Year-End Planning Ideas for Individuals

Superannuation Contributions

The concessional (before-tax) contributions cap for 2025–26 is $30,000. From 1 July 2026 this increases to $32,500. Your employer’s compulsory super guarantee (SGC) contributions count toward this cap, so take that into account before making voluntary contributions.

• If your super balance is below $500,000 and you’ve contributed less than the cap in prior years (from FY2019–20 onwards), you may be able to carry forward unused cap amounts and make additional concessional contributions this year.
• Non-concessional (after-tax) contributions are capped at $120,000 per year. If you are under 75 and meet the work test, the bring-forward rule may allow contributions of up to $360,000 over three years.
• Make sure personal deductible contributions reach your fund by 30 June and that you lodge a valid notice of intent to claim a deduction.

Work-Related Deductions

To claim a deduction you must have incurred the expense yourself, not been reimbursed, and the expense must be directly connected to earning your income. Receipts and invoices are required for claims over $300.

• Work from home: You can use the revised fixed-rate method of $0.70 per hour or the actual cost method. The fixed-rate method requires a complete record of hours worked from home — estimates or four-week diaries are no longer accepted.
• Car expenses: The cents-per-kilometre rate is $0.88 per km (maximum 5,000 km). If using the logbook method, ensure your logbook is less than five years old and reflects your current travel patterns.
• Electric vehicles: If you use an EV for income-producing purposes, you can use the ATO’s EV home charging rate of 4.2 cents per km for the year ended 30 June 2026, increasing to 5.47 cents per km from 1 July 2026.

Capital Gains Planning

Consider the timing of any asset disposals. The CGT event generally occurs on contract date, not settlement. If you have held an asset for more than 12 months you may be entitled to the 50% CGT discount.

• Review your portfolio for assets that are sitting at a loss — crystallising losses before 30 June can offset gains made during the year.
• Small business CGT concessions may be available to reduce or eliminate gains on qualifying business assets. Contact us to assess eligibility.
• Note the proposed changes to the CGT discount from 1 July 2027 (see Federal Budget section below) — now may be the time to model the impact on your investment portfolio.

Other Individual Planning Tips

• Review your Medicare Levy Surcharge position. If your income (plus your spouse’s) exceeds the relevant threshold and you don’t have adequate private hospital cover, you may face a surcharge of 1%–1.5%.
• Rental property: Ensure all deductible expenses are paid before 30 June. As an SBE, prepayments of up to 12 months are immediately deductible.
• Division 293 tax: If your income and concessional super contributions total more than $250,000, an additional 15% tax applies to some or all of those super contributions.
• Income from the sharing economy (Uber, Airbnb, Airtasker): Declare all income and claim the proportion of related expenses. All Uber drivers must be registered for GST.

Federal Budget Updates — Individuals

$1,000 Instant Deduction for Work-Related Expenses

From the 2026–27 income year, the Government proposes an optional standard deduction of $1,000 for eligible work-related expenses. Under this measure:

• You can claim $1,000 without keeping receipts or other substantiation records.
• If your actual deductible work-related expenses exceed $1,000, you can still claim your actual expenses under existing rules.
• Certain deductions outside the standard deduction (e.g. self-education, union fees) may still be claimable separately.
• This measure is targeted at employees and individuals earning labour income. It does not provide a cash payment — the benefit arises when your tax return is assessed.

Working Australians Tax Offset

A permanent annual $250 tax offset will be introduced for eligible Australian workers from the 2027–28 income year. This provides a modest reduction in tax liability for wage earners and sole traders.

Negative Gearing Changes (from 1 July 2027)

For residential properties purchased after 7:30pm AEST on 12 May 2026 (Budget night):

• Rental losses can only be offset against rental income or capital gains from residential properties.
• Any remaining losses must be carried forward and applied against future residential rental income or capital gains only.
• Grandfathering applies: properties already owned (or under contract) at Budget night continue under existing rules.
• New builds remain fully eligible under existing negative gearing rules regardless of when purchased.

