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The Government recently passed legislation to extend the $20,000.00 instant asset write-off for small businesses by 12 months to 30 June 2026...
Keeping a car logbook may be required to accurately calculate the business-use percentage of vehicle expenses...
The Federal Government handed down the Federal Budget on 12 May 2026, with some of the biggest changes to the tax system in years...
The Government recently passed legislation to extend the $20,000.00 instant asset write-off for small businesses by 12 months to 30 June 2026.
Taxpayers should note that if their business has an aggregated annual turnover of less than $10 million, they may be able to use the instant asset write-off (IAWO) to immediately deduct the business portion of the cost of eligible assets which cost less than $20,000.00.
Eligible assets must basically have been first used (or installed ready for use) between 1 July 2025 and 30 June 2026. The $20,000.00 limit applies on a per asset basis, so taxpayers can instantly write-off multiple assets.
The IAWO can be used for both new and second-hand assets (but some exclusions and limits apply).
Please contact our office if you require assistance regarding the above, including in relation to also claiming deductions for improvement costs for certain assets.
The ATO is ‘cracking down’ on businesses that use cash to avoid meeting their tax, employer and business obligations. Businesses that do this may:
● fail to report all sales transactions and fail to issue receipts;
● avoid paying GST, income tax, PAYG withholding, super guarantee, insurance and work cover protection;
● report their income below the $75,000.00 threshold to avoid registering for GST;
● exploit workers by not meeting award conditions and work cover protections; or
● undercut honest businesses by offering cheaper prices for cash.
The ATO warns that workers who are paid cash-in-hand or working ‘off the books’ are often disadvantaged. Apart from not receiving the entitlements they should be, if they are injured at work, they may not be protected.
Through data matching, the ATO is seeing some contractors incorrectly reporting or omitting contractor 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 (TPRS), certain businesses must lodge a ‘Taxable payments annual report’ (TPAR) to report payments made to contractors for providing the following services:
● building and construction;
● courier;
● cleaning;
● information technology;
● road freight; and
● security, investigation or surveillance.
For taxpayers who work as a contractor and provide any of these services, the business they contract to should be reporting those payments to the ATO on their TPAR. Contractors obviously then need to include this income on their tax return.
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.
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.
When completing their next BAS, the ATO is asking taxpayers to remember that they cannot claim GST credits for purchases:
● where they do not have a tax invoice;
● that were cancelled or reversed; or
● that do not have GST in the price (such as bank fees).
Taxpayers that have nothing to report still need to lodge a ‘nil’ BAS by the due date.
The Administrative Review Tribunal (ART) 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 $61,000.00, in relation to (among other things) 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 (e.g., car service records).
In relation to travel expenses (taxi and Uber fares), 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 themselves. In any case, the ART was not satisfied that the taxpayer’s apportionment of those expenses was fair and reasonable.
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.
If you require any further information, please do not hesitate to contact us should you need any assistance.
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).
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).
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; and/or
● 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; and/or
● they work solely as an employee rather than independently.
Please keep us informed of all your income earning and side hustle activities so we can help with this distinction.
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.
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.
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).
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.
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.
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 are 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. 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.
If you require any further information, please do not hesitate to contact us should you need any assistance.
The Federal Government handed down the Federal Budget on 12 May 2026, with some of the biggest changes to the tax system in years.
Some of the main proposed changes include:
● Delivering a new Working Australians Tax Offset (WATO) to provide a permanent annual $250.00 tax offset to all eligible Australian workers. This applies to eligible income earned from 1 July 2027 (i.e., from the 2027/28 income year).
● Introducing a $1,000.00 instant tax deduction to allow workers to deduct up to $1,000.00 of work-related expenses without keeping receipts from 1 July 2026.
● Limiting negative gearing for residential property to new builds from 2027/28. Arrangements will remain unchanged for all existing investments made before 7:30pm AEST on 12 May 2026.
● Replacing the 50% CGT discount with inflation‑adjusted indexation from 1 July 2027 to “restore the taxation of real gains”, with a minimum tax rate of 30% on realised gains. This will apply to all assets (including pre-CGT assets) except new builds of residential properties (where taxpayers can choose either the old or the new CGT rules to apply). It will be prospective, with gains accrued on existing investments prior to the start date to retain the 50% discount (where eligible).
