Practice Update – July 2026

Lowe Lippmann Chartered Accountants

Government's tax reform package


The Government has recently legislated several of the tax reform measures announced in the 2026 Federal Budget (and in later media releases). These include, among other things: 


  • Replacing the CGT discount with cost base indexation and a 30% minimum tax on gains accruing from 1 July 2027 (including gains on pre-CGT assets);
  • Increasing the small business turnover threshold for the 50% active asset reduction from $2 million to $10 million;
  • Limiting negative gearing for residential property to new residential dwellings from 1 July 2027 (subject to transitional rules); and
  • Introducing the Working Australians Tax Offset from 1 July 2027, and the $1,000 instant tax deduction for work-related expenses from 1 July 2026.


After a round of consultation, the Government has also announced further proposed measures, broadly including (among others):


  • A new targeted CGT discount for investors in innovative start-ups;
  • Barring SMSFs from utilising future limited recourse borrowing arrangements (LRBAs) to acquire residential property; and
  • Exempting income of discretionary testamentary trusts from the minimum tax proposed for trusts.


We recently released a Tax Alert considering the legislation restricting SMSFFs using residential property LRBAs – to read click here.


For full details of each of the 2026 Federal Budget announcements, please see our Federal Budget Tax Alert – to read click here.

Payday Super has arrived & what Employers need to know from 1 July 2026


One of the most significant changes to the Australian superannuation system in decades has now commenced.  From 1 July 2026, Payday Super requires employers to ensure super contributions reach employee super funds within seven business days of each payday.  For many businesses, this represents a major shift from a quarterly payment cycle to a more frequent, real-time obligation.


While the Government is aiming to get super into employee accounts faster and help close the national super gap, the new system introduces new compliance, cash flow and administrative considerations for employers.  Businesses that have prepared well should find the transition manageable, but those still relying on quarterly processes need to act quickly to avoid significant problems.


What exactly has changed?


Under the previous rules, employers generally had until 28 days after the end of each quarter to make super contributions. Under Payday Super, the clock now starts on each “Qualifying Earnings” (QE) day which is essentially your payday for salary, wages, commissions, bonuses and certain contractor payments.


What are the key requirements?


  • Contributions must be received and allocated to the employee’s fund within 7 business days of payday (there are limited exceptions to this).
  • Shortfalls are now calculated per QE day rather than quarterly.
  • The ATO’s Small Business Superannuation Clearing House has closed, meaning businesses previously using the service must now use a SuperStream-compliant alternative.


Penalties are also tougher.  The administrative uplift can reach 60% of the shortfall (with reductions available for early voluntary disclosure), although the Superannuation Guarantee Charge itself is deductible in more circumstances.


The ATO’s first-year compliance approach (PCG 2026/1) adopts a risk-based view, with businesses that make genuine efforts to comply and promptly rectify mistakes generally treated as lower risk. However, if an employee reports a problem to the ATO then don’t expect the ATO to ignore this.


How to best manage the June / July changeover


There is a technical quirk in the rules which could catch out unsuspecting employers, especially when it comes to SG contributions made across the month of July 2026.


If a business has paid employees during the June 2026 quarter then the SG deadline for this quarter would normally be 28 July 2026. However, many employers have decided to pay the SG amount for the June quarter before this deadline to reduce the risk of accidentally triggering a SGC problem.


This is because any SG contributions made from 1 July 2026 will reduce the super owing for the June quarter first, before any remaining amount is used to meet Payday Super obligations relating to pay runs that occur in July.


The best way to manage this situation to avoid SGC liabilities really depends on the dates of any July pay runs. Please contact us if you need help identifying any potential problems or to help come up with a practical solution.


Three practical steps to take now


  1. Review Your Systems:  Confirm that your payroll software, clearing house and internal processes are operating correctly under the new rules.  If you have not already done so, review pay codes and contribution workflows to ensure QEs are correctly identified.
  2. Monitor Cash Flow and Processes:  Assess the impact of more frequent super payments on cash flow.  Review approval processes, onboarding procedures and the handling of bonuses or out-of-cycle payments.
  3. Strengthen Controls and Communication:  Ensure payroll and finance teams understand the new requirements and have appropriate controls in place.  Ongoing monitoring and periodic reviews will help identify issues before they become compliance problems.


The interdependencies between payroll systems, clearing houses and super funds mean small oversights can quickly create larger compliance issues.  Businesses that continue to monitor and refine their processes will be best placed to meet their obligations.

Changes to car thresholds from 1 July 2026


The car limit for the 2027 income year is $69,883.


This is the highest value that a taxpayer can use to calculate depreciation on a car where they use the car for work or business purposes (and they first use or lease the car in the 2027 income year).


The maximum GST credit that can generally be claimed for the creditable acquisition of a car above the limit is $6,353 (i.e., one-eleventh of $69,883).


The luxury car tax (LCT) threshold for the 2027 income year is $91,661 for fuel-efficient vehicles, and $80,809 for all other luxury vehicles.

What's new for Small Business?


The ATO is reminding business taxpayers of recent changes they should keep in mind this Tax Time, including the following:


  • From 1 July 2026, Payday Super applies. Employers will need to pay super to an employee's nominated super fund each payday, and it must reach the fund within 7 business days after payday (unless a longer timeframe applies, such as for new employees).

         Employers must also report both qualifying earnings and super liability through Single Touch Payroll (STP) reporting.

         If super is not received by the fund, in full and on time, the super guarantee charge applies. 

