Federal Budget 2026-27

On Tuesday night, 12 May 2026, Federal Treasurer Jim Chalmers handed down his fifth Federal Budget for the Labor Government.  This year’s Budget proposes significant and unprecedented changes to a number of key taxation areas, including capital gains tax, negative gearing and the taxation of family trusts.  If these measures are implemented as proposed, they will represent a substantial shift in taxation policy.

Outlined below are some of the key budget initiatives that may directly impact our clients. As with all budgetary measures, these measures are not final until the relevant legislation has been passed by the Government. We will keep you updated on the status of any proposed measures.

Impact for individuals

Cuts to individual tax rates (announced in previous budgets)

  • From 1 July 2026, the 16% marginal tax rate (for income between $18,201 – $45,000) will drop to 15%, and then to 14% from 1 July 2027.

 $250 Working Australians Tax Offset (WATO)

  • From 1 July 2027, there will be a permanent tax offset for all Australians who derive income from wages and salary or business income as a sole trader.  This will increase the effective tax-free threshold to $24,985 for individuals who are also eligible to the low-income tax offset.

 $1,000 instant tax deduction 

  • From 1 July 2026, individual taxpayers can claim a $1,000 instant tax deduction for work-related expenses (without the need to keep records).  If you have more than $1,000 to claim, the normal deductibility/substantiation rules will apply.  You can still claim the following costs (in addition to the $1,000): charitable donations, union fees, professional association membership fees, non-work-related deductions.

 Medicare levy

  • Low-income thresholds for Medicare Levy are increasing.

Capital Gains Tax Changes

There are significant changes to capital gains tax (CGT) announced as part of this budget.  We will outline the broad impact of these changes as detailed in the budget papers (noting that the draft legislation will provide more detail on how the calculations will be performed):

  • From 1 July 2027, the 50% CGT discount will be replaced by an cost base indexation for assets held for more than 12 months, with a minimum 30% tax on net capital gains.

  • This will apply to all assets, including pre-CGT assets, held by individuals, trusts and companies (although the main residence exemption may still be applicable to the of principal places of residence held by an individual).  (Note, there is no mention of changes to CGT calculations for superannuation funds who currently receive a 33% discount for capital assets held for more than 12 months.)

  • Transitional arrangements will ensure that the changes only apply to gains arising on or after 1 July 2027 (such that the discount will be available up to 1 July 2027 and indexation applicable thereafter).

  • To encourage investment in new residential properties, investors will hold new residential properties be able to choose between the 50% discount and the indexed cost base and 30% minimum tax.

Who is impacted: Taxpayers (individuals, trusts and companies) with any capital investments.

Negative Gearing Tax Changes – Residential Rental Properties

There are significant changes to negative gearing for residential rental properties announced as part of this budget.  We will outline the broad impact of these changes as detailed in the budget papers (noting that the draft legislation will provide more detail on how the new measures will be implemented):

  • From 1 July 2027, the tax benefits of negative gearing on residential rental properties will only be available for new residential properties.

  • Existing arrangements will remain unchanged for all properties held on or before 12 May 2026 (Budget Night).  Properties currently under contract but not yet settled will also be exempt from these changes.

  • Investors investing in established residential houses after 12 May 2026 will not be able to claim the immediate tax benefit of any negative gearing of that property after 1 July 2027.  However, any losses incurred on the property can be carried forward and offset against any future income from the property (ie. if it becomes positively geared in the future) or against any future capital gain on the property.

  • It is not proposed that these changes will extend to commercial properties.  Nor does it appear that they will extend to investments in shares or other asset classes.  It also doesn’t extent to investments held by widely held trusts and superannuation funds. Based on this, you can claim a tax benefit for any negative gearing into commercial rental properties or shares.  Also based on this, existing LRBA arrangements that result in negative gearing in superannuation funds for residential property investments, are unlikely to be affected.

Who is impacted: Taxpayers (individual, trust or company) looking to purchase a negatively geared existing residential investment property after 12 May 2026.

Discretionary Trusts – 30% minimum tax

There are significant changes to the taxation of trusts announced as part of this budget.  We will outline the broad impact of these changes as detailed in the budget papers (noting that the draft legislation will provide more detail on how it will be implemented):

  • From 1 July 2028, there will be a 30% minimum tax on the taxable income of discretionary trusts.