CGT Discount Changes (from 1 July 2027)

The current 50% CGT discount for individuals will be replaced from 1 July 2027 with:

• Cost base indexation (inflation adjustment), and
• A proposed minimum 30% tax rate on capital gains.

Gains accruing before 1 July 2027 will still receive the 50% CGT discount. Valuing assets at 1 July 2027 will be important. Contact us to discuss what this means for your investments.

Medicare Levy Low-Income Thresholds

The Medicare levy low-income thresholds have been retrospectively increased from 1 July 2025:

What’s New for Individuals

ATO Interest Charges No Longer Deductible

From 1 July 2025, General Interest Charges (GIC) and Shortfall Interest Charges (SIC) imposed by the ATO are no longer tax-deductible. This makes outstanding tax debts more expensive in real terms. If you are struggling to meet ATO obligations, contact us early so we can assist with payment arrangements.

Rental Property — Stricter ATO Guidelines

The ATO has finalised new guidance (TR 2026/1, PCG 2026/2 and PCG 2026/3) on residential rental property deductions, particularly for holiday homes and properties with some private use.

• Properties primarily held for private enjoyment may have deductions (interest, rates, insurance, depreciation) denied entirely.
• The ATO will examine whether properties were blocked out during peak periods, whether rents were set artificially high, or whether occupancy was genuinely low.
• All rental income, including through Airbnb and informal family arrangements, must be declared.

Electric Vehicle Home Charging Rate

The ATO’s EV home charging rate is 4.2 cents per km for the year ending 30 June 2026, increasing to 5.47 cents per km from 1 July 2026. This applies where you use an EV for income-producing purposes and charge at home using the logbook or actual expense method.

ATO Scrutiny — Individuals

Work-Related Deductions

The ATO’s key compliance focus for Tax Time 2026 includes work-related deductions and working from home claims. Sophisticated data-matching systems compare claims against industry benchmarks and occupation-specific guidelines. Ensure all claims are documented and genuinely incurred in earning your income.

 Work from Home Expenses

If using the 70 cents per hour fixed-rate method, you must maintain a complete record of every hour worked from home. The ATO no longer accepts estimates or four-week sample diaries. You must also keep at least one document for each type of running expense covered by the rate. Be alert to “double-dipping” — do not claim mobile phone costs separately if using the fixed rate (it already includes these).

Omitted Income

The ATO uses extensive data-matching programs across banks, digital platforms, employers, government agencies and crypto exchanges. All sources of income — including side-hustles, online platforms and overseas receipts — must be declared. Income received from overseas relatives may also need to be reviewed for its tax treatment.

Crypto Assets

The ATO is expanding its Crypto Assets Data-Matching Program, covering disposals, token swaps, staking and DeFi transactions. If you hold crypto assets, maintain complete records of acquisition dates, disposal dates, transaction values and wallet activity.

Year-End Planning Ideas for Companies

Superannuation

Super contributions are only deductible in the year they are received by the fund. Ensure all quarterly super obligations have been met on time — late payments are not deductible and attract the Superannuation Guarantee Charge. Super for the June 2026 quarter is due by 28 July 2026.

Division 7A — Shareholder Loans

If your company has advanced funds to a shareholder or related party, or allowed private use of company assets, a deemed dividend may arise unless a complying loan agreement is in place.

• Review all shareholder loan accounts before 30 June. Minimum annual repayments must be made on loans placed under complying loan agreements in prior years.
• If the company needs to declare dividends to fund loan repayments, ensure the dividend resolution is prepared and documented before 30 June.
• Avoid accidentally triggering debt forgiveness or other Division 7A events during restructures or estate planning.

Instant Asset Write-Off

The instant asset write-off threshold is $20,000 for the 2025–26 year for SBEs (turnover < $10M).

• Assets must be first used or installed ready for use by 30 June 2026 to claim the deduction in this year’s return.
• The $20,000 limit applies per asset — multiple assets can each qualify.
• Both new and second-hand assets can qualify, subject to some exclusions.

