As we approach the end of the 2026 financial year, it is an opportune time to review your tax position and consider strategies to optimise your outcome. Proper planning before 30 June can assist in maximising available deductions, managing cash flow, and ensuring compliance with ATO requirements.

Investments – Property, shares and everything else

From 1 July 2027, the 50 per cent Capital Gains Tax (CGT) discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30 per cent minimum tax on net capital gains.

These changes will apply to all CGT assets, including pre-1985 CGT assets, held by individuals, trusts and partnerships. Transitional arrangements will limit the impact on existing investments by ensuring the changes only apply to gains arising on or after 1 July 2027. The 50 per cent CGT discount will continue to apply to gains arising before 1 July 2027. Capital gains on pre-1985 assets arising before 1 July 2027 will remain exempt from CGT. To maintain incentives for new housing supply, investors in new residential properties will be able to choose either the 50 per cent CGT discount, or cost base indexation and the minimum tax. Income support payment recipients, including Age Pension recipients, will be exempt from the minimum tax.

The Government will limit negative gearing for residential property to new builds. From 1 July 2027, losses from established residential properties will only be deductible against rental income or the capital gains from residential properties. Excess losses will be carried forward and able to be offset against residential property income in future years. These changes will apply to established residential properties acquired from 7:30PM (AEST) on 12 May 2026. Properties acquired prior to this time (including contracts entered into but not yet settled) will be exempt from the changes until disposed of. Eligible new builds will be exempt from the changes, ensuring the benefits of negative gearing are directed to investment that increases the housing stock. Properties in widely held trusts and superannuation funds will be excluded, alongside targeted exemptions for build-to-rent developments and private investors supporting government housing programs.

Discretionary Trusts

The Government will introduce a 30 per cent minimum tax on discretionary trusts to improve the fairness of the tax system and help fund new tax cuts for workers. From 1 July 2028, trustees will pay a minimum tax of 30 per cent on the taxable income of discretionary trusts. Beneficiaries, other than corporate beneficiaries, will receive non-refundable credits for the tax payable by the trustee.

The minimum tax 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 and charitable trusts. Some types of income such as primary production income, certain income relating to vulnerable minors, amounts to which non-resident withholding tax applies, and income from assets of discretionary testamentary trusts existing at announcement will also be excluded. The Government will provide expanded rollover relief for three years from 1 July 2027 to support small businesses and others that wish to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust.

Business incentives

For tax years commencing on or after 1 July 2026, companies with aggregated annual global turnover of less than $1 billion will be able to carry back a tax loss and offset it against tax paid up to two years earlier. Loss carry back will apply to revenue losses only and will be limited by a company’s franking account balance.

The Government will also introduce loss refundability for small start‑up companies. For tax years commencing on or after 1 July 2028, start‑up companies with aggregated annual turnover of less than $10 million that generate a tax loss in their first two years of operation will be able to utilise the loss to generate a refundable tax offset. The offset will be limited to the value of fringe benefits tax and withholding tax on wages paid in respect of Australian employees in the loss year.

From 1 July 2026, the Government will permanently extend the $20,000 instant asset write‑off for small businesses with turnover up to $10 million. Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool. The provisions that prevent small businesses from re‑entering the simplified depreciation regime for 5 years after opting out will continue to be suspended until 30 June 2027.

The Government will also provide $10.9 million to the Australian Taxation Office to expand its pilot of dynamic pay as you go (PAYG) instalment calculations, and will expand access to monthly payments. From 1 July 2027, small and medium businesses will be able to opt in to reporting and paying PAYG instalments monthly and to using an ATO-approved calculation embedded in accounting software to calculate and vary their instalments. This will support businesses by enabling tax instalments to better reflect real time business activity. Taxpayers with a demonstrated history of non‑compliance will be required to report and pay PAYG instalments monthly.

Individuals

The Government will deliver a new tax cut for every working Australian taxpayer by introducing a $250 Working Australians Tax Offset from the 2027–28 income tax year. The Working Australians Tax Offset will provide a permanent annual tax offset for Australians for their income derived from work, such as wages and salaries and the business income of sole traders, from 1 July 2027.

The Working Australians Tax Offset will increase the effective tax-free threshold for income derived from work by nearly $1,800 to $19,985 (or up to $24,985 for workers eligible for the Low Income Tax Offset).

The Government will introduce an instant tax deduction of up to $1,000 from the 2026–27 income tax year to make the tax system simpler while also delivering more cost-of-living relief. Australian tax residents who earn income from work will be eligible for the instant tax deduction and will not need to itemise and claim work-related expenses if claiming less than $1,000. Individuals who incur work‑related expenses greater than the instant tax deduction can continue to claim their deductions in the usual way. Charitable donations, union and professional association membership fees and other non-work-related deductions can still be itemised separately and claimed on top of the instant tax deduction.

Click here to view a detailed breakdown of all the tax reform additions and changes produced by Thompson Reuters

ATO is 'clearing up' some common Payday Super myths

With less than two months until Payday Super starts (on 1 July 2026), the ATO wishes to 'clear up' the following common misconceptions.

Myth: "There is nothing super fund trustees need to do before the start date."

Fact: Super funds should have already taken steps to receive more frequent contributions and meet shorter processing timeframes. System updates and testing should be underway, including implementing and testing for 'SuperStream Contributions v3.0' upgrades.

Myth: "Payday Super just means super funds will receive contributions more often."

Fact: Payday Super raises expectations on speed, accuracy and responsiveness. It is not just about frequency — it is about how quickly and accurately contributions are allocated or rejected, within a tighter timeframe. Faster allocation and earlier rejection support employers to meet their obligations.

Myth: "Super fund actions do not impact employer compliance."

