funds are generally not allowed to borrow money. A limited recourse borrowing arrangement, or LRBA, is one of the few exceptions. It lets a fund borrow to buy a single asset, with the lender’s rights limited to that asset alone. If the loan goes bad, the lender can take the asset but cannot touch the rest of the fund. That protection is what makes the arrangement attractive to many trustees.

How an LRBA works

Under an LRBA, the borrowed money is used to buy one asset, which is held in a separate holding trust until the loan is repaid. The fund makes the repayments and, once the loan is paid off, takes full ownership of the asset.

The law allows a fund to borrow for a single acquirable asset, or for a parcel of identical assets that have the same market value. A common example is a parcel of shares. The fund can use an LRBA to buy shares, but they must all be in the same company. A bundle of different shares does not qualify, because that would be more than one asset.

What is changing

A new law will soon restrict what an SMSF can borrow to buy. Once it takes effect, a fund will no longer be able to use an LRBA to acquire residential property.

This is a significant change. Residential property has been one of the most popular uses of LRBAs, with many funds borrowing to buy a house or unit as a long-term investment. That door is closing for new arrangements.

What you can still borrow for

LRBAs are not being abolished. A fund will still be able to use one to buy business real property, broadly meaning land and buildings used wholly and exclusively in a business. This might include a commercial premise. A fund will also still be able to borrow to buy a parcel of identical shares or other listed securities, provided they are all the same. Units in a managed fund remain available too, again as long as the units are identical, being the same class in the same fund. So the change is targeted. It removes residential property from the list, while leaving genuine business premises, shares and managed fund investments available.

When the change starts

The restriction applies from 10 August 2026.

Importantly, arrangements already in place are protected. If your fund entered into a borrowing arrangement before the start date, it is not affected. Refinancing an existing loan is also allowed. And if your fund has signed a contract to acquire an asset before the start date, that arrangement is not impacted even if settlement happens afterwards.

What this means for you

If you are considering using an LRBA to buy residential property, timing matters. Once the change commences, that option is gone for new arrangements. If a commercial property or share investment is part of your plan borrowing will remain being available.

This article is general information only. It does not take account of your objectives, financial situation or needs, and it is not personal financial or taxation advice.

High Court rules unpaid trust amounts are not loans

What this means for you

If your family trust gives a company a share of trust income but does not actually pay it across, the High Court has confirmed this is not automatically treated as a loan back to the trust. That matters, because being treated as a loan could trigger an unexpected tax bill under the rules known as Division 7A.

The background

Many family trusts distribute income to a related company, often called a “bucket company”, but leave the money sitting in the trust rather than paying it over. When income is owed to a beneficiary but not yet paid, it is called an unpaid present entitlement, or UPE.

For about 15 years the ATO took the view that if the company did not call for its money, the unpaid amount worked like a loan from the company back to the trust. On that view, the arrangement could be taxed as if a dividend had been paid, unless the trust put a formal loan agreement in place and made regular repayments.

The Bendel case put that view to the test. A trust controlled by Mr Bendel set income aside for a related company year after year. The company never asked to be paid, and the funds stayed in the group. The ATO assessed the unpaid amounts as loans and taxed them.

What the High Court decided

On 10 June 2026 the High Court ruled in favour of the taxpayer, by a five to two majority. It found that simply leaving an entitlement unpaid is not a loan.

The key point is that a loan needs an obligation to repay money that was advanced. Here, the company had not advanced anything. It had simply chosen not to call for what it was owed. Doing nothing, the Court said, is not the same as making a loan or providing finance. The unpaid amount remained the company’s entitlement, but it did not become a debt the trust had to repay until the company actually asked for payment.

In short, the long-standing ATO position has been overturned.

The ATO’s response

The ATO has said it welcomes the clarity and is considering what the decision means. It will release further guidance for affected taxpayers as soon as it can.

Where this leaves you

This is a helpful outcome, but it does not mean unpaid entitlements can be ignored. The result turned on the specific wording of the trust deed and the fact that the company never called for payment. Other tax rules can still apply, and how the decision affects your trust will depend on your own arrangements.

There is also a longer-term question mark. The Government has proposed taxing trust income at a minimum rate from 1 July 2028, which could reduce the appeal of distributing income to companies in any case.

If your trust uses a bucket company, please speak to us so we can review where you stand.

The new 30% minimum tax on capital gains: what it means for self-funded retirees

The Government has legislated major changes to capital gains tax (CGT). From 1 July 2027, the 50% CGT discount for individuals, trusts and partnerships will be replaced. In its place comes cost base indexation and a new 30% minimum tax rate on capital gains.

How the 30% minimum tax works

Under the current rules, you pay tax on only half your capital gain on assets held for more than 12 months, with that half taxed at your marginal rate.

The new rules work differently. The 50% discount is removed but your cost base is lifted for inflation. So you only pay tax on the real gain. Then a floor applies to the rate of tax. Even if your marginal rate is below 30%, your real capital gain is taxed at a minimum of 30%.

The measure applies to assets held for at least 12 months. It also brings pre-1985 assets into the net for gains accruing after 1 July 2027. Your family home stays exempt. Super funds are not affected and keep their existing discount.

Why it matters for self-funded retirees

The minimum tax is aimed at people who sell assets in low-income years. Retirement is the obvious example.

Many self-funded retirees have little taxable income. They often plan to sell shares or property in retirement, when their marginal rate is low. The new rules take much of the value out of that plan. A retiree with a marginal rate of 16% would still pay 30% on a real gain. That is close to double the tax on the same sale today.

Age pensioners are exempt

There is an important carve-out. The Treasurer has confirmed that recipients of certain government payments, including the Age Pension and JobSeeker, will be exempt from the 30% minimum tax. Pensioners would keep being taxed at their marginal rate.

A word of caution on the pension

The Age Pension is means tested. To qualify you must pass both an income test and an assets test. You must also meet the age and residency rules.

If the pension is part of your plan, a few points help. Know the assets test thresholds and where you sit against them. Remember your home does not count as an asset. Watch the gifting rules, as you cannot simply give assets away to qualify. And think carefully about the timing of any large sale.

This article is general information only. It does not take account of your objectives, financial situation or needs, and it is not personal financial or taxation advice.

Jun 23

June 2026 Newsletter

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BUDGET CHANGES TO NEGATIVE GEARING
What do they mean for you?

So, what do the Budget changes to negative gearing mean to you if you own a residential investment property?

Well, the first thing to note is that the negative gearing changes are “grandfathered”

they do not apply to properties that are already owned at the time of the Budget (12 May 2026) – and such properties can be continued to be negatively geared as long as you own them.

Furthermore, if you buy a property between Budget day and 1 July 2027, you can still negatively gear it up to 1 July 2027. But for any property bought from 1 July 2027, you will not be able to negatively gear it.

However, under the changes your denied negatively geared deductions will not be lost for ever.

They can be carried forward and offset again positive rental income from the property in future years.

In other words, the losses are “quarantined” (as per the Keating model from the 1980s) .

And to the extent this is offsetting is not possible, well the current law still allows those denied deductions to reduce any capital gain you make on sale of the property.

So, it is all not bad news.

Also, if you do buy a rental property between now and 1 July 2027, there are legitimate ways to maximise the deductions you can claim before the new rules against negative gearing apply.

However, it is important to emphasise two things:

Firstly, this proposed negative gearing restriction does not apply to any other investment assets that you may borrow money to buy (eg. commercial property, shares in a company or units in a unit trust).

Secondly, the negative gearing restrictions do not apply to SMSFs (and nor do the proposed changes to the CGT discount).

Suffice to say, the devil will be in the legislative detail after many months of consultations and submissions. And there is already clamouring for changes to be made to these proposals.

So, it is a good idea to come and speak with us about what may be best to do if you already own such a property and are looking to sell it or if you are considering buying an investment property in the future.

BUDGET CHANGES TO CGT DISCOUNT
What do they mean to for you

So, what do the Budget changes to the CGT discount mean to you?

And what these changes will do is to allow any capital gain that accrues up to1 July 2027 to continue to be entitled to the 50% discount -but thereafter the assessable gain will be worked out under an inflation base indexation rule and gain itself will be subject to a minimum 30% tax rate.

But firstly, here are the specific rules regarding the proposed changes In a nutshell:

Firstly, if you buy and sell an asset after 30 June 2027, the new rules apply (ie your gain will be calculated by reference to inflation based indexation only and a minimum 30% tax rate will apply to the gain).

Secondly, if you buy and sell an asset before 1 July 2027, the existing 50% discount rules will continue to apply and there is no minimum tax rate.

Thirdly, if you buy an asset before 1 July 2027 but sell it after that date (ie your ownership of the assets straddles this key date), then you will get the discount up to the asset’s market value on 1 July 2027 and thereafter the gain is calculated under indexation and a minimum 30% tax rate will apply to the gain.

Importantly, the new rules apply to all assets (eg. shares) – and not just real estate.

A fundamental feature of this rule as it applies to the straddling situation, is the need to determine the asset’s market value on 1 July 2027. This will be easy in some cases (eg publicly listed shares on the ASX). But harder in other cases – including real estate.

But here it is worth noting that the ATO currently takes the view that you do not have to get a professional valuer where the CGT rules requires a market value – and that a “comparative valuation” will do instead eg comparative sales of similar houses in the neighbour (and perhaps supported by a real estate agent’s letter).

However, if the Commissioner challenges your market valuation the onus will be on you to show that your valuation is better than the Commissioner’s valuation!

Another key thing to bear in mind is whether the new indexation system will give you better advantage than the discount – which is possible especially if you have owned the asset for a long time. Also, if shares you have owned on the share-market have only risen in line with inflation, indexation may also give a better result.

The timing of sale is also important because it is better to realise a capital gain in an income year in which your other income is low (or you have capital losses or a tax loss) – so that you therefore pay less tax on the gain. And with the minimum tax rate of 30% applying from 1 July 2027, this is an important matter – especially if you are considering retiring in the near future.

Suffice to say, these CGT discount matters are ones on which important planning decisions can be made. So, make an appointment to see us to discuss how they apply to your assets.

The new 30% minimum tax on trust income will hit many small businesses hard

Discretionary trusts have been a familiar feature of Australian business life for generations, partly due to their suitability for asset protection and retirement planning, as well as their ability to legitimately achieve lower overall tax rates through income splitting, where trustees of discretionary trusts allocate all or part of the trust income to associates who have a lower marginal rate than the high-income primary earner. If enacted, the 12 May 2026 Budget announcements will put an end to tax minimisation through income splitting.

As from 1 July 2028, there is to be a radical shift away from the well-established flow-through treatment of the taxable income of discretionary

trusts. Instead, a 30% minimum tax is to apply at the trustee level. The 30% tax paid by the trustee will be creditable (but not refundable) to non-corporate beneficiaries.

Trustees in receipt of franked dividends will have to apply their franking credits to the 30% tax impost, while corporate beneficiaries are prevented from using the 30% credit at all, leading to the likely demise of bucket companies as such a structure would involve double taxation going forward in most cases.

The proposed new rules will not apply to other types of trusts such as fixed and widely held trusts (including fixed testamentary trusts), complying superannuation funds, special disability trusts, deceased estates or charitable trusts.

The government seems to think its new 30% minimum tax applied to trust income will mainly fall on lotus eating wealthy investors who reduce their tax bill by

splitting their income with lower tax family members, with the Treasury Explainer released on Budget night noting:

“The majority of trust income flows

to the top earning 10% of families and approximately 90% of total private trust wealth is held by the wealthiest 10%

of households (those with net worth above around $2.3 million).”

We’re not so sure about that.

Our experience suggests that many clients who use trust structures are hardworking Australian small business owners who certainly do not regard themselves as wealthy. They would have been advised to adopt a trust structure when they took a risk and started off their business because it provided them with asset protection as well as an effective path for their eventual retirement. Trust structures do allow for some income splitting, but they have been around for decades and there is nothing particularly artificial or aggressive about the practice.

Wealthier beneficiaries are mostly already taxable

at higher marginal rates, so that a minimum 30% tax at the trustee level would make no practical difference to their net tax position at all.

The change is expected to raise $4.5 billion over five years from 2025-26. That additional revenue will be applied to funding a permanent $250 annual rebate from

1 July 2027 for Australian salaried workers, as well as for business owners who run their own business as sole traders. That’s equivalent to one cup of coffee a week.

Good luck to employed Australians and sole traders for being singled out for a modest tax cut, but hitting small business operators with higher tax bills as from July 2028 to help pay for it is just going to put even further financial pressure on that group. Instead

of pitting one set of battlers against another, the government could perhaps have done more to reduce spending.

It’s important to remember that none of this is yet law. There is to be a consultation process around the announced measures and, starting on 1 July 2027, there will be a three-year window to allow businesses to restructure their affairs. Whether the States and Territories will be prevailed upon to also provide stamp duty relief remains to be seen. If not, the cost of restructuring could be pretty steep if there is real property involved and you factor in the cost of legal and accounting advice.

If you operate your business through a trust structure we need to get together and work out how much extra tax your business might be paying under the proposed new rules. We can also make an estimate of what restructuring will cost, including through the tax profile of an alternative business structure.

There is an unusually high level of pushback on the announced trust, capital gains tax and negative gearing changes (when compared to previous Budgets), so the final scope and shape of the tax package may well change through the consultation and legislative process.

We will keep you informed of further developments as they occur.

CEASED WORK AND CLAIMING JOBSEEKER?
What it Means for Your Super

If you’ve stopped working in your early 60s and are receiving JobSeeker Payment (JSP) while waiting to access your super or the Age Pension,

there’s an important rule you need to understand. The conditions attached to JSP can directly conflict with the rules for releasing your superannuation, potentially leaving your retirement savings locked away longer than you expected.

The Conflict Explained

There are two ways to access your super under the retirement condition of release once you’ve reached age 60. The first requires satisfying your super fund that you have no intention of ever again being gainfully employed for 10 or more hours per week. The second is simpler, you just need to have ceased a gainful employment arrangement after turning 60.

The problem with the first pathway is that JobSeeker recipients must agree to accept any offer of suitable paid work. You can’t declare to your super fund that you never intend to work again while also assuring Centrelink that you’ll accept suitable job offers.

The two positions are incompatible.

The second pathway is also unavailable if you ceased work before turning 60, because it specifically requires the employment arrangement to end after you’ve reached that age. In this situation, your super may remain inaccessible until age 65, when it becomes available regardless of your work status.

Pathways that may still be available

The good news is that this doesn’t necessarily mean your super is out of reach. There are alternative pathways worth exploring with an adviser.

Transition to Retirement (TTR) income stream. Once you’ve reached age 60, you can commence a TTR pension to draw on your super while still satisfying JobSeeker requirements. You’re limited to drawing 10% of the account balance each year,

and the balance will count under Centrelink’s assets and income tests, which may reduce your JSP.

Severe financial hardship provisions. This is an often-overlooked pathway. If you’ve received JobSeeker (or another qualifying Commonwealth income support payment) for a cumulative period of 39 weeks after reaching your preservation age, and you’re not currently gainfully employed, your entire super balance can become accessible. This is a particularly powerful option because, unlike the standard hardship provision (which only allows a single withdrawal of between $1,000 and $10,000 per year), this pathway unlocks your full balance.

The Bottom Line

The interaction between Centrelink rules and superannuation law can be complicated, and decisions made without

proper advice can have unintended consequences including delayed access to your retirement savings.

Super and Bankruptcy:
What’s Safe and What isn’t

If bankruptcy is on the horizon, one of the first questions people ask is what happens to their super. The answer turns on timing, the type of contribution, and how you draw on the fund.

The general rule

Money sitting in a regulated super fund is protected from your bankruptcy trustee. Creditors cannot touch it, and the balance stays yours. That protection covers accumulation accounts and pension accounts inside the fund, and it extends to lump sums you withdraw after the date your bankruptcy starts. If you take a lump sum out post-bankruptcy and use it to buy a car or a holiday or invest in your own name, those assets remain protected too.

The protection only applies to regulated funds, approved deposit funds, and public sector schemes. If your fund becomes non-complying, you lose protection.

Contributions made to defeat creditors

Under sections 128B and 128C of the Bankruptcy Act, your trustee can claw back super contributions made before bankruptcy if the main purpose of the contribution was to keep money out of creditors’ reach. This applies whether you made the contribution yourself or someone made it on your behalf such as employer via a salary sacrifice arrangement.