  • When the income is distributed to beneficiaries, they will receive a non-refundable credit for the tax payable by the trustee (except corporate beneficiaries).  Corporate beneficiaries will not receive a credit for the tax paid by the trustee.

  • This will not apply to: fixed trusts, widely held trusts, fixed testamentary trusts, complying superannuation funds, special disability trusts, deceased estates and charitable trusts.

  • This will also not apply to some types of income: primary production income, income relating to vulnerable minors, amounts to which non-resident withholding tax applies, income from assets of a discretionary testamentary trust that existed as at 12 May 2026.

  • There will be rollover relief for three years from 1 July 2027 to support small businesses and others that want to restructure out of discretionary trusts to another structure (like a company or fixed trust).

Who is impacted: All discretionary trusts.

Our comments:

  • Under these proposed measures, distributions to corporate beneficiaries will incur a double layer of tax – 30% paid by the trustee and a further 25%/30% by the corporate beneficiary with no credit for the 30% paid by the trustee.  By the time the tax reaches the hands of an individual, the effective tax rate (if distributed via a corporate beneficiary) could be as high as 77%.

  • While the Federal Government is promising “rollover relief” for restructures – there is also a significant possibility of a transfer/stamp duty cost at the state level.  This will need to be considered on a state-by-state basis depending on where your business operates or where your investments are held.  The Federal Government does not have the power to legislate to exempt a restructure from state-based taxes.

  • If you provide for the establishment of a testamentary trust as part of your estate planning, you should review this with your lawyer and tax adviser to determine if this is still an appropriate strategy for your estate.

Loss Carry-Back

The loss carry-back provisions are also set to return:

  • From 1 July 2026, eligible companies that make a loss in the current income year, can use that loss to get a refund of tax paid in the prior 2 income years.

  • To be eligible, the company needs to have annual global turnover of less than $1 billion.

Our comments: 

  • We welcome the return of the loss carry-back provisions especially to support businesses who have a suffered a temporary set-back with their business.

Startup Loss Refunds

From 1 July 2028, startups with an aggregated turnover of less than $10 million may be eligible for a refundable tax offset for their losses. in the first 2 years of operations (limited to the value of fringe benefits tax and withholding tax paid on employee wages).

$20k Instant Asset Write-Off – Permanent

A measure that has been temporary and varied significantly over the past 6 or so years, this Budget will make the Instant Asset Write-Off a permanent part of the legislation.

From 1 July 2026, small businesses with a turnover of up to $10 million will be able to permanently access the instant asset write-off for assets acquired for less than $20,000.

Assets acquired for $20,000 or more can continue to be placed in the simplified depreciation pool and depreciated over time.

Electric Cars & FBT

All electric cars will retain the FBT discount rate that was in place when the arrangement commenced (so all electric cars valued up to and including $75,000 that are provided before 1 April 2029 will continue to be exempt from FBT).

Electric cars that are valued above $75,000 and up to and including the fuel-efficient luxury car threshold that are provided to employees for private use between 1 April 2027 and 1 April 2029 will only be eligible for a 25% discount on FBT.

PAYG instalments

From 1 July 2027, businesses can opt in to monthly PAYG income tax instalments.  There is also the option to use ATO-approved calculations imbedded in your accounting software to calculate and vary your instalments.  This will help businesses to match their instalments to their business activity.

Taxpayers with a demonstrated history of non-compliance will be required to report and pay PAYG income tax instalments monthly.

We will keep you up-to-date with the progress of the implementation of these Budget measures.

If you would like to discuss the tax implications of the budget proposals, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Opposition Budget Response 2025-26

Federal Election 2025

What Peter Dutton’s Budget Reply Means for Australian Households and Businesses

As the countdown to the 2025 Federal Election begins, all eyes are on the policies shaping the economic landscape. In his Opposition Budget Reply speech on 27 March 2025, Opposition Leader Peter Dutton outlined the Coalition’s vision for Australia—one focused on reducing cost-of-living pressures, boosting home ownership, and ensuring essential services are well funded.

With the official election date set to be announced tomorrow, Dutton’s speech is more than just a political statement—it’s the Coalition’s blueprint for the nation’s future.