● Applying a minimum 30% tax rate on discretionary trusts from 2028/29 to “bring tax outcomes for trusts closer to the rates that apply to the vast majority of Australian workers.”
Some of the other proposed Budget changes affecting businesses include:
● Making the $20,000.00 instant asset write‑off permanent to “give businesses more certainty to invest”.
● Delivering a permanent two‑year loss carry back for companies with turnover of up to $1 billion from 1 July 2026.
● Introducing loss refundability for start‑ups from 1 July 2028, to help new businesses invest and grow in their first two years.
The ATO is providing information that employers need to know to manage the changeover from quarterly super to Payday Super from 1 July 2026 (i.e., when employers will begin paying super with each payday under the Payday Super changes).
During July 2026, employers may need to manage more than one super payment, including:
● the final quarterly super payment (i.e., the June quarter payment, due 28 July); and
● one or more Payday Super payments for July paydays.
If employers do not finalise their June quarter payments by 28 July 2026 (or earlier):
● they must lodge a super guarantee charge (‘SGC’) statement by 28 August and pay the SGC to the ATO for the June quarter;
● the late payment offset is not available; and
● any super payments received on or after 29 July will be applied under the new Payday Super rules, even if the employer intended these payments to be made for any super owed for the June quarter.
Also, from 1 July 2026, employers calculate, pay and report super guarantee for their employees (including eligible contractors) under the Payday Super rules. This includes ensuring the money is in their employees’ super accounts generally within 7 business days after payday.
Note that superannuation for pay runs in July may be due before their final quarterly super payment is due on 28 July, but contributions received on or before 28 July will reduce any super owing for the June quarter first. If there is any remainder, contributions will then be used under Payday Super.
However, the ATO assures employers that pay on time for quarterly and Payday Super that they will not risk incurring penalties.
The Small Business Superannuation Clearing House (SBSCH) will permanently close on 1 July 2026. Therefore, employers still using it have less than a month to transition to an alternative service provider, test their new arrangements and resolve any issues before Payday Super begins.
The ATO recommends that affected employers act now to:
● download all their SBSCH records (because, after 11:59pm AEST on 30 June, user access will be closed, and they won’t be able to view or retrieve any records);
● stop using the SBSCH and test their new payment method; and
● be ready to use their alternative provider to pay super.
The ATO is warning the community to be wary of incorrect or misleading information this Tax Time, particularly claims promising greater refunds, shortcuts or hacks.
The ATO is seeing a rise in tax-related content and ‘tips’ being shared – especially online – and is urging taxpayers to treat unverified advice with caution.
Australians should think twice before acting on information from third-party sources such as artificial intelligence (AI) platforms, ‘finfluencers’, or advice from family or friends. Although the ATO acknowledges that AI can be helpful, it can lead to inaccurate advice: “Your tax return isn’t the place for guesswork.”
The ATO also revealed that, this Tax Time, it will be focusing on areas where taxpayers are likely to make errors, including work-related deductions and expenses (and properly apportioning such expenses), and omitted income (including from ‘side-hustles’, cash jobs, and rental income).
The ATO has released updated guidance to clarify how it assesses rental property income and expenses, to reflect changes in the way investors rent out their properties.
This is particularly important for clients whose rental property also doubles as a holiday home.
If a rental property that doubles as a holiday home is not used primarily to earn assessable income, taxpayers won’t be able to claim deductions, including for ownership or use expenses (such as interest expenses, council and water rates, body corporate fees, and capital works and depreciation).
Only expenses such as advertising costs, cleaning costs after a guest stay, and booking fees and commissions will be deductible.
If the holiday home is used mainly to produce income, but there’s a small portion of private use (e.g., a week or a few weekends in the off-season where there was no booking, or very low chance of a booking), then taxpayers may claim a deduction (although the expenses must be apportioned, and they cannot claim for the period of private use).
Please note: Many of the comments in this publication are general in nature. 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.
If you require any further information, please do not hesitate to contact us should you need any assistance.
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