What does the bankrupt trustee actually look at? Patterns. A sudden spike in voluntary contributions in the year or two before bankruptcy is a red flag, particularly if it looks out of step with your earlier contribution history. Routine employer SG contributions and ordinary salary sacrifice arrangements that have been running for years usually pass without issue. Large one-off personal contributions when you knew the wheels were falling off do not.

There is also a presumption to be aware of. If you were insolvent or about to become insolvent when the contribution was made, the law presumes the contribution was made to defeat creditors, and the burden shifts to you to prove otherwise.

Pensions and the income limit

Lump sums from super are treated very differently to pension payments. Once your super starts paying

you a pension or income stream, those payments are counted as income under the Bankruptcy Act. Income during bankruptcy is only protected up to a threshold set by Australian Financial Security Authority (AFSA), which is indexed twice a year and varies based on your number of dependants. Anything above the threshold gets split, with 50 per cent going to your bankruptcy trustee.

For someone already drawing a pension when bankruptcy hits, it can be worth getting advice on commuting the pension back to accumulation

phase and taking lump sums instead. The tax and Centrelink consequences need careful thought before doing this.

A few other things worth knowing

Withdrawals taken out of super before you become bankrupt are not protected. Once the money is sitting in your bank account, it forms part of your divisible property.

If you run an SMSF, you must resign as trustee

on bankruptcy. You become a disqualified person under the SIS Act, and staying on is an offence.

Super is generally protected in bankruptcy, but the timing and shape of any contribution or withdrawal matters enormously. Get advice before you move money.

May 13

May 2026 Newsletter

By admin | Uncategorized | No Comments

Budget musings:
Changes to negative gearing, the CGT discount on the cards

Even before the current war in the Middle East, the Budget has clearly been under some pressure. Recent comments from various government sources suggest that changes to the tax rules around investment properties could be under serious consideration.

So, what sort of changes could we see on 12th May? And how might they affect you?

While there has been a lot of focus on the 50% CGT discount, there is also a push to restrict negative gearing – ie, the ability to offset rental losses against other income, such a salary and wages. Most other countries don’t permit this.

The 50% discount

Arguments have been advanced that the 50% discount is too generous, especially for assets that have not been held for a long time, and there are calls for reducing the discount to 331/3 % or even 25%.

Another idea is to have a staggered discount, depending on how long the asset has been held. There have also been calls to extend the existing 12 month holding period before a capital gain can qualify for the discount to, say, 18 months or 24 months.

Negative gearing

On the negative gearing issue, reform ideas range from quarantining losses altogether and offsetting them against future rental profits or against the CGT gain that arises when the property is sold to limiting negative gearing to two properties per taxpayer or to some dollar amount.

All assets or just residential property?

While many people view housing as special, the government may consider whether to apply any changes to assets more broadly, including commercial property, shares and the like.

Date of effect

If any changes made only apply to assets acquired by a taxpayer after the Budget date, then any significant revenue gains would be a long way off. But Australians generally don’t like retrospective tax changes and the way these things have generally been handled is to make any adverse tax changes operate prospectively. After all, people have invested under the rules which existed at the time.

Applying any changes to the CGT discount or negative gearing to existing assets would be a courageous decision (in a “Yes Minister” sense), and one that the Opposition parties would relish.

What should you do now?

Anyone who owns an investment property or is considering buying or selling one should probably sit back and wait for the Budget to land. There may be nothing of any consequence in it after all, but if there is you’re welcome to come and speak to us about how you are affected and what your options are.

Fuel response payment plan

Following a government media release on the same day, the ATO on 1 April 2026 announced that eligible taxpayers who are experiencing difficulties in paying their tax debts due to recent high fuel prices can apply to the ATO for a temporary fuel response payment plan.

An eligible taxpayer can apply for the ATO’s fuel response payment plan which has the following features:

no upfront payment; a 3-year payment plan period of 36 equal monthly instalments; the ATO will make a decision to remit any General Interest Charge that has accrued from the time of the application to the date of the third monthly instalment, provided the taxpayer has:

paid all instalments agreed under the payment plan for 3 months; and
brought any outstanding lodgements up to date in that period.

A taxpayer is eligible to apply if they are an ABN holder who meets all of the following four criteria:

They have experienced an increase in business operating costs, and these costs are either directly attributable to higher fuel costs, or indirectly attributable to high fuel costs because of increased transport, logistics or other supply chain costs.

They have a new tax debt or are unable to service an existing tax debt.

They can demonstrate a reduced capacity to pay due to the high fuel prices. This is separate from a general downturn in business or ordinary cash flow issues. It means that if fuel prices had not been so high, the taxpayer anticipates they would have been able to meet their payment obligations, including their instalments under existing payment plans.

Their lodgements are up to date within three months of the payment plan being put in place. The ATO may cancel the payment plan if lodgements are not up to date within this period. Up-to-date lodgements are also required for the ATO to make a decision to remit GIC under the fuel response payment plans.

The plan is available by application until 30 June 2026.

If you’re experiencing financial difficulties because of the spike in fuel prices due to the Middle East conflict, even indirectly, you may be able to benefit from the ATO’s fuel response payment plan. It may only be a deferral, but it could make a difference in these difficult times.

And if you’re not sure whether you’re eligible, or you need help in making an application, please don’t hesitate to contact us.

CGT relief if an asset is lost or accidentally destroyed

The capital gains tax (CGT) rules provide a lot of important concessions where
a capital gain arises in unusual or unexpected circumstances.

One such concession is the rollover where a CGT asset (or part of one) is lost or accidentally destroyed.

This typically occurs where a natural disaster occurs (eg flood, fire, cyclone etc) which results in the destruction of an asset – such as an investment property, a commercial building etc. And, importantly, this includes the partial destruction of an asset (eg where a roof on an investment property or a commercial building is destroyed and has to be replaced).

The rollover may also occur where a CGT asset is stolen or where it is lost due to fraud. (But note that the ATO now takes the view that roll-over no longer applies where a broker accidentally sells your shares on your behalf.)

Under CGT principles these type of “destruction or loss” scenarios can give rise to an assessable capital gain because, in effect, the ownership of the asset has changed – even though this occurs accidentally or in circumstances outside the taxpayer’s control.

And this where the CGT rollover for “where an asset is lost or accidentally destroyed” steps in.

But, suffice to say, there are several key conditions to be met before the rollover can apply.

And the main one of these is that money (eg insurance or other indemnity) or a replacement asset is received in compensation for the loss or destruction of the asset. Importantly, in the case of money this must be applied in acquiring a replacement asset within a certain time period.

In this case, the capital gain that you would otherwise would have made as a result of the loss or destruction is disregarded – and the replacement asset you acquired is deemed to have the same cost for CGT purposes as the original asset.

However, there are important rules to be aware of where you receive money as compensation and you spend only some of it (or more than it) in acquiring a replacement asset. And this can give rise to an immediate capital gain or other CGT adjustments. These rules are messy and require the advice of an expert.

In the event, that the original asset was acquired pre-CGT (ie before the CGT regime was introduced) then any replacement asset will be taken to have been acquired pre-CGT also provided the cost of replacement asset is within certain thresholds or the replacement asset is substantially the same as the original asset.

Suffice to say the rules for qualifying for the rollover in the first place and their exact effect will depend on individual circumstances.

Moreover, they can be quite complex – depending on the circumstances – and require the advice of an expert.

So, if you find yourself in this situation make an appointment and come and speak to us as soon as possible so all the right steps can be undertaken to obtain this important CGT relief.

CGT and options –
when is the asset acquired?

There was a recent case before the Federal Court which had to deal with the issue of when is an asset acquired for CGT purposes when an option is exercised to acquire it.

Is it at the time the option agreement is entered into or is it when the option is exercised?

And it is an important issue for the person who acquires the asset.

For example, it may affect their ability to use the 50% discount on a subsequent sale of the asset which requires a 12 month holding period – or it may trigger the rule that prevents the discount
from being used if an agreement to sell an asset is entered into within 12 months of acquiring it.

It is also an important issue for the person who sells the asset when the option is exercised – and for similar reasons.

In that Court case, the Court confirmed the Commissioner’s views that the time of disposal is when the subsequent contract to sell the asset is entered into following the exercise of the option – and not when the option agreement itself is entered into.

So, if for example you enter into an option agreement to buy land on 1 April 2026 and then exercise that option 6 months later on 1 September 2026, then you will be considered to have acquired the land when you exchange the written contracts drawn up to effect that sale.

And this is all because the CGT rules generally say that an asset is acquired when the contract for its sale or disposal is entered into (or if no contract, when the change of ownership occurs).

Of course, this result may have adverse consequences for the acquirer (as suggested above).

However, all may not be lost.

This is because there is High Court authority* that says that an option agreement is itself a “conditional contract” and that when the option is exercised this condition is met. And therefore, the relevant contract is the option agreement not any later sale contract entered into

Therefore, for CGT purposes it is arguable that the relevant contract for the sale or disposal of the asset is the original option agreement itself.

However, this goes against the ATO’s stated position (and also some tribunal cases).

So, if you have entered into an option agreement to buy or sell an asset, or are intending to do so, you should come and speak to us first.

* Laybutt v Amoco Australia Pty Ltd [1974] HCA 49

The work test:
Claiming a tax deduction for super contributions after 67

If you’ve turned 67 and want to top up your super and claim a tax deduction for doing so, there’s one extra hurdle to clear: the work test. It’s a simple requirement, but it catches people out, so it’s worth understanding when it applies and how to meet it.

What the work test is

The work test requires you to be gainfully employed for at least 40 hours in any 30 consecutive day period during the financial year you make the contribution. “Gainfully employed” means working for payment or reward as an employee or self-employed, in a business, trade or profession.

Unpaid work, including volunteering, doesn’t count.

The 40 hours needs to be completed over a 30-day window in the financial year. You only need to meet it once in the year.

When it applies

Since 1 July 2022, the work test no longer applies to non-concessional contributions. However, the test still applies if you’re aged 67 to 74 and want to claim a tax deduction for a personal contribution. It’s the gateway to turning a personal contribution into a concessional (tax-deductible) one. Once you turn 75, you generally can’t make personal contributions, except for Downsizer contributions, so deductible contributions are not ordinarily available from 75. However, there is a small window which allows personal contributions received within 28 days after the end of the month you turn 75 to be accepted.

Who checks it?

Your super fund used to ask for a work test declaration before accepting your contribution. Now, the ATO checks at the time you lodge your tax return and claim the deduction. The responsibility sits with you to keep evidence of having met the test. For example payslips, invoices, or a record of self-employed work and hours.

The work test exemption

If you’re recently retired and didn’t work in the year you made the contribution, you may still claim a deduction using the one-off work test exemption. You must:

have met the work test in the previous financial year
have had a total super balance under $300,000 at the end of the previous financial year, and
not have used the exemption before.

It’s a once-only opportunity, designed to give recent retirees a final chance to make a deductible contribution.

Claiming the deduction

Meeting the work test is only one step. To claim the deduction, you must make the contribution into your super fund and
Lodge a “notice of intent to claim a deduction” with your fund, and
Receive an acknowledgment from the fund before lodging your tax return.

Without that acknowledgment, the deduction can’t be claimed, even if you met the work test. The deduction also can’t create a tax loss, so size the contribution against your taxable income.

The bottom line

If you’re between 67 and 74 and planning a personal deductible super contribution, remember the work test. Forty hours of paid work in a 30-day window. Speak to us if you’re unsure whether your situation qualifies.

30 June 2026
Tax and Super Checklist

With the end of the financial year coming up, now’s a great time to get on top of your tax and super. A little planning before 30 June can help you make the most of any opportunities to reduce tax, boost your super, and avoid last-minute surprises.

This checklist outlines key things to consider and action before the financial year wraps up. It’s a simple way to stay on track and finish the year with confidence.

TAX CHECKLIST

Here are some practical things to consider before 30 June to help you tidy up your tax position and potentially reduce your bill.

Bad Debts

If you’re running a business, write off any bad debts that won’t be recovered before 30 June so they can be claimed.

Employee Bonuses and Director Fees

Planning to pay employee bonuses or director fees? Make sure they’re confirmed in writing and communicated to recipients by 30 June, even if payment happens later.

Charitable Donations

Bring forward any planned donations and have the highest-earning family member make the gift. Remember:

» Donations must be to registered charities.

» They can’t create a tax loss.

» Keep receipts.

Prepay Interest on Loans

If you have a loan for an income-generating asset (like an investment property), consider prepaying interest before 30 June to bring forward the deduction.

Claim Work-Related or Business Costs

Bring forward costs such as repairs, stationery, or supplies by 30 June 2026. These small deductions can add up. This applies to all taxpayers, not just businesses.

Prepay Expenses

You can claim prepaid expenses, such as insurance or subscriptions.

Where the expense is:

» Under $1,000 – all taxpayers can claim the expense

» Over $1,000 – fully deductible if you’re a small business if the expense relates to a period of 12 months or less. Note that this is also available if it’s a non-business expense of individuals, such as work related expenses or rental property costs.

Write Off Old Stock

If you hold stock, write off any damaged, outdated or unsellable items before 30 June 2026.

Review Assets & Depreciation

Small businesses (turnover under $10m) can immediately deduct assets under $20,000 that were acquired from 1 July 2025 and ready to use by 30 June 2026.

Also, remove any old equipment from your depreciation schedule if it’s been sold, thrown out, or is no longer usable.

Electric Vehicles

If your business provides an electric vehicle to an employee, you may be eligible for depreciation deductions and Fringe Benefits Tax (FBT) concessions.

Defer Income

If possible, delay receiving income (like issuing invoices) until after 30 June to push tax into next year.

Offset Capital Gains

Selling an asset this year with a profit? You could crystallise capital losses before 30 June to offset that gain.

Watch out: ‘wash sales’ (selling and rebuying the same asset just to get a loss) are not allowed.

Personal Services Income (PSI)

If you’re working in your own name (like a contractor or freelancer), check that your income qualifies as a business under PSI rules.

Business Losses

If your business runs at a loss, you may not be able to claim that loss if you carry on a “non-commercial business” – unless you pass one of the ATO’s tests (eg, income, asset, or profit test).

Company Loans to Shareholders (Division 7A)

If you’ve borrowed from your company, the loan needs to be properly documented, put on commercial terms and repaid.

If repaying through dividends, make sure the dividends are legally declared and paid prior to 1 July (with appropriate documentation in place).

Trust Distributions

If you’re a trustee, resolutions must be made before 30 June to properly distribute income to beneficiaries. You also need to let your beneficiaries know what they’re entitled to.

Beneficiary TFN Reporting

If new beneficiaries gave you their TFN between April

-June, you must lodge a TFN report by 31 July 2026.

Motor Vehicle Logbook

Planning to claim car expenses using the logbook method? Start now and track 12 weeks of usage (can span over two tax years). Also record your odometer readings and remember to fill out the logbook at the end of each business journey.

Private Health Insurance

Make sure you have the right level of cover to avoid the Medicare Levy Surcharge, especially if your family situation has changed (eg. new baby, separation, adult children moving off your policy).

Check Your Insurance Cover

Review your personal and business insurance needs. Not only does this provide peace of mind, some policies may also be tax deductible, especially if prepaid.

Review Your Business Structure

Is your current setup still the right one? Changes in income, family, or risk levels may mean a trust, company, or restructure could be more effective. We can help you weigh up your options.

SUPER CHECKLIST

Make the most of your super before 30 June 2026 with these smart, simple tips.

Check Your Contribution Limits

Before adding more to super, log in to myGov > ATO

> Super > Information to check how much you’ve already contributed.

Tip: If you’re in an SMSF, your info may not be up to date in myGov but we can help you work this out.

Add to Super and Claim a Tax Deduction

You may be able to make a personal deductible contribution and claim it at tax time.

To be eligible:

» You must be over 18

» If you’re 67–74, you must meet the work test or qualify for a work test exemption

» If you’re over 75, you must contribute within 28 days of your birthday month

Don’t forget: To claim a tax deduction, submit a Notice of Intent to Claim a Deduction to your super fund and get their confirmation before lodging your tax return or making withdrawals, rollovers, or starting a pension.

