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Stay up to date with Connole Carlisle’s blog series about everything accounting & finance related

Granny flats: Beware of the CGT consequences

Granny flats are becoming more of a common feature of the urban environment. No doubt this is due to the ongoing and unremitting nature of the housing affordability crisis, and the relaxing of regulations about where and how they can be built. And they do seem to offer a very viable solution to the problem – at least in the short term.

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

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

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

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

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

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

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

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

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

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

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

2026-04-07T13:10:13+10:00April 7th, 2026|
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Div 296 tax is now law: What it means for your super

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

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

A quick recap

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

The original plan included:

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

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

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

What’s changed in the final version?

Here’s what the new rules look like now:

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

How does the tax work?

Think of it like a tiered system:

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

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

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

Who does it apply to?

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

A few key things to know:

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

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

How do you pay it?

You don’t need to calculate the tax yourself.

Here’s how it works:

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

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

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

What does this mean for you?

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

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

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

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

Don’t rush into decisions

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

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

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

Getting the right advice before making any changes is key.

Final word

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

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

2026-04-07T13:06:26+10:00April 7th, 2026|
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FBT Checklist 2025–26

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

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

FBT Checklist 2025-26

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

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

CAR FRINGE BENEFITS

Checklist item Y N
Does a car fringe benefit arise?
For FBT purposes a “car” is:
‧ any motor-powered road vehicle (including a four-wheel drive) that is designed to carry:
‧ less than one tonne, and
‧ fewer than nine passengers.		 □ □
Were any vehicles provided to employees (or associates) during the FBT year?
You make a car available for private use by an employee on any day that either:
(a) the car is actually used for private purposes by the employee, or
(b) the car is available for the private use of the employee.

A car is treated as being available for private use by an employee on any day that either:
(a) the car is not at the employer’s premises, and the employee is allowed to use it for private purposes, or
(b) the car is garaged at the employee’s home.

 □ □
If so, was the vehicle designed to carry less than one tonne and fewer than nine passengers?
If so, the vehicle would be classified as a “car” for FBT purposes. If not, the provision of the vehicle may constitute a “residual fringe benefit” (see later). Different requirements in valuing the benefit then apply.		 □ □
Exemptions
Is the vehicle a taxi, panel van or utility?
If so, an exemption is available where there is private use of the vehicle by a current employee and the vehicle is either:
‧ a taxi, panel van or a utility designed to carry less than one tonne, or
‧ any other road vehicle designed to carry less than one tonne which is not designed to principally carry passengers, and
‧ the employee’s use of such a vehicle is limited to:
‧ travel between home and work
‧ travel incidentals where travel expenses are incurred in the course of performing employment-related duties, and
‧ non-work-related use that is minor, infrequent and irregular. This means (according to the ATO) less than 1,000 kms of private vehicle use for the FBT year, with no single private use journey in excess of 200 kms. (The ATO expects the employer to exercise some oversight over the minor, infrequent and irregular use of the vehicle.)		 □ □
Is the vehicle a dual cab vehicle?
If so, the vehicle will qualify for the work-related use exemption only if:
‧ it is designed to carry a load of one tonne or more, or more than eight passengers, or
‧ while having a designed load capacity of less than one tonne, it is not designed for the principal purpose of carrying passengers.		 □ □
Is the vehicle a “modified” vehicle?
Certain modified vehicles are exempt from FBT where modifications permanently change a car and cannot be readily reversed for the car to be regularly used alternately as a passenger or non-passenger car. An example of such a vehicle is a hearse.		 □ □
Is the vehicle an unregistered vehicle?
If a car is unregistered for the full FBT year and used principally for business purposes (such as off-road or cars used on farms), any private use is exempt from FBT. A car that may be lawfully driven on a public road is regarded as being registered.		 □ □
Does the vehicle qualify for the electric cars exemption?
Zero or low emission vehicles (including some plug-in hybrids) are exempt from FBT where they are first held from 1 July 2022 and made available to current employees or associates. This incentive will apply until at least 2027, when there is to be a review. The GST-inclusive cost of the EV cannot exceed $91,387, which is the Luxury Car Tax threshold for fuel efficient vehicles for 2025-26. Plug-in hybrids have lost their exemption after 31 March 2025 unless there is a binding commitment to continue to provide the vehicle after that date.		 □ □