Fact: Super fund actions directly influence employer outcomes. They can support employer compliance by:

• rejecting incorrect employer contributions within the required timeframe;
• providing clear, timely error messaging; and
• maintaining high quality reporting for member accounts, using consistent ABNs and member account numbers, and keeping member data up to date.

ATO responds to high fuel costs

The ATO recognises that high fuel costs are affecting some businesses, and it will provide targeted support to eligible businesses that are unable to meet their payment obligations for three months, from 1 April 2026 to 30 June 2026.

In particular:

• the ATO will provide streamlined access to more flexible payment plan arrangements, including longer payment terms, no upfront payment, and access to general interest charge ('GIC') remission where payment and lodgment conditions are met;
• high fuel costs will be a relevant factor in consideration of additional requests for remission of GIC and other penalties; and
• the ATO will provide support to vary pay as you go ('PAYG') instalments where there has been a reduction in taxable income.

Businesses can assess their eligibility and notify the ATO of their interest in accessing a tailored payment plan and intention to vary PAYG instalments through the ATO's online services. The ATO will then contact these businesses or their representatives with more information and next steps.

ATO wants businesses to review their GST turnover

The ATO has noticed some businesses have not updated their GST reporting and accounting methods after exceeding the relevant thresholds.

If a taxpayer's business has a GST turnover of $10 million or more, they need to use full BAS reporting instead of 'simpler BAS', and account for GST on a non-cash (accruals) basis.

If their business has a GST turnover of $20 million or more, they need to report GST monthly on their BAS instead of quarterly.

The ATO is moving some businesses to the correct GST reporting and accounting methods from 1 July 2026, although taxpayers can voluntarily make the switch now in 'Online services for business' on the ATO's website.

Tribunal decision regarding home office and car expenses overturned

The Full Federal Court recently allowed the ATO's appeal against an Administrative Review Tribunal decision that a taxpayer was entitled to claim deductions for home office and car expenses.

The taxpayer worked full-time for the ABC as a sports presenter and producer. During the 2021 income year, because of COVID-19 pandemic restrictions, the taxpayer undertook one of his work roles from a second bedroom in his home apartment which he was renting with his wife. He undertook most of another work role from the ABC's Southbank Studios in Melbourne.

The Tribunal had allowed the taxpayer's deductions for occupation expenses (being a proportion of the rent for his apartment) and for car expenses (incurred in driving between his home and the ABC studio to perform his two roles) in full.

However, the Full Federal Court subsequently overturned this decision, noting (in relation to the claim for the occupation expenses) that the 'essential character' of the rent paid was to secure domestic accommodation, and the prevailing conditions requiring the taxpayer to work from home did not alter this.

Also, in relation to the car expense claims, the Court considered the taxpayer's travel between his home and the ABC studio was 'to work' rather than 'on work', and was therefore not deductible.

Tribunal rejects claims for self-education expenditure

The Administrative Review Tribunal recently rejected an employee's claims for self-education expenses, as they did not have a sufficient nexus with his current job and income-earning activities.

The taxpayer worked as an employee for a large company. He claimed that his role evolved to include marketing and sales responsibilities during the 2022 income year, and that he was required to take courses in sales and marketing to help him perform his role.

The taxpayer sought to amend his tax return for the 2022 income year by claiming additional deductions for expenditure on online educational and training courses, related computer software and hardware, and membership fees.

The ATO disallowed these deductions, and the Tribunal affirmed the ATO's decision. The Tribunal noted that there was nothing in writing from the taxpayer's employer requiring him to undertake sales and marketing activities, let alone take self-education courses in those areas.

The expenditure incurred by the taxpayer related to online content creation, affiliate marketing, and entrepreneurship, whereas the taxpayer's work related to providing technical IT and computer services. Therefore, the expenditure did not bear a sufficient nexus with the taxpayer's income-earning activities for it to be deductible.

ATO launches new app feature to stop scam calls

Taxpayers can now instantly confirm whether a call claiming to be from the ATO is genuine, with the launch of a new in-app security feature designed to shut down scammers.

The new verify call feature allows users to confirm, in real time, that they are speaking with the real ATO, not a fraudster.

Taxpayers are encouraged to download the ATO app and register their device. Then, when they receive a call from someone claiming to be from the ATO, they can simply open the ATO app, login and select the verify call option.

Within 30 seconds, a notification should confirm it is an ATO call. If it does not appear, users should treat it as a scam call and hang up.

New superannuation tax for high balances – What you need to know

Parliament has now passed legislation introducing an additional tax on superannuation earnings for individuals with large super balances. These measures are commonly referred to as the Division 296 tax and will affect members with total superannuation balances above certain thresholds.
Below we outline the key features of the new rules and what they may mean for you.

Overview of the New Tax

Commencement date

The start date has been deferred, with the new tax now applying from 1 July 2026. This provides additional time for super funds, trustees and members to prepare.

How earnings will be calculated

The tax will apply to realised earnings only, rather than year to year changes in account balances.
In practical terms:

• Earnings are based on the superannuation fund’s taxable income, adjusted to:
  • exclude contributions, and
  • include exempt current pension income and capital gains from segregated pension assets
• A portion of those earnings is then attributed to members whose Total Superannuation Balance (TSB) exceeds the relevant thresholds

Two Tier Tax Structure

The legislation introduces a graduated approach:

• Balances above $3 million
  An additional 15% tax applies to the portion of earnings attributable to the balance exceeding $3 million
• Balances above $10 million
  A further 10% tax applies to earnings attributable to balances above $10 million

Capital Gains Tax (CGT) Cost Base Reset for Small Super Funds

Trustees of small superannuation funds (including SMSFs) will be able to elect to reset the cost base of fund assets to their market value as at 30 June 2026, for Division 296 purposes only.
Key points to be aware of:

• The election is made by the trustee and must be lodged by the due date of the 2026–27 fund income tax return
• The reset applies on a whole of fund basis and is irrevocable
• The original cost base continues to apply for standard CGT purposes, meaning funds may need to maintain dual records
• Accurate and defensible market valuations will be critical, particularly where the fund holds unlisted or illiquid assets

What This Means for You

• Members with superannuation balances above $3 million should expect higher tax on super earnings from the 2026–27 financial year onwards (Caution: This doesn’t mean taking the money out of super will produce a better result)
• SMSFs and funds with unlisted investments will need robust valuation, reporting and record keeping processes, as both total super balance and realised earnings drive the calculation

Planning Considerations

For affected clients, we recommend considering the following in advance of 30 June 2026:

• Reviewing projected Total Superannuation Balances
• Ensuring up to date and well documented valuations, particularly for SMSF assets
• Understanding whether a CGT cost base reset election may be appropriate. The ability to opt-in is available to any SMSF, not just the SMSF’s that have members with a balance of more than $3 million
• Compare the alternatives to investing via Superannuation, and decide which is the better option in terms of tax

Illustrative Example

If a member has a total superannuation balance of $4.5 million and the fund earns $500,000 in 2026–27:

• One third of the balance is above the $3 million threshold
• One third of the earnings ($166,667) is attributed to the excess
• An additional 15% Division 296 tax applies to that portion, resulting in extra tax of approximately $25,000, on top of the usual 15% fund tax (or 0% if in pension phase)

Please give our friendly team a call with any questions.

If you would like advice tailored to your personal circumstances, our financial planning division, StewartBrown Advisory, offers comprehensive advice on SMSFs, retirement planning and investments.

Key Actions for Payroll Compliance and Smooth Transition

From 1 July 2026, major changes to superannuation obligations, known as ‘payday super’, will take effect for all employers. The new timeframes and contribution processes apply to all employers, including companies, sole traders, partnerships, and trusts. These changes mean that super guarantee contributions must now be paid and received by your employees’ super funds within seven days of each payroll cycle. Super will be calculated on employees’ Qualifying Earnings (payment for ordinary hours of work plus any salary sacrifice super amounts). This article outlines the practical steps your business should take to remain compliant and ensure a seamless transition.

Cashflow Management: Ensuring Timely Super Payments

The new rules require super payments to reach employees’ super funds within seven days after processing payroll, rather than the previous quarterly deadlines. To meet these stricter timelines, it is crucial to review and adjust your cashflow management. Consider forecasting super obligations for each pay run, maintaining a buffer in your accounts, and scheduling payments to align with payroll dates. Proactive planning will help avoid late payments and potential penalties.

Payroll System Readiness: Checking and Updating Your Systems

With the introduction of payday super, your payroll software or system must be capable of processing and remitting super contributions promptly after each pay cycle. Review your current payroll processes and consult with your provider to ensure your system is configured for the new payment frequency. It’s also a good time to test automated super payments and ensure that reporting aligns with the updated requirements.

Transition from the Small Business Superannuation Clearing House (SBSCH)

The SBSCH will permanently close on 1 July 2026. If your business currently uses the SBSCH to process super payments, you will need to transition to an alternative super clearing house or direct payment method. Before the closure, download and securely store all historical super payment records from the SBSCH for your compliance files. Investigate other clearing house options early to avoid disruption and ensure your new provider can meet the seven-day payment requirement.

Staff Onboarding: Ensuring Correct Super Fund Options

Effective onboarding of new team members is more important than ever. When bringing on new staff, ensure you offer a choice of super fund and clearly explain the default fund option if they do not nominate their own. Accurate and timely onboarding will help avoid delays in setting up super contributions, ensuring compliance from day one.

Conclusion: Key Actions and Compliance Reminders

The shift to payday superannuation requires careful preparation. Adjust your cashflow processes, confirm your payroll system is ready, transition away from the SBSCH, and update your onboarding procedures. Taking these steps now will help your business stay compliant and support your employees’ retirement savings. For more tailored advice, please contact our office for a review of your payroll and superannuation processes.

Know when a new logbook is required

Editor: Keeping a car logbook may be required to accurately calculate the business-use percentage of vehicle expenses (e.g., fuel, registration, insurance and depreciation) for tax deductions.

Taxpayers can keep the same logbook for their car for five years, but there are circumstances where they may need a new one during that period.

Relying on a logbook that no longer represents a client's work-related travel may result in them claiming more, or less, than they are entitled to.

A new logbook may be required when a taxpayer:

• Moves to a new house or workplace — updating their residential or work address may then be necessary.
• Has changes to their pattern of use of the car for work purposes — checking that they are still doing the same role and routine may then be necessary.

Taxpayers using the logbook method for two or more cars need to keep a logbook for each car and make sure they cover the same period.

Clients who purchase a new car during the income year and want to continue relying on their previous car's logbook must make a nomination in writing. The nomination must be made before they lodge their tax return and state:

• They are replacing their original car with a new car; and
• The date that nomination takes effect.

Taxpayers should remember that, if their employer provides them with a car or they salary sacrifice a car using a novated lease, they are not entitled to claim work-related car expenses using the logbook or cents per kilometre method, as they do not own the car.

When claiming car expenses using the logbook method, taxpayers also need to keep various types of other records, including (among other things) odometer records for the start and end of the period they own the car, proof of purchase price, decline in value calculations, and fuel and oil receipts (or records of a reasonable estimate of these expenses based on odometer readings).

Editor: Please contact our office if you require assistance regarding the above, including in relation to claiming car expenses using the logbook method or determining if a new logbook is required.