Use Up Unused Contribution Limits

Haven’t used your full concessional contribution cap in recent years? You may be able to catch up using the carry-forward rule if your total super balance is under $500,000 on 30 June 2025.

Split Contributions with Your Spouse

You can split up to 85% of your 2024–25 concessional (pre-tax) contributions with your spouse before 1 July 2026.

This is a great way to even out your balances and plan ahead for retirement.

Note – To use this strategy, your spouse must be under their preservation age or aged 64 or younger and not retired when you make the request to your fund.

Get a Tax Offset for Spouse Contributions

If your spouse earns less than $40,000, consider making an after-tax contribution to their super.

By doing so, you could get up to a $540 tax offset while boosting their retirement savings.

Grab a Government Co-Contribution

If you earn less than $60,400 and at least 10% comes from work or running a business, you could be eligible for a government co-contribution. All you need to do is add up to $1,000 to your super and the government may add up to $500 extra.

Avoid the Division 293 Tax Trap

If your income (plus employer contributions) is over

$250,000, you may pay an extra 15% tax on some of your super contributions.

Strategies like bringing forward expenses or deferring income may help keep you below the threshold.

Maximise Non-Concessional (After-Tax) Contributions

If you’re under 75, you may be able to contribute up to $360,000 in one year using the bring-forward rule.

New rules from 1 July 2026 may allow you to contribute even more – speak with us about getting the timing right.

Take Your Minimum Pension Payment

If you’re drawing a pension from your super, make sure you take the minimum amount by 30 June. Missing the minimum may affect your fund’s tax benefits for the whole year.

Age	Minimum pension
Under 65	4%
65-74	5%
75-79	6%
80-84	7%
85-89	9%
90-94	11%
95 or more	14%

Need Help?

We’re here to help you make the most of EOFY tax and super opportunities. Contact us to discuss what options might work best for your situation.

Apr 06

April 2026 Newsletter

By admin | Uncategorized | No Comments

Division 296 tax is now law: What it means for your super

There’s been a lot of talk about changes to super, and one of the biggest updates is now official.

The government has passed the Division 296 tax, which will start from 1 July 2026. While it mainly affects people with large super balances, it’s still important to understand what’s changing and why.

A quick recap

When this tax was first proposed back in 2023, it caused quite a stir.

The original plan included:

Taxing unrealised gains (basically, increases in value on paper that you haven’t actually received yet)
A $3 million threshold that wasn’t going to increase over time

Understandably, many people were concerned this wasn’t fair.

After strong feedback, the government has revised the rules. The final legislated version aligns more closely with how tax usually works, that being, taxation of actual income not paper gains.

What’s changed in the final version?

Here’s what the new rules look like now:

You’ll only pay tax on actual earnings, not paper gains
Your super fund calculates your earnings and reports them to the ATO
The $3 million threshold will increase over time with inflation
A new $10 million threshold has been added
The rules start from 1 July 2026, giving people limited time to prepare
Defined benefit pensions are included, so all types of super funds are treated the same

How does the tax work?

Think of it like a tiered system:

Up to $3 million – earnings are taxed as normal (up to 15%)
$3 million to $10 million – a portion of earnings are taxed up to 30%
Above $10 million – a portion of earnings are earnings taxed up to 40%

Importantly, if your balance is only slightly above $3 million, only a small share of your earnings will be subject to the higher tax rate.

Put simply, the more you have in super above these thresholds, the higher the tax applied to that portion of your earnings.

Who does it apply to?

This tax only applies to individuals with more than $3 million in super or pension phase.

A few key things to know:

The threshold applies per person, not per fund
That means a couple could have up to $6 million combined and not be affected
Even if an SMSF has more than $3 million, you won’t be impacted unless your personal share exceeds the $3 million threshold

The first time this will apply is based on your balance at 30 June 2027.

How do you pay it?

You don’t need to calculate the tax yourself.

Here’s how it works:

Your super fund reports your balance and earnings to the ATO
The ATO works out if you owe extra tax
You’ll receive a notice if you’re affected

If you do have a tax bill, you can choose to:

Pay it from your own money, or
Have it released from your super fund

What does this mean for you?

For most people, this change won’t apply at all.

But if you have a high super balance, it could mean:

Paying more tax on part of your super earnings
Rethinking how your super is structured over time

The new rules start from 1 July 2026, with the first tax assessments expected in 2027–28.

Don’t rush into decisions

If you think this might affect you, it’s important not to act too quickly.

Taking money out of super might seem like a solution, but:

It can be difficult to put it back in due to contribution limits
You could lose long-term tax advantages

Getting the right advice before making any changes is key.

Final word

While Division 296 tax is a big change, it’s targeted at people with large super balances and has been refined to be fairer than originally proposed.

If you’re unsure how it affects you, we’re here to help you understand the new rules and what they could mean for your situation.

Granny flats: Beware of the CGT consequences

Granny flats are becoming more of a common feature of the urban environment. No doubt this is due to the ongoing and unremitting nature of the housing affordability crisis, and the relaxing of regulations about where and how they can be built.

And they do seem to offer a very viable solution to the problem – at least in the short term.

However, if you are thinking of constructing one, or already have one in place, you need to be aware of all the tax implications – and they can be very significant.

Firstly, if you rent it at commercial or arm’s length rates, then not only will you be assessable on the rent (albeit being able to claim a portion of the deductions), but you will lose a part of the capital gains tax (CGT) exemption on your home. This is because you are using your home to produce income.

But in most cases, this partial CGT liability should be taxed concessionally by giving you a market value cost (at the time you first rent it) from which to calculate the gain (or loss).

Furthermore, the CGT 50% discount (or whatever is in place after the May Budget) should, in most cases, be available to reduce the amount of your assessable income.

However, where you do not rent your granny flat at commercial rates (including where the occupants may only pay their share of outgoings, such as electricity and rates) then you will not lose any CGT exemption on the home.

This will typically be the case where your granny flat is occupied by a relative, such as an adult child – or by a granny (and/or granddad), themselves!

It should also be noted that it is becoming common for the owner of the home (young adult children) to come to some sort of agreement with a parent or parents, whereby the parent/s agree to pay the price for building the granny flat in exchange for the “right to occupy” for a number of years. Likewise, such agreements may bring to an end a right to occupy.

The making of an agreement whereby “granny-flat” rights are created in another party (or bought to an end) can technically have immediate CGT consequences – despite the fact that it is made in relation to the CGT-exempt home and among family members.

However, the CGT rules provide that this will not be the case where the person acquiring the granny flat right has reached pensionable age (or has a relevant disability) and the arrangement is in writing and is not of a “commercial” nature.

These and other granny flat arrangements require good professional advice – particularly in terms of determining if such an agreement is “commercial”.

So, if you currently own a granny flat or you are thinking of constructing one for any purpose, it is important to come and speak to us – especially in terms of preserving the CGT exemption on your home (or at least maximising it).

Higher super contribution caps from 1 July 2026: What it means for you

From 1 July 2026, the amount you can contribute to super will increase, creating new opportunities to boost your retirement savings.

The annual concessional contribution cap will rise from $30,000 to $32,500. These are contributions made from pre-tax money, such as employer contributions, salary sacrifice and personal deductible contributions.

Non-concessional contributions

The annual non-concessional contribution (NCC) cap will also increase from $120,000 to $130,000. These are contributions made from your after-tax money.

For people who are eligible to use the bring-forward rule, the higher caps will allow even larger contributions. From 1 July 2026, the three-year bring-forward cap will increase from $360,000 to $390,000.

Whether you can use these higher NCC caps will depend on your total super balance (TSB) at 30 June 2026. Your TSB is the total amount you have across all of your super accounts at that date, including money in accumulation and pension phase.

The table below highlights how the TSB thresholds and NCC caps will change from 2025–26 to 2026–27.

Thresholds and caps in 2025-26		Thresholds and caps in 2026-27
TSB at 30 June 2025	NCC cap	TSB at 30 June 2026	NCC cap
Less than $1.76 million	$360,000 (3 years)	Less than $1.84 million	$390,000 (3 years)
At least $1.76 million but less than $1.88 million	$240,000 (2 years)	At least $1.84 million but less than $1.97 million	$260,000 (2 years)
At least $1.88 million but less than $2 million	$120,000 (1 year)	At least $1.97 million but less than $2.1 million	$130,000 (1 year)
$2 million or more	Nil	$2.1 million or more	Nil

One important trap to watch is that if you have already triggered a bring-forward period before
1 July 2026, you do not get access to the new higher caps for that existing period. For example, if you triggered a three-year bring-forward in 2025–26, you remain limited to the current maximum of $360,000 across that three-year period, being until 1 July 2028. You do not get to use the new $390,000 cap.

Concessional contributions

The higher concessional cap may also create extra opportunities through catch-up concessional contributions. If your TSB is less than $500,000 at 30 June of the previous year, you may be able to use unused concessional cap amounts from the previous five years. In some cases, this could allow a very large deductible contribution to be made.

This means the lead-up to 30 June 2026 could be an important planning window. In some cases, it may make sense to delay a contribution until the new financial year to access the higher caps. In others, if you have already met a condition of release, taking a small amount out of super before 30 June may help keep your balance below a key threshold and preserve access to valuable contribution strategies.

The key message is that the higher caps could create valuable opportunities, but the rules around timing and TSB are also important. Now is a good time to check how these changes may apply to you.

CGT still applies even if you are “forced” to sell an asset (4)

During the COVID pandemic years, we all suffered in one way or another – in particular the small businesses who relied on customers coming through their doors.

Mr Lewis was one such small businessman who operated a “multi-gym business” and who as result of the COVID pandemic found it impossible to keep his business operating and pay staff without additional financing. In his own words:

“…the government imposed lockdowns shut down my business operations virtually overnight. I had no income, no relief fast enough to respond, and no option but to sell personal assets just to meet my basic obligations — to pay rent, staff, escalating legal costs and debts.”

So that is exactly what he did.

He arranged for the family trust of which he was a beneficiary to sell shares and to distribute the gain to him. (Luckily, the trust had made some good investments.) As a result, a $200,000 capital gain was distributed to him which he used to keep his business going and to pay staff, etc.

The problem was he was clearly assessable on that capital gain – and he sought to challenge the decision by arguing he was forced to sell the shares and that he did not really make a gain because he had to use the money to save his business.

In short, Mr. Lewis argued the Tribunal should consider his intention and his hardship, claiming the gain was not a true “profit” since proceeds offset business losses from lockdowns.

However, the Tribunal had to conclude that he had realised the capital gain and that there was no discretion in the law to exclude it or exempt it.

Furthermore, there were no CGT concessions available – and, in particular, the 50% discount was not available as the shares were not held by the trust for more than 12 months.

The moral of this story is that where a capital gain has duly been realised or come home to the taxpayer there is no discretion for the amount to be excluded from the assessment process (unless the tax law specifically provides one: eg, a roll-over).

This is the case, despite the circumstances under which gain arose – including where the taxpayer was “forced” to sell an asset or the gain “accidentally” arose. The only exception is where there has been a compulsory acquisition of an asset under relevant legislation.

Otherwise, a taxpayer can only seek relief after the assessment process by making a hardship relief application – and even then it is very difficult to succeed, especially if there were any reasonable measures a person could have taken to avoid the hardship.

If you find yourself in such circumstances, come and speak to us about the matter – and preferably before you think you may be “forced” to sell some CGT assets.

Car logbooks: Back to basics

Three recent Administrative Review Tribunal (ART) decisions on claims for car expenses have shone a light on what the law requires in relation to car logbooks.

Where you use your car for business purposes, there are two ways of making a claim – the cents per kilometre method for up to 5,000 business kilometres, or the logbook method based on the business percentage of your actual expenditure. The logbook method will generally result in a bigger deduction where your business use of the car is high and the actual car expenditure plus depreciation is significant. Bear in mind that travelling between home and work is not generally deductible.

To work out your business percentage, you can’t just make an estimate. You need to maintain a logbook for a representative period of 12 weeks. Unless your work or personal circumstances change, the resulting business percentage can then continue to be applied for five years.

For each car journey made for business purposes during the 12-week period the logbook has to record:

The day the journey began and the day it ended
The car’s odometer readings at the start and the end of the journey
The number of kilometres the car travelled on the journey
Why the journey was made

To calculate your deduction, you use the car’s odometer readings at the start and end of the 12-week test period to work out the total number of kilometres travelled during the period and apply the total business kilometres recorded in the logbook to arrive at the business percentage.

Importantly, and this is something that is sometimes overlooked, the law requires that the record in the car logbook is made “at the end of the journey or as soon as possible afterwards”. And this is where some taxpayers come to grief.

People are busy, and promise themselves they’ll do it later, but the longer they wait the more likely they are to make mistakes. It’s actually quite difficult to accurately recall various trips you think you must have made weeks ago, and the Tax Office can usually spot the difference between a genuine logbook that has been more or less contemporaneously completed and one that has been stitched together well after the event.

While recording all your car use every day for a twelve-week period may seem burdensome, once you’ve done it you’re generally good for another 248 weeks, which isn’t a bad trade-off. You also have some flexibility about which 12-week period you use.

The three taxpayers involved in the three ART decisions referred to above were seen by the Tax Office and the Tribunal as not having made contemporaneous logbook entries, having logbook odometer readings that were inconsistent with service records, having several versions of the logbook for the same test period and in one case being a complete fabrication.

In each of the three cases there were other reasons why their claims for car expenses failed, but the Tax Office will have noted the Tribunal decisions and must be more likely in future to critically examine logbooks supporting large car expense claims to ensure they comply with the law.

It’s never too late to fix these things, so if you have any doubts about the reliability of the logbook you are using to make your motor vehicle claim, come in and see us and we’ll see if we can sort things out.

Mar 04

March 2026 Newsletter

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Payday super checklist for employers – steps to stay compliant

From 1 July 2026, employers must pay their employees’ superannuation guarantee (SG) contributions at the same time as salary or wages. This new system is known as payday super.

Currently, most employers pay super on a quarterly basis. From July 2026, super will instead need to be paid each pay cycle.

The ATO has released a checklist to help employers prepare for this change. Below is a straightforward guide outlining what small businesses should be doing now to get ready.

If you’re an employee, this article explains what your employer will need to do on your behalf from 1 July 2026. The aim of these changes is to ensure super is paid more frequently and reaches your super fund sooner.

Now: Understand the new requirements

☐ From 1 July 2026, SG contributions must be paid on every payday

☐ SG contributions must generally reach employees’ super funds within 7 business days after payday

☐ Super will be calculated using a new concept called “qualifying earnings”, so it is important to understand what this covers. In simple terms, qualifying earnings include an employee’s ordinary time earnings (OTE) – that is, payments for ordinary hours of work, as well as certain types of paid leave, allowances, bonuses and lump sum payments. Qualifying earnings also include commissions, salary sacrificed amounts to super, and payments made to workers captured under the expanded definition of employee, such as independent contractors who are paid mainly for their labour

☐ Employers will need to report OTE/qualifying earnings and superannuation liabilities via single touch payroll (STP) software

February to March 2026: Plan and prepare

☐ Decide how your business will move from quarterly payments to payday payments

☐ Speak to us as your trusted accountant or payroll provider if unsure about how to transition to payday super

☐ Review how paying super more often will affect your cash flow and update your cash-flow forecasting and budgeting processes accordingly (we can help with this)

☐ Make sure all employee super fund details are correct and confirm member account numbers and unique superannuation identifiers are up to date to prevent any errors

☐ Fix any warning messages you receive from your employees’ super funds as incorrect details may cause payments to be rejected after 1 July 2026 causing a late payment

April to June 2026: Lock in your plans

☐ Confirm your payroll software will be ready for payday super

☐ If using a clearing house, check it can support payday super and whether updates are required

☐ If currently using the ATO Small Business Superannuation Clearing House (SBSCH), transition to an alternative clearing house provider before 1 July 2026, as the SBSCH will cease operating from that date

☐ Download and retain all SBSCH transaction history before 1 July 2026. Once the service permanently closes, records will no longer be accessible. These records may be required in the future to respond to ATO reviews, audits or employee enquiries

☐ Put a process in place to quickly fix any SG contributions payment errors

☐ Allow enough time for SG contributions to clear so the super fund receives the contribution within 7 business days after payday

☐ Keep clear records of all super payments

☐ Pay SG contributions for the January – March 2026 quarter by 28 April 2026

1 July 2026: Payday super starts

From 1 July 2026, payday super takes effect. To meet the new requirements, employers must:

☐ Pay SG contributions in full, on time and to the correct super fund. Failure to do so may result in penalties, including the superannuation guarantee charge (SGC), which can exceed the original super amount owed

☐ Ensure SG contributions are received by and allocated to employees’ super funds within 7 business days of each payday

☐ Calculate SG contributions based on qualifying earnings

☐ Report qualifying earnings and SG liabilities via STP-enabled software

☐ Pay the final quarterly SG contribution for the April – June 2026 quarter by 28 July 2026

☐ Note that the SBSCH cannot be used for any payments made on or after 1 July 2026, and no late payment offset will apply for that final quarter.