CAR PARKING FRINGE BENEFITS

Checklist item Y N
Does a car parking fringe benefit arise?
A car parking fringe benefit arises in relation to a particular day where all of the following conditions are present on that day:
‧ the car is parked on business premises or associated premises of the provider
‧ a commercial parking station is located within a 1km radius of the premises at which the car is parked
‧ the lowest fee charged by the operator of any such commercial parking station located within a 1km radius for all-day parking on the first “business day” of the FBT year is more than the “car parking threshold” ($11.03 for the 2025-26 FBT year).
‧ the car is parked on the premises for more than four hours (cumulative) between 7.00am and 7.00pm on that day
‧ the car is used for travel between home and work at least once on that day
‧ the provision of the parking facility is in respect of the employment of the employee
‧ the car is owned by, leased to, or otherwise under the control of the employee, and
‧ the employee has a primary place of employment on that day and the parking is at or in the vicinity of that primary place of employment.

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

 □ □

LOAN FRINGE BENEFITS

Checklist item Y N
Does a loan fringe benefit arise…
‧ Has a loan been made by an employer (or associate) to an employee (or their associate)?		 □ □
‧ Was the loan provided in respect of the employment of the employee? □ □
‧ Do you know the date the loan was made? □ □
‧ Do you know the amount of the loan? □ □
‧ Do you know the purpose of the loan? □ □
‧ Has interest been charged on the loan that is at a rate lower than the benchmark interest rate of 8.62% (2025-26)?

The loan is not a fringe benefit where it is either:
‧ compliant with s109N ITAA 1936 for Division 7A purposes, or
‧ treated as a deemed dividend under s109D ITAA 1936 for Division 7A purposes.

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

DEBT WAIVER FRINGE BENEFITS

Checklist item Y N
Has an employer (or their associate) released the employee (or their associate) from repaying an outstanding debt?
A debt waiver fringe benefit arises.		 □ □
Does the debt forgiveness give rise to a deemed dividend under Division 7A ITAA 1936?
If so, the debt waiver does not constitute a fringe benefit.

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

 □ □
Does the debt waiver constitute the forgiveness of a genuine bad debt?
If so, the debt waiver is exempt from FBT.		 □ □

EXPENSE PAYMENT FRINGE BENEFITS

Checklist item Y N
Does an expense payment fringe benefit arise? □ □
Did an employer (or their associate) pay or reimburse an employee (or their associate) for any expenses incurred by the employee (or their associate)? □ □
Was the payment or reimbursement for an item that was used solely for an income-generating purpose?
If yes, a fringe benefit does not arise.

Employee to complete Expense payment fringe benefit declaration.

 □ □
Was the expenditure reimbursement by the employer to the employee on a cents-per￾kilometer basis?
If yes, the payment is FBT-exempt. Note that the employee will be assessed on this reimbursement.		 □ □
Exemptions
Is the minor benefits exemption under s58P FBT Act applicable?		 □ □
Is an exemption available for a work-related item which is used primarily in the employee’s employment?
These work-related items include a portable electronic device (including mobile phones, laptops and tablet pcs), briefcase, tool of trade or an item of computer software, or protective clothing. Specific conditions apply to the provision of portable electronic devices.