Reminder of March 2026 Quarter Superannuation Guarantee ('SG')

Employers are reminded that employee super contributions for the quarter ending 31 March 2026 must be received by the relevant super funds by Tuesday, 28 April 2026.

If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component.

The SG rate is 12% for the 2026 income year (increased from 11.5% for the 2025 income year).

When a hobby becomes a business

Taxpayers may not think they are running a business from their hobby or 'side hustle' activities. However, if they start to earn money from doing these activities regularly, they may be carrying on a business without realising it.

Generally, carrying on a business involves ongoing and repeated activities with the intention of making a profit. These activities can include:

• Regularly providing goods or services.
• Obtaining and maintaining any necessary licences or permits.
• Keeping records of their work.

However, a taxpayer's activities may indicate that they are not operating a business where:

• Their transactions are one-off.
• They do not intend to make a profit.
• They work solely as an employee rather than independently.

Editor: Please keep us informed of all your income-earning and side hustle activities so we can help with this distinction.

Hybrid vehicles and FBT changes

Employers that provide plug-in hybrid electric vehicles ('PHEVs') to employees (or associates) for personal use should remember the following.

Home-charging expenses — new shortcut method

The ATO has updated its guidelines to include a new method to make it easier to calculate PHEV electricity costs when a vehicle is charged at an employee's home.

To use the shortcut home-charging rate, employers and other individual taxpayers must meet the relevant eligibility requirements (or they can still choose to calculate the actual electricity costs instead of using this optional method).

Eligibility for FBT exemption

Since 1 April 2025, PHEVs are not considered a zero or low emissions vehicle under FBT law and no longer qualify as exempt. Employers that provide PHEVs to their employees for private use, or that have PHEVs that are available for private use, may now have FBT obligations for the 2025/26 FBT year (subject to transitional arrangements).

Taxable payments annual report lodgment reminder

Businesses that pay contractors for 'Taxable payments reporting system services' may need to lodge a 'Taxable payments annual report' ('TPAR') by 28 August each year.

Editor: This includes businesses paying contractors in the building and construction, cleaning and IT industries (among others).

The ATO will apply penalties to businesses that have not lodged their TPAR from 2025 or previous years, and/or that have been issued three reminder letters about their overdue TPAR.

Businesses that do not need to lodge a TPAR can submit a 'non-lodgment advice ('NLA') form'. Businesses that no longer pay contractors can also use this form to let the ATO know that they will not need to lodge a TPAR in the future.

Expenses incurred to obtain employment were non-deductible

The Administrative Review Tribunal ('ART') recently held that medical expenses incurred by a taxpayer to obtain (or regain) employment were not deductible as they were not incurred in gaining or producing his assessable income.

The taxpayer was an airplane pilot. In July 2021, the Civil Aviation Safety Authority advised the taxpayer of the steps that he needed to take to regain the medical certificates that were a prerequisite to him holding a licence to work as a pilot.

The taxpayer incurred expenses relating to this between July 2021 and May 2022, and he claimed a deduction for these expenses in his tax return for the 2022 income year.

The ATO disallowed these deductions, and the ART affirmed the ATO's decision.

The ART noted that the medical expenses incurred by the taxpayer merely put him in a position to undertake employment as a pilot, and as such were not deductible.

That is, the expenses were not deductible because they were incurred to put the taxpayer in a position to earn income (i.e., to regain his certification), rather than in the course of earning that income, and they were therefore incurred "too soon" (despite some being incurred after his employment commenced in March 2022).

Please note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information's applicability to their particular circumstances.

The Fringe Benefits Tax (“FBT”) year ends on 31 March 2026 and each employer is required to calculate their liability for FBT. Where a liability for FBT exists, an annual return is required to be lodged and any tax paid by 21 May 2026. However, if the return is lodged electronically by a Tax Agent the due date of lodgement and for payment is 25 June 2026.

Welcome to the Land Tax edition of our client newsletter for 2026 where we aim to keep you informed of the important land tax compliance issues affecting owners of land in Australia. You may recall that land tax is a state tax and different rules apply in each state.

In this newsletter we have summarised the position in NSW. If in any doubt about your particular land tax circumstances, please contact your StewartBrown Manager or Partner.

Click here to view or download a PDF copy of this newsletter.

NSW Land Tax Reminder – Action Required by 31 March 2026

Land Tax 2026 – Registration Form

All landowners in NSW, including Individuals, Companies, Superannuation Funds and Trusts are reminded that the due date for lodgement of the initial return for land held as at 31 December 2025 is 31 March 2026.

If you have previously registered for land tax, you do not need to complete a variation form unless your ownership or usage details have changed and you haven’t already received a correct 2026 assessment.

If you own a property other than your principal residence and you have not previously registered with Revenue NSW, or if you need to lodge a variation form, please contact us as soon as possible. Penalties and interest may be levied for late registration and payment of land tax.

Land tax applies to:

• vacant land, including vacant rural land
• land where a house, residential unit or flat has been built
• a holiday home
• investment properties
• company title units
• residential, commercial or industrial units, including car spaces
• commercial properties, including factories, shops and warehouses
• land leased from state or local government
• the portion of a property opted into property tax that is owned by a not included owner–a person listed on the property title but ineligible for certain schemes–applies when the combined land value of all properties owned exceeds the land tax threshold.

Land tax is an annual, asset-based tax. It is irrelevant whether you are receiving income from the land or not.

Land Tax Rates 2026

The land tax rate for 2026 is 1.6 per cent (plus $100) on the combined value of all taxable land in excess of the threshold. The 2026 land tax threshold is $1,075,000 for all taxpayers except discretionary trusts, some unit (fixed) trusts and certain groups of companies where the threshold is nil.