Final reminder

Start preparing early by checking that payroll software is ready, reviewing cash flow and confirming employee super details are correct. Payday super is a significant change, but with proper planning the transition can be smooth. If you are uncertain about how the new rules will affect your cash flow or payroll processes, please contact us – we are here to help ensure everything is in place before the July 2026 start date.

Commonwealth Seniors Health Card (CSHC):
What’s changing from 20 March 2026

The Commonwealth Seniors Health Card (CSHC) can be valuable for many self-funded retirees, helping reduce out-of-pocket health costs (for example, cheaper PBS medicines and other concessions). But its income tested, and an upcoming rise in deeming rates may affect some people’s eligibility.

CSHC income cut-off thresholds

To qualify, you must meet the CSHC income test – there is no assets test. Centrelink assesses your (and your partner’s) adjusted taxable income and this may also include deemed income from any account-based pensions (ABPs) you have.

The current CSHC income limits are:

$101,105 p.a. if you’re single
$161,768 p.a. for couples (combined)
$202,210 p.a. for couples separated by illness/respite care/prison.

What are deeming rates?

Deeming is the Government’s method of assuming a set rate of return on financial assets, rather than using your actual earnings. It’s designed to keep the rules simple and treat people consistently, regardless of how their money is invested.

Deeming commonly applies to assets such as:

bank accounts and term deposits
shares and managed funds.

For CSHC purposes, deeming is relevant if you have an ABP as these products are generally deemed and counted under the income test.

Deeming rates are increasing from 20 March 2026

The Government is increasing the deeming rates. From 20 March 2026, the new deeming rates will be:

1.25% (lower rate) for financial assets up to $64,200 (singles) and $106,200 (couples combined)
3.25% (upper rate) for financial assets above those thresholds.

How this could affect your CSHC

If you’re close to the CSHC income limit, higher deeming rates can increase your assessed income even if your actual investment earnings don’t change. That may mean you:

lose eligibility for the CSHC, or
don’t qualify when you otherwise expected to.

This risk is greatest for self-funded retirees who have significant taxable income in addition to their ABP where deeming applies.

What to do next

If you’re near the thresholds, it’s worth reviewing your adjusted taxable income plus any deemed income using the new deeming rates.

If you’re unsure how this impacts you, consider seeking advice. A quick calculation can often show whether you’re comfortably under the limit or sitting in the “at risk” zone as the new rates begin.

2025-26 FBT Checklist

With the due date for FBT returns coming up, the following non-exhaustive checklist may prove useful in determining whether you as an employer has an FBT liability.

Although it will generally fall to your accountant to prepare the FBT return from your software file or other records, all of the instances where you have provided employees and/or their associates (e.g. spouse) with a potential fringe benefit may not always be apparent to them. To assist you in bringing these potential benefits to the attention of your accountant, following is a general checklist to refer to.

CAR FRINGE BENEFITS

Does a car fringe benefit arise?

For FBT purposes a “car” is:

any motor-powered road vehicle (including a four-wheel drive) that is designed to carry:
- less than one tonne, and
- fewer than nine

Were any vehicles provided to employees (or associates) during the FBT year?

You make a car available for private use by an employee on any day that either:

the car is actually used for private purposes by the employee, or
the car is available for the private use of the employee.

A car is treated as being available for private use by an employee on any day that either:

the car is not at the employer’s premises, and the employee is allowed to use it for private purposes, or
the car is garaged at the employee’s home.

If so, was the vehicle designed to carry less than one tonne and fewer than nine passengers?

If so, the vehicle would be classified as a “car” for FBT purposes. If not, the provision of the vehicle may constitute a “residual fringe benefit” (see later). Different requirements in valuing the benefit then apply.

Exemptions

Is the vehicle a taxi, panel van or utility?

If so, an exemption is available where there is private use of the vehicle by a current employee and the vehicle is either:

a taxi, panel van or a utility designed to carry less than one tonne, or
any other road vehicle designed to carry less than one tonne which is not designed to principally carry passengers, and
the employee’s use of such a vehicle is limited to:
- travel between home and work
- travel incidentals where travel expenses are incurred in the course of performing employment-related duties, and
- non-work-related use that is minor, infrequent and irregular. This means (according to the ATO) less than 1,000 kms of private vehicle use for the FBT year, with no single private use journey in excess of 200 kms. (Note: the ATO expects the employer to exercise some oversight over the minor, infrequent and irregular use of the vehicle.)

Is the vehicle a dual cab vehicle?

If so, the vehicle will qualify for the work-related use exemption only if:

it is designed to carry a load of one tonne or more, or more than eight passengers, or
while having a designed load capacity of less than one tonne, it is not designed for the principal purpose of carrying passengers.

Is the vehicle a “modified” vehicle?

Certain modified vehicles are exempt from FBT where modifications permanently change a car and cannot be readily reversed for the car to be regularly used alternately as a passenger or non-passenger car. An example of such a vehicle is a hearse.

Is the vehicle an unregistered vehicle?

If a car is unregistered for the full FBT year and used principally for business purposes (such as off-road or cars used on farms), any private use is exempt from FBT. A car that may be lawfully driven on a public road is regarded as being registered.

Does the vehicle qualify for the electric cars exemption?

Zero or low emission vehicles (including some plug-in hybrids) are exempt from FBT where they are first held from 1 July 2022 and made available to current employees or associates. This incentive will apply until at least 2027, when there is to be a review. The GST-inclusive cost of the EV cannot exceed $91,387, which is the Luxury Car Tax threshold for fuel efficient vehicles for 2025-26. Plug-in hybrids have lost their exemption after 31 March 2025 unless there is a binding commitment to continue to provide the vehicle after that date.

CAR PARKING FRINGE BENEFITS

Does a car parking fringe benefit arise?

A car parking fringe benefit arises in relation to a particular day where all of the following conditions are present on that day:

the car is parked on business premises or associated premises of the provider
a commercial parking station is located within a 1km radius of the premises at which the car is parked
the lowest fee charged by the operator of any such commercial parking station located within a 1km radius for all-day parking on the first “business day” of the FBT year is more than the “car parking threshold” ($11.03 for the 2025/26 FBT year).
the car is parked on the premises for more than four hours (cumulative) between 7.00am and 7.00pm on that day
the car is used for travel between home and work at least once on that day
the provision of the parking facility is in respect of the employment of the employee
the car is owned by, leased to, or otherwise under the control of the employee, and
the employee has a primary place of employment on that day and the parking is at or in the vicinity of that primary place of employment.

Small businesses (gross turnover less than $10 million or aggregated turnover less than $50 million) are exempt from car parking FBT unless employees are using a commercial car parking station.

LOAN FRINGE BENEFITS

Does a loan fringe benefit arise…

Has a loan been made by an employer (or associate) to an employee (or their associate)?
Was the loan provided in respect of the employment of the employee?
Do you know the date the loan was made?
Do you know the amount of the loan?
Do you know the purpose of the loan?
Has interest been charged on the loan that is at a rate lower than the benchmark interest rate of 8.62% (2025/26)?

The loan is not a fringe benefit where it is either:

compliant with s109N ITAA 1936 for Division 7A purposes, or
treated as a deemed dividend under s109D ITAA 1936 for Division 7A purposes.

Exemptions

Is the minor benefits exemption under s58P FBT Act applicable?
Did the loan constitute an advance of money by the employer to the employee to meet employment-related expenditure which will be incurred within six months?

If yes, an exemption is available.

DEBT WAIVER FRINGE BENEFITS

Has an employer (or their associate) released the employee (or their associate) from repaying an outstanding debt?
A debt waiver fringe benefit arises.
Does the debt forgiveness give rise to a deemed dividend under Division 7A ITAA 1936?

If so, the debt waiver does not constitute a fringe benefit.

Section 109F ITAA 1936 may operate to treat a forgiven debt as a deemed dividend in the hands of a current or former shareholder (or associate) of a private company even if they are also an employee of the company (see s109ZB(2) ITAA 1936).

Does the debt waiver constitute the forgiveness of a genuine bad debt?

If so, the debt waiver is exempt from FBT.

EXPENSE PAYMENT FRINGE BENEFITS

Does an expense payment fringe benefit arise?
Did an employer (or their associate) pay or reimburse an employee (or their associate) for any expenses incurred by the employee (or their associate)?
Was the payment or reimbursement for an item that was used solely for an income-generating purpose?

If yes, a fringe benefit does not arise.

Employee to complete Expense payment fringe benefit declaration.

Was the expenditure reimbursement by the employer to the employee on a cents-per- kilometer basis?

If yes, the payment is FBT-exempt. Note that the employee will be assessed on this reimbursement.

Exemptions

Is the minor benefits exemption under s58P FBT Act applicable?
Is an exemption available for a work-related item which is used primarily in the employee’s employment?

These work-related items include a portable electronic device (including mobile phones, laptops and tablet pcs), briefcase, tool of trade or an item of computer software, or protective clothing. Specific conditions apply to the provision of portable electronic devices.

Employers who are eligible small businesses (ie, aggregated annual turnover of less than $50 million) can provide multiple work-related portable electronic devices (such as laptops and tablets) in certain circumstances.

Is an exemption available for the reimbursement of the following:

membership fees and subscriptions to:
- a trade or professional journal
- use a corporate credit card, or
- an airport lounge membership
newspapers and periodicals to employees for business purposes, and
expenses relating to emergency assistance such as:
first aid or other emergency health care
emergency meals, food supplies, clothing, accommodation, transport or use of household goods
temporary repairs, and
any similar matter.

BOARD FRINGE BENEFITS

Does a board fringe benefit arise?

Was a meal provided to an employee (or their associate) where the following conditions are satisfied:

there is an entitlement under an industrial award or employment arrangement to be provided with residential accommodation and at least two meals per day
the meal is supplied by either:
- where the employer is not a company – the employer, or
- where the employer is a company – the employer or a related company
either of the following applies:
- the meal is cooked or prepared on the premises of the employer (or related company) and is provided to the recipient on employer’s premises (other than a public dining facility), or
- the following conditions are satisfied:
  - the employee’s duties consist principally of duties to be performed in, or in connection with, an eligible dining facility of the employer or a facility for the provision of accommodation, recreation or travel which includes the dining facility
  - the meal is cooked or prepared in the cooking facility of the dining facility, and
  - the meal is provided to the recipient in the dining facility
- the facility in which the meal is cooked or prepared is not used wholly or principally for cooking or meal preparation for the employee or their associates, and
- the meal is not provided at a social function (eg, party or reception).

LIVING-AWAY-FROM-HOME ALLOWANCE (LAFHA)

Does a LAFHA benefit arise?
Was an employee paid an allowance by an employer as compensation for additional expenses because the employee was required to live away from his or her usual place of residence located in Australia to perform employment duties during the FBT year?

If yes: The LAFHA rules may apply.

Has documentary evidence been obtained from the employee to substantiate accommodation expenses and food expenses (if reasonable amounts determined by the ATO are not being used)?
Alternatively, has a declaration for employee-related expenses been obtained?

If a declaration is made, the record must be maintained for five years from its making.

Relocation costs

Were any of the following expenses incurred in relation to the employee relocating from their usual place of residence to perform employment-related duties:

engagement of a relocation consultant
removal and storage of household effects
sale or acquisition of a dwelling
connection or reconnection of certain utilities (eg, water, electricity), or
transport of the employee (and family members) and any meals and accommodation en-route to the new location?

The provision of such benefits either as an expense payment, property or residual fringe benefit is typically exempt from FBT.

Declarations and substantiation

Have the relevant LAFHA declarations been sought from employees in receipt of allowances or benefits before the lodgment day of the FBT return?

The ATO has released on its website pro-forma LAFHA declarations. The declarations include employees who fly-in, fly-out or drive-in or drive-out, employee-related expenses, and employees who maintain a home in Australia.

MEAL ENTERTAINMENT FRINGE BENEFITS

Does a meal entertainment fringe benefit arise?
Has entertainment been provided to an employee (or their associate) by way of food or drink, accommodation or travel in connection with the provision of food or drink or recreation?

Calculation of taxable value

Has an election been made to use either the 50/50 split method or the 12 week register method?

If no election is made, the benefit is typically treated as either a property, expense payment or residual fringe benefit and the taxable value calculated based on the rules for those types of benefits (ie, under the actual method).

50/50 split method – has all expenditure in respect of all persons been included?
12-week register method:
- Has all expenditure in respect of all persons been included?
- Does the register include details of the date, cost, location and persons in relation to the meal entertainment?

See TR 97/17 for guidance on the various circumstances where food and drink is provided and the applicable FBT and income tax treatment.

Where the actual method is used:

Has the food or drink been consumed by current employees on the employer’s business premises on a working day?

If so, apply the s41 FBT Act exemption relating to property benefits.

Is the minor benefits exemption pursuant to s58P FBT Act applicable?

Reduction in taxable value

Did the employee contribute towards the provision of the benefit?

If so, reduce the taxable value by the amount of the employee’s contribution.

HOUSING FRINGE BENEFITS

Does a housing fringe benefit arise?
Has an employer (or their associate) provided an employee (or their associate) with a right to occupy a “unit of accommodation” as the usual place of residence of the employee (or their associate)?

A housing fringe benefit will arise except where an exemption applies.

An exemption will arise where the benefit constitutes remote area housing.

Reduction in taxable value

Did the employee contribute towards the provision of the benefit?

Reduce the taxable value by the amount of the employee’s contribution.

ENTERTAINMENT LEASING FACILITY EXPENSES

Did an entertainment leasing facility expense fringe benefit arise?
Has entertainment been provided to an employee (or their associate) by way of the employer incurring “entertainment leasing facility expenses”?

This includes the hire or leasing of a corporate box, boats or planes or “other premises or facilities” for providing entertainment.

Expenses, or parts of expenses, that are not entertainment facility leasing expenses for these purposes are:

expenses attributable to providing food or beverages, and
expenses attributable to advertising that would be an allowable income tax deduction.

TAX-EXEMPT BODY ENTERTAINMENT FRINGE BENEFITS

Does a tax-exempt body entertainment fringe benefit arise?

A charity must be endorsed in order to be income tax-exempt.

Has entertainment been provided to an employee by a tax-exempt body (an organisation that is wholly or partially exempt from tax)?

Where this is the case, a separate category of fringe benefit arises (referred to as a “tax-exempt body entertainment fringe benefit”). It is only non-deductible entertainment that falls within this category of benefit (eg, a meal at a party). Refer to TR 97/17 for further guidance.

A tax-exempt body is an entity which is either:

wholly exempt from income tax (eg, a club that earns income from members only), or
partially exempt from income tax (eg, a club that earns income from both members and non-members).

Calculation of taxable value

Equal to the expenditure incurred in the provision of the entertainment.

Reduction in taxable value

Did the employee contribute towards the provision of the benefit?

Reduce the taxable value by the amount of the employee’s contribution.

Exemption

Is the minor benefits exemption under s58P FBT Act applicable?

PROPERTY FRINGE BENEFITS

Does a property fringe benefit arise?
Was any property provided in respect of an employee’s employment?

Property includes both tangible and intangible property e.g. goods, shares and real property.

Exemption

Is the minor benefits exemption under s58P FBT Act applicable?
Is an exemption available for a work-related item which is used primarily in the employee’s employment?

Ie, a portable electronic device (including mobile phones, laptops and tablet pcs), briefcase, tool of trade or an item of computer software, or protective clothing.

