50% CGT Discount is replaced with Indexation From 1 July 2027, the 50% CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30% minimum tax on net capital gains. These changes will apply to all assets, including pre-CGT (1985) assets, held by individuals, trusts and partnerships. The changes will only apply to gains accruing on or after 1 July 2027. The 50% CGT discount will continue to apply to gains that accrued before 1 July 2027 and capital gains on pre-CGT assets that accrued before 1 July 2027 will remain exempt from CGT. Investors in new residential properties will still be able to choose between the 50% discount; or the indexation method and the 30% minimum tax. Income support payment recipients will be exempt from the minimum 30% tax and assets that are sold prior to 1 July 2027 will continue to receive th 50% discount. Reforms to Negative Gearing From 1 July 2027, rental 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 are able to be offset against residential property income in future years. These changes will apply to established residential properties acquired from 7:30 PM (AEST) on 12 May 2026. Properties acquired prior to this time will be exempt from the changes. Exemptions apply to eligible new builds, properties in superannuation funds and widely held trusts. Targeted exemptions apply to build-to-rent developments and private investors supporting government housing programs. Reforms to taxation of discretionary trusts From 1 July 2028, discretionary trusts will be charged a minimum 30% tax on taxable income. Beneficiaries, excluding corporate beneficiaries, will receive non-refundable credits for the tax paid by the trust. Corporate beneficiaries will not be entitled to a credit for the tax paid by the trustee causing a punitive tax burden for corporate beneficiaries. The minimum tax will not apply to other types of trusts such as fixed trusts, fixed testamentary trusts, complying superannuation funds, special disability trusts and deceased estates. 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. Expanded rollover relief will be available for three years from 1 July 2027 for small businesses and others that wish to restructure out of discretionary trusts into another type of entity, such as a company or fixed trust. Measures for Individuals $ 250 tax offset will be available for working Australians such as employees and soletraders from 1 July 2027. A standard deduction of $ 1,000 will be available for work-related expenses from 2027 financial year. Individuals who incur work-related expenses greater than the $1,000 maximum standard deduction can continue to claim their deduction in the usual way. The current 16% tax rate for taxable income upto $ 45,000, will be reduced to 15% effective 1 July 2026 and to 14% effective 1 July 2027. From 1 July 2025, the current Medicare levy threshold is increased from $ 27,222 to $ 28,011 for individuals and $ 45,907 to $ 47,238 for families.For each dependent child the threshold is increased from $ 4,216 to $ 4,338. Single Seniors and Pensioner threshold will increase from $ 43,020 to $ 44,268 and Senior and Pensioner families threshold will increase from $ 59,886 to $ 61,623. The age based private health insurance rebate will be removed effceteive 1 April 2027. Measures for Businesses The $ 20,000 instant asset write-off for small businesses with a turnover below $ 10 million will continue. Tax loss carry back rules are reintroduced effective 1 July 2026. Tax losses can be carried back for two years for companies with an annual global turnover below $ 1 billion. Startup companies with a an annual aggregate turnover below $ 10 million that generate tax losses in their first two years will receive a refundable tax offset. Offset will be limited to the FBT and PAYG withholding tax paid. Reducing the Electric Car Discounts From 1 April 2029, FBT discount will drop to 25% for all electric cars valued up to and including the fuel-efficient luxury car tax threshold, implemented through a 15% rate in the statutory formula. Transitional arrangements: • All eligible electric cars will retain the FBT discount rate that was in place when the arrangement commenced. • All electric cars valued up to and including $75,000 that are provided before 1 April 2029 will continue to be eligible for a 100% discount on FBT • Electric cars valued above $75,000 and up to and including the fuel-efficient luxury car tax threshold that are provided between 1 April 2027 and 1 April 2029 will be eligible for a 25% discount on FBT. Research and Development Incentive From 1 July 2028, the Government will: • Increase the offset for core R&D expenditure by around 25% to 50%, through a 4.5 percentage point increase in core R&D offset rates. • Reduce the intensity threshold from 2% to 1.5%. • Remove eligibility of supporting R&D expenditure for the R&D tax incentive. • Increase the turnover threshold for the highest offset rate from $20 million to $50 million. • Entities below the $50 million turnover threshold, maintain previous eligibility for the higher offset rate while limiting refundability to entities under 10 years of age. • Lift the maximum R&D tax incentive expenditure threshold from $150 million to $200 million. • Lift the minimum expenditure threshold from $20,000 to $50,000, with research activities valued below this amount required to be undertaken with a registered Research Service Provider or Cooperative Research Centre. ATO’s response to High Fuel Costs The ATO 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 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 the ATO will provide support to vary PAYG instalments where there has been a reduction in taxable income. 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. 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. Tribunal decision regarding home office and car expenses overturned The 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 as a sports presenter. During the 2021, 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 employer’s studio. 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 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. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.

