The new financial year brings with it more than the usual tax planning conversations. While some changes have already taken effect from 1 July 2026, others are scheduled for future years but may require consideration well before their commencement dates.
For business owners, investors, and family groups, the most important question is not just what has changed, but what action (if any) should be taken now. Some decisions made today could influence the tax outcomes, flexibility and planning opportunities available in the years ahead.
From Payday Super and the new $3 million super tax, to CGT and negative gearing changes landing in 2027, below we’ve summarised the key changes and what they may mean for you.
Payday Super starts from 1 July 2026
The Payday Super rules commenced on 1 July 2026. Employers now need to pay superannuation guarantee contributions at the same time they pay salary and wages, rather than managing super on a quarterly cycle. For most employers, this means super will need to be calculated and processed every pay run, with contributions reaching the employee’s super fund within the required timeframe.
This is a significant shift for payroll, cash flow, and compliance. If you employ staff, now is the time to check:
- whether your payroll software is ready
- whether your clearing house or payment process can meet the timing rules
- how the change may affect cashflow
- whether employee super fund details are complete and current
- whether your payroll team or bookkeeper understands the new process
The main message is simple: super is becoming a payday obligation, not a quarterly catch-up. Getting systems ready now will make the transition much smoother.
Division 296 tax: super balances over $3 million
The new Division 296 tax affects individuals with large total superannuation balances. In broad terms, the rules introduce additional tax on certain earnings attributable to super balances above the $3 million threshold. This will not affect most Australians, but it is highly relevant for individuals with large SMSFs, property or business assets held in super, multiple super interests, or balances approaching the threshold.
For those potentially affected, the key planning issues include:
- understanding your total super balance across all funds
- reviewing liquidity, particularly where an SMSF holds property or other illiquid assets
- considering whether your current investment structure remains appropriate
- allowing enough time to model the potential impact before making changes
This is not an area for rushed decisions. If your balance is close to or above $3 million, it is worth reviewing your position carefully.
Bendel case: UPEs and Division 7A
We have had a number of questions from clients about the Bendel case and what it means for unpaid present entitlements, commonly referred to as UPEs.
The High Court has confirmed that a UPE owing from a trust to a corporate beneficiary is not automatically treated as a loan for Division 7A purposes. This is an important decision, particularly for private groups that have historically managed UPEs under the ATO’s long-standing approach.
However, this does not mean all existing arrangements can simply be ignored or unwound. If past UPEs have already been converted into complying Division 7A loans, those loan agreements still need to be managed in accordance with their terms. Other tax provisions may also still be relevant, depending on the structure and the way funds have been used.
For clients with trusts and corporate beneficiaries, this is an area we will continue to monitor closely. The practical treatment may become clearer once the ATO provides further guidance or the Government responds.
CGT changes from 1 July 2027
From 1 July 2027, the 50% CGT discount will be replaced with cost-base indexation for individuals, trusts, and partnerships. Rather than halving a capital gain, the cost base will be adjusted for inflation, meaning tax applies only to the real gain above CPI. A minimum 30% tax rate will also apply to capital gains arising after that date.
The changes apply broadly to all CGT assets, but the most immediate impact for many clients will be on residential investment property. Gains built before 1 July 2027 can still access the existing 50% discount on that portion, which makes the value of your property at the transition date important. Newly constructed dwellings are treated more favourably, with investors able to choose between the old discount or the new indexation method at the time of sale. Superannuation funds, including SMSFs, are excluded from these changes entirely.
Planning tip
Consider obtaining valuations for significant CGT assets as at 30 June 2027. As gains will be split between the old and new rules based on the asset’s value at the transition date, a documented valuation at that time will be important evidence to support the calculation and protect your position if it’s ever reviewed.
Negative gearing changes from 1 July 2027
Alongside the CGT reforms, the Government is restricting negative gearing for established residential property. From 1 July 2027, net rental losses on an established residential property acquired after 7:30pm AEST on 12 May 2026 (Budget night) can only be deducted against rental income or capital gains from residential property, not against wages or other income. Any excess loss is carried forward and can be used against future rental income or gains, rather than being lost.
A few points worth noting for clients:
- Properties acquired before 12 May 2026 are unaffected and keep the current negative gearing rules for as long as they’re held.
- New builds are exempt from the restriction, so investors in new residential construction can continue to negatively gear in the normal way.
- Commercial property is not affected at all – the restriction applies to residential property only.
- Positive and neutral gearing arrangements are unaffected, since the change only limits losses where borrowing costs exceed rental income.
For clients considering an established residential property purchase, the acquisition date relative to 12 May 2026 (and whether the property qualifies as a new build) will materially affect how the investment is taxed going forward.
Holiday homes: ATO’s tighter stance
If you own a holiday home or a property let through a short-term platform, two separate issues are worth understanding – the Budget’s negative gearing changes above, and a more immediate ATO compliance issue that has its own deadline.
A holiday home that is genuinely rented out is treated the same as any other residential property under the negative gearing changes: grandfathered if held before 12 May 2026, subject to loss quarantining if acquired after that date (unless it’s a qualifying new build).
Separately, and more immediately, the ATO has finalised its guidance on when a holiday home is treated as a ‘leisure facility’ under section 26-50 of the tax law. Where a property is used, or held for use, for your (or your family and friends’) holidays or recreation, the ATO can deny most ownership and holding deductions – interest, rates, insurance and similar costs – almost entirely, unless the property is mainly used to produce rental income.