Is an exemption available for the provision of:

membership fees and subscriptions to:
- a trade or professional journal,
- use of a corporate credit card, or
- an airport lounge membership
newspapers and periodicals to employees for business purposes, or
expenses relating to emergency assistance such as:
- first aid or other emergency health care
- emergency meals, food supplies, clothing, accommodation, transport or use of household goods
- temporary repairs, and
- any similar matter?

RESIDUAL FRINGE BENEFITS

Does a residual fringe benefit arise?
Has a fringe benefit been provided by an employer to an employee which does not fall within any other specific fringe benefit category in the FBT Act?

Exemption

Is the minor benefits exemption under s58P FBT Act applicable?
Is an exemption available for a work-related item which is used primarily in the employee’s employment?

ie, a portable electronic device (including mobile phones, laptops, tablet, PC), briefcase, tool of trade or an item of computer software, or protective clothing.

Employers who are eligible small businesses (ie, aggregated annual turnover of less than $50 million) can provide multiple work-related portable electronic devices.

FBT REBATE

Are you a rebatable employer?

Certain non-government, non-profit organisations are eligible for the FBT rebate. These include:

certain religious, educational, charitable, scientific or public educational institutions
trade unions and employer associations
organisations established to encourage music, art, literature, science, a game, a sport or animal races
organisations established for community service purposes
organisations established to promote the development of aviation or tourism
organisations established to promote the development of information and communications technology resources, and
organisations established to promote the development of agricultural (etc.), fishing, manufacturing or industrial resources.

Endorsement for FBT rebatable status is required from the ATO for charities.

Reduce FBT liability by a rebate equal to 47% of the gross liability subject to a capping threshold. The capping threshold is $30,000 per employee per FBT year.

The full capping threshold applies for the FBT year even if the employee was not employed by the organisation for the full year.

Feb 02

February 2026 Newsletter

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Change to the tax treatment of holiday homes

No doubt noting the growing trend for people to rent out property for short-term accommodation, the ATO has withdrawn a 40-year old ruling and replaced it with a new draft Taxation Ruling accompanied by two draft Practical Compliance Guidelines that between them cover everything relating to renting out all or part of your property without carrying on a business, including income and deductions in a variety of circumstances.

This article focuses on holiday homes, which have always been a bit of a grey area from a tax perspective. The new guidance material tightens up the rules around the deductibility of ownership costs (mortgage interest, rates, insurance, maintenance and repairs), although not by as much as it might seem at first glance.

The ATO has always maintained that net rental losses from a holiday home are only deductible if the property is genuinely available for rent on commercial terms, particularly around peak seasonal times. Blocking out large slabs of time over Christmas and the school holidays for the owner’s personal use of their beach house or for use by family and friends for free or at below market rates while asking for unrealistically high rents or imposing onerous conditions on would-be renters would not be regarded as making the property genuinely available for rent.

Under the withdrawn guidelines, this issue was addressed by only allowing deductions for holding costs on a time basis – eg, if the holiday home was let to unrelated parties on commercial terms for, say, 18 days in an income year, the owner would have to include all of the rent received as assessable income but could only claim 4.9% of the outgoings, including holding costs. There was no deduction for holding costs attributable to the time spent at the property by the owner, nor for the period when the property was vacant.

The new guidance material uses a different approach. After many years it has occurred to someone in the ATO that a holiday home is a “leisure facility”, and under the law the cost of acquiring or holding a leisure facility is non-deductible. So even the 4.9% that was deductible under the withdrawn guidelines will no longer be deductible. Perhaps not much of a change in the scheme of things, but in the wrong direction for holiday home owners.

But there is an exception to the blanket disallowance of holding costs for leisure facilities, and this is where they are “mainly” used to produce rental income. This opens up the same can of worms that the withdrawn guidelines had to grapple with, but the guidance material does provide some practical examples about the meaning of “mainly” in this context.

A time analysis is a useful starting point, but it is not in itself determinative. Other less tangible factors include the pattern of use of the holiday home and the times it is set aside for the owner’s personal use. The mere fact of advertising the holiday home for rent is helpful, provided the rent being sought is commercial and the home is genuinely available to rent at peak times.

There is also a lot of useful guidance on apportionment where the rental pattern establishes the main use of the holiday home is to produce rental income. One of the examples given makes it clear that the numerator in the apportionment formula is the sum of the number of days the property is actually let plus the number of days it was vacant but genuinely available for rent. That makes it worthwhile clearing the “mainly” requirement if you can.

Because the leisure facility approach is new, the ATO has stated that it will not devote compliance resources to applying the new stricter view to properties owned before 12 November 2025 for the income years ending 30 June 2026 or earlier.

Holiday home owners should keep careful records of their holiday home, including:

Detailed logs of rental and private use
Evidence of market-based pricing and booking acceptances and rejections
Evidence of not blocking peak periods for personal use

As your trusted advisors, it’s our job to alert you to tax changes that might affect you. But we also realise there are intangible benefits and priceless memories that can come from the enjoyment of a well located holiday home, whether it’s on the beach or near the snowline. Enjoy what you have and perhaps don’t base all your decision making around a 4 or 5 per cent tax deduction.

Permanent incapacity and super – what it means if you’re totally and permanently disabled

Most people think of superannuation as money they can’t touch until retirement, but there are important exceptions. One significant exception is the permanent incapacity condition of release, which can allow people who are totally and permanently disabled to access their super earlier.

Understanding how this works can make a real difference at a time when income, medical costs, and financial security are often under pressure.

What is permanent incapacity?

Under superannuation law, permanent incapacity generally means that, because of physical or mental ill-health, you are unlikely to ever work again in a job for which you are reasonably qualified by education, training, or experience.

To meet this condition of release, your super fund usually requires certification from two medical practitioners confirming that your condition is permanent and prevents you from returning to suitable employment.

Once this condition is satisfied, your super can be released to you, even if you are well below preservation age.

You can access super even without insurance

A common misconception is that you can only receive money from super if your fund held Total and Permanent Disability (TPD) insurance. That’s not the case.

Even if your super fund did not have any insurance cover at all, you may still be able to access:

Your existing super balance
Employer contributions
Personal contributions and earnings

The permanent incapacity condition of release applies to your super savings themselves, not just to insurance payouts. This can be especially important for individuals who changed jobs frequently, had low balances, or opted out of insurance.

In other words, the absence of insurance does not prevent access to super if you meet the permanent incapacity rules.

How the money can be paid

Once approved, the released super can usually be taken as:

A lump sum – which may assist with large expenses like paying off the mortgage
An income stream which may assist with meeting ongoing living expenses

Tax treatment may vary depending on your age and the components of your super, but in most cases, part of the benefit will be taxed concessionally compared to regular income.

It is important to get advice about your options and any tax implications before payment.

The role of TPD insurance in super

While insurance is not required to access super under permanent incapacity, TPD insurance held inside super can provide significant additional support.

If your fund includes TPD cover and your claim is accepted, the insurance benefit is paid into your super account. This can substantially increase the amount available to you, often at a time when earning an income is no longer possible.

Some key benefits of TPD insurance in super include:

Premiums are generally deductible to the fund and this benefit is passed on to the member
Premiums are paid from super, not your take-home pay meaning it won’t impact your cashflow
You may not have to deplete super savings otherwise set aside for retirement

Final thoughts

The permanent incapacity condition of release from super exists to provide financial support when it’s needed most. If you are totally and permanently disabled, superannuation is not locked away indefinitely and can be accessed to help you manage life after work.

Whether or not insurance is involved, understanding your options can ease financial stress and give you more control during a difficult time. If you think you may qualify, speak to us to help guide you through your next step with confidence.

CGT – Buying a new home before selling the old

If you find yourself in the position of having bought yourself a new home before you sold your existing home, there are important CGT issues to consider – and these centre on the fact that under the CGT rules, you cannot have two or more CGT exempt homes at the same time.

However, there is an important concession that allows you to treat both the new home and the existing home as exempt from CGT for up to a period of six months – provided the new home actually becomes your main residence.

So, for example, in the simple case where you bought your new home on 1 February 2026 and then sell your existing one five months later on 1 July 2026, your existing home won’t be subject to any CGT – and your new home won’t lose any CGT exemption for this five month period.

However, the availability of this concession is subject to a number of important conditions.

Firstly, the existing home must have been your home for a period of at least three months in the 12 months period before you sold it. And, secondly, it must not have been used for the purpose of producing taxable income in any part of that 12 month period when you did not live in it.

So, in the above example, if you rented your existing home in the five month period before you sold it (which vendors sometimes do while waiting to sell it), you could not use this concession to give you an additional five months of exemption on that home.

As a result, you will be subject to a partial CGT liability to reflect the fact that your dwelling could not be treated as a main residence during this five month period.

(But if this was the first time you rented it and it would otherwise have been entitled to a full main residence exemption just before you rented it, then you would calculate this partial CGT liability by reference to its market value when you first rented it and the amount you sell it for.)

However, the stringency of these conditions about the use of your existing dwelling in the 12 month period before you sell it can be alleviated by using another concession (the “absence concession”) to continue to treat it as your main residence, even if you rent it in this period.

In a similar fashion, you can use another concession (the “building concession”) to treat any land you acquire on which to build a new home as your new home for the purposes of this six month overlap rule.

However, in both these cases the application of these particular concessions, and their interaction with the rule that allows you to treat an existing home and new home as CGT exempt for up to six months, can be quite complex. And much will depend on the precise facts of the case.

If you find yourself in the position of having bought yourself a new home before you sold your old one (or are intending to do this) come and speak to us – and we will show you how the rules operate in your circumstances, and how they can be applied most advantageously.

Six changes impacting your super in 2026

Superannuation rules are always evolving, and 2026 is shaping up to be another year of important changes. Some of these updates may only affect a small group of people, while others could impact almost everyone with super.

Whether retirement feels a lifetime away or it’s already on the horizon, understanding what’s changing can help you make smarter decisions and avoid costly mistakes. Here are six key changes to keep on your radar.

Possible tax changes for large super balances

One of the most talked-about changes is the government’s proposal to increase tax on large super balances, also known as Division 296 tax.

Here’s how it’s expected to work (if the legislation passes):

Balances up to $3 million: no change. Earnings continue to be taxed at 15% as they are now.
Balances between $3 million and $10 million: an extra 15% tax on earnings, bringing the total to 30% on that portion.
Balances above $10 million: the total tax rate on earnings will rise as high as 40%.

It’s important to note:

These changes are not law yet
Only a small number of Australians would be affected
Withdrawing super prematurely can be hard to undo because of contribution limits

If this may apply to you, the best approach is patience. Wait until the rules are final and get professional advice before making any big moves.

Payday super is locked in

One change that is definitely happening is payday super.

Currently, employers only have to pay super at least once every three months. From 1 July 2026, that changes.

Under the new rules:

Employers must pay super at the same time as salary or wages
Contributions must reach your super fund within 7 business days of payday
For new employees, the first contribution must be paid within 20 business days of the salary or wages being paid

This is good news for workers. Paying super more frequently means:

Your money gets invested sooner
Less chance of unpaid or forgotten super
Better long-term outcomes thanks to compounding

If you’re an employer, now is the time to start preparing for these changes ahead of their commencement on 1 July 2026. Reviewing your payroll systems and internal processes early will help ensure a smooth transition. This may involve speaking with your payroll software provider, accountant, or registered tax professional to confirm your systems are compliant. If you need support, we’re here to guide you through the process and help you get ready with confidence.

Contribution caps are expected to increase

Thanks to rising wages, super contribution limits are expected to increase from 1 July 2026.

While final confirmation depends on official figures released in late February 2026, the changes are widely expected to be:

Concessional (before-tax) cap increasing to $32,500
Non-concessional (after-tax) cap increasing to $130,000

These caps are linked to wage growth, and based on recent data, it would take a significant and unlikely drop in wages for indexation not to occur.

This change could create opportunities for:

People topping up their super
Those who arrange with their employer to salary sacrifice part of their income into super
Individuals planning larger after-tax contributions

Once the new caps are confirmed, we’ll let you know and help you understand what they mean for your super strategy.

Transfer balance cap: what’s happening next?

The transfer balance cap (TBC) limits how much super you can move into a retirement-phase pension. Unlike contribution caps, the TBC is indexed to inflation (CPI) rather than wages.

Based on the latest December CPI figures, the TBC is set to increase from $2 million to $2.1 million from 1 July 2026.

This change will mainly affect people who haven’t yet started a retirement pension. If you already receive a retirement pension from your super, you may still benefit from a partial increase, depending on your individual circumstances and how much of your cap you’ve already used.

More flexibility for legacy pensions

Good news for people stuck in older super pension products.

New rules now allow greater flexibility for certain legacy pensions, such as lifetime, life expectancy and market-linked pensions held in SMSFs.

Previously, these pensions:

Couldn’t be easily changed or exited
Often no longer suited members’ needs
Had strict limits around reserves and conversions

Under the new rules:

A five-year window allows eligible members to review and restructure these pensions
This creates opportunities to simplify super and improve flexibility

Because legacy pensions are complex, professional advice, especially from an SMSF specialist, is strongly recommended before making changes.

Better fund performance, transparency and tech

Large APRA-regulated super funds continue to face increased scrutiny, and that’s a win for members.

In 2026, expect to see:

Ongoing pressure on underperforming funds, including forced mergers
Clearer reporting on fees, performance and investments
Better tools to compare super funds and make informed choices

At the same time, technology is transforming how we interact with super. Many funds are rolling out:

Smarter online dashboards
Improved mobile apps
AI-driven tools to help with investment choices and retirement planning

If you haven’t logged into your super account lately, 2026 is a good year to start.

Final thoughts

Superannuation is a long-term game, and even small rule changes can have a big impact over time.

Take the time to review your super, stay informed about potential changes, and consider speaking to a financial adviser if needed. With the right knowledge and strategy, you can make sure your super keeps working hard for your retirement.

Dec 08

December 2025 Newsletter

By admin | Uncategorized | No Comments

Can the cost of clothing be tax deductible?

Sometimes it can be, but only in limited circumstances.

The tax deductibility of expenditure on clothing is subject to strict ATO guidelines. These cover occupation-specific clothing, compulsory or registered non-compulsory uniforms and protective items.

Conventional clothing

What you can’t claim is the cost of conventional clothing, even where your employer expects you to observe a particular dress style. You might work in an office environment, and your employer expects you to wear a business suit to work, even though you wouldn’t have even bought the suit but for your employer’s dress requirements. While the cost of the suit might seem like a work related expense, it is not deductible as it is conventional clothing that could also be worn outside of work. This makes it a private expense, even though it relates directly to your employment.

Conventional clothing includes business attire, non-monogrammed black trousers and white shirts worn by wait staff, non-protective jeans and drill shirts worn by tradies and athletic clothes and shoes worn by PE teachers.

Occupation-specific clothing

On the other hand, occupation-specific clothing falls on the deductible side of the line, for example a chef’s distinctive chequered pants or a health worker’s blue uniform, including nurses’ stockings and non-slip shoes.

Compulsory uniforms

The cost of clothing that forms part of a compulsory uniform is generally deductible. A compulsory uniform is a set of clothing that identifies you as an employee of a particular organisation. Your employer must make it compulsory to wear the uniform and have a strictly enforced workplace policy in place.

You can only claim a deduction for shoes, socks and stockings if:

They are an essential part of a distinctive compulsory uniform, and
The characteristics (the colour, style and type) are an integral and distinctive part of your uniform that your employer specifies in the uniform policy, for example, airline cabin crew members.

You can claim for a single item of clothing such as a jumper if it’s distinctive and compulsory for you to wear it at work. An item of clothing is unique and distinctive if it:

Has been designed and made only for the employer, and
Has the employer’s logo permanently attached and is not available to the public.

Just wearing a jumper of a particular colour is not part of a compulsory uniform, even if your employer requires you to wear it, or you pin a badge to it.

Non-compulsory uniforms

You can only claim for non-compulsory work uniforms if your employer has registered the design with AusIndustry. This means the uniform has to be on the Register of Approved Occupational Clothing. Your employer will be able to clarify whether your uniform is registered.

Protective clothing

The cost of protective clothing is deductible, and covers such items as:

Fire-resistant clothing
Sun protection clothing with a UPF sun protection rating
Hi-viz vests
Non-slip nurse’s shoes
Protective boots, such as steel-capped boots or rubber boots for concreters
Gloves and heavy-duty shirts and trousers
Occupational heavy duty wet-weather gear
Boiler suits, overalls, smocks or aprons you wear to avoid damaging or soiling your ordinary clothes during your work activities.