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

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

BOARD FRINGE BENEFITS

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

LIVING-AWAY-FROM-HOME ALLOWANCE (LAFHA)

Checklist item Y N
Does a LAFHA benefit arise? □ □
Was an employee paid an allowance by an employer as compensation for additional expenses because the employee was required to live away from his or her usual place of residence located in Australia to perform employment duties during the FBT year?
If yes: The LAFHA rules may apply.		 □ □
Declarations and substantiation
Have the relevant LAFHA declarations been sought from employees in receipt of allowances or benefits before the lodgment day of the FBT return?
The ATO has released on its website pro-forma LAFHA declarations. The declarations include employees who fly-in, fly-out or drive-in or drive-out, employee-related expenses, and employees who maintain a home in Australia.		 □ □
Has documentary evidence been obtained from employee to substantiate accommodation and food expenses (if reasonable amounts determined by the ATO are not being used)? □ □
Alternatively, has a declaration for employee￾related expenses been obtained?
If a declaration is made, the record must be maintained for five years from its making.		 □ □
Relocation costs
Were any of the following expenses incurred in relation to the employee relocating from their usual place of residence to perform employment￾related duties:
‧ engagement of a relocation consultant
‧ removal and storage of household effects
‧ sale or acquisition of a dwelling
‧ connection or reconnection of certain utilities (eg, water, electricity), or
‧ transport of the employee (and family members) and any meals and accommodation en-route to the new location?

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

 □ □

MEAL ENTERTAINMENT FRINGE BENEFITS

Checklist item Y N
Does a meal entertainment fringe benefit arise? □ □
Has entertainment been provided to an employee (or their associate) by way of food or drink, accommodation or travel in connection with the provision of food or drink or recreation? □ □
Calculation of taxable value
Has an election been made to use either the 50/50 split method or the 12 week register method? □ □
If no election is made, the benefit is typically treated as either a property, expense payment or residual fringe benefit and the taxable value calculated based on the rules for those types of benefits (i.e. under the actual method).
‧ 50/50 split method – has all expenditure in respect of all persons been included?
‧ 12-week register method:
‧ Has all expenditure in respect of all persons been included?
‧ Does the register include details of the date, cost, location and persons in relation to the meal entertainment?

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

 □ □
Where the actual method is used:
‧ Has the food or drink been consumed by current employees on the employer’s business premises on a working day?
If so, apply the s41 FBT Act exemption relating to property benefits.
‧ Is the minor benefits exemption pursuant to s58P FBT Act applicable?		 □ □
Reduction in taxable value
Did the employee contribute towards the provision of the benefit?
If so, reduce the taxable value by the amount of the employee’s contribution.		 □ □

HOUSING FRINGE BENEFITS

Checklist item Y N
Does a housing fringe benefit arise? □ □
Has an employer (or their associate) provided an employee (or their associate) with a right to occupy a “unit of accommodation” as the usual place of residence of the employee (or their associate)?
A housing fringe benefit will arise except where an exemption applies.

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

 □ □
Reduction in taxable value
Did the employee contribute towards the provision of the benefit?
Reduce the taxable value by the amount of the employee’s contribution.		 □ □

ENTERTAINMENT LEASING FACILITY EXPENSES

Checklist item Y N
Did an entertainment leasing facility expense fringe benefit arise? □ □
Has entertainment been provided to an employee (or their associate) by way of the employer incurring “entertainment leasing facility expenses”?
This includes the hire or leasing of a corporate box, boats or planes or “other premises or facilities” for providing entertainment.

Expenses, or parts of expenses, that are not entertainment facility leasing expenses for these purposes are:
‧ expenses attributable to providing food or beverages, and
‧ expenses attributable to advertising that would be an allowable income tax deduction.

 □ □

TAX-EXEMPT BODY ENTERTAINMENT FRINGE BENEFITS

Checklist item Y N
Does a tax-exempt body entertainment fringe benefit arise?
A charity must be endorsed in order to be income tax-exempt.		 □ □
Has entertainment been provided to an employee by a tax-exempt body (an organisation that is wholly or partially exempt from tax)?
Where this is the case, a separate category of fringe benefit arises (referred to as a “tax-exempt body entertainment fringe benefit”). It is only non-deductible entertainment that falls within this category of benefit (eg, a meal at a party). Refer to TR 97/17 for further guidance.

A tax-exempt body is an entity which is either:
‧ wholly exempt from income tax (eg, a club that earns income from members only), or
‧ partially exempt from income tax (eg, a club that earns income from both members and non-members).

