May 2026 - Update 2026 - 27 Federal Budget

Author na1616mewedewd

50% CGT Discount is replaced with Indexation

 
From 1 July 2027, the 50% CGT discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30% minimum tax on net capital gains.
 
These changes will apply to all assets, including pre-CGT (1985) assets, held by individuals, trusts and partnerships. The changes will only apply to gains accruing on or after 1 July 2027.
 
The 50% CGT discount will continue to apply to gains that accrued before 1 July 2027 and capital gains on pre-CGT assets that accrued before 1 July 2027 will remain exempt from CGT.
 
Investors in new residential properties will still be able to choose between the 50% discount; or the indexation method and the 30% minimum tax.
 
Income support payment recipients will be exempt from the minimum 30% tax and assets that are sold prior to 1 July 2027 will continue to receive th 50% discount.
 

Reforms to Negative Gearing

 
From 1 July 2027, rental losses from established residential properties will only be deductible against rental income or the capital gains from residential properties. Excess losses will be carried forward and are able to be offset against residential property income in future years.
 
These changes will apply to established residential properties acquired from 7:30 PM (AEST) on 12 May 2026. Properties acquired prior to this time will be exempt from the changes.
 
Exemptions apply to eligible new builds, properties in superannuation funds and widely held trusts. Targeted exemptions apply to build-to-rent developments and private investors supporting government housing programs.
 

Reforms to taxation of discretionary trusts

 
From 1 July 2028, discretionary trusts will be charged a minimum 30% tax on taxable income.

Beneficiaries, excluding corporate beneficiaries, will receive non-refundable credits for the tax paid by the trust. Corporate beneficiaries will not be entitled to a credit for the tax paid by the trustee causing a punitive tax burden for corporate beneficiaries.

The minimum tax will not apply to other types of trusts such as fixed trusts, fixed testamentary trusts, complying superannuation funds, special disability trusts and deceased estates.
 
Some types of income such as primary production income, certain income relating to vulnerable minors, amounts to which non-resident withholding tax applies, and income from assets of discretionary testamentary trusts existing at announcement will also be excluded.
 
Expanded rollover relief will be available for three years from 1 July 2027 for small businesses and others that wish to restructure out of discretionary trusts into another type of entity, such as a company or fixed trust.
 

Measures for Individuals

  • $ 250 tax offset will be available for working Australians such as employees and soletraders from 1 July 2027.
     
  • A standard deduction of $ 1,000 will be available for work-related expenses from 2027 financial year. Individuals who incur work-related expenses greater than the $1,000 maximum standard deduction can continue to claim their deduction in the usual way.
     
  • The current 16% tax rate for taxable income upto $ 45,000, will be reduced to 15% effective 1 July 2026 and to 14% effective 1 July 2027.
     
  • From 1 July 2025, the current Medicare levy threshold is increased from $ 27,222 to $ 28,011 for individuals and $ 45,907 to $ 47,238 for families.For each dependent child the threshold is increased from $ 4,216 to $ 4,338. Single Seniors and Pensioner threshold will increase from $ 43,020 to $ 44,268 and Senior and Pensioner families threshold will increase from $ 59,886 to $ 61,623.
     
  • The age based private health insurance rebate will be removed effceteive 1 April 2027.

 

Measures for Businesses

  • The $ 20,000 instant asset write-off for small businesses with a turnover below $ 10 million will continue.
     
  • Tax loss carry back rules are reintroduced effective 1 July 2026. Tax losses can be carried back for two years for companies with an annual global turnover below $ 1 billion.
     
  • Startup companies with a an annual aggregate turnover below $ 10 million that generate tax losses in their first two years will receive a refundable tax offset. Offset will be limited to the FBT and PAYG withholding tax paid.

 

Reducing the Electric Car Discounts

 
From 1 April 2029, FBT discount will drop to 25% for all electric cars valued up to and including the fuel-efficient luxury car tax threshold, implemented through a 15% rate in the statutory formula.
 
Transitional arrangements:
 
• All eligible electric cars will retain the FBT discount rate that was in place when the arrangement commenced.

• All electric cars valued up to and including $75,000 that are provided before 1 April 2029 will continue to be eligible for a 100% discount on FBT

• Electric cars valued above $75,000 and up to and including the fuel-efficient luxury car tax threshold that are provided between 1 April 2027 and 1 April 2029 will be eligible for a 25% discount on FBT.
 

Research and Development Incentive

 
From 1 July 2028, the Government will:

• Increase the offset for core R&D expenditure by around 25% to 50%, through a 4.5 percentage point increase in core R&D offset rates.

• Reduce the intensity threshold from 2% to 1.5%.

• Remove eligibility of supporting R&D expenditure for the R&D tax incentive.

• Increase the turnover threshold for the highest offset rate from $20 million to $50 million.
 
• Entities below the $50 million turnover threshold, maintain previous eligibility for the higher offset rate while limiting refundability to entities under 10 years of age.
 
• Lift the maximum R&D tax incentive expenditure threshold from $150 million to $200 million.
 
• Lift the minimum expenditure threshold from $20,000 to $50,000, with research activities valued below this amount required to be undertaken with a registered Research Service Provider or Cooperative Research Centre.

ATO’s response to High Fuel Costs

The ATO will provide targeted support to eligible businesses that are unable to meet their payment obligations for three months, from 1 April 2026 to 30 June 2026.
In particular:

  • the ATO will provide streamlined access to more flexible payment plan arrangements, including longer payment terms, no upfront payment, and access to GIC remission where payment and lodgment conditions are met
     
  • high fuel costs will be a relevant factor in consideration of additional requests for remission of GIC and other penalties
     
  • the ATO will provide support to vary PAYG instalments where there has been a reduction in taxable income.