Where the taxable value of land held in NSW is more than $6,571,000 (known as the Premium Threshold) the land tax payable is $88,036 for the first $6,571,000 in land value, then 2 per cent over that amount.

Revenue NSW obtains property values from the NSW Valuer General, who values land in NSW on 1 July each year. The unimproved value of a taxable property is the value used as the taxable value of the land for land tax valuation purposes.

The taxable value of each parcel of land is determined on the average value from the current year and the two past years, where applicable. When a parcel of land has been created less than three years ago – for example, through a subdivision or amalgamation – only the years after it was created are taken into account.

If you disagree with the valuation assessed to your land, you may object to the land valuation used in your land tax assessment, but that objection must be lodged in writing within 60 days of receiving your notice of assessment.

Land tax exemptions potentially apply to:

• principal place of residence (except if the property is rented or is used for business purposes)
• the former principal place of residence of some deceased persons (subject to limitations)
• land used for primary production
• boarding houses
• low-cost accommodation
• residential parks (including caravan parks)
• non-profit organisations
• retirement villages, aged care establishments and nursing homes
• childcare centres
• societies, clubs and associations not carried out for financial profit
• crown or council land (subject to limitations)

Exemptions depend upon ownership and use of the land.

Paying your Land Tax

Once you receive your land tax assessment notice you have the option to pay the assessment using one of the following methods:

1. Pay the full tax amount upfront or
2. Pay by an interest free payment plan over 3, 6 or 9 months by fortnightly or monthly instalments.

If you wish to use the payment plan option, please ensure you apply well before the due date for tax payable (stated on your assessment notice).

Should you have any queries regarding your Land Tax Assessment Notice or need any assistance in applying for a payment plan, please do not hesitate to contact us.

Land Tax Foreign Owner Surcharge

The 2026 surcharge land tax rate for foreign owners is 5 per cent. If you are a foreign person who owns residential land in NSW, you must now pay a Land Tax Foreign Owner Surcharge (LTFOS) of 5 per cent of the value of the land. This is in addition to the 1.6 per cent land tax amount.

The LTFOS is only payable by foreign persons owning land in NSW. It applies to all properties owned by foreign persons including their principal place of residence. Importantly there is no tax-free threshold applicable to the LTFOS. A foreign person can be:

• an individual
• a corporation
• a trustee of a trust
• a beneficiary of a land tax fixed trust
• a government
• a government investor
• a partner in a limited partnership

An individual, who is not an Australian citizen, is a foreign person if they are not ordinarily a resident in Australia. Australian citizens are not foreign persons, no matter where they reside.

If you are a foreign person and own land in NSW, you must inform Revenue NSW. It may well be that you are liable for the LTFOS but not land tax (for example if your NSW land value falls below the threshold for land tax assessment purposes).

Certain visa holders i.e. Permanent, Partner (provisional) and Retirement, will be exempt from LTFOS on their principal place of residence if they use or intend to use and occupy their home for a continuous period of 200 days in a land tax year. These visa holders need to apply for the exemption from LTFOS by 31 March in the relevant tax year.

A trust may be liable for surcharge land tax where the beneficiaries of a trust include foreign persons. A surcharge liability can be avoided where the discretionary trust deed has been validly amended to irrevocably exclude foreign persons as beneficiaries.

Given the extent of the “foreign person” definition and the absence of a threshold, the LTFOS can create significant and often unexpected liabilities, particularly for trust structures. Careful review of ownership structures and trust deeds is essential to ensure compliance and optimise tax outcomes.

Landholder Duty

Landholder Duty is applied when someone acquires a ‘significant interest’ in a company or unit trust that owns real property in NSW with an unencumbered value of $2 million or more.

A significant interest means that if all the property is distributed, you are entitled to:

1. For acquisitions made on or after 1 February 2024

• 50 per cent or more of the property in a ‘private landholder', or
• 20 per cent or more of the property in private unit trust schemes other than registered wholesale unit trust or imminent wholesale unit trust schemes, or
• 90 per cent or more of the property in a ‘public landholder’

2. For acquisitions made prior to 1 February 2024

• 50 per cent or more of the property in a ‘private landholder, or
• 90 per cent or more of the property in a ‘public landholder’

Acquiring a significant interest does not have to occur in one event. For instance, if you already hold a 45 per cent interest in a landholder that is a private company and then acquire another five per cent, you may be liable to pay landholder duty.

This change means that taxpayers who hold 20 per cent or more of the units in a private unit trust may need to pay duty on their acquisition of the units, potentially adding significant unexpected costs to the transaction.

Changes to Eligibility Criteria for the Principal Place of Residence Exemption

To receive the principal place of residence (PPR) exemption from 2026 land tax year onwards you must:

• own at least 25 per cent of the property, either solely or jointly, and
• meet the PPR eligibility requirements

If these minimum requirements are not met by the owner/s they will be liable for land tax from 1 January 2026 onwards.

Owner/s who purchase a property, move into an existing property or acquire land on or after 1 January 2026 and do not meet these requirements will become liable from the 2026 land tax year.

Mandating cash acceptance

The Government recently announced that it was delivering on its commitment "to mandate cash acceptance for essential purchases by finalising regulations that require fuel and grocery retailers to accept cash from 1 January 2026."

The changes mean that, from 1 January 2026, most food and grocery retailers must accept cash for in-person transactions of $500 or less between 7am and 9pm.

Small businesses with aggregate annual turnover under $10 million are generally exempted from this mandate. However, this mandate still applies to small businesses that choose to share a trademark with a large retailer.

The Government noted that, in addition to the cash mandate for fuel and groceries, consumers also already have the option to pay their bills, including utilities, phone bills and council rates, in cash at their local Australia Post outlet through Post Billpay.

The Government will review this mandate after three years, to ensure it is functioning as intended.