Laundry and dry cleaning costs and repairs

You are entitled to a deduction for the cost of cleaning your deductible clothing. If you launder them at home, the Tax Office will allow you a deduction of $1 per load where the load contains only deductible clothing, or 50 cents per load where deductible clothing is mixed with other items.

You are entitled to claim the cost of dry cleaning deductible clothing, as well as the cost of mending and repairs.

Record keeping

You should keep receipts or other documentary evidence of your expenditure on buying, laundering or repairing deductible work clothing. Proof of laundering clothing at home can be in the form of diary entries.

Allowances

If your employer pays you a clothing allowance, this needs to be included in your assessable income, and you can only claim what you have actually spent.

Feel free to come and see us for advice as to whether your expenditure on work clothing is deductible.

Thinking of a Christmas stay in your SMSF property? Think again!

If your SMSF owns a beach house, country cottage or apartment that feels like the perfect Christmas getaway, this is your friendly end-of-year reminder: you and your family can’t use it over the Christmas and New Year period, not even “just for a week,” and not even if it’s sitting vacant.

It’s one of the most common SMSF traps, and it can lead to serious penalties. Here’s why, in plain English.

Why personal use is off-limits

SMSFs receive generous tax concessions but they come with strict rules. The big one is the sole purpose test. This means your SMSF must exist only to provide retirement benefits to members (and their dependants if a member dies).

Using an SMSF-owned property for a holiday gives you a personal benefit before retirement, which fails that test. The ATO is very clear: residential property held by an SMSF can’t be lived in, stayed in, or used as a holiday home by members or related parties.

“Related parties” covers anyone closely connected to you or the fund, including all fund members, your spouse, children (including adopted children), and wider family like parents, grandparents, siblings, uncles, aunts, nephews and nieces. It also extends to your business partners and any companies or trusts linked to you.

So even if the place is empty for a few weeks and you think “no harm done,” the rules say otherwise.

What if we pay market rent?

This is where people try to get clever and where things still go wrong.

Even if you pay what looks like market rent, leasing residential property to a member or relative is generally prohibited and can trigger other breaches.

One key problem is the in-house asset rule. If your SMSF leases an asset to a related party, that asset is usually treated as an in-house asset, and in-house assets must stay under 5% of the fund’s total value.

Because a holiday home is often a large chunk of an SMSF’s value, renting it to a related party almost always pushes you over that limit, unless your SMSF is extremely large.

And even if you somehow manage to remain under 5%, the ATO may still say the fund was being run partly for your lifestyle, not purely for retirement which brings you right back to the sole purpose test.

The bottom line is that paying rent doesn’t make it okay.

What if we are retired – can we use the holiday home then?

The answer is still no. Reaching preservation age or retiring doesn’t automatically give you the right to stay in or live in a property owned by your SMSF. The property remains a fund asset and using it personally would still be considered personal use of an SMSF asset.

If you want to live in the property after retirement, the usual pathway is to transfer the property out of the SMSF into your own name. This is called an in-specie transfer, which simply means the fund transfers the asset to you personally rather than selling it for cash.

Once the property is in your personal ownership, you can use it without breaching the sole purpose test, because it’s no longer an SMSF asset and you’re not receiving a benefit from the fund.

However, an in-specie transfer can only happen after you’ve met a condition of release, for example, retiring after reaching preservation age, or stopping gainful employment after age 60, meaning you’re legally allowed to access your super.

Alternatively, you may be able to buy the property from the fund yourself, provided the sale is conducted on a genuine arm’s-length, commercial basis.

It’s also important to get advice first, because transferring property out of an SMSF can have tax consequences, including potential capital gains tax (CGT).

What happens if you break the rules?

Breaches around personal use of SMSF assets are treated seriously. Possible consequences include:

Significant administrative penalties on each trustee
Being forced to unwind the arrangement
Trustees being removed or disqualified
And, at the very worst, the fund losing its complying status (which can mean a huge tax hit).

That’s a steep price for a week at the beach.

What can you do instead?

If your SMSF owns a holiday-style property, the safe approach is simple:

Rent it to unrelated tenants at market rates, with a proper lease and evidence to support the rent
Treat it like a real investment, not a family asset
If you want a holiday there, book somewhere else like any other traveller.

Final word

At this time of year it’s easy to blur the lines between “investment property” and “our holiday place.” But with an SMSF, the lines are firm. If you’re unsure about what’s allowed, how your property is being used, or whether any past use could create an issue, contact us. We can explain the rules in your situation and help you keep your SMSF compliant while protecting your retirement savings.

The 50% CGT discount: More than meets the eye

There is much in the media about how the 50% capital gains tax (CGT) discount has contributed to the housing affordability problem in Australia (although no doubt the problem is a lot more complex than attributing it mainly to any taxation measure or measures).

Nevertheless, the CGT discount looms large for anybody who owns assets that are subject to CGT (and note in this regard a passenger car of any sort – including a vintage car – is not subject to CGT).

However, the 50% discount may even have relevance to your otherwise CGT-exempt home because you may be subject to a partial exemption due to the way you have used it to produce income or in some other cases.

Also, you may inherit a home and not satisfy the requirements for a full CGT exemption!

But the rules for applying the discount are not as straightforward as you would think.

For example, in any case where you make a capital gain you must first apply any prior year or current year capital losses you have before you apply the discount – and this in effect dilutes the value of the discount.

And if the gain arises from the sale of a business asset and if you qualify for the CGT small business concessions, there are other rules to consider before applying the discount (if at all).

Importantly, the full 50% CGT discount is generally not available to foreign residents for assets they acquire after 8 May 2012 (but an apportionment may be applied for any period of residency before becoming a foreign resident).

Further, even if you are a resident when you sell an asset, the 50% discount may be lost to the extent you were not a resident during the period you otherwise owned it.

But these rules are very messy and need to be looked at closely if the need arises.

Note that not all taxpayers can use the discount. For example, a company does not get it (albeit, it has lower tax rate of generally 30%). And superfunds (including SMSFs) are only entitled to a 331/3% discount.

Likewise, not all capital gains qualify for the discount. Typically, capital gains which arise from granting legal rights to another person or entity do not qualify for the discount – such as gains from granting a restrictive covenant to your employer or granting an easement over land.

Finally, in order to qualify for the CGT discount, you must have owned the asset that gave rise to the capital gain for at least 12 months – and the ATO takes the view that this does not include the day you legally acquired the asset nor the day you sold it.

So, it really means you need to have held the asset for 367 days – or 368 days in a leap year!

As with anything to do with tax, even the CGT discount is not straightforward. So, as always, make sure you seek our advice on any such matters.

Could you be missing out on thousands in lost super?

Most of us keep a close eye on our bank accounts. But superannuation can be easier to lose track of, especially if you’ve changed jobs, moved house, changed your name, or simply set up a new fund and assumed everything followed you.

That’s why the Australian Taxation Office (ATO) has issued a timely reminder. There is now $18.9 billion in lost and unclaimed super sitting across Australia. That’s up $1.1 billion since 2024 and spread across just under 7.3 million accounts.

In other words, a lot of Australians have retirement savings that aren’t currently working for them and some of it could be yours.

What “lost” or “unclaimed” super actually means

Super doesn’t vanish, but it can go missing from your radar. It typically happens when an account becomes inactive and your super fund can’t contact you, or when you end up with multiple funds over the years.

The ATO also holds certain amounts of super on behalf of individuals, for example, small inactive balances that have been transferred to the ATO, or other unclaimed amounts.

The average amount of lost or unclaimed super is around $2,590 per person. That might not sound life-changing today, but over time it can grow into tens of thousands by retirement.

A special note if you have an SMSF

If you have an SMSF, this ATO update is particularly worth paying attention to. When you established your SMSF, you might have transferred most of your super across, but kept some behind, for example, to retain insurance cover through another fund. That means there could still be older super accounts from past jobs or retail/industry funds sitting in your name.

The ATO is urging SMSF members to do a check, because a share of the $18.9 billion in lost and unclaimed super might be yours and could be rolled into your SMSF.

One important practical tip is that if you locate lost super and want to move it into your SMSF, but your SMSF doesn’t show up as a transfer option in ATO online services, it’s often due to the fund’s compliance status. Take a moment to confirm your SMSF is listed as “complying” or “registered” on Super Fund Lookup.

How to check for lost super (it only takes minutes)

The ATO has made this super simple (pun intended!). You can:

Log in to myGov and go to ATO online services
Navigate to the Super section to view:
- Super held by the ATO
- Any lost or unclaimed accounts
Request a transfer to an eligible super account.

Even if you don’t find anything, you’ll at least know everything is where it should be.

Simple habits that help you stay on top of super

Finding lost super is great but preventing it from happening at all is even better. A few easy habits can make a big difference:

Keep your details up to date with your fund and the ATO so you stay contactable.
Check whether you’ve got more than one account. Multiple accounts can mean multiple fees and duplicated insurance
Consider consolidating if it suits your situation. Fewer accounts can mean lower fees and easier management but just be sure to check any insurance you might lose before rolling over
Read your annual statement. It’s a quick way to confirm contributions, fees, returns, investment mix and beneficiaries.

Why acting now matters

Since 2022, the ATO has already reunited Australians with about $5.5 billion in previously unclaimed super. But there’s still nearly $19 billion waiting to be found.

A few minutes today could translate into a healthier retirement balance later.

Final word

It’s easy to put super in the “deal with it later” basket, but it’s still your hard-earned money. If you want a hand finding lost super, combining accounts, or moving money into your SMSF, reach out to us. We can guide you through the steps and make sure you’re able to claim any lost super without any hassles.

Who can make a claim against a deceased estate?

In Australia, the law recognises that a will maker may sometimes fail to make adequate provision for close family or dependants. In that situation, certain people can ask the Supreme Court for a share, or a larger share, of the deceased’s estate. This is usually called a family provision claim or a claim against a deceased estate.

Although each state and territory has its own Act, they all broadly follow the same idea:

You must be an eligible person, and
You must show that you’ve been left without adequate provision for your proper maintenance and support.

Who is generally allowed to claim?

The exact list differs slightly by state, but across Australia the following categories are commonly eligible:

Spouses and de facto partners

A husband or wife at the time of death
A de facto partner who was living with the deceased in a genuine domestic relationship.

Children

Biological and adopted children are generally eligible in every jurisdiction.

Step-children may be eligible in some states either directly (for example in Victoria and Western Australia) or where they were financially dependent or part of the deceased’s household.

Former spouses or partners

Most states allow a former spouse or domestic partner to claim, usually where there has not already been a full and final family law property settlement, or where there are special “factors warranting” an application.

Other dependants

Many Acts also allow claims by:

Grandchildren who were financially dependent on the deceased or were, in substance, brought up by them
Other household members (for example, a step-child, parent, or other relative living in the same household) who were wholly or partly dependent on the deceased
A person in a “close personal relationship” with the deceased. This might include a long-term carer or companion providing domestic support and personal care. This is most clearly recognised in New South Wales but similar ideas appear elsewhere.

Because the detail differs, someone who is eligible in one state may not be eligible in exactly the same way in another, so local advice is important.

Being eligible is only the first step

Even if you fit into one of these categories, the Court will not automatically change the will. It must decide whether, looking at all the circumstances, adequate provision has been made for you.

Across Australia, courts generally look at similar factors, such as:

The nature and length of your relationship with the deceased
Any obligations or responsibilities the deceased had towards you (compared with other beneficiaries)
The size and nature of the estate
Your financial position, health, age and future needs
Any significant contributions you made to the deceased or their property
Any gifts or support you already received during the deceased’s lifetime
Any serious misconduct or long-term estrangement, in appropriate cases.

Judges often talk about “what a wise and just” person, or what the “community” would generally regard as fair in the circumstances would have done, without simply rewriting the will from scratch.

Time limits and next steps

Time limits to make a family provision claim are strict and vary by state. The Court will only extend time beyond these time limits in limited situations.

If you think you may have a claim, it is generally sensible to get prompt advice from a wills and estates lawyer.

Surviving (and maybe avoiding) an ATO audit

This piece is aimed at self-employed clients, so if you’re a salary earner or a retiree you can safely move on to the next item.

For others, it goes without saying that at tax time you should disclose all your assessable income and only claim legitimate business deductions. Failure to do so exposes you to the risk of penalties and interest on top of the underpaid tax.

And the chances of popping up on the ATO’s radar are not negligible. It runs an active small business compliance program that uses industry benchmarks and other information, including “dob ins” received from community members.

Cash jobs

Offering a discount for cash for a lower price might seem tempting, but it suggests an intention of under reporting income. Tradies and the like occasionally fall out with their clients, some of whom might then report them to the ATO and those “dob ins” can lead to audits being conducted. The practice remains widespread, but you should avoid doing cash jobs – there’s a good chance they will come back to bite you.

Benchmarks

The ATO keeps extensive data of industry benchmarks for many industries, tracking gross income, expenses and profits margins. Its website suggests this data enables you to see how you compare with your peers and perhaps identifies areas for improvement. But it also gives the ATO a way of identifying potential audit cases.

If your trading results are well below the industry average, you might want to think about what some of the reasons for that might be. These could include:

Ill health suffered by yourself or a close family member
A long holiday
Your café or retail business is not in the best location
Competition from similar businesses operating nearby
You’re inexperienced or just not a great business person.

Averages are just that, and some businesses will be under while others are over. Having an idea of where you sit on the spectrum and why may help you engage with the ATO if and when the time comes.

Lifestyle factors

Another way of identifying cases suitable for audit is for the ATO to assess whether your apparent lifestyle matches the net income disclosed in your tax returns. If you drive a flash car, take expensive holidays, have your children in private schools, have had major home renovations done or get around wearing a Rolex while your disclosed income doesn’t support such a level of spending, you might have some explaining to do.

The audit

If, for whatever reason, the ATO isn’t satisfied that the taxable incomes you have disclosed are correct, they can make their own estimate using whatever information is available. Any amended default assessments will generally be based on a bank account analysis, as well as estimates of private spending. They can’t just pluck a figure out of the air, but they don’t have to prove where the discrepancy came from either.

Those without complete and accurate records of both their business and private finances are vulnerable to adjustments that involve double counting, especially from a bank analysis that assumes that every unexplained deposit represents undisclosed income and every unexplained withdrawal was used to fund private expenditure. As often as not the two are offsetting but the taxpayer can’t prove it.

To challenge a default assessment a taxpayer has to show not only that the ATO’s estimate is wrong in some respect – they also have to show what their correct taxable income is. The courts and tribunals are littered with default assessment cases where the taxpayer has failed in this regard, leaving them with a very large tax bill.

Protective measures

Here are some of the practices that might assist you in an ATO audit. Most of them would need to be in place before an audit even starts:

Keep your private and business accounts separate
Avoid using cash for business transactions
Never run private expenditure through your company account
Keep documentary evidence of gifts, loans and other non-taxable receipts that flow through your bank accounts. Create a written record of such transactions as they occur
Be prepared to explain any apparent discrepancies between your lifestyle and the income disclosed in your tax returns
If you have made a mistake or two, consider making a voluntary disclosure when you are notified of the audit but before it starts. This could help reduce penalties
Ensure you have books of account and bank records that verify the taxable income disclosed in your tax returns.

Come and see us to help get you ready for an ATO audit (or avoid one altogether).

Nov 11

November 2025 Newsletter

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Christmas and tax

With the festive season fast approaching, business owners will be turning their mind to year-end celebrations with both employees and clients.

Knowing the rules around Fringe Benefits Tax (FBT), GST credits and what is or isn’t tax deductible can help keep tax costs to a minimum.

Holiday celebrations generally take the form of Christmas parties and/or gift giving.

Parties

Where a party is held during a working day, on business premises, attended by current employees only and costs less than $300 a head (GST inclusive), FBT does not apply. However, the cost of the function will not be tax deductible and GST credits cannot be claimed.

Where the function is held off business premises, say at a restaurant, or is also attended by employees’ partners, FBT applies where the GST-inclusive cost per head comes to $300 or more, the costs are tax deductible and GST credits are available.