Four Key Bills to Set the Tone

If elected, Dutton announced that the Coalition would hit the ground running, introducing four major legislative packages when Parliament resumes:

  • Energy Price Reduction Bill – to combat rising power bills through increased domestic energy supply.

  • Lower Immigration and More Homes for Australia Bill – aimed at easing housing pressures by reducing migration and ramping up housing supply.

  • Keep Australia Safe Bill – a broad initiative expected to cover national security and law enforcement.

  • Guaranteed Funding for Health, Education and Essential Services Bill – to ensure stability and support in key service areas.

Major Policy Highlights

Here’s a closer look at some of the key announcements in Dutton’s budget reply – and what they could mean for you:

🚗 Fuel Savings for Aussie Families

In a move to ease everyday expenses, the Opposition has pledged to halve the fuel excise for 12 months, with a review at the end of the period. This would put approximately $14 a week back in the pocket of a one-car household, or $28 for families with two cars.

🏡 Helping First Home Buyers Get Ahead

Under the proposed plan, first home buyers could access up to $50,000 of their superannuation to put toward a home deposit—potentially helping thousands break into the property market faster.

🏗️ Tackling the Housing Crisis

With the housing market under pressure, the Coalition is proposing a 25% cut to migration to free up housing and ease demand. This would be supported by a national energy plan and increased domestic gas production to reduce energy costs.

🛠️ Support for Small Business and Apprentices

Small business owners could benefit from an increase in the instant asset write-off threshold to $30,000, giving them more flexibility to invest in equipment and growth. The plan also includes a target of 400,000 new apprentices, aiming to build a stronger, skilled workforce for the future.

🧠 Funding Where It Matters Most

  • $400 million will be invested in youth mental health services, addressing growing concerns around the wellbeing of young Australians.

  • $50 million in funding to food charities will support their expansion, including school breakfast programs to help children start the day right.

What’s Next?

With the official campaign period just around the corner, this budget reply marks a pivotal moment in the election race. Whether you’re a small business owner, a first home buyer, or simply feeling the pinch from rising living costs, these policies offer a glimpse into what a Coalition-led government could prioritise.

Stay tuned as the Federal Election is officially called and the political debate ramps up. We’ll continue to break down what each party’s promises mean for you.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Federal Budget 2025-26

On Tuesday night, 25 March 2025, Federal Treasurer Jim Chalmers handed down his fourth Federal Budget for the Labor Government.  The Treasurer says that this Budget is built on five main pillars:

  • Helping with the cost of living
  • Strengthening Medicare
  • Building more homes
  • Investing in every stage of education
  • Making our economy stronger, more productive and more resilient.

This budget marks a return to a deficit, following two consecutive years of surplus. However, running persistent surpluses can sometimes be more detrimental than maintaining modest deficits. A surplus-driven approach may be the result of underinvestment in critical areas such as public services and infrastructure, potentially hindering long-term economic growth and development.

It’s also essential to remember that governments are not businesses and do not have the same profit-driven objectives. While deficits are not inherently problematic, it is vital that these deficits are manageable.

Given the current state of global fiscal uncertainty, particularly the ongoing trade tensions under President Trump’s administration, we also may face additional economic challenges in the future.

Outlined below are some of the key budget initiatives that may directly impact our clients. As with all budgetary measures, these measures are not final until the relevant legislation has been passed by the Government. We will keep you updated on the status of any proposed measures.

Impact for individuals

✅ Cuts to individual tax rates

  • From 1 July 2026, the 16% marginal tax rate (for incomes between $18,201 – $45,000) will drop to 15%, and then to 14% from 2027.  This is a saving of $268 for all taxpayers in the first year, and $536 in the second.  Noting that the Coalition will not support the tax rate changes with the Shadow Treasurer commenting that “Seventy cents a day, in a year’s time, is not going to help address the financial stress Australian families are currently under”.

✅ Medicare Levy Relief

  • Low-income thresholds have been increased, exempting over 1 million Australians from paying the Medicare levy.

✅ Cheaper Medicines

  • PBS co-payments will drop from $31.60 to $25 from 1 January 2026, saving households over $200 million annually.  Additional subsidies for medicines like contraceptives and endometriosis treatments.