Whether a property escapes this treatment depends on factors such as:
- occupancy and genuine demand during peak periods
- whether the property is blocked out for personal use over school holidays, ski season or similar peak periods
- whether it’s consistently and genuinely advertised at market rates
- whether any personal use is incidental rather than the main purpose of holding the property
Even where a property is not classed as a leisure facility, expenses still need to be apportioned between private and rental use under the ATO’s approved methods (time-based, area-based, or a combination of the two).
The ATO allowed transitional relief for arrangements already in place before 12 November 2025, but that relief ended on 1 July 2026. If you own a holiday home or short-term rental, now is the time to review your occupancy patterns, advertising, and record-keeping to make sure your deductions are supportable.
Small business CGT concessions
Business owners can take some reassurance here. The four existing small business CGT concessions have been retained in full, and the turnover threshold for the 50% active asset reduction has been lifted from $2 million to $10 million from 1 July 2027. For most business owners selling an active business asset, the concessions should continue to provide meaningful protection.
Planning tip
Have your business valued at 30 June 2027 as well. Business assets and private company shares transition to the new CGT rules in the same way as other CGT assets, so a documented valuation at that date will help establish the split between the old and new rules and support your position down the track.
SMSF borrowing for residential property
As part of securing Senate passage of the legislation, the government agreed to ban SMSFs from entering new limited recourse borrowing arrangements to purchase residential property. This change is also now law, taking effect from 10 August 2026. Existing arrangements are fully grandfathered, and commercial property borrowing inside an SMSF is unaffected.
Proposed trust reforms from 1 July 2028
The Budget also included proposed reforms to discretionary trusts. From 1 July 2028, discretionary trust distributions are expected to face a minimum 30% tax rate, with some exceptions. This is intended to reduce the benefit of distributing income to beneficiaries on lower marginal tax rates. For many family groups, this could change the way trust distributions are planned.
Importantly for estate planning, the Government has confirmed that testamentary trusts established for genuine testamentary purposes will be exempt from the new minimum tax rate, in respect of income from assets of the deceased estate. This means testamentary trusts remain a sound estate planning tool and are not expected to be caught by this reform in the way discretionary trusts more broadly will be. One nuance to be aware of: for testamentary trusts established from 1 July 2028 onward, eligible beneficiaries are proposed to be restricted to individuals and tax-exempt entities, so this is worth factoring into any succession or estate planning being put in place now.
For clients with discretionary trusts, the next few years will be important for reviewing:
- whether the trust structure still supports your commercial and family objectives
- how distributions are currently being made
- whether corporate beneficiaries remain appropriate
- whether succession or estate planning arrangements need to be revisited
- whether restructuring should be considered before the proposed rules commence
Other changes that took effect on 1 July
A number of broader superannuation and tax changes also took effect on 1 July 2026. A summary of the ones most relevant to our clients:
Personal income tax cut
The tax rate on income between $18,201 and $45,000 has dropped from 16% to 15%. For someone earning $45,000 or more, this is worth $268 in tax this financial year, rising to $536 in 2027-28. A further cut to 14% is legislated for 1 July 2027.
Concessional and non-concessional super caps increase
The concessional (before-tax) contributions cap has risen from $30,000 to $32,500, and the non-concessional cap has increased from $120,000 to $130,000. The three-year bring-forward cap is now $390,000, up from $360,000. Remember that compulsory employer contributions count towards the concessional cap, which reduces the room available for salary sacrifice for higher-income earners.
$1,000 instant work-related expense deduction
From the 2026-27 income year (the return you’ll lodge in mid-2027), individuals can choose a standard $1,000 deduction for work-related expenses instead of substantiating actual costs. Anyone who typically claims more than $1,000 in deductions is better off continuing to keep records and claim actual expenses.
Paid parental leave extended
Government-funded paid parental leave has increased by 10 days, to a total of 26 weeks (130 days), for children born or adopted from 1 July 2026. The portion reserved for a partner to use has also increased, from 15 to 20 days.
Medicare levy surcharge thresholds increase
The income thresholds before the Medicare levy surcharge applies have increased. A single person can now earn up to $105,000 before facing the surcharge for not holding private hospital cover.
Super transfer balance cap rises
The general transfer balance cap – the amount that can be moved into a tax-free retirement phase pension – has increased from $2 million to $2.1 million. This higher cap only applies to individuals starting their first retirement-phase pension from 1 July 2026 onward; those who already have a pension in place retain their existing personal cap, which will sit somewhere between $1.6 million and $2 million depending on timing.
Instant asset write-off made permanent
The $20,000 instant asset write-off is now a permanent feature of the tax system rather than a year-by-year extension. Businesses with turnover under $10 million can immediately deduct the business-use portion of eligible new or second-hand assets costing under $20,000, provided the asset is first used or installed ready for use in the year the deduction is claimed.
Loss carry-back offset returns
The company loss carry-back offset is back. From 1 July 2026, companies with turnover under $1 billion can again offset a tax loss against tax paid in either of the two prior income years, rather than only being able to carry losses forward against future profits.
Looking ahead
While EOFY is always an important time to review the year that has passed, this year it is equally important to look ahead.
Several of the changes discussed above will not commence until future financial years, but the planning opportunities, and potential challenges, often arise well before the effective date. Taking the time to understand how these changes may interact with your personal circumstances, business structures, investments or family plans can help you make informed decisions when the time comes.
If you believe any of these changes may affect you, your family or your business, we encourage you to speak with the Fuse Wealth team before making any significant decisions. Early advice can provide greater flexibility and help ensure your strategy continues to align with your goals.
If you would like to discuss how these changes may apply to your circumstances, please get in touch with our team.