ATO child support data-matching program

The ATO has advised that it will acquire child support data from Services Australia for the 2025 to 2027 income years, including the following:

• client identification details (names, addresses, phone numbers, and dates of birth); and
• child support details (child support identification reference number, child support role type, and child support category).

The ATO estimates that records relating to up to 300,000 individuals will be obtained each financial year, which will be matched against ATO records.

The objectives of this program are to (among other things):

• allow Services Australia to more accurately assess child support obligations, and maximise opportunities to collect child support debts; and
• identify and educate individuals who may be failing to meet their lodgment obligations and help them to finalise their lodgment obligations, or notify the ATO that an income tax return is not required.

Time limits on GST and fuel tax credit claims

Taxpayers should note that GST credits and fuel tax credits will expire if not claimed within the 4-year credit time limit (i.e., generally four years from the due date of the original BAS in which the taxpayer could have claimed them).

Once credits expire, the ATO has no discretion or ability to amend the assessment to include those credits.

The 4-year credit time limit is different to the period of review and applies more strictly.

There may be situations where the ATO is able to amend for overpaid or underpaid GST or overclaimed credits, but additional credits cannot be included in an amendment assessment.

If credits are near expiry, instead of writing to request an amendment, taxpayers should consider:

• claiming the credits in their next BAS that is still within the 4-year credit time limit;
• requesting the amendment by lodging a revised BAS for the tax period to which the credits are attributable (these are generally processed faster than amendment requests in other forms); or
• lodging a valid objection against their assessment for the period to which the GST credits are attributable before the end of the 4-year credit time limit.

Taxpayer's dog breeding activities held to be an enterprise

The Administrative Review Tribunal ('ART') recently held that a taxpayer had carried on an enterprise of dog breeding for GST purposes.

He had lodged activity statements for the quarters ended 30 September 2018 to 31 December 2021 inclusive, claiming input tax credits ('ITCs') for the dog breeding activities he carried on from his home (among other activities).

The ATO disallowed the taxpayer's claims for the above periods, arguing that enterprises were not carried on, and that there was a lack of appropriate substantiation (among other reasons).

The ART however held that the taxpayer's dog breeding operation was an enterprise for GST purposes, noting that his activities had "the necessary commercial character." Therefore, the taxpayer was entitled to ITCs for that enterprise.

However, the ART affirmed the ATO's decision to reduce the taxpayer's other ITC claims, such as in relation to stamp duty on the acquisition of a property and for café and grocery expenses.

The ART also admonished the taxpayer for apparently using artificial intelligence in the presentation of his case, as he appeared to rely on cases and principles that did not exist.

Paying super guarantee

The ATO is reminding employers that they must pay super guarantee ('SG') contributions for eligible employees.

Employers need to pay a minimum of 12% (the current SG rate as from 1 July 2025) of each employee's ordinary time earnings into a complying super fund on a quarterly basis (the due date for the March 2026 quarter is 28 April 2026).

In most cases, employees can choose the super fund.

Employers who do not pay in full, on time or to the correct super fund will have to pay the SG charge, which is made up of the super they owe, nominal interest on those amounts (currently 10%), and an administration fee of $20 per employee, per quarter.

These payments must be made through SuperStream (where super payments and information move through the system electronically).

Employers who use the Small Business Superannuation Clearing House to make super contributions should note that this service will be permanently closed from 1 July 2026. Existing users should switch to an alternative method to pay their employees' super guarantee.

Also, when new employees start, employers may have an extra step to take to comply with the 'choice of fund rules' if the new employee does not choose a super fund. Employers may now need to request the new employee's 'stapled super fund' details from the ATO.

Tax dodgers banned from leaving the country

The ATO is actively using departure prohibition orders ('DPOs') as part of a broader shift towards strengthening payment performance and debt collection. A DPO is an enforcement action available to the ATO to prevent certain persons with tax liabilities from leaving Australia without paying their outstanding tax.

Since July 2025, the ATO has issued 21 DPOs, more than the total number issued in the entire financial year ended 30 June 2025.

The ATO notes that a taxpayer was recently prevented from boarding a flight in the early hours of the morning due to a DPO imposed because of deliberate non-payment of a significant debt.

Year-end (and other) staff parties

FBT and 'entertainment'

Under the FBT Act, employers must choose how they calculate their FBT meal entertainment liability, and most use either the 'actual method' or the '50/50 method', rather than the '12-week method'.

Using the actual method

Under the actual method, entertainment costs are normally split up between employees (and their family) and non-employees (e.g., clients).

Such expenditure on employees is deductible and liable to FBT. Such expenditure on non-employees is not liable to FBT and not tax deductible.

Using the 50/50 method

Rather than apportioning meal entertainment expenditure on the basis of actual attendance by employees, etc., many employers choose to use the more simple 50/50 method.

Under this method (irrespective of where the party is held or who attends) 50% of the total expenditure is subject to FBT and 50% is tax deductible.

However, the following traps must be considered:

• even if the function is held on the employer's premises – food and drink provided to employees is not exempt from FBT;
• the minor benefit exemption* cannot apply; and
• the general taxi travel exemption (for travel to or from the employer's premises) also cannot apply.

(*) Minor benefit exemption

The minor benefit exemption provides an exemption from FBT for most benefits of 'less than $300' that are provided to employees and their associates (e.g., family) on an infrequent and irregular basis.

The ATO accepts that different benefits provided at, or about, the same time (such as a Christmas party and a gift) are not added together when applying this $300 threshold.

However, entertainment expenditure that is FBT-exempt is also not deductible.

Example: Christmas party

An employer holds a Christmas party for its employees and their spouses – 40 attendees in all.

The cost of food and drink per person is $250 and no other benefits are provided.

