Practice Update – January/February 2024

Lowe Lippmann Chartered Accountants

Government announces changes to proposed 'Stage 3' tax cuts


Despite previous assurances, and after much speculation, the Government has announced tweaks to the 'Stage 3' tax cuts that will apply from 1 July 2024.


More particularly, the Government proposes to:

  • reduce the 19% tax rate to 16%;
  • reduce the 32.5% tax rate to 30% for incomes between $45,000 and a new $135,000 threshold;
  • increase the threshold at which the 37% tax rate applies from $120,000 to $135,000; and
  • increase the threshold at which the 45% tax rate applies from $180,000 to $190,000.


The Medicare levy low-income thresholds for the 2024 income year will also be increased.


We recently released a Tax Alert on this topic, to see full details click here.


Changes in reporting requirements for sporting clubs


Not-for-profits (NFPs), including sporting clubs, societies and associations with an active ABN, need to lodge an annual NFP self-review return to continue accessing their income tax exemption.


The main purpose of a sporting organisation must be the encouragement of a game, sport or animal racing.  Any other purpose of the organisation must be incidental, ancillary or secondary.


The organisation's governing documents will help identify the purpose for which it was set up, and the organisation's activities in the year of income must then demonstrate that the main purpose is the encouragement of its game, sport or animal racing.


NFP organisations need to lodge their first NFP self-review return for the 2024 income year between 1 July and 31 October 2024. 


NFP organisations with their own ABN need to complete their own NFP self-review return even if they are affiliated with a broader sporting group.


If an NFP organisation does not lodge the return, they may become ineligible for an income tax exemption and penalties may apply.


Deductions denied for work-related expenses


The Administrative Appeals Tribunal (AAT) recently held that a taxpayer should not be allowed deductions for various work-related expenses, largely because the substantiation requirements had not been satisfied.


The taxpayer, a real estate salesperson, claimed tax deductions for the 2018 to 2020 income years, during which time he derived income from his employment with a real estate company.


However, the ATO disallowed the taxpayer's claims for various work-related expenses, including car expenses, and gifts and donations.


The AAT agreed with the ATO, and held that the expenses claimed were not deductible and that the taxpayer had failed to substantiate his claims.


The taxpayer had claimed deductions for car expenses using the logbook method, but the AAT noted that the car was owned by a company and was not leased to the taxpayer. Therefore, the car was not 'held' by the taxpayer, as required by the logbook method. The taxpayer's logbook also lacked "sufficient specificity" for this method.


While the taxpayer produced credit card statements and telephone tax invoices (in relation to credit card interest and telephone expenses), it was not clear from these documents whether the costs claimed related to work expenses.


The taxpayer sought to rely on bank transaction statements in relation to other expenses, but they were considered to be insufficient, as it was unclear from these statements what the relevant expense was, how the expense was incurred in earning the taxpayer's assessable income, and any apportionment between business and personal use. 


There were also no receipts or tax invoices for any of the claimed donations.


Sale of land subject to GST


The AAT recently held that the sale of land by a taxpayer was subject to GST, as it was a supply made in the course of an enterprise being carried on by the taxpayer.


The taxpayer purchased a single parcel of land in 2013 for $1.6 million, and he subsequently took steps for the land to be subdivided and rezoned. He then sold the land in 2021 for $4.25 million before the subdivision was completed.


The ATO advised the taxpayer that the sale of the land was subject to GST as a taxable supply under the GST Act.


The taxpayer objected to the GST assessment on the following grounds:

  • the sale of the property was not made by him in the course of his enterprise; and
  • as the property was the taxpayer's residential premises, it was an input taxed supply, so no GST should apply anyway.


However, the AAT agreed with the ATO that the sale of the property was subject to GST as a supply made in the course of the taxpayer's enterprise.


The AAT first noted that the sale of the property was not an input taxed supply of residential premises because the buildings on the property were uninhabitable, and so the property did not meet the definition of 'residential premises' in the GST Act.


The AAT also held that the taxpayer's development works were in "the form of a business", even if he was not in the business of being a property developer. Relevant factors included the scale of the operations that the taxpayer was involved in (including rezoning and subdividing the property), as well as the amount of capital invested by him in the purchase of the property and development works.


The taxpayer's "series of activities" throughout his ownership of the property therefore amounted to the carrying on of an enterprise, and the taxpayer was liable to pay GST on the sale of the property.


Melbourne man sentenced to jail for attempting to defraud the ATO


A Wheelers Hill man was recently sentenced to three years and six months imprisonment for defrauding the ATO of nearly $35,000 and attempting to defraud the ATO of a further $458,000, following a joint investigation by the Australian Federal Police (AFP) and ATO's serious financial crime taskforce.



The investigation began in June 2020, after the ATO linked the man to a number of suspicious claims, including 40 fraudulent applications for JobKeeper.


The sentence is "a warning to criminals who seek to exploit and steal from the Commonwealth and by extension, Australian taxpayers".


New ATO guidance on "who is an employee?"


The ATO recently issued a ruling which explains when an individual is an 'employee' of an entity for pay as you go (PAYG) withholding purposes.



