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.