However, FBT will not apply where the per person cost is below the $300 threshold if it can reasonably be regarded as an exempt minor benefit – ie, one that is only provided irregularly and infrequently. Where FBT does not apply because of the minor benefit rule, the cost will not be deductible and GST credits will not be available.

Where clients also attend, FBT will not apply to the cost applicable to them, but those costs will not be tax deductible and GST credits will not be available. Where there is a mix of attendees, you may need to keep track of who participated in the function.

Gifts

First, you need to work out whether the gift itself is in the nature of entertainment – for example, movie or theatre tickets, admission to sporting events, holiday travel or accommodation vouchers.

Where the recipient of an entertainment gift is an employee (or an associate of an employee) and the GST-inclusive cost is below $300, the minor benefit exemption should apply so that FBT is not payable, in which case the cost will not be tax deductible and GST credits are not claimable. For larger entertainment gifts to employees, however, FBT applies, the cost is deductible and GST credits can be claimed.

Where the gift is not in the nature of entertainment and it falls below $300, the FBT minor benefit exemption should apply – for example, Christmas hampers, bottles of alcohol, pen sets, gift vouchers. But because the entertainment rules don’t apply, the cost of the gift is tax deductible and GST credits are claimable.

Where a gift is made to a client, the $300 FBT minor benefit exemption falls by the wayside, but as long as it is not an entertainment gift and it was made in the reasonable expectation of creating goodwill and boosting future business it should be deductible to the business. GST credits are also claimable, while the amount is uncapped (within reason).

Best approach for employees

Provided partying is not a regular thing in your business, taking employees out for Christmas lunch escapes the FBT net, as long as the cost per head stays below the $300 threshold. While the cost of the function will be non-deductible, and no GST credits are available, that generally has less of a cash-flow impact on the business than the grossed-up FBT amounts.

For employees and their associates, non-entertainment gifts under $300 are a good way to go. Making a non-entertainment gift costing up to $299 is a very tax effective way of showing your appreciation. And because the $300 cap applies separately to each benefit, depending on how generous you feel, you could also make a gift costing up to $299 to the partner or spouse of an employee, which effectively doubles the $300 minor benefits cap.

Where the cost of a non-entertainment gift costing up to $299 is not subject to FBT, it will be tax deductible, with an entitlement to GST credits, giving you the best of both worlds.

Best approach for clients

While FBT is off the table for business clients, making a non-entertainment gift (tax deductible; no dollar limit within reason) is actually much more tax effective than wining and dining a key client (non-deductible entertainment). If you put some thought into what gift to buy a client and perhaps deliver it yourself, you might make much more of an impact than inviting them to share a restaurant meal in their already crowded Christmas calendar.

If you’re not sure and you need help in sorting out the tax treatment of your upcoming holiday celebrations and gifting, don’t hesitate to give us a call.

Reducing your tax bill while topping up your super

Let’s say you’ve just sold the house you inherited from your parents 12 years ago for $1.3 million. You’ve been renting it out for most of that time, but the property market has been hotting up and you were told by several real estate agents that they could get you a good price.

But what about the tax consequences?

At age 50, you’re still working (salary of $120,000 per annum), having returned to the workforce in July 2023 following a five-year absence for personal reasons. You don’t expect to retire from paid employment until age 65 at the earliest. Your total super balance on 30 June 2025 was $300,000, sitting in a retail fund.

Your accountant has calculated the net capital gain on selling Mum’s house as $600,000. After applying the 50% CGT discount, this results in a taxable income of $420,000, and a whopping tax bill of $163,538 to go with it.

Can anything be done?

Depending on your superannuation history, there may be a legitimate way of taking a big chunk out of that tax bill while topping up your super at the same time.

Concessional super contributions are subject to an annual cap, which is set at $30,000 for the 2025-26 income year. That figure is well above the mandatory employer super guarantee amount for most income levels. Many people don’t go close to using up their concessional contribution caps, which can leave them with carry-forward concessional contributions.

To help people with modest total super balances (below $500,000 on the previous 30 June), the government gives them the option of using some or all of their previously unused concessional contributions cap on a rolling basis for five years – ie, the five previous income years from 2020-21 to 2024-25, plus the current year (2025-26).

Conveniently, the ATO keeps track of your carry-forward concessional contributions balance, which you can look up on myGov.

The beauty of this arrangement is that you can use your catch-up concessional contributions to make personal deductible contributions, which can offset part of the CGT gain from the sale of the inherited property. Instead of being taxed at the top marginal rate of 47%, the amount of the catch-up contribution is taxed at the normal rate of 15% in your super fund, which creates a net saving of 32% on the contributed amount.

It is not unusual for someone to have carry-forward concessional contributions in excess of $100,000, which would take your taxable income down to $320,000, with tax payable of $116,538, or $47,000 less than what your tax bill would be without making the tax deductible catch-up contribution. That tax saving has to be reduced by $15,000 in contributions tax payable by your super fund, for a net saving of $32,000.

Remember, however, that any super contributions you make at age 50 will not be accessible until you reach preservation age (60 if retired or 65 if you’re still working). If you have other plans for that $100,000 (and you did pocket $1.3 million on the house sale) you will need to weigh up your options. But locking up a small part of the house proceeds seems like a small price to pay for a $32,000 tax saving.

On the other hand, if you have an appetite for putting even more money into your super, you might want to consider also making a non-concessional contribution of up to $360,000. This is not tax deductible and there is no 15% contributions tax when paid into your fund.

That covers the tax side of things but since you have received a life-changing windfall, you should consider getting advice from a licensed financial adviser.

If you find yourself in this situation, come in and see us well before 30 June 2026. If you decide to go ahead with making a catch-up contribution the super fund has to be notified, which we can help you with.

Division 296 tax revisited

Big news for anyone with a large super balance – the government has gone back to the drawing board on the controversial Division 296 tax, and the changes are a big step toward fairness and common sense.

A quick recap

When the Division 296 tax was first announced in 2023, it caused an uproar. The main problem? It would have taxed unrealised gains, that is, paper profits you haven’t actually made yet and set a $3 million threshold that wasn’t indexed meaning it wouldn’t rise with inflation.

After a wave of feedback from the industry, the government has listened. The Treasurer’s new announcement, made in October 2025, fixes some of the biggest issues. The revamped version is designed to be fairer, simpler, and more in line with how tax usually works.

The plan is to start the new system from 1 July 2026, with the first tax bills expected in 2027–28.

What’s changing

Here’s what’s new under the revised Division 296 tax:

Only real earnings will be taxed. No more tax on unrealised gains as you’ll only pay on earnings you’ve actually made.
Super funds will work out members’ real earnings and report this to the ATO.
The $3 million threshold will be indexed to inflation in $150,000 increments, keeping pace with rising costs.
A new $10 million threshold will be introduced. Earnings above that will be taxed at a higher rate of 40%, and that threshold will also rise with inflation.
The start date is pushed back to 1 July 2026, giving everyone more time to prepare.
Defined benefit pensions are included, so all types of super funds are treated the same.

So what does this mean in practice? Think of it as a tiered tax system:

Up to $3 million – normal super tax of 15%.
Between $3 million and $10 million – taxed at 30%.
Over $10 million – taxed at 40%.

Basically, the more you have in super, the higher the tax rate on your earnings above those thresholds.

How it will work

Super funds will continue reporting members’ balances to the ATO, which will figure out who’s over the $3 million mark. If you are, your fund will tell the ATO your actual earnings (not paper gains). The ATO will then calculate how much extra tax you owe.

We don’t yet have the fine print on what exactly counts as “realised earnings,” but it’s likely to mean profits you’ve actually made, similar to how taxable income is treated now.

What’s still up in the air

While these updates make the system much fairer, there are still a few unanswered questions:

What exactly counts as “earnings”? Will it only include profits made after 1 July 2026, or could older gains that are sold later be included too?
What happens with capital gains? Super funds usually get a one-third discount on capital gains for assets held over a year, but it’s unclear whether that will still apply.
How will pension-phase income be handled? Some super income is tax-free when you’re in the pension phase, and we don’t yet know how that will interact with the new rules.
Can people with over $10 million move money out? If your earnings above $10 million are taxed at 40%, you might want to shift funds elsewhere but the government hasn’t said if that’ll be allowed.

What it means for you

If your super balance is over $10 million, the proposed rules mean that a portion of your superannuation earnings could attract a higher tax rate of up to 40%.

For people with between $3 million and $10 million, the new system could also change how much tax applies to their super earnings, depending on how the final legislation defines “realised gains.”

But don’t rush. These rules aren’t law yet, and if you take your super out, it’s hard to put it back because of contribution limits. It’s best to wait for the final legislation and get professional advice before making any decision to withdraw benefits from super.

Home Equity Access Scheme: What you need to know

For many older Australians, having wealth tied up in the family home can make day-to-day expenses challenging. The Home Equity Access Scheme (HEAS) is a government-backed program that allows eligible seniors to unlock some of the value in their home without selling it.

What is HEAS?

HEAS is essentially a reverse mortgage run by the Australian Government. If you are of age pension age and own real estate in Australia, you can apply for regular loan payments from the government. These payments come in either fortnightly instalments or up to two lump sums per year.

It’s designed to help retirees who may not qualify for a full pension or who need extra income. The loan is secured against your property and is not considered taxable income. You don’t need to make repayments while you’re alive, though interest does accumulate.

Who can apply?

You may be eligible if:

You are age pension age.
You or your partner own real estate in Australia.
You receive a part or no pension, or would qualify if not for the assets or income test.
You’re not bankrupt and your property is properly insured.

Even self-funded retirees can access this scheme, as long as they meet the age and property requirements.

How much can you borrow?

You can receive:

Fortnightly payments up to 150% of the full age pension.
Advance lump sums up to 50% of the annual age pension, taken once or split into two payments every 26 fortnights.

The total amount you can borrow depends on your age and the value of your home. The government uses a formula that includes an age-based component, so older applicants can usually borrow more.

You can also nominate an amount to exclude from your property value if you want to preserve equity and leave something for your family.

What about interest and repayment?

The current interest rate is currently 3.95% per annum (compounding fortnightly). The loan does not need to be repaid until:

You sell the property.
You pass away.
You choose to repay early.

When the loan ends, your estate or surviving partner will repay the debt. The scheme’s “No Negative Equity Guarantee” ensures that you’ll never owe more than your home is worth.

Key benefits

No regular repayments required during your lifetime.
You remain the owner of your home.
Flexibility to adjust or stop payments.
Peace of mind through the No Negative Equity Guarantee.

Things to consider

Before applying, think about:

How much of your home equity you’re willing to give up.
The long-term impact on your estate and inheritance.
Alternative options like downsizing or private loans.
Making sure your property stays well maintained and insured.

Final word

HEAS can be a smart way to boost your retirement income while staying in your home. But it’s a long-term decision. If you would like to know more, give us a call so we can weigh your options carefully to make sure it suits your lifestyle and future plans.

Renting your holiday home

With summer around the corner and beach holiday homes back on the agenda, perhaps it is time to revisit a few tax matters about their use.

And the big issue is how you claim expenses if your holiday home is only rented for part of the year.

Well, the ATO takes the view that you can claim expenses for the property based on the extent that they are incurred for the purpose of producing rental income, but that you’ll need to apportion your expenses if your property is available for rent for only part of the year.

Moreover, it has to be genuinely available for rent! The ATO says that factors that may indicate a property isn’t genuinely available for rent include:

It’s advertised in ways that limit its exposure to potential tenants; eg, the property is only advertised at your workplace or on restricted social media groups.
The location, condition of the property, or accessibility of the property mean that it’s unlikely tenants will seek to rent it.
You place unreasonable or stringent conditions on renting out the property that restrict the likelihood of renting out the property; eg, setting the rent above the rate of comparable properties in the area, requiring prospective users to give references for short holiday stays and conditions like “no children” and “no pets”.

You refuse to rent out the property to interested people without adequate reasons.

The ATO also requires you to apportion your expenses if you charge less than market rent to family or friends to use the property. And in this case, the general rule is that you can only claim expenses up to the amount of rent derived – so that you have a tax neutral outcome

Importantly, the ATO also says that it may not be appropriate to apportion all expenses on the same basis. For example, expenses that relate solely to the renting of your property are fully deductible and you don’t need to apportion them based on the time the property was rented out. Such expenses include real estate commissions and the costs of advertising for tenants

And again you can’t claim a deduction for expenses that relate to periods when the property is not genuinely available for rent or periods when the property is used for a private purpose or for the part of the property that isn’t rented out; eg, the cost of cleaning your holiday home after you, your family or friends have used the property for a holiday or a repair for damage.

Oh, and finally just a word on selling the property.

If you have never lived in it as your home, then you will be subject to CGT if you sell it (unless you bought it before 20 September 1985). And this will be the case regardless of whether you only used it as a holiday home or you partly rented it as well

Importantly, in calculating the capital gain you can include in its cost all the non-deductible costs of owning or holding the property such as mortgage interest, insurance, repairs, council rates etc, – and even those costs of having the lawns mown regularly. However, you will need to have kept appropriate records of these expenses to do use them.

And of course, you are entitled to the 50% CGT discount to reduce the amount of any assessable gain.

These then are some of the important things about tax and holidays homes. But there are a lot more things that you need to know. So, come have a chat to us about it if you want.

Using your home to produce income

In contrast to holiday homes, what happens where you use all or part of your home to produce assessable income?

Well, there will be important capital gains tax (CGT) consequences – the most important of which is that you will be likely to lose some of your CGT exemption on the home.

However, the rules about possible partial CGT exemptions on homes are quite complex and they will depend on how exactly you used your home to produce assessable income.

For example, in the simple case, if you vacated your home and rented it for a period of up to six years you can choose to use the “absence concession” to continue to treat it as your CGT exempt home during this period of absence.

In other words, you won’t lose your CGT exemption at all in this case.

But there is one important proviso: during this period of absence no other home can qualify as you’re CGT exempt home.

Nevertheless, applying this rule is not entirely straightforward. There are important considerations to bear in mind.

On the other hand, if you only use a part of your home to produce assessable income then you cannot use this absence rule and you will generate a partial CGT liability on your home in most cases.

This will typically occur when for example you rent a room in the home, carry on a business from part of the home (eg, a professional practice) or construct a granny flat and rent it out.

But note that that if you only rent part of the home to a friend or a relative and do not charge commercial rent, you will not trigger this rule about losing part of your CGT exemption as you have not used the home to produce assessable income.

Also note that because you have used part of your home to run a business, you may be eligible to apply the small business CGT concessions to reduce, eliminate, or roll over any capital gain arising from the business use of your home.

However, it is not as easy to qualify for these concessions as it seems – and our advice should be sought on any such matter.

There is also another important rule which is often overlooked when at home his first used to produce assessable income – and that is at the home will be considered to have been reacquired for its market value at that time. This will help reduce the amount of the assessable capital gain that is calculated.

And finally, the 50% CGT discount is available to reduce the amount of any assessable gain from using part of your home to produce any form of assessable income – as long as you have owned it for at least 12 months.

So if you have this type of CGT issue in relation to probably your most valuable asset, come speak to us first before selling your home.

Oct 01

October 2025 Newsletter

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Protecting your super from scams

With more than $4 trillion in superannuation, it’s no surprise scammers see it as a goldmine. ASIC has warned Australians to be on high alert after a rise in pushy sales tactics and false promises designed to lure people into risky super switches. Since your super is one of the biggest investments you’ll ever make, protecting it is crucial. Here’s what you need to know to keep your nest egg safe.

Why scammers target super

Superannuation accounts often hold large balances, which makes them a prime target. Fraudsters know that many people don’t regularly check their super fund or may feel uncertain about whether they’re getting the best deal. This makes them vulnerable to slick sales pitches that promise “better returns” or “lost super recovery.”

ASIC has noticed a rise in schemes where consumers are encouraged to switch super funds quickly, often through high-pressure phone calls, clickbait advertising, or “free” online super health checks.

The red flags to look out for

Not every call or offer about super is a scam, but there are some big warning signs to watch out for:

High-pressure tactics – being told you must act immediately. Remember, a genuine super opportunity won’t disappear overnight.
Cold calls or unexpected emails/messages, especially if you’ve never contacted the provider before.
“Free super health checks” or prizes – these are often advertised through social media or websites.
Offers to “find lost super for free” – while this sounds helpful, scammers often use it as a hook. (Tip: you can safely track down lost super yourself via the ATO.)
Unlicensed advisers – people giving advice without proper authorisation.
Mostly phone-based dealings – with little or no opportunity to meet a qualified financial adviser in person.
Promises of guaranteed or high returns – if it sounds too good to be true, it probably is.