A useful approach for establishing whether or not a worker is an employee of an engaging entity is to consider whether the worker is working in the business of the engaging entity, based on the construction of the terms of the relevant contract. Importantly, the fact that a worker may be conducting their own business, including having an ABN, is not determinative.



Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

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September 4, 2026
Yesterday, Treasurer Jim Chalmers released draft legislation to implement the key components of the 30% minimum trust tax on discretionary trusts announced in the Federal Budget during May 2026.
September 2, 2026
Discretionary trusts and the proposed 30% minimum tax Discretionary trusts, often referred to as family trusts, have been a popular structure for Australian families and businesses for many decades. They are commonly used to operate family businesses, hold investments and assist with succession planning. Their flexibility, together with asset protection and estate planning benefits, has made them an attractive option for many groups. In the 2026–27 Federal Budget, the Government announced a significant proposed change. From 1 July 2028 , trustees of discretionary trusts would generally be required to pay a minimum tax of 30% on the trust's taxable income . According to the Government, the proposal is intended to better align the tax paid on trust income with that paid by salary and wage earners, while reducing opportunities to split income between family members. However, the announcement has generated considerable debate. Professional bodies, business groups and tax advisers have expressed concerns that the changes could increase complexity and compliance costs for many genuine family businesses and investment structures. How the proposal is expected to work Under the proposal, the trustee would generally pay the minimum 30% tax on the trust's taxable income. Where trust income is distributed to individual beneficiaries or certain other non-corporate beneficiaries , those beneficiaries would generally receive a non-refundable tax offset recognising the tax already paid by the trustee. This is intended to reduce the risk of the same income being taxed twice, but while maintaining the impact of the 30% minimum tax rate. Importantly, the minimum tax would not apply to every trust . The Government has indicated that a number of trusts would be excluded, including fixed trusts, widely held trusts, complying superannuation funds, charitable trusts, deceased estates, special disability trusts and genuine testamentary trusts. Primary production income and certain income relating to vulnerable minors would also be excluded. The Government has also stated that more than 90% of small businesses are not expected to be affected. While that may be reassuring for some taxpayers, there are still some important issues that could affect family groups using discretionary trusts. What could this mean in practice? One area likely to receive close attention is the use of companies as beneficiaries of family trusts. Many family groups have historically distributed some trust income to a company. This can provide flexibility in managing cash flow, retaining profits within the business and funding future growth. Under the proposed rules, however, the corporate beneficiary would not receive a tax offset for the tax already paid by the trustee . In many cases this will mean that income distributed from a discretionary trust to a company would be subject to double taxation. Another practical impact of the proposed change is that some family groups may find it more difficult to fully utilise existing tax losses. While the impact will depend on each group's circumstances, the proposed minimum tax is likely to reduce some of the flexibility that currently exists when managing taxable income across a family structure within many groups. The Government has also proposed a temporary three-year rollover period, commencing from 1 July 2027, to help restructure into alternative business structures , such as companies or fixed trusts, without triggering immediate income tax or capital gains tax consequences. While this may assist some groups, restructuring is rarely straightforward. Depending on the circumstances, it might be necessary to consider things like stamp duty, loan approvals, financing arrangements, contract changes, licensing requirements and professional advice. Even relatively simple restructures can involve significant time and cost, so careful planning will be important. The rules are not yet final At this stage, the proposal remains subject to consultation . Treasury released a consultation paper in July 2026 seeking feedback on a range of design issues, including how the new rules would operate in different situations. Final legislation has not yet been introduced , meaning aspects of the proposal could still change before the rules become law. For this reason, most groups utilising discretionary trust structures should avoid making major structural decisions based solely on the announcement. Instead, it is sensible to monitor developments while considering whether existing structures are likely to remain appropriate if the proposal proceeds. What should you do now? For many families, discretionary trusts are about much more than tax. They can continue to provide valuable asset protection, succession planning and business flexibility. The proposed changes do not remove those benefits, nor do they prevent discretionary trusts from continuing to be used. However, the proposal does have the potential to change the tax outcomes for some family groups, particularly those with more complex structures or those that regularly distribute income to companies. With the proposed start date still some time away, there is an opportunity to pause and carefully understand how the changes may affect your circumstances and consider whether any planning or restructuring might be appropriate. As the legislation develops, we can help you assess the impact on your business or investment structure and determine whether any action is warranted.
August 4, 2026
Government to permanently extend $20,000 instant asset write-off The Government has recently introduced legislation that would make the $20,000 instant asset write-off permanent for small businesses (as announced in the 2026 Federal Budget). If enacted, the changes would: permanently set the instant asset write-off threshold at $20,000 (instead of $1,000) for eligible depreciating assets first used, or installed ready for use, for a taxable purpose from 1 July 2026; and permanently set the general small business pool threshold at $20,000 from 1 July 2026. The changes would also further suspend the 'lock-out rule' until 30 June 2027. This rule otherwise prevents a business that has chosen not to use the simplified depreciation rules from re-entering the regime for five years.
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