A new financial year is here, bringing with it the usual fresh start, new goals, new plans and, of course, a few tax changes to get across.
Since the Federal Budget was handed down in May, there has been plenty of discussion about what the announcements could mean for individuals and businesses. But a Budget announcement is not necessarily the final word. Some measures have now become law, while others are still working their way through Parliament or are not due to commence for another year or two.
So, where have things landed, and which changes do you actually need to know about? We have broken down the key updates, what has been confirmed and what is still on the horizon.
Businesses
Payday Super Is Here
Probably the biggest operational change for businesses is the introduction of Payday Super. We’ve talked about the potential of its introduction before, but now it’s actually here.
Previously, you had 28 days after the end of each quarter to pay employee superannuation. From 1 July 2026, that changes dramatically. Now, Super contributions must be received by an employee’s super fund within seven business days of each payday. Practically, this means you should be paying employee superannuation at the same time as you pay their wages.
This aligns with the Government’s objective to get retirement savings into employee accounts sooner. So, you need to make sure your payroll systems, cash flow, and internal processes are set up to handle this significant change.
While the ATO will adopt a practical approach to businesses that are genuinely trying to comply with the new rules, there could still be penalties if you don’t make your Super contributions on time.
Personal Services Income On Watch
While no new legislation has been introduced in this area, the ATO has made it very clear there will be greater scrutiny for Personal Services Income arrangements.
The vast majority of professionals operate legitimately via companies or trusts. Some companies have arrangements that divert the income earned to family members or associates. While most of these arrangements are legitimate, some are in place solely to reduce the amount of tax to be paid. The increased focus is the ATO’s way of ensuring that the individuals earning the income are receiving both the benefits of that income and the tax obligations.
If you aren’t sure whether your current business structure meets the requirements, you can check by considering these three questions:
- Are your retained profits remaining in your business for genuine commercial reasons?
- Are you, your family members, or any associates being paid appropriately for the actual work performed?
- Would your structure pass an ATO review?
If you answered no to any of those questions, it is time to review your arrangements. The ATO has provided a transition period until 30 June 2027 for taxpayers to review and, where necessary, restructure arrangements covered by its updated compliance guidance. This should not be treated as a general amnesty, and arrangements that do not comply with the existing PSI rules remain at risk.
More ATO Activity
The Tax Ombudsman has reported a sharp increase in complaints concerning the ATO this last tax year. Many of the complaints have been linked to debt collection, penalties, or interest charges.
The ATO is continuing its increased focus on debt recovery and compliance, so you can’t bury your head in the sand if you have cash flow challenges or an outstanding tax obligation. Interest charges, payment arrangements, and penalty notices are becoming increasingly common as the ATO works to reduce outstanding tax debts.
If you fear you won’t be able to meet your current tax obligations, the best thing to do is seek advice early and put a plan in place before the ATO is forced to contact you. Your accountant can help with advice in this area.
Individuals
Making Tax Easier
The 2026/27 Budget has brought some good news for everyday Australians. You may have already noticed a small change in your take-home pay since 1 July.
Here are some of the key changes that have been introduced:
- Income Tax Cuts: The tax rate on income between $18,201 and $45,000 will be reduced from 16% to 15%. That could put up to $268 more in your pocket this year!
- Medicare Levy Surcharge Threshold: The Medicare Levy Surcharge threshold has increased to $105,000 for individuals and $210,000 for families.
- Work-Related Costs: Claiming work expenses just became simpler with the introduction of a $1,000 instant deduction. If you incur work-related expenses of $1,000 or less, you can simply claim the standard deduction without having to keep receipts. Of course, those with deductible costs over $1,000 can still choose to claim their actual costs under the existing rules.
- Minimum Wage Increase: Minimum wage is set to increase by 4.75% to $26.44 per hour, or $1,005 per week. The increase will apply from the first full pay period on or after 1 July 2026.
- Paid Parental Leave Extended: The government’s paid parental leave scheme has increased from 24 weeks to 26 weeks for children born or adopted after 1 July 2026.
Superannuation
There have also been some Super changes that are worth noting:
- Contribution Caps Increase: The amount you can contribute to your Super has increased. The concessional cap has increased to $32,500, and the non-concessional cap has increased to $130,000.
- Transfer Balance Cap Increase: The amount you can transfer into a tax-free retirement income stream has increased from $2 million to $2.1 million.
- Division 296: If your total Super balance is above $3 million for the year, you may attract an additional 15% tax on fund earnings known as Division 296. For balances above $10 million, an additional 10% tax will also apply to relevant earnings, making the tax rate effectively 40%. If the tax applies to you, it will be calculated by the ATO, and they will issue you a payment notice. This can either be paid personally or via your fund.