✅ Energy Bill Relief

  • Extra $1.8 billion allocated to extend energy rebates into 2025.  Eligible households receive two extra $75 quarterly rebates.

✅ Higher Education

  • HECS debts and other student loans to be reduced by 20%.  This will remove $16 billion from student loan accounts of 3 million Australians.

  • From 1 July 2025, the minimum repayment threshold to increase to $67,000 (from $54,435).

  • 100,000 free TAFE places from 2027 – aimed at tackling shortages in the construction industry and healthcare.

✅ Limiting Non-Compete Clauses

  • One in five workers are subject to non-compete clauses in their employment contracts that restrict their ability to move to a new job and are significantly suppressing wages. The Government will ban these clauses for low and middle income earners. This measure is expected to boost wages as these workers will be able to move to more productive, higher-paying positions.

Impact for businesses

The Budget contained a few measures to help small businesses:

✅ Energy Rebates Extended

  • Over 1 million small businesses to continue receiving electricity bill relief through 2025.

✅ Instant Asset Write-off 

  • Extension of the $20,000 instant asset write-off was noticeably absent from this year’s Budget.  The $20,000 threshold should extend to 30 June 2025 (with legislation currently before Parliament, but if an election is called the bill will lapse).  From 1 July 2025, without an extension, this will revert back to the legislated threshold of $1,000 for the first time in almost 10 years.  

✅ Tax System Overhaul & Compliance

  • $1.8 billion in revenue improvements from increased ATO funding to combat tax evasion and shadow economy activity.

  • Funding to crack down on illicit tobacco trade and reduce unfair market practices.

✅ Phoenixing & Fair Trading

  • New measures to tackle illegal phoenix activity, with funding to ASIC to target high-risk sectors like construction.

  • Enhanced protections from Unfair Trading Practices, including better enforcement on unfair contract terms and surcharges.

✅ Digital Upgrades

  • Funding to enhance business register systems, including linking Director ID numbers to company records.

We will keep you up-to-date with the progress of the implementation of these Budget measures.

If you would like to discuss the tax implications of the budget proposals, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Loan Redraw vs Loan Offset

Loan Offset Account vs Loan Redraw

What’s the difference?


Thinking of investing in shares or property using your home loan?  How you access those funds—whether via an offset account or a loan redraw—can make a big difference at tax time. Understanding the distinction could mean the difference between a tax deduction… or none at all.

There is a distinction between drawing money from an offset account and redrawing funds from an existing loan, and misunderstanding this difference could lead to unintended tax consequences.   Let’s break it down.

1. How Do Offset Accounts and Redraws Actually Work?

Offset Account

An offset account is a transaction account linked to your loan. Any money sitting in the offset account reduces the interest charged on your home loan but does not directly repay the loan itself.  It is a separate bank account.

For example, if you have a home loan of $500,000 and $100,000 in an offset account, you are only charged interest on $400,000. However, you still have a loan of $500,000 and a separate bank account with $100,000 that can be accessed at any time.

Redraw Facility

A redraw facility allows you to make extra payments onto your loan and then draw them back out, if and when required.  Unlike an offset account, these funds have been used to pay down the loan principal.

For example, if your original loan was $500,000 and you made an extra $50,000 in repayments, your loan balance would be $450,000. If you then redraw $50,000, your loan balance increases back to $500,000.

2. Tax Implications of Using Each for Investment

In determining whether loan interest is deductible, we need to examine the original purpose of the loan. For example, if you borrowed $500,000 to purchase your main residence, the interest on this loan is not deductible as the loan funds were not used to purchase income producing assets.

The same principle applies when looking at offset against and loan redraws.

Using Money from an Offset Account to Invest

If you withdraw funds from your offset account to purchase shares or an investment property, you are essentially using your own money. This means you are not borrowing funds for the investment, and as a result, the interest on the original loan remains non-deductible.

Redrawing from a Loan for Investment

If you redraw funds from an existing loan and use them to invest in income-producing assets, the interest on the redrawn amount may be tax-deductible, provided the funds are used solely for investment purposes.

If the funds are mixed with personal use (e.g., part used for investments, part for a holiday), only the investment-related portion is deductible.

