Changes Galore & a New CPA
Just when you think you’ve finally mastered the rules, setup your structures and parted with your hard earned capital to “have a go”, the government unveils a new set of proposed changes that make the tax system feel less like a financial framework and more like a season finale of a reality TV show that doesn’t quite end how you think it should.
Recently proposed changes to Australian tax laws (especially the drastic changes CGT, Negative Gearing, and the taxing of Family Trusts) have sparked plenty of discussion among us all. While policymakers often describe these reforms as measures to improve fairness, boost productivity, or simplify compliance, many Australians hear the words “tax reform” and immediately prepare for several hours of confusion and an unexpected conversation with their accountant.
Despite the jokes and memes, these changes can have significant impacts on household budgets, investment decisions, and business operations. Understanding what has changed and how it affects you is essential for navigating Australia’s ever-evolving tax landscape without losing your sense of humour.
Speaking of humour, our resident office joker Jacob Krautz has recently completed his seven years of studies and can now call himself a Certified Practising Accountant – better known as a CPA. We congratulate Jacob on earning his stripes, and look forward to many more years with his infectious personality and expertise around our office.
Attached again are a few articles regarding the massive changes on the way, and of course our whole team are always here to bounce these issues off if you need to see how they specifically affect you.
See you at the Kitchen Bench…..
The Team at Lidgerwoods
SOPHIE, MARC, KYLIE, LOUISE, JACOB, DAVID, DARCY, LASTARI & CATH
2026 Budget: The Big Changes
Editor: 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 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 instant tax deduction to allow workers to deduct up to $1,000 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 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.
None of it is yet law, but the media in recent days seems to think it will be all passed.
IMPORTANT – do not panic, and know that you do have quite a bit of time before most of this comes into play. Just chat with us if you want to know more.
New Anti-Money Laundering Rules Start 1 July 2026
From 1 July 2026, new Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws will apply to Australian accounting firms. These changes are designed to help prevent criminals from using professional services to hide illegal money or fund unlawful activities.
Under the new legislation, accounting firms are required to carry out client identification and verification procedures. This means that clients may be asked to provide identification documents, confirm ownership and control details, and supply information about certain transactions or business activities. These requirements are mandatory and we cannot provide some services unless the necessary information is received.
To meet our legal obligations, additional administration and compliance work may be required. For some clients, this may result in an administration fee to cover the time and resources involved in completing these checks. We will advise you in advance if a fee applies.
We appreciate your cooperation and support as we implement these important compliance measures. Please contact our team if you have any questions.
Editor: many clients have experienced this type of identity issue with your banks who have already had to undergo the same requirements for some time.
Payday Super: How to manage super during the changeover
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.
Editor: We have tried to contact most employer clients over the last few months in anticipation of this big change. If you need to know more contact us immediately.
New ATO guidance for rental property owners
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)
Know when a new logbook is required
Editor: Keeping a car logbook may be required to accurately calculate the business-use percentage of vehicle expenses (e.g., fuel, registration, insurance and depreciation) for tax deductions.
Taxpayers can keep the same logbook for their car for five years, but there are circumstances where they may need a new one during that period.
Relying on a logbook that no longer represents a client’s work-related travel may result in them claiming more, or less, than they are entitled to.
A new logbook may be required when a taxpayer:
- moves to a new house or workplace — updating their residential or work address may then be necessary;
- has changes to their pattern of use of the car for work purposes — checking that they are still doing the same role and routine may then be necessary.
Taxpayers using the logbook method for two or more cars need to keep a logbook for each car and make sure they cover the same period.
Clients who purchase a new car during the income year and want to continue relying on their previous car’s logbook must make a nomination in writing. The nomination must be made before they lodge their tax return and state:
- they are replacing their original car with a new car; and
- the date that nomination takes effect.
Taxpayers should remember that, if their employer provides them with a car or they salary sacrifice a car using a novated lease, they are not entitled to claim work-related car expenses using the logbook or cents per kilometre method, as they do not own the car.
When claiming car expenses using the logbook method, taxpayers also need to keep various types of other records, including (among other things) odometer records for the start and end of the period they own the car, proof of purchase price, decline in value calculations, and fuel and oil receipts (or records of a reasonable estimate of these expenses based on odometer readings).
Editor: Please contact our office if you require assistance regarding the above, including in relation to claiming car expenses using the logbook method or determining if a new logbook is required.
ATO launches new app feature to stop scam calls
Taxpayers can now instantly confirm whether a call claiming to be from the ATO is genuine, with the launch of a new in-app security feature designed to shut down scammers.
The new verify call feature allows users to confirm, in real time, that they are speaking with the real ATO, not a fraudster.
Taxpayers are encouraged to download the ATO app and register their device. Then, when they receive a call from someone claiming to be from the ATO, they can simply open the ATO app, login and select the verify call option.
Within 30 seconds, a notification should confirm it is an ATO call. If it does not appear, users should treat it as a scam call and hang up.
Editor: Please always be vigilant regarding contact from the ATO, and if any doubt contact us.
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.
Lastly we welcome your feedback. If you found this E-Newsletter very useful (or not?),
we’d appreciate your feedback either way.
‘The Team’ at Lidgerwoods Accountants