 □ □
Calculation of taxable value
Equal to the expenditure incurred in the provision of the entertainment.
Reduction in taxable value
Did the employee contribute towards the provision of the benefit?
Reduce the taxable value by the amount of the employee’s contribution.		 □ □
Exemption
Is the minor benefits exemption under s58P FBT Act applicable?		 □ □

PROPERTY FRINGE BENEFITS

Checklist item Y N
Does a property fringe benefit arise? □ □
Was any property provided in respect of an employee’s employment?
Property includes both tangible and intangible property eg, goods, shares and real property.		 □ □
Exemption
Is the minor benefits exemption under s58P FBT Act applicable?		 □ □
Is an exemption available for a work-related item which is used primarily in the employee’s employment?
i.e. a portable electronic device (including mobile phones, laptops and tablet pcs), briefcase, tool of trade or an item of computer software, or protective clothing.		 □ □
Is an exemption available for the provision of:
‧ membership fees and subscriptions to:
‧ a trade or professional journal
‧ use of a corporate credit card, or
‧ an airport lounge membership
‧ newspapers and periodicals to employees for business purposes, or
‧ expenses relating to emergency assistance such as:
‧ first aid or other emergency health care
‧ emergency meals, food supplies, clothing, accommodation, transport or use of household goods
‧ temporary repairs, and
‧ any similar matter?		 □ □

RESIDUAL FRINGE BENEFITS

Checklist item Y N
Does a residual fringe benefit arise? □ □
Has a fringe benefit been provided by an employer to an employee which does not fall within any other specific fringe benefit category in the FBT Act? □ □
Exemption
Is the minor benefits exemption under s58P FBT Act applicable?		 □ □
Is an exemption available for a work-related item which is used primarily in the employee’s employment?
i.e. a portable electronic device (including mobile phones, laptops, tablet, PC), briefcase, tool of trade or an item of computer software, or protective clothing.

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

 □ □

FBT REBATE

Checklist item Y N
Are you a rebatable employer?
Certain non-government, non-profit organisations are eligible for the FBT rebate. These include:
‧ certain religious, educational, charitable, scientific or public educational institutions
‧ trade unions and employer associations
‧ organisations established to encourage music, art, literature, science, a game, a sport or animal races
‧ organisations established for community service purposes
‧ organisations established to promote the development of aviation or tourism
‧ organisations established to promote the development of information and communications technology resources, and
‧ organisations established to promote the development of agricultural (etc), fishing, manufacturing or industrial resources.

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

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

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

 □ □
2026-03-03T18:08:39+10:00March 3rd, 2026|
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Commonwealth Seniors Health Card: What’s changing from 20 March 2026

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

CSHC income cut-off thresholds

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

The current CSHC income limits are:

  • $101,105 p.a. if you’re single

  • $161,768 p.a. for couples (combined)

  • $202,210 p.a. for couples separated by illness/respite care/prison.

What are deeming rates?

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

Deeming commonly applies to assets such as:

  • bank accounts and term deposits

  • shares and managed funds.

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

Deeming rates are increasing from 20 March 2026

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

  • 1.25% (lower rate) for financial assets up to $64,200 (singles) and $106,200 (couples combined)

  • 3.25% (upper rate) for financial assets above those thresholds.

How this could affect your CSHC

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

  • lose eligibility for the CSHC, or

  • don’t qualify when you otherwise expected to.

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

What to do next

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

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

2026-03-03T17:59:48+10:00March 3rd, 2026|
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Payday super checklist for employers: Steps to stay compliant

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

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

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

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

NOW: UNDERSTAND THE NEW REQUIREMENTS

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

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

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

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

FEBRUARY TO MARCH 2026: PLAN AND PREPARE

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

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

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

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

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

APRIL TO JUNE 2026: LOCK IN YOUR PLANS

  • Confirm your payroll software will be ready for payday super

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

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

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

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

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

  • Keep clear records of all super payments

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

1 JULY 2026: PAYDAY SUPER STARTS

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

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

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

  • Calculate SG contributions based on qualifying earnings

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

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

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

FINAL REMINDER

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

2026-03-03T17:57:57+10:00March 3rd, 2026|
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Six changes impacting your super in 2026

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

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

1. Possible tax changes for large super balances

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

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

  • Balances up to $3 million: no change. Earnings continue to be taxed at 15% as they are now.