Example

Sarah has a $600,000 home loan and $100,000 in an offset account.  She wants to buy an investment property.  If she uses the $100,000 from her offset account, it won’t create a tax-deductible loan and the interest on her $600,000 home loan will remain non-deductible.. But if she redraws $100,000 from her existing loan and uses it solely for the property, the interest on that amount could be deductible.

4. Alternative Strategies

If you have funds in an offset account but want to maintain interest deductibility, one alternative is to borrow separately (e.g., take out an investment loan or a separate equity loan). This allows clear separation between investment and personal debt while preserving your home loan’s tax benefits.

5. When is an Offset Account the Smarter Choice?

An offset account can be highly beneficial for home owners who may later turn their home into an investment property.

If you think there is a possibility that you might convert your home into an investment property in the future, keeping savings in an offset account rather than making extra loan repayments can help preserve tax deductibility of the interest in the future.

5. Key Takeaways

The way you access funds for investment can have significant tax implications. Using an offset account means you’re spending your own money, whereas redrawing from a loan could allow you to claim tax deductions on interest.

We help investors make smart funding decisions that protect both their cash flow and tax position. Book a strategy session today to get personalised advice tailored to your goals..

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Tax Planning for Life

Tax Planning for Life – Not Just for Year End

 

When most people think about tax planning, they think about scrambling in June to find a few quick deductions before the financial year ends.  But smart tax planning is so much more than last-minute strategies – it’s about long-term planning that supports your personal and business goals throughout your life.

Tax planning evolves with you

Your financial needs and opportunities change over time.  The right strategies for a start-up business owner are different from those of someone growing a successful business, investing in property, or preparing for retirement.  That’s why tax planning isn’t a “set and forget” process – it’s an ongoing conversation that evolves as your life and business grow.

Key times to review your tax plan

  • Starting a business – Choosing the right structure (sole trader, company, trust) can make a big difference to how much tax  you pay and your legal protection.
  • Growing wealth – Whether you’re investing in property, shares or expanding your business, you’ll want to manage tax efficiently or maximise your returns.
  • Major life changes – Marriage, children, divorce or inheritance can all have tax consequences.
  • Succession and retirement planning – Long before you plan to sell or retire, you should be considering the tax implications and ways to maximise the value you retain.

Tax planning isn’t just about saving tax

While minimising tax is important, good tax planning is really about protecting your wealth, supporting your goals, and ensuring you have the right structures in place to adapt to changing circumstances. It’s about working smarter, not just harder, so your financial affairs are aligned with your lifestyle and future plans.

Selling your business?

Hve you considered your business exit strategy?  If it involves selling your business, there may be significant tax savings available through the Capital Gains Tax (CGT) small business concessions. These concessions can be incredibly valuable but are also complex, with strict eligibility criteria and timing requirements. In some cases, selling even one day too early (or too late) can mean the difference between a tax-free sale and a hefty tax bill.

Ongoing tax planning ensures you’re well-positioned to take full advantage of these concessions when the time comes, helping you achieve the best possible tax outcome on the sale of your business.

Looking to invest?

Investment decisions also benefit greatly from proactive tax planning. Whether you’re considering buying an investment property or investing in the share market, choosing the right ownership structure is crucial. Many people default to making investments in their personal name without considering the long-term tax implications or asset protection risks.

A tailored investment structure can optimise tax outcomes, provide flexibility, and protect your assets. Strategic planning before you invest ensures your wealth is built on a solid foundation.

Need help with long-term tax planning?

If you’d like to take a more strategic approach to tax planning — one that looks at the bigger picture and helps you plan for life, not just year-end — we’re here to help.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore it should be regarded as confidential and not be made available to any person without our consent,

Federal Budget 2024-25

On Tuesday night, 14 May 2024, Federal Treasurer Jim Chalmers handed down his third Federal Budget for the Labor Government.  If anything, it was quite an underwhelming budget, leaning towards higher spending particularly over the upcoming year.  While this is the second consecutive budget surplus for the Labor Government, there is a forecast $28.3 billion deficit for the next financial year.  In fact, for the four years after the current year surplus, the forecast is for a combined deficit of $122 billion.

The economic story though is all about inflation at the moment: “When will we be rid of it?”  “And how much damage has it done along the way?”

Energy bill relief – $2.6 billion – yes it makes your electricity bills cheaper today, but will this lead to upwards inflationary pressure over the longer period?