  • Businesses with an aggregated turnover of less than $10 million may be able to immediately deduct the business portion of eligible assets costing less than $20,000, where the asset was first used or installed ready for use between 1 July 2025 and 30 June 2026.
  • Businesses cannot claim a deduction for general interest charge (GIC) or shortfall interest charge (SIC) incurred from the 2025/26 income year.
  • From 1 April 2025 (i.e., from the 2026 FBT year), plug-in hybrid electric vehicles are no longer treated as zero or low emissions vehicles for the purposes of the FBT exemption.

Fuel excise relief extended for July


The Government has announced a further temporary extension of fuel excise relief for July, together with a reduction in the Heavy Vehicle Road User Charge.


The Government says these measures will make petrol and diesel 16 cents per litre cheaper than they otherwise would have been during July.

Check for ATO-held super


The ATO is reminding taxpayers that they may have superannuation money held by the ATO. This can include:


  • unclaimed super money received from super funds (for example, inactive low-balance accounts);
  • employer super guarantee amounts that could not be paid to a fund; and
  • certain government super contributions.


Taxpayers can check for ATO-held super through myGov, ATO online services or the ATO app.

ATO app alerts and super verification


The ATO has added an extra verification step for super transfer and consolidation requests made through the ATO's online services.


This step is the latest ATO app security feature that helps protect against fraudulent activity.


If a taxpayer has registered their device using the ATO app, they will need to verify requests to transfer or consolidate super before the request is submitted (from May 2026).



The ATO has also advised that, on 5 June 2026, a large number of ATO messages were sent about changes to bank account details. The ATO notes that these messages were caused by a planned internal system update, and no action is required because of that message alone.


The ATO nonetheless recommends that taxpayers review any real-time ATO app alerts, check their details, and act quickly if something looks wrong.

Dental clinic liable for super guarantee charge


The Administrative Review Tribunal (ART) recently considered whether an oral health therapist engaged by a dental clinic was an 'employee' for super guarantee purposes.


The clinic argued that the therapist was not an employee but was instead an independent contractor and, as such, the clinic was not liable for the super guarantee charge. 


The ART disagreed, and held that the therapist was an employee under the extended definition.


The extended definition of 'employee' for these purposes includes a person who works under a contract that is wholly or principally for the labour of the person.


In particular, the ART found that:


  • the contract contained features consistent with an 'employment' arrangement;
  • the therapist was part of a regulated profession and could not practise independently;
  • the purpose of the contract was to engage the therapist personally to work as a member of an integrated team (rather than to provide her with the use of the clinic and its facilities for a fee);
  • the clinic did not establish that she had a genuine right to delegate/subcontract her work; and
  • the therapist was not directly rewarded for her services, as her remuneration was subject to adjustments applied by the clinic on patient invoices.

Ending card surcharges & what your business needs to know before 1 October 2026


The Reserve Bank of Australia (RBA) has confirmed that all surcharges on credit and debit card payments — across eftpos, Mastercard and Visa — will be banned from 1 October 2026.


This represents one of the most significant updates to Australia’s payments landscape in years and will have a direct impact on businesses and consumers.

 

Why does this matter?


For many businesses this will mean simpler pricing, fewer compliance headaches and potentially better margins, but it also means some preparation is needed.


What is changing?


The RBA’s reform package has three key components:


1. Surcharges banned

From 1 October 2026, businesses cannot add any surcharge — percentage or flat fee — for payments made using eftpos, Mastercard, Visa or related networks. Customers must see and pay one final price, whether they purchase online, at the counter, or via mobile payment.


2. Lower interchange fees

Interchange fees (the wholesale fees charged between banks when a customer pays by card) will be reduced, with new caps for foreign-issued cards. This should directly lower the cost that a business needs to pay to accept card payments.


3. Greater transparency

Banks, card schemes and payment providers must publish clearer information about fees and margins. They must also demonstrate how reductions in wholesale fees are being passed through to retailers. This gives businesses more power to compare providers and negotiate.


These changes are supported by oversight from the Australian Competition and Consumer Commission (ACCC) and guidance from the Australian Small Business and Family Enterprise Ombudsman.


What should your business do now?


1. Review your merchant fees

Look at your recent statements and determine:


  • How much you currently pay in card-acceptance fees; and
  • Whether you have been relying on surcharges to offset part of those costs.


If surcharges are part of your pricing strategy, you may need to adjust prices to maintain margins, where commercially appropriate.


2. Speak to your payment provider

With lower interchange fees coming and more transparency required, it’s a good time to negotiate:


  • Better merchant service fees
  • Updated pricing plans
  • POS or terminal upgrades


Small businesses often pay closer to the current fee caps, so they stand to gain the most.


3. Update your pricing and POS systems

You’ll need to remove:


  • Surcharge signage
  • Online checkout surcharges
  • Automatic percentage add-ons


All displayed prices must become all-inclusive.


4. Build changes into your cash flow

Lower merchant fees won’t appear immediately, but most businesses should see reduced costs flow through during the 2026–27 financial year. This is a good time to revisit budgets, especially for cafés, retailers, trades and service-based operators that have a high proportion of small card transactions.


5. Watch customer behaviour

Businesses might find that the removal of surcharges encourages more customers to pay by card. Higher card usage is often positive for convenience and transaction speed, but keep an eye on total acceptance costs as patterns shift.


Final thoughts


This is ultimately a practical reform: fewer add-ons at the checkout, simpler pricing for customers, and lower complexity for businesses. Some businesses will see this as an opportunity to improve margins, streamline processes and enhance the customer experience.


We recommend reviewing your payment arrangements in the coming months. Our team can help analyse your current merchant fees, model the likely impact of the changes, and support negotiations with providers.


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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Tax Alert - Draft legislation offers alternative to restructuring and avoid the 30% minimum trust tax

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.

Practice Update – September 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.

Practice Update – August 2026

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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