Hobby or Business? You may not think you are running a business from your hobby or side hustle. However, if you start earning income from these activities regularly, you may be carrying on a business. 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; and/or keeping records of their work. However, you may not be operating a business where: Your transactions are one-off You do not intend making a profit You work as an employee rather than independently FBT Changes for Hybrid cars 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. 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. Do you need a new Logbook? You can keep the same logbook for your car for five years, but there are circumstances where you may need a new logbook. Relying on a logbook that no longer represents your work-related travel may result in them claiming more, or less, than you are entitled to. A new logbook may be required when a taxpayer: moves to a new house or workplace has changes to the pattern of use of the car for work purposes 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. If you 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 that you are replacing your original car with a new car; and that the date that nomination takes effect. If your employer provides you with a car or you salary sacrifice a car using a novated lease, you are not entitled to claim work-related car expenses using the logbook or cents per kilometre method. When claiming car expenses using the logbook method, you also need to keep various types of other records, including odometer records for the start and end of the period you own the car, proof of purchase price, decline in value calculations, and fuel and oil receipts. Reminder for March 2026 Superannuation Obligations 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. Reminder for Taxable payments annual report Businesses who pay contractors may need to lodge a 'Taxable payments annual report' by 28 August each year. This includes businesses paying contractors in the building and construction, cleaning and IT industries and certain other industries. 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. If you do not need to lodge a TPAR, you can submit a 'non-lodgment advice 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 recently held that medical expenses incurred by a taxpayer to obtain 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 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. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.

$20,000 instant asset write-off is extended Small business instant asset write off is extend to 30 June 2026. If a business has an aggregated annual turnover of less than $10 million, they may be able to use the instant asset write-off to immediately deduct the business portion of the cost of eligible assets that are $20,000. Eligible assets must be first used between 1 July 2025 and 30 June 2026. The $20,000 limit is per asset. Cash in hand sales The ATO is cracking down on businesses that use cash to avoid paying tax, employer and business obligations. Some examples of such situations are: Failure to report all sales Failure to pay GST, income tax, PAYG withholding, super guarantee, insurance and work cover Reporting income below $75,000 to avoid GST registration Failure to meet employment awards and work cover Workers who are paid cash-in-hand risk losing their entitlements and if they are injured at work, they may not be protected. Contractors income Data matching records indicate some contractors are incorrectly reporting or omitting income. Contractors need to report all their income in their tax return, including payments made by businesses for their contracting work. Note that, as part of the taxable payments reporting system, businesses in some industries must lodge a Taxable payments annual report to report contractor payments for providing the following services: Building and construction; Courier; Cleaning; Information technology; Road freight; and Security, investigation or surveillance. Contractors who provide the above services must note that the businesses they contract to report their payments to the ATO on their TPAR. Contractors must then report their income in their tax returns to avoid data matching discrepancies. If the ATO suspects a contractor may have omitted TPRS income on their tax return, it may contact them to request they amend their tax return. If the contractor does not take action, the ATO may conduct a review and audit of their business, and penalties and interest may apply. Government payments programs The ATO is reminding taxpayers that receive government payments for delivering services under a Commonwealth program, such as healthcare, disability support or child care, that they have an obligation to: Keep accurate records; and Report any such income they receive in their tax return. The ATO recently advised that it would be contacting taxpayers and tax agents in February by email to ensure that income received from government agencies such as the Aged Care Subsidy or under the National Disability Insurance Scheme is reported correctly in their tax returns. The ATO has updated its Government Payments Program data-matching program protocol to better detect non-compliance, and work more effectively with other government entities. Work-related expense claims rejected by ART  The Administrative Review Tribunal recently disallowed a taxpayer's claims for many different types of work-related expenses. The taxpayer was employed full-time as an engineer, working from home two days a week. For the 2023 income year, he claimed deductions totalling over $61,000, in relation to car expenses, travel expenses, clothing expenses, and home office expenses, all of which he claimed were work-related. The ATO largely disallowed these deductions, and the ART affirmed the ATO's decision, primarily due to problems with substantiating these claims. For example, in relation to the car expenses, the ART noted that none of the log books were contemporaneous, and the log book entries were inconsistent with independent records. In relation to travel expenses, the ART noted that the taxpayer did not provide evidence clearly identifying which travel expenses had been reimbursed by his employer, and the ride share documentation did not include the date, time or destination of travel. In relation to home office utility expenses, the ART noted that the taxpayer only provided calculations estimating the business use proportion of those expenses, without providing any documentary evidence to substantiate the expenses. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.