The Government indicates inflation will be under control by Christmas 2025, but many economists and perhaps, more importantly, the RBA may not agree with that.

We would still call for more broader tax reforms including reducing state based taxes like transfer duty and payroll taxes, and replacing it will greater broad based consumption taxes (like GST).

Production tax credits and critical mining projects and fast-tracked investment processes were helpful wins for the top end of town.

We’ve outlined below some of the measures that were announced in the Budget that will impact on our clients.  As with all budgetary measures, these measures are not final until the relevant legislation has been passed by the Government.  We will keep you updated on the status of any proposed measures.

Impact for individuals

Individual income tax rates

As previously announced by the Treasurer, the Stage 3 individual income tax rates were amended to provide tax relief to all taxpayers. 

The current tax rates (to 30 June 2024) are as follows:

 

From 1 July 2024, the reduced tax rates are as follows:


The tax savings for certain income levels are as follows:

 

The last table shows the difference between the tax payable for the 2024 financial year, compared to the tax payable for the 2025 financial year and how much that translates to a weekly saving.

Energy bill relief

A $300 rebate will be applied to all Australian households towards their electricity bills.  This will be a $75 credit on each quarterly electricity bill in the 2024-25 financial year.  Eligible small businesses will receive a credit of $325.

HECS

Another measure that was announced last week was the change to the HECS indexation rate.  Currently, HECS debts are indexed each year on 1 June using the Consumer Price Index (CPI).  Given the high rates of inflation, this resulted in an indexation rate of 7.1% applied to HECS debts on 1 June 2023.

The Budget announcement is to use the lower of CPI and Wage Price Index (WPI) to index HECS debts (backdated to 1 June 2023).  This means that the 7.1% CPI indexation rate used last year will be replaced with a 3.2% WPI (and a credit applied to HECS accounts to reflect the lower indexation at 1 June 2023).

It is also forecasted for the WPI to be 4% for the 1 June 2024 indexation.

Please read our article for more information about the indexation of HECS debts and whether it is beneficial to repay some or all of your debt.

Medicare Levy Low-Income Thresholds

The Medicare Levy low-income thresholds for singles, families, seniors and pensioners will also be increased from 1 July 2023.  The family income threshold will also now be increased by $4,027 per child (up from $3,760).

Rent Assistance

The Commonwealth Rent Assistance maximum rates have been increased by 10% from 20 September 2024 to address rental affordability challenges.

Paid Parental Leave

$1.1 billion was allocated in the budget towards paying superannuation on Commonwealth Funded Paid Parental Leave for births and adoptions on or after 1 July 2025.

Impact for businesses

The Budget contained a few measures to help small businesses:

Instant asset write-off threshold extended

From 1 July 2023, the instant asset write-off threshold was due to reduce to $1,000.  Last budget, this threshold was increased to $20,000 for businesses with an aggregated turnover of less than $10 million.  The increased threshold was to apply until 30 June 2024.  The announcement in this budget was to extend the $20,000 threshold to 30 June 2025.  We note that the announcement from last year’s budget (to increase the threshold to the $20,000) has still not passed by Parliament, leaving this measure uncertain as we close in on the end of the financial year.

We also note that, assets acquired for more than $20,000 can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first year and 30% thereafter.

ATO Counter-Fraud Strategy

$187 million has been allocated to the ATO Counter Fraud Strategy, including allocating funds to:

  • Identify and block suspicious activity in real time
  • Recover lost revenue from fraud
  • Counter fraud
  • Extend the period for which the ATO can withhold GST refunds (extended from 14 days to 30 days)

ATO Tax Avoidance Taskforce

The ATO Tax Avoidance Taskforce has been extended for 2 years from 1 July 2026.  The task force pursues key tax avoidance risks from multinationals, large public and private businesses and high-wealth individuals.

Foreign Resident CGT regime

The foreign resident capital gains tax (CGT) regime will be strengthened to provide greater certainty about the operation of the rules.  The amendments will apply to CGT events on or after 1 July 2025 and will:

  • Clarify and broaden the types of assets that foreign residents are subject to CGT on
  • Amend the point-in-time principal asset test to a 365-day testing period
  • Require foreign residents disposing of shares and other membership interests exceeding $20 million to notify the ATO, prior to the transaction being executed

Supporting Small Businesses

$41.7 million has been specifically allocated to supporting small businesses, as follows:

  • $25.3 million to support the Payment Times Reporting Regulator;
  • $10.8 million to extend the Small Business Debt Helpline;
  • $3 million to implement the Government’s response to the Review of the Franchising Code of Conduct;
  • $2.6 million for the Australian Small Business and Family Enterprise Ombudsman to support unrepresented small businesses to navigate business-to-business disputes through alternative dispute resolution.