  • Balances between $3 million and $10 million: an extra 15% tax on earnings, bringing the total to 30% on that portion.

  • Balances above $10 million: the total tax rate on earnings will rise as high as 40%.

It’s important to note:

  • These changes are not law yet

  • Only a small number of Australians would be affected

  • Withdrawing super prematurely can be hard to undo because of contribution limits

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

2. Payday super is locked in

One change that is definitely happening is payday super.

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

Under the new rules:

  • Employers must pay super at the same time as salary or wages

  • Contributions must reach your super fund within 7 business days of payday

  • For new employees, the first contribution must be paid within 20 business days of the salary or wages being paid

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

  • Your money gets invested sooner

  • Less chance of unpaid or forgotten super

  • Better long-term outcomes thanks to compounding

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

3. Contribution caps are expected to increase

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

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

  • Concessional (before-tax) cap increasing to $32,500

  • Non-concessional (after-tax) cap increasing to $130,000

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

This change could create opportunities for:

  • People topping up their super

  • Those who arrange with their employer to salary sacrifice part of their income into super

  • Individuals planning larger after-tax contributions

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

4. Transfer balance cap: what’s happening next?

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

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

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

5. More flexibility for legacy pensions

Good news for people stuck in older super pension products.

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

Previously, these pensions:

  • Couldn’t be easily changed or exited

  • Often no longer suited members’ needs

  • Had strict limits around reserves and conversions

Under the new rules:

  • A five-year window allows eligible members to review and restructure these pensions

  • This creates opportunities to simplify super and improve flexibility

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

6. Better fund performance, transparency and tech

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

In 2026, expect to see:

  • Ongoing pressure on underperforming funds, including forced mergers

  • Clearer reporting on fees, performance and investments

  • Better tools to compare super funds and make informed choices

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

  • Smarter online dashboards

  • Improved mobile apps

  • AI-driven tools to help with investment choices and retirement planning

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

Final thoughts

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

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

2026-02-17T07:34:08+10:00February 3rd, 2026|
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CGT: Buying a new home before selling the old

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

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

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

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

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

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

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

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

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

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

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

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

2026-02-17T07:30:44+10:00February 3rd, 2026|
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Permanent incapacity and super

What it means if you’re totally and permanently disabled

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

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

What is permanent incapacity?

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

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

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

You can access super even without insurance

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

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

  • Your existing super balance

  • Employer contributions

  • Personal contributions and earnings

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

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

How the money can be paid

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

  • A lump sum – which may assist with large expenses like paying off the mortgage

  • An income stream which may assist with meeting ongoing living expenses

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

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

The role of TPD insurance in super

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

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

Some key benefits of TPD insurance in super include:

  • Premiums are generally deductible to the fund and this benefit is passed on to the member

  • Premiums are paid from super, not your take-home pay meaning it won’t impact your cashflow

  • You may not have to deplete super savings otherwise set aside for retirement

Final thoughts

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

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

2026-02-17T07:31:14+10:00February 3rd, 2026|
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Change to the tax treatment of holiday homes

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

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

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

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

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

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

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

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

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

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

  • Detailed logs of rental and private use

  • Evidence of market-based pricing and booking acceptances and rejections

  • Evidence of not blocking peak periods for personal use

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

In the meantime, we’re here to help clarify any questions you might have about the tax treatment of short-term rentals generally, including holiday homes.

2026-02-17T07:31:52+10:00February 3rd, 2026|
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Surviving (and maybe avoiding) an ATO audit

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

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

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

Cash jobs

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

Benchmarks

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

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

» Ill health suffered by yourself or a close family member
» A long holiday
» Your café or retail business is not in the best location
» Competition from similar businesses operating nearby

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

Lifestyle factors

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

The audit

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

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

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

Protective measures

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

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

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

2025-12-02T19:25:22+10:00December 2nd, 2025|
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