Bad Debts

Write off irrecoverable debts before 30 June to claim a deduction in the current year. Document your recovery attempts. Any subsequent recovery of written-off debts will be assessable income.

Stocktake & Prepayments

Perform a stocktake before 30 June. As an SBE, if the difference between opening and closing stock values is less than $5,000, you are not required to conduct a formal stocktake. Prepayments of 12 months or less are immediately deductible for SBEs.

Bonuses, Director Fees & Management Charges

Commit to employee bonuses and director fees in writing before 30 June. Where management fees are charged between related entities, raise the invoices before 30 June and ensure they are commercially reasonable and documented.

FBT Review

Review any benefits provided to employees or their associates (motor vehicles, discounted loans, expense payments). Ensure FBT returns are lodged and any reportable fringe benefits exceeding $2,000 are included in employee payment summaries via STP.

Federal Budget Updates — Companies

Loss Carry-Back

The Government has proposed re-introducing the loss carry-back measure for income years starting on or after 1 July 2026. This allows eligible companies to carry back tax losses against prior tax paid up to two years earlier, potentially generating a tax refund.

Small Start-Up Tax Offset

From income years starting on or after 1 July 2028, small start-up companies in their first two years of operation may receive a refundable tax offset calculated by reference to their tax losses. This is intended to support early-stage businesses.

Minimum 30% Tax on Discretionary Trust Distributions

From 1 July 2028, a minimum 30% tax is proposed on discretionary trust distributions. The design is likely to discourage the use of corporate beneficiaries (bucket companies). If your company receives trust distributions, contact us to model the impact on your structure.

R&D Tax Incentive

Changes are proposed to better target the R&D tax incentive from 1 July 2028. If your company claims R&D offsets, we will keep you informed as details emerge.

Negative Gearing — Residential Property

From 1 July 2027, deductions for residential property losses will be limited to new builds for properties acquired after Budget night. Companies holding established residential investment properties should review the impact.

Pre-CGT Assets

Pre-CGT assets (acquired before 20 September 1985) are proposed to be brought within the CGT net for gains accruing from 1 July 2027. This is a significant change for companies holding long-held assets. Contact us to discuss.

What’s New for Companies

Payday Super — Starts 1 July 2026

From 1 July 2026, employers must pay super at the same time as wages. Contributions must reach the employee’s super fund within 7 business days of payday. Late payments will attract the Superannuation Guarantee Charge (SGC) including interest and penalties. Unlike the existing system, SGC amounts will normally be deductible — but penalties for late payment will not.

The Small Business Superannuation Clearing House (SBSCH) will be retired on 1 July 2026. All businesses should set up an alternative payment channel now.

ATO Interest Charges No Longer Deductible

From 1 July 2025, General Interest Charges (GIC) and Shortfall Interest Charges (SIC) are not deductible. Outstanding ATO debts are now more expensive in after-tax terms. Let us know if you are struggling to pay so we can assist with a payment arrangement.

Instant Asset Write-Off Proposed to Be Permanent

The Government has announced an intention to permanently increase the instant asset write-off threshold to $20,000 from the 2027 income year, but legislation has not yet been released. We will update you when confirmed.

Card Surcharge Ban — 1 October 2026

The Reserve Bank of Australia has confirmed that surcharges on credit and debit card payments across eftpos, Mastercard and Visa will be banned from 1 October 2026. Businesses should:

• Review current merchant fee structures and assess whether prices need to be adjusted to recover costs.
• Remove surcharge signage and update online checkout and POS systems.
• Speak to your payment provider about lower merchant service fees, which should follow from reduced interchange fee caps.

ATO Scrutiny — Companies

Contractor Payments — TPAR

The ATO continues to focus on businesses in the Taxable Payments Reporting System (TPRS) — building, construction, courier, cleaning, IT, road freight and security. Ensure your Taxable Payments Annual Report (TPAR) is lodged by 28 August 2026. Mismatches between TPAR data and contractor tax returns may trigger amended assessments and penalties.