We will keep you up-to-date with the progress of the implementation of these Budget measures.

If you would like to discuss the tax implications of the budget proposals, please call us on (07) 56656469.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

ATO Hit List – 2024 tax returns

ATO Hit List 2024 tax returns

The ATO have released their hit-list for the 2024 tax returns – essentially, this is a list of key areas that they will be focusing on for their tax return reviews (noting that, really, all areas are subject to review):

  • Incorrectly claiming work-related expenses
  • Inflating claims for rental properties
  • Failing to include all income in your tax return

Work-related expenses

Last year the ATO changed the records that were required to be kept to claim the fixed rate working from home deduction (see more in our article here).

To claim a working from home deduction using the fixed rate method, you need to have kept the following records:

  • Diary evidence showing the total hours worked from home; and
  • Records of the additional costs you have incurred for working from home (eg. Electricity bill, internet bill).

Simply “copying and pasting” your deduction from last year will likely result in a review of your tax return.

Rental properties

The ATO have specifically identified repairs and maintenance of rental properties as one of the areas of concern.  General repairs can be claimed as a tax deduction, but expenses that are capital in nature are not deductible as repairs (these may be eligible for a depreciation deduction instead).

While not specially identified by the ATO, interest deductions are also another area where significant mistakes are made by taxpayers. 

You need to ensure you keep full and complete records to ensure so your tax return can be prepared accurately.

See our previous article for rental properties here.

Missing income

If you rush to lodge your tax return on 1 July, not all of your income will be available on your ATO prefill report. 

Check that your income statement from your employer is marked as “tax ready” before lodging your tax return. 

Also check that all of your investment income has been included in your tax return (as it can take some time for this to be available on your ATO prefill report).

By following these steps, it means it will be less likely that your return will need to be amended.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice.  Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information.  We recommend that our formal advice be sought before acting in any of the areas.  The article is issued as a helpful guide to clients and for their private information.  Therefore, it should be regarded as confidential and not be made available to any person without our consent,

Higher Education Debt – should I make voluntary repayments?

Higher Education Debt: 

Should I Make Voluntary Repayments?

Higher education debts (eg. HECS/HELP debts) that are unpaid on 1 June (and have been outstanding for 11 months) are automatically increased by an indexation rate. Previously, these debts have been increased by CPI. Last year, the application of CPI as the relevant indexation rate saw HECS debts increase by 7.1% last year – the highest indexation rate ever applied. 

On 6 May 2024, the Federal Government announced that the calculation of the indexation rate for HECS/HELP debts would be changed.  They would be increased by either the Consumer Price Index (CPI) or the Wage Price Index (WPI) whichever is lower. They also announced that this would be backdated to 1 June 2023. The relevant WPI for June 2023 is 3.2% (less than half of the 7.1% CPI rate applied last year). Noting that this is subject to the legislation being passed. 

For anyone who had a HECS/HELP debt that was indexed on 1 June 2023 at the 7.1% CPI rate, you will receive a credit on 1 June 2024 for the difference between the 7.1% CPI and the new 3.2% WPI rate*.  

Prior to this announcement, we knew that the CPI rate for the June 2024 indexation of the HECS/HELP debts was 4.7%. We are now awaiting the release of the WPI figures to determine the indexation rate under WPI. The Federal Government have suggested that this will be approximately 4%*.  

For anyone who has a HECS/HELP debt, it is forecasted that it will be indexed on 1 June 2024 by approximately 4%* (with a credit also applied for the reduction in the indexation rate at 1 June 2023 noted above).

Any reduction of the debt prior to this date will mean the amount of indexation will be lower (as the debt is lower).  If you have an outstanding tax return that will reduce the debt, we recommend you lodge the return as soon as possible to ensure the payment from your tax return is applied. 