The Bigger Tax Changes Are Still Ahead
While the personal tax cuts may be the first changes people notice, some of the most significant Budget measures relate to property investment, capital gains, trusts and self-managed super funds.
Most of these changes do not take effect immediately, but they could influence decisions being made now.
Negative Gearing Restricted for Residential Property
From 1 July 2027, negative gearing for residential property will be limited to newly built properties (with limited exceptions).
Residential properties held before 7:30pm on 12 May 2026 will be grandfathered and continue to operate under the existing rules. New builds will also remain eligible for negative gearing.
However, investors who acquired an established residential property after Budget night will no longer be able to offset rental losses against unrelated income, such as salary or business income, from 1 July 2027. Losses may instead be offset against other residential property income or carried forward for use in a later year.
On Thursday 25 June, the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 officially passed both houses of Parliament.
This measure is now officially law and will come into effect 1 July 2027.
Major Changes to the CGT Discount
In addition to the Negative gearing changes, the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 also legislated changes to the Capital Gains discount regime.
The existing 50% capital gains tax discount for individuals, trusts and partnerships will be replaced from 1 July 2027.
Under the new system, the cost base of an asset will be adjusted for inflation and a minimum tax rate of 30% will apply to the resulting real capital gain.
Importantly, the new rules only apply to the portion of a capital gain that accrues from 1 July 2027. Gains that accrued before that date will continue to be dealt with under the existing rules.
These changes have also passed Parliament and are now law. Anyone considering selling a significant asset over the next few years should obtain advice before deciding on the timing of the sale.
Minimum Tax on Discretionary Trusts
The Government has announced that a minimum tax rate of 30% will apply to certain discretionary trusts from 1 July 2028.
Unlike the negative gearing and CGT changes, this measure has not yet been legislated. Treasury released a consultation paper in July 2026 seeking feedback on how the new rules should operate, with draft legislation still to follow.
The proposal is that trustees would pay tax at a minimum rate of 30% on relevant trust income.
The Government has indicated that fixed trusts, complying superannuation funds, testamentary trusts, deceased estates, special disability trusts and charitable trusts will be exempt. Certain income, including primary production income, is also expected to be excluded.
Expanded rollover relief is proposed to be available for three years from 1 July 2027 for eligible businesses and families that choose to restructure before the new rules commence.
For now, it is a case of watching this space as the Government works through the consultation process and develops the final rules.
SMSF Borrowing for Residential Property to End
The rules allowing an SMSF to borrow under a limited recourse borrowing arrangement have also been abolished for residential property from 10 August 2026.
From 10 August 2026, an SMSF will no longer be able to enter into a new borrowing arrangement to acquire an ordinary residential investment property. New property borrowing will be limited to property that satisfies the definition of “business real property”, such as qualifying commercial premises used wholly and exclusively in a business.
Existing arrangements entered into before the commencement date are protected, and specific rules also apply to refinancing existing loans.
This change has passed Parliament and is now law. Although the formal commencement date is 10 August 2026, anyone currently considering purchasing residential property through an SMSF should act quickly. Lenders may impose their own earlier cut-off dates for new applications or approvals, so it is important to confirm both the legal position and the bank’s requirements before entering into a contract or borrowing arrangement. If this is something you are considering, contact us now.
Other Changes Worth Watching
A few other Budget measures may also affect small businesses and employers:
Permanent $20,000 instant asset write-off: The Government proposes to make the $20,000 threshold permanent for small businesses with turnover below $10 million. The measure is intended to apply from 1 July 2026 but is not yet law.
Company loss carry-back: Eligible companies may be able to carry losses back against taxable profits from the previous two years and receive a refund of tax previously paid. This measure is before Parliament.
Electric vehicle FBT changes: The Government has proposed reducing the current full FBT exemption for some electric vehicles from 1 April 2027, with broader changes from 1 April 2029. Legislation has not yet been introduced.
What Does It All Mean?
Regardless of whether you are an employee, an employer, or something in between, 1 July 2026 introduces changes that you need to be aware of.
While not every change will affect every taxpayer, almost everyone will be impacted in some way. The best way to stay ahead is to understand which changes apply to your circumstances and seek advice before small issues become costly problems.
Also, although several Budget measures have begun, there is the potential for more reform to come. So, now is a good time to understand how the current changes and the proposed ones may impact you or your business.
At Cadenze, we are already helping clients navigate these new rules and identify the opportunities that come with them. If you’d like to discuss how the 1 July 2026 changes affect you, your family, or your business, we’d love to help.