Succession Planning

The ATO has increased its focus on succession planning for privately owned and wealthy groups. High-risk scenarios include:

• Failing to recognise CGT events on restructures or asset transfers.
• Incorrectly applying tax concessions or rollover relief.
• Using complex structures to access concessions not otherwise available.
• Division 7A implications when transferring wealth through loans, payments or debt forgiveness.

Please contact us if you are considering or reviewing a succession plan.

Lifestyle Assets

The ATO continues to monitor situations where personal assets (luxury vehicles, boats, holiday properties, aircraft) are incorrectly claimed as business assets. Ensure deductions and GST credits are supported by business use records such as logbooks and invoices. Only the business-related portion is deductible where private use exists.

GST Refund Claims

The ATO is closely monitoring GST refund claims, particularly those involving artificial or contrived transactions between related entities. Arrangements generating unusual GST refund patterns may attract compliance activity. All GST claims must be supported by genuine transactions and valid tax invoices. Related-party transactions should be commercially supportable and at arm’s length.

Director Personal Liability for Company Tax Debts

Directors can be held personally liable for unpaid PAYG withholding, GST, super guarantee and other liabilities under the Director Penalty regime. Resigning as a director after the fact provides no protection. If your company is struggling to meet its tax obligations, contact us immediately.

Year-End Planning Ideas for Trusts

Trustee Resolutions — Act Before 30 June

This is the single most important action for discretionary trusts this year. Trustees (or directors of a corporate trustee) must make and document valid distribution resolutions by 30 June 2026 — or earlier if required under the trust deed.

• If no valid resolution is in place by 30 June, taxable income will be assessed in the hands of default beneficiaries, or — if there is no default beneficiary — the trustee at the top marginal rate of 47%.
• Resolutions should address all income types: ordinary income, dividends, capital gains and any franked distributions.
• If you want to stream franked dividends or capital gains to specific beneficiaries, the entitlement must be recorded in writing by 30 June 2026 (or 31 August for capital gains that don’t form part of trust income).

Section 100A — Anti-Avoidance

Section 100A applies where trust income is appointed to a beneficiary but the real economic benefit goes to another person. The ATO’s guidelines divide arrangements into risk zones:

• White zone: Pre-1 July 2014 arrangements generally not reviewed.
• Green zone: Low-risk arrangements — e.g. funds paid to a joint bank account, or retained as working capital by a trust the beneficiary controls.
• Red zone: High-risk — includes adult children’s entitlements used to repay loans for pre-18 expenses, and circular trust distributions.

Review all trust distribution arrangements against these guidelines before making resolutions. Appropriate documentation is essential.

Division 7A — Trust-to-Company Distributions

If your trust distributes to a company, ensure all payments have actually been made to avoid Unpaid Present Entitlements (UPEs) being treated as Division 7A loans. Review existing UPEs and ensure complying loan agreements are in place where necessary.

TFN Reporting

Ensure Tax File Numbers have been received from all beneficiaries (excluding minors, non-residents and tax-exempt entities) before appointing income. Where a TFN has not been provided, withhold tax at 47% and report annually. Lodge TFN reports within one month of the end of the quarter in which a TFN was received.

Minors

Distributions to minors from a discretionary trust are generally taxed at penalty rates above $416. The low-income tax offset is not available for minors receiving unearned income. Normal marginal rates may apply to minors receiving distributions from testamentary trusts, subject to strict conditions.

Tax-Exempt Entity Beneficiaries

If you are distributing to a tax-exempt entity, the trustee must either pay the full distribution within two months of year end, or notify the entity in writing within that period — otherwise the trustee is assessed at the top marginal rate on that income.

Super & Operational Housekeeping

• Pay super contributions to deduct them in the current year.
• Write off bad debts and scrap obsolete stock or plant and equipment.
• Raise any inter-entity management fee invoices before 30 June.
• Complete stocktake if required (SBEs with stock movements under $5,000 are exempt).