If the actual method is used:

• For all 40 employees and their spouses – no FBT is payable (i.e., if the minor benefit exemption is available), however, the party expenditure is not tax deductible.

If the 50/50 method is used:

• The total expenditure is $10,000, so $5,000 (i.e., 50%) is liable to FBT and tax deductible.

Christmas gifts

Again, it is important to understand how gifts to staff and clients, etc., are handled 'tax-wise'.

Gifts that are not considered to be entertainment

These generally include a Christmas hamper, a bottle of whisky or wine, gift vouchers, a bottle of perfume, flowers or a pen set, etc.

Briefly, the general FBT and income tax consequences for these gifts are as follows:

• gifts to employees and their family members – are liable to FBT (except where the 'less than $300' minor benefit exemption applies) and tax deductible; and
• gifts to clients, suppliers, etc. – no FBT, and tax deductible.

Gifts that are considered to be entertainment

These generally include, for example, tickets to attend the theatre, a live play, sporting event, movie, etc, a holiday airline ticket, or an admission ticket to an amusement centre.

Briefly, the general FBT and income tax consequences for these gifts are as follows:

• gifts to employees and their family members – are liable to FBT (except where the 'less than $300' minor benefit exemption applies) and tax deductible (unless they are exempt from FBT); and
• gifts to clients, suppliers, etc. – no FBT and not tax deductible.

Actual method used for meal entertainment

Under the actual method no FBT is payable, because the cost of each separate benefit (being the expenditure on the Christmas party and the gift respectively) is less than $300 (i.e., the benefits are not aggregated).

No deduction is allowed for the food and drink expenditure, but the cost of each gift is tax deductible.

50/50 method used for meal entertainment

Where the 50/50 method is adopted:

• 50% of the total cost of food and drink is liable to FBT and tax deductible; and
• in relation to the gifts:
  • the total cost of all gifts is not liable to FBT because the individual cost of each gift is less than $300; and
  • as the gifts are not entertainment, the cost is tax deductible.

Alternative providers to the SBSCH

Employers should start preparing for the permanent closure of the Small Business Superannuation Clearing House ('SBSCH') on 1 July 2026.

By acting now to find an alternative service, employers will:

• have an established process in place to pay super guarantee ('SG') for the March and June quarters (if they currently pay quarterly);
• reduce the risk of late payment of SG for the June 2026 quarter due date (28 July), as the SBSCH will be already closed;
• have more time to set up their business cash flow to enable frequent payments of SG; and
• have finalised payments and downloaded any reports from the SBSCH before it closes permanently.

Employers that are still using the SBSCH should be aware of the following key dates.

• 10 December 2025 — Super payments, along with instructions, must be received by 5.30 pm AEDT on this date. The ATO says payments received after this time will be processed from 2 January 2026.
• 28 January 2026 — December 2025 SG quarterly payments due date.
• February to March 2026 — Employers should move to an alternative option to the SBSCH.
• 28 April 2026 — March 2026 SG quarterly payments due date.
• 30 June 2026 — Final day for employers to use the service, make any final payments and download reports.
• 28 April 2026 — March 2026 SG quarterly payments due date.
• 30 June 2026 — Final day for employers to use the service, make any final payments and download reports.
• 1 July 2026 — SBSCH is no longer available.

Employers may already have other options readily available so they can exit from using the SBSCH ahead of time.

They should check their existing software and payroll packages, as they may already include super functions they can use to pay SG.

Otherwise, employers can look for options from super funds or digital service providers offering payroll services, software or commercial clearing houses.

Reminder of December 2025 Quarter Superannuation Guarantee ('SG')

As noted in the above article, employee super contributions for the quarter ending 31 December 2025 must be received by the relevant super funds by 28 January 2026.

If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component.

The SG rate is 12% for the 2026 income year (increased from 11.5% for the 2025 income year).

Dental expenses are private expenses

The ATO has been seeing a number of deduction claims for dental expenses this tax time. Dental expenses, including preventative and necessary dental treatment, medical expenses and other costs relating to client's personal appearance (such as teeth whitening, makeup, skin care, shaving products and haircuts) are not deductible.

These expenses are generally private expenses, even if an employer expects an employee to maintain a certain appearance, or pays them an allowance to cover grooming expenses.

Taxpayers should remember that they can only claim an expense that directly relates to earning their income. Private expenses cannot be claimed as a deduction.

Taxpayers should have written evidence of all their expenses, and be able to show a direct connection with those expenses to their employment income.

Australians call out tax dodgers in record numbers

The ATO has hit a major milestone of over 300,000 tip-offs from the community about tax avoidance and other dishonest behaviours since 1 July 2019. In the 2024/25 financial year alone, almost 50,000 red flags were raised by members of the community who spotted something suspicious.

Most of the tip-offs received related to shadow economy activity, coming from customers, employees, other businesses, and even family and friends.

This year, Australians reported businesses and individuals who:

• did not declare their income;
• demanded or paid for work in cash to avoid tax;
• lived lifestyles that did not match their known income; and
• failed to report all sales.

The top three industries seeing a surge in 'red flags' this financial year are:

• building and construction;
• cafes and restaurants; and
• hairdressing and beauty services.

ATO's new approach to holiday home expenses

The ATO has announced that it will take a somewhat different approach in relation to expenses that are claimed in relation to holiday homes.

Broadly, the ATO now takes the view that, if a taxpayer's rental property is also their holiday home, certain deductions relating to holding it will be completely denied (rather than being apportioned).

Expenses relating to ownership and use of the holiday home (e.g., interest, rates and maintenance) will not be deductible, unless the holiday home is 'mainly' used to produce assessable income.

Whether a holiday home is used 'mainly' to produce assessable income will be determined based on a consideration of a number of factors.