Why these tactics are dangerous

These schemes don’t always look like traditional scams. In fact, they often feel legitimate. A salesperson may sound knowledgeable, polite, and genuinely interested in helping you. Some even refer you to an adviser during the call to make the process seem credible.

The catch? The investments may be complex, high risk, or poorly explained. Even experienced investors can find it hard to spot the pitfalls. Once you’ve switched your super, it can be very difficult and sometimes impossible to reverse the decision.

How to protect yourself

Here are a few simple steps you can take to keep your retirement savings safe:

Don’t rush. Take your time when making decisions about super.
Hang up on pressure. If you feel pushed or uncomfortable, end the call.
Check credentials. Make sure anyone giving financial advice is licensed with ASIC.
Do your own research. Use trusted resources like ASIC’s Moneysmart website to learn about your options.
Talk to your accountant or adviser. Before making changes, get independent advice from someone who knows your situation and isn’t tied to the sales pitch.
Be cautious online. Avoid clicking on random ads or pop-ups offering “free” super reviews.

The bottom line

There can be legitimate benefits to switching or consolidating super, but only after careful consideration of the risks and fees involved. The key is to make sure any decision is made on your terms, not under pressure from a cold call or pushy salesperson.

Your super is too important to risk on false promises. Stay alert, ask questions, and if you’re ever unsure, speak with us before making any changes.

Family trusts are great, but beware of disadvantages

The tax advantages of using a family trust are well known – in particular, the ability to split income among family members so that a lower effective tax rate applies to the income unlike where one person derived all the income or the trust itself was liable to pay tax on it.

A family trust, like a company, is also a good way to protect assets from potential creditors in the case of financial trouble – or from other parties as the need may arise (eg, when a family member gets married and may be gifted property or money to buy a house).

So, even though a home held by a family trust is not entitled to the capital gains tax (CGT) main residence exemption, there may be other non-tax benefits that carry greater weight.

A family trust can also be used to help in business succession matters, for example, where farmland is held by a family trust where successive generations of a family can continue to farm it for their benefit.

Of course, to effectively use a family trust you need to have assets it can hold or acquire. It is of no use in trying to obtain tax advantages in respect of personal services income per se. You need for it to be able to hold assets – and preferably good income-producing assets.

However, for all their benefits there are a few demands associated with using a family trust.

For a start, if you wish to “stream” capital gains and/or franked dividends to certain beneficiaries – so that they retain their character as concessionally taxed amounts in the beneficiary’s hands – then there are some complex rules that must be followed. And if they are not followed properly you can end up getting a tax result far removed from what you intended. Oh, and the trust deed must allow streaming of gains (so you may need an updated deed).

Secondly, if a trust has capital losses it cannot, unlike a partnership, distribute those losses to beneficiaries. They instead remain in the trust – and furthermore can only be used to reduce future taxable income or capital gains if certain “continuity of ownership” tests are met. And this often involves the need to make an irrevocable family trust election which locks the trust into distributing all its income to certain beneficiaries only.

Thirdly, contrary to common knowledge, distributions to children are not tax-effective in that they are usually taxed at penalty rates which equate to the top tax rate in most cases (albeit, you do get the benefit of a tax-free threshold of some $700).

Fourthly, trusts do not generally last forever (although in some state jurisdictions it is possible). At some stage the trust has to be wound up (usually after 80 years) and assets held by the trust have to be distributed to certain beneficiaries. And this can often trigger a CGT liability (and a large one at that). Just ask Gina Rhinehart and her family.

And there is also the question currently before the High Court of whether a company will be liable for Div 7A tax in respect of “unpaid present entitlements” made to it by a trust. This too is a hot issue in relation to if and how to use a family trust effectively for tax purposes.

So, the issue of whether to use a family trust is not always straightforward. Therefore, if you intend to use one, or think your current one needs some revisions, come and chat to us.

The CGT retirement exemption concession: What a boon!

If you run a small business and sell it – or some of its asset(s) – and make a capital gain, the CGT “retirement exemption” may be invaluable to reduce or eliminate the tax payable on the gain.

The funny thing is that you don’t have to retire to use the CGT retirement exemption.

Rather, it just means if you are under 55 of age you have to pay the exempt gain into your superannuation (and the amount is exempt from the non-concessional contributions cap). On the other hand, if you are 55 years of age or over you can take the gain in your hands tax-free.

Furthermore, if you are under 55 and have to pay it into super, you could use the related rollover concession to defer the taxation of the gain for two years – and this may allow you then to use the retirement exemption for the reinstated gain when you are 55 years or over.

However, there is a limit on the amount of capital gain that is entitled to the retirement exemption. You only have a lifetime exempt limit of $500,000 – whether you take it into your hands tax-free or you put it into super (or you take it as a stakeholder payment in a company or trust where a company or trust make a gain).

It should also be noted that if you are going to use the CGT small business concessions (and there are four specific concessions which can be used, including the “15 year exemption” and the “50% reduction”), then if you meet the conditions for the 15 year exemption, it must be used in preference to any other concession. And one of the advantages of this concession is that it exempts the whole capital gain (regardless of how big it is) – unlike the retirement exemption which is subject to the lifetime limit of $500,000.

Crucially, there are special rules that apply if a company or trust makes the gain and you wish to use the retirement exemption. And if you don’t meet these rules – especially the payment rules – then the retirement exemption is not available at all.

These payment rules are, broadly, that the payment must be made to the relevant stakeholder by seven days after the company or lodges its return.

And another great thing about the concession in this case is that the payment of the exempt gain to a stakeholder does not have to be in proportion to their interest in the company or trust. This allows excellent tax planning opportunities.

These are just a few of the “ins and outs” about using the retirement exemption. But there are also important eligibility rules to be met in the first place.

So, if you are thinking of selling your small business come speak to us first so that we can help you maximise the benefit of the concession, and make sure you qualify for them in the first place.

Helping your kids buy their first home using super

If you want to give your children a head start on saving for their first home, the First Home Super Saver Scheme (FHSSS) is worth considering. It offers a tax-effective way for young people to grow a deposit more quickly and is open to anyone who meets the eligibility rules and has never owned property.

What is the First Home Super Saver Scheme?

The FHSSS allows first-home buyers to make voluntary contributions into their super fund and later withdraw those funds, plus earnings, to put toward a home deposit.

Here’s how it works:

They can contribute up to $15,000 per financial year, and up to $50,000 total, in voluntary contributions.
These contributions can be either:
- Concessional contributions (CC) such as salary sacrifice or personal deductible contributions
- Non-concessional contributions (NCC) which is after-tax money contributed from their own savings for which no deduction will be claimed

Children 18 or over can apply to withdraw the total voluntary contributions up to $50,000, plus notional earnings (currently 6.61%) on these contributions, to buy their first home. Whilst children must be at least 18 to withdraw an amount for their first home, they can start saving earlier.

Why use super to save for a home?

One advantage of using the FHSSS is the tax savings. Contributions made by way of personal deductible contributions or salary sacrifice reduce taxable income, which can mean less tax to pay.

In addition, any investment earnings on those contributions are taxed at only 15% inside super, compared to the saver’s marginal tax rate. When the funds are withdrawn under the FHSSS, the assessable portion is taxed at the saver’s marginal tax rate, but with a 30% offset applied. This means less tax and more savings to put toward a deposit. All this can mean more money is saved compared to saving in a regular bank account.

How parents can help

If your child is working and has a super fund, you can give them money, which they can then contribute themselves to their super fund. They may claim a tax deduction on the contribution and this may boost their after-tax income. Alternatively, they may choose not to claim a tax deduction. If your child is earning a low income and makes a personal after-tax contribution to super, they may be eligible for a government co-contribution of up to $500. Whilst this is a nice freebie, it cannot be withdrawn under the FHSSS, as it is not a personal contribution.

Important note: You cannot contribute directly on your child’s behalf. The ATO requires the contribution to come from your child’s own bank account to be eligible for the FHSSS withdrawal.

When your child is ready to buy their first home, they apply through myGov to find out the maximum amount they can access under the scheme. Once they have this determination from the ATO, they can then request to withdraw up to that amount to use as part of their deposit.

The FHSSS comes with strict eligibility rules and timeframes, so it’s important to get the details right. If you’re thinking about helping your child save a deposit this way, give us a call. With some forward planning and the right contribution strategy, your child could boost their savings, cut down their tax bill, and step into their first home sooner.

Tax on redundancy payments explained

If you’re made redundant, you may receive a lump sum payout. While this can provide financial breathing room, it’s important to understand how that money is taxed. Not all parts of a redundancy payment are taxed the same and how it is taxed can make a big difference to what you actually take home.

If your position is terminated, you might receive various payments, including:

Unused annual or long service leave
Payment in lieu of notice
A severance payout
Additional “ex-gratia” or goodwill payments

Some of these are taxed as regular income, others may be taxed concessionally and some may even be tax-free if it is treated as a ‘genuine redundancy’ amount.

What is a genuine redundancy?

A redundancy is considered genuine if your role no longer exists and is not being replaced. You must also be under age 67 at the time of termination to access tax-free benefits. If you’re dismissed due to poor performance or you resign voluntarily, it doesn’t count as a genuine redundancy.

Tax-free threshold for genuine redundancy

If your redundancy is genuine, part or all your payout can be received tax-free.

For the 2025–26 financial year, the tax-free amount is $13,100 + $6,552 for each full year of service.

For example, if you’ve worked 10 years, your tax-free threshold is:

$13,100 + ($6,552 × 10) = $78,620

Any payment above that amount may be taxed as an employment termination payment (ETP).

How are ETPs taxed?

ETPs can include payments like severance pay, golden handshakes, or unused sick leave. How these are taxed depends on your age and how much you receive.

If you’re under 60, payments under the ETP cap ($260,000 in 2025–26) are taxed at up to 30%. If you’re 60 or older, the rate drops to 15%. Anything above the cap is taxed at 45%.

On top of the ETP cap, there is also a ‘whole-of-income cap’ that applies to high income earners. This cap limits how much certain termination payments can qualify for concessional tax treatment.

Unused leave is taxed differently

Payments for unused annual or long service leave are taxed at different rates depending on whether your termination is a genuine redundancy or not. Generally, these are taxed at a maximum rate of 30% if it is a genuine redundancy. If you resign or retire, your unused leave payments will generally be taxed at your marginal tax rate, plus Medicare levy.

Some tips to reduce tax

You may be able to contribute part of your redundancy payment to super and claim a tax deduction, especially if you have unused concessional cap space from previous years. The catch-up rules allow you to use any unused portions of the concessional contributions cap (currently $30,000) from the past five financial years, as long as your total super balance was under $500,000 at the previous 30 June.

This strategy can help offset the taxable portion of your redundancy payment, lowering your overall tax bill while boosting your retirement savings.

Key message

Redundancy payments can be complex, with different components taxed in different ways. Knowing the rules and using strategies like super contributions can make a big difference to what you keep. If you’re facing redundancy and want to understand your options, give us a call. We can help you plan ahead, minimise tax, and make the most of your payout.

Car claims for electric vehicles

Working out the cost of electricity used to run your electric vehicle (EV) where you use the vehicle for business purposes and you use the logbook method for making your claim for car expenses is a little more complex than monitoring the cost of fuel used to run an all petrol vehicle. You need to keep certain records and make some choices along the way.

But first, a quick look at some of the basic rules around tax claims for the business use of cars, including EVs.

What trips are eligible?

Costs incurred in running your car for business purposes can be deducted using one of several methods. The term “business purposes” includes:

Attending meetings or conferences away from your usual place of work
Collecting supplies or delivering items
Travel between two separate places of work (eg, for a second job)
Travel from your home or your usual place of work to an alternative worksite (eg, a client’s office or worksite), and
Itinerant work, where the job requires you to work at more than one location each day before going home.

Travel between your home and your usual place of work is only deductible in quite limited circumstances – eg, when transporting bulky equipment to and from a worksite.

Cents per kilometre up to 5,000 business kilometres per year

For many taxpayers, the statutory safe harbour rate of 88 cents per kilometre for the 2025-26 income year for up to 5,000 business kilometres can be the best way of claiming their car expenses. It gets you a deduction of up to $4,400 without having to keep any receipts.

The cents per kilometre method covers all car expenses, including depreciation, registration and insurance, repairs and maintenance, and fuel costs. If you use this method, you can’t add any of these costs on top of the cents per kilometre amount. The cents per kilometre method applies the EVs (including plug-in hybrids – PHEVs) as well as petrol only cars.

If you use this method, you will need to keep records that show how you have worked out your business related kilometres. That can be done by way of a travel diary that covers the entire income year. You also need to show that you own or lease the car.

Logbook method

The cents per kilometre method will not always be optimal for everyone. If you have a high percentage of business use of the car, the logbook method may well give you a better result. But you will need to keep receipts or other evidence of all your car expenses, as well as completing a logbook for a representative and continuous 12-week period. The logbook needs to show the destination and purpose of each business trip, as well as the total kilometres travelled. It also needs to show the opening and closing odometer readings for the logbook period. The percentage of business use is worked out using the logbook and is applied to the total costs attributable to running the car.

The logbook can be relied upon for five years, unless your pattern of use changes significantly (eg, if you move house or the nature of your job changes). If that happens, you will have to complete a new 12-week logbook.

Having completed the logbook, and for a non-electric car, you then need to keep receipts for fuel and oil expenses, or make a reasonable estimate of those expenses based on opening and closing odometer readings, standard fuel use by your car (per the manufacturer) and average petrol prices for the income year (per the Australian Institute of Petroleum website). You should also keep receipts or other evidence of what you’ve spent on registration and insurance, repairs and maintenance, lease payments and interest charges. You should also have a record of the cost of the car and show how you have worked out your depreciation claim.

You then apply your business use percentage to the total running costs and there’s your claim for car expenses.

Electric vehicles

EVs are typically charged at both commercial charging stations and using home chargers. You need to keep a record of the cost of using commercial charging stations, which should be straight-forward enough.

For home charging, however, the electricity usage for charging EVs is combined with the total electrical consumption of the household, and cannot generally be separately identified.

Unless your EV is capable of reporting the percentage of home charging, the best basis for claiming electricity costs is to use the Commissioner’s home charging rate of 4.2 cents per kilometre to the total distance travelled by the EV during the year of income. The 4.2 cents per kilometre home charging rate covers all electricity costs for the EV, so if you use this method, you cannot also claim the cost of using commercial charging stations.

Where you are able to determine the home charging vs commercial charging station percentage, you can work out the total number of kilometres attributable to your home charging, multiplying those kilometres by the 4.2 cents EV home charging rate and then adding any commercial charging station costs.

You must still keep receipts substantiating your commercial charging station costs, keep an electricity bill and record your opening and closing odometer readings. Having calculated your electricity costs you add it to all the other car running costs (including depreciation) and claim the business proportion as per your logbook.

Plug-in Hybrids (PHEV)

PHEVs are trickier than EVs since they use petrol as well as electricity. The ATO has come up with a seven-step method statement for calculating the combined petrol and electricity costs applicable to a PHEV which we won’t bore you with here.

What you need to keep for our lodgement meeting are:

Your PHEV’s actual petrol and oil costs for the period
Opening and closing odometer readings, and
Your PHEV’s Condition B test cycle fuel economy figure (per the manufacturer).

We will do the rest and ensure you are claiming your legitimate entitlement.

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BUDGET CHANGES TO NEGATIVE GEARING
What do they mean for you?

BUDGET CHANGES TO CGT DISCOUNT
What do they mean to for you

CEASED WORK AND CLAIMING JOBSEEKER?
What it Means for Your Super

Super and Bankruptcy:
What’s Safe and What isn’t

Budget musings:
Changes to negative gearing, the CGT discount on the cards

CGT and options –
when is the asset acquired?

The work test:
Claiming a tax deduction for super contributions after 67

30 June 2026
Tax and Super Checklist

Commonwealth Seniors Health Card (CSHC):
What’s changing from 20 March 2026