Federal Budget Updates — Trusts

Minimum 30% Tax on Discretionary Trust Distributions (from 1 July 2028)

The Government has proposed a minimum 30% tax rate on taxable income distributed by discretionary trusts. Key features include:

• The 30% tax is initially paid at the trust level by the trustee.
• Individual and non-corporate beneficiaries receive a non-refundable tax credit for the tax paid by the trustee.
• Corporate beneficiaries will not receive the credit — this is designed to discourage use of “bucket companies”.
• Exemptions apply for fixed and widely held trusts, super funds, special disability trusts, deceased estates, charitable trusts, primary production income and some other specific trust types.
• Three years of CGT rollover relief (from 1 July 2027) is proposed for those restructuring out of discretionary trusts into companies or fixed trusts.

This is a potentially significant change for many family business and investment structures. Now is the time to start modelling your current distributions and understanding the options available. Contact us to arrange a planning discussion.

CGT Discount Changes (from 1 July 2027)

From 1 July 2027, the 50% CGT discount available to trusts that distribute capital gains to individual beneficiaries will be replaced by cost base indexation and a minimum 30% tax on capital gains. Gains accruing before 1 July 2027 will still receive the existing discount — asset valuations at that date will be important. Pre-CGT assets are also proposed to be brought within the CGT net for gains from 1 July 2027.

Negative Gearing (from 1 July 2027)

Trusts holding established residential investment properties purchased after Budget night will face restrictions on deducting rental losses — similar to the changes for individuals. New builds remain fully eligible. Contact us if your trust holds residential property.

What’s New for Trusts

Payday Super — Starts 1 July 2026

Where a trust employs staff, super must be paid at the same time as wages from 1 July 2026. The SBSCH will be retired on 1 July 2026. Set up an alternative payment channel now.

ATO Interest Charges No Longer Deductible

From 1 July 2025, GIC and SIC are no longer deductible. Outstanding ATO debts have a higher real cost. Let us know if you are struggling with any ATO liabilities.

Instant Asset Write-Off

The $20,000 instant asset write-off remains available for SBE trusts for the 2025–26 year. Assets must be first used or installed ready for use by 30 June 2026. The Government has proposed to make this permanent from 2027 onwards.

Validity of Trust Distributions

A recent Supreme Court case found that a trustee had failed to give real and genuine consideration to all beneficiaries when making distributions. Distributions were found to be invalid, with potential tax consequences. Ensure your trustee exercises genuine discretion when determining beneficiaries and that the resolution process is properly documented.

ATO Scrutiny — Trusts

Trust Distribution Arrangements

The ATO continues to scrutinise trust distributions intensively. High-risk arrangements in the ATO’s sights include:

• Circular trust distributions (round-robin arrangements between related trusts or trust-company-trust flows).
• Deliberate mismatches between distributable income and taxable income.
• Distributions of franked dividends where franking credit integrity rules are not correctly applied.
• Distributions to SMSFs and tax-preferred or tax-exempt beneficiaries.
• Income recharacterisation arrangements (e.g. converting ordinary income to discounted capital gains).
• Non-resident beneficiaries and capital gains attributed to them.
• Distributions that appear designed to direct economic benefit to a person other than the named beneficiary (potential reimbursement agreements under s100A).

Profits of Professional Services Firms

If your trust operates a professional services firm, the ATO applies specific guidelines examining how profits flow through to the professional practitioner. Structures where the professional receives significantly less than the value of services they provide may attract Part IVA anti-avoidance action. The ATO has been actively reaching out to taxpayers following the finalisation of this guidance. Contact us if you would like your structure reviewed.

Succession Planning

The ATO is closely examining succession planning arrangements for privately owned and wealthy groups. Risks include incorrect recognition of CGT events, misapplication of rollovers and concessions, and Division 7A issues arising from debt forgiveness or wealth transfers. Family trust elections and amendments to trust deeds (trustee, appointor, beneficiaries, vesting dates) also attract scrutiny.

Non-Lodgment

The ATO is focused on trusts that fail to lodge tax returns and meet compliance requirements. Ensure your trust return is up to date and all reporting obligations (TFN reports, TPAR, FBT) are met on time.