However, this will generally not apply to expenses incurred in relation to holiday homes that are rental properties before 1 July 2026, if those expenses are incurred under an arrangement entered into prior to 12 November 2025.

ATO warns about barter credit tax scheme

The ATO is warning the community to steer clear of an emerging tax scheme involving barter credits — a type of alternative currency used in some business networks.

A tax scheme that involves artificially inflating deductions for donations of barter credits to deductible gift recipients ('DGRs') is on the rise. While it may seem enticing, promoters and taxpayers could face potentially significant consequences if they are involved.

The ATO is concerned that such schemes are being enabled by several barter exchanges that are allowing participants to access barter credits with a nominal face value that is much more than any payments actually made to the exchange. Participants then donate these barter credits to a DGR and claim a larger tax deduction than they are entitled to.

Those involved may have to repay the tax, plus face heavy penalties, interest and legal action.

Dual cab utes and FBT

The ATO wishes to dispel the 'common myth' that dual cab utes are automatically exempt from fringe benefits tax ('FBT'). If an employer provides dual cab utes to staff to complete their duties and the vehicle is available for personal use, then the benefit may be subject to FBT.

By understanding how their employees use their dual cab utes, employers can work out if FBT applies and meet their FBT obligations.

To qualify for an exemption, the dual cab ute must be an 'eligible vehicle'. That is, it must be designed to carry a load of one tonne or more, or more than eight passengers (including the driver), or a load under one tonne and not primarily designed for carrying passengers.

The dual cab ute must also only be used for limited private use (i.e., minor, infrequent and irregular), such as the occasional trip to the tip or helping a mate move house.

If an employee's personal use of the dual cab ute does not meet both of the above exemption conditions, then the employer will be liable for FBT.

ATO reminder: Business expenses that can (and cannot) be claimed

Taxpayers can claim a tax deduction for most business expenses, provided they meet the ATO's three 'golden rules':

• The expense must be for business use, not for private use.
• If the expense is for a mix of business and private use, they can only claim the portion that is used for business.
• They must have records to prove their claim.

The ATO also wants business taxpayers to remember that there are some expenses that they cannot claim, including entertainment expenses, traffic fines, and expenses that relate to earning non-assessable income.

ATO's focus on small business

The ATO is 'detecting and addressing' recurring errors in specific industries when businesses have a turnover between $1 million and $10 million.

These industries include property and construction (including builders, contractors and tradies), and professional, scientific and technical services (including engineering, design, IT and consulting professionals).

In these industries, the ATO continues to see recurring issues, including:

• omitted sales and income in BAS and tax returns, including income from related entities;
• overclaimed expenses and GST credits;
• private expenses incorrectly reported as business-related, or not properly apportioned between business and personal use;
• failure to register for GST when required;
• incorrect claims for the research and development (R&D) tax incentive offset, especially for activities that do not meet the eligibility criteria; and
• not seeking independent advice from a registered tax agent, particularly in head contractor/subcontractor arrangements.

By sharing the issues that it is seeing, the ATO hopes to help taxpayers running a small business in one of these (or other) industries to avoid common errors and get it right from the start.

New ATO Data-Matching Programs

The ATO acquires and uses data for pre-filling, detecting dishonest or fraudulent behaviour, and identifying areas where it can educate taxpayers to help them understand their tax obligations.

When data does not match, the ATO may contact tax agents and their clients to find out why.

Rental Income Data-Matching

Over the coming months, the ATO will be sending letters where its data indicates:

• tax returns including rental income may need to be lodged for specific years; or
• rental income should be included in previously lodged tax returns.

Offshore Merchant Data-Matching Program

The ATO will acquire merchant data from the big four Australian banks (ANZ, Commonwealth Bank, National Australia Bank and Westpac) for the 2025 to 2027 income years.

The ATO estimates that records relating to approximately 9,000 offshore merchants will be obtained each financial year.

SMSF non-compliance with release authorities

Release authorities are documents issued by the ATO to super funds, authorising the release of money from a member's super account to pay specific liabilities, including in relation to excess concessional contributions, excess non-concessional contributions, and Division 293 tax assessments.

The ATO is seeing a rise in SMSFs that receive a release authority and are either:

• not responding within 10 business days as required; or
• responding incorrectly (i.e., either not releasing the requested amount, or failing to submit a release authority statement back to the ATO, or both).

Failure to meet these obligations may result in significant penalties for the fund. SMSF trustees should make sure they have effective processes in place to respond to release authorities promptly and accurately

GST held to apply to sales of subdivided lots

The Administrative Review Tribunal ('ART') recently held that some sales of subdivided farmland were subject to GST as they were made by the taxpayer in the course of carrying on an enterprise.

The taxpayer owned farmland near Adelaide. He entered into an agreement with a developer, under which the developer sought rezoning and development approvals, carried out development works, and marketed the subdivided lots.

The taxpayer progressively gave the developer access to the property as required and signed documents where necessary, including contracts for the sale of the subdivided lots. The taxpayer received 20% of the proceeds of sale progressively as sales of the subdivided lots were completed, with the developer receiving the remaining 80%.

The taxpayer argued that his role was passive, and that such rights as he had, and actions he took under the agreement with the developer, were of an administrative nature not amounting to a series of activities in the form of a business.

The ART disagreed, finding that the sales of the subdivided land were subject to GST as they were made in the course of carrying on an enterprise.

The ART noted that the taxpayer's activities "exhibited some of the well-known indicia of a business."

Amongst other factors, the taxpayer's activities in facilitating the implementation of the development agreement "had a degree of regularity and repetition", including allowing access to the land progressively as required, an ongoing obligation not to encumber or sell the land during the project, and the continuous signing of sales contracts and monitoring of sales returns.