If you want to make a voluntary repayment towards the debt, we recommend this be done no later than 22 May to ensure it is received by the ATO and applied to your debt prior to 1 June. 

You can check your outstanding higher education debt via your myGov app if it is linked to the ATO.  You can also find payment details for the debt in your ATO account via myGov.  If you have any problems finding these details, please do not hesitate to contact us. 

For your reference, the following debts are affected by indexation: 

  • Higher Education Loan Program (HELP, formerly HECS)
  • VET Student Loan (VSL)
  • Student Financial Supplement Scheme (SFSS)
  • Student Start-up Loan (SSL
  • ABSTUDY Student Start-up Loan (ABSTUDY SSL)
  • Trade Support Loan (TSL)

 
* The recent announcements by the Federal Government are subject to the passing of legislation.  If the legislation is not passed, the backdated credit will not be applied for the 2023 year and the indexation rate applied on 1 June 2024 will be 4.7% (CPI).

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Upcoming Changes to ATO Interest: What Businesses Need to Know

Upcoming Changes to ATO Interest: What Businesses Need to Know

As part of the Mid-Year Economic and Fiscal Outlook, the Government announced that it will pass legislation to deny deductions for ATO interest charges (this includes General Interest Charge (GIC) and shortfall interest charges (SIC)) from 1 July 2025.

This applies to all GIC and SIC charged by the ATO – including interest charged on payment arrangements.

Despite the ATO’s interest rates rendering it an expensive debt financing option (current rate is 11.34% in June 2024), numerous businesses have favoured it for its ease and accessibility, bypassing the formalities associated with traditional lenders like banks.

Although the ATO imposed GIC/SIC will no longer be deductible, if businesses were to seek finance elsewhere to pay their ATO debt, interest on this finance is deductible. 

What does this mean for businesses?

If you currently use payment plans with the ATO as a means of financing your tax liabilities (including GST, PAYG withholding and income tax), we recommend that you review your cashflow forecasting to ensure you have sufficient cashflow to pay your tax liabilities as and when they fall due.

Cashflow forecasting should always be a cornerstone of your business planning.  However, if you don’t currently forecast your cashflow, we recommend that you start from at least 1 July 2024 to ensure that you have sufficient cashflow to fund your 2024-25 and future ATO liabilities.

As needed, consider exploring alternative financing avenues to pay ATO liabilities, such as bank overdrafts or loans secured by property. Interest incurred on such borrowings is tax-deductible when used for business purposes, including paying ATO obligations.

How can we help?

We’re here to help you evaluate your business’s cash flow and forecasts. Additionally, we can connect you with finance brokers who specialise in assisting clients in accessing additional financing options for their businesses.

Note: Legislation to enact this has not yet been passed.  We will keep you up-to-date of the passage of the relevant legislation.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.

Selling a property? Do you need a tax clearance certificate?

Property Sales

Do you need a tax clearance certificate?

 

From 1 July 2016, purchasers of residential property were required to withhold 10% of the purchase price where the property cost was more than $2 million (this changed to 12.5% and $750,000 from 1 July 2017).  The ultimate goal of the withholding regime was to have tax withheld for the anticipated capital gain for foreign vendors.  However, under the legislation all sellers are deemed to be foreign vendors.  Australian residents could only avoid the withholding obligation by obtaining a clearance certificate from the ATO and providing it to the purchaser.

Recently, the Government announced that from 1 July 2025, it would increase the withholding rate to 15% and reduce the threshold for withholding to $0.  As such (provided the relevant legislation is passed for these changes), from 1 July 2025, all Australian resident vendors of property will be required to obtain a clearance certificate to provide to the purchaser.  Failure to do so will result in 15% of the sales proceeds being withheld by the purchaser and remitted to the ATO.

What do you need to do?
 
If you are an Australian resident selling property, currently you will need to obtain a clearance certificate from the ATO if the sales price is more than $750,000.  From 1 July 2025, all Australian resident vendors will need to obtain a clearance certificate.

DISCLAIMER: The information in this article is general in nature and is not a substitute for professional advice. Accordingly, neither TJN Accountants nor any member or employee of TJN Accountants accepts any responsibility for any loss, however caused, as a result of reliance on this general information. We recommend that our formal advice be sought before acting in any of the areas. The article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our consent.