 

ATO launches new app feature to stop scam calls

 
Taxpayers can now instantly confirm whether a call claiming to be from the ATO is genuine, with the launch of a new in-app security feature designed to shut down scammers.

The new verify call feature allows users to confirm, in real time, that they are speaking with the real ATO.

Taxpayers are encouraged to download the ATO app and register their device. Then, when they receive a call from someone claiming to be from the ATO, they can simply open the ATO app, login and select the verify call option. 

Within 30 seconds, a notification should confirm it is an ATO call. If it does not appear, users should treat it as a scam call and hang up.

Tribunal decision regarding home office and car expenses overturned
 

The Federal Court recently allowed the ATO's appeal against an Administrative Review Tribunal decision that a taxpayer was entitled to claim deductions for home office and car expenses.

The taxpayer worked full-time for as a sports presenter. During the 2021, because of COVID-19 pandemic restrictions, the taxpayer undertook one of his work roles from a second bedroom in his home apartment which he was renting with his wife. He undertook most of another work role from the employer’s studio.

The Tribunal had allowed the taxpayer's deductions for occupation expenses being a proportion of the rent for his apartment and for car expenses incurred in driving between his home and the ABC studio to perform his two roles in full.

However, the Federal Court subsequently overturned this decision, noting in relation to the claim for the occupation expenses that the essential character of the rent paid was to secure domestic accommodation, and the prevailing conditions requiring the taxpayer to work from home did not alter this.

Also, in relation to the car expense claims, the Court considered the taxpayer's travel between his home and the ABC studio was to work rather than on work, and was therefore not deductible.

Tribunal rejects claims for self-education expenditure

 
The Administrative Review Tribunal recently rejected an employee's claims for self-education expenses, as they did not have a sufficient nexus with his current job and income-earning activities.

The taxpayer worked as an employee for a large company. He claimed that his role evolved to include marketing and sales responsibilities during the 2022 income year, and that he was required to take courses in sales and marketing to help him perform his role.

The taxpayer sought to amend his tax return for the 2022 income year by claiming additional deductions for expenditure on online educational and training courses, related computer software and hardware, and membership fees.

The ATO disallowed these deductions, and the Tribunal affirmed the ATO's decision. The Tribunal noted that there was nothing in writing from the taxpayer's employer requiring him to undertake sales and marketing activities, let alone take self-education courses in those areas.

The expenditure incurred by the taxpayer related to online content creation, affiliate marketing, and entrepreneurship, whereas the taxpayer’s work related to providing technical IT and computer services. Therefore, the expenditure did not bear a sufficient nexus with the taxpayer's income-earning activities for it to be deductible.

The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.


Crawford News

November 2026 - Update

November 4, 2026
ATO will accept credit cards until 30 June 2027 Despite Reserve Banks credit card surcharge terms, ATO will continue to accept credit card payments for tax obligations until 30 June 2027. After 30 June 2027, taxpayers who wish to use credit cards to pay ATO will have to use third-party payment providers. Early Release of Super Schemes The ATO is concerned that some health practitioners and third-party facilitators are using predatory practices to get individuals to inappropriately access their super. Red flags include practitioners or third parties advertising early access to super for cosmetic or dental procedures on social media, or asking for myGov sign-in details so they can apply for you. Other common red flags include: practitioners conducting telehealth appointments, rather than in-person examinations for ‘compassionate release of super’; recommending more expensive treatments when cheaper options may be available; encouraging the use of super to pay for treatment, rather than other payment options, such as a payment plan; requiring the use of a specific provider to prepare the second ‘compassionate release of super’ medical report, or a specific third party to submit the application; requiring upfront payment for treatments and withholding information about the ongoing costs of the treatment; and charging fees to assist with preparing or submitting a ‘compassionate release of super’ application without being a tax agent. Work cars: Are employers overlooking private use? The ATO is calling on employers to check how their employees use work cars, as FBT may apply where a car is used or made available for private use by an employee or their family members or associates. Private use can include: school pick-ups or drop-offs personal trip garaging the car at or near the employee's home taking the car on weekend recreational trips. 2026 Budget Announcements Common rental property deduction errors The ATO has recently published the three most common rental property deduction errors it sees. Not apportioning interest expenses correctly Broadly, rental property owners can only claim deductions for interest they pay on a loan used to: buy the rental property; buy a depreciating asset for the property pay for deductible expenses that arise from renting out the property finance renovations and extensions to the rental property Interest on any part of the loan used for private purposes is not deductible. Where the loan is refinanced or redrawn to pay private expenses, such as school fees or a holiday, a deduction cannot be claimed for the interest on that portion. Incorrect claims of repairs vs capital works The ATO continues to see errors in claims for repairs, maintenance and capital works expenses. Generally speaking: repairs, such as fixing wear and tear, or damage to a property that occurred while renting it out, can be claimed as a deduction in the year they occur; improvements, such as renovating or replacing an entire structure, are capital expenses which can be claimed over time (generally 40 years); and adding or replacing something that’s not part of the structure is a depreciating asset and the cost is generally claimed over the asset's effective life. Separating private use of a property The ATO is also seeing rental expenses not being apportioned for any private use. Generally speaking, if a rental property owner: only uses part of the property to earn rent, they must apportion the expenses based on the area of the property rented; rents out the entire property, but for only part of the year, they must apportion the expenses based on the number of days it was rented or held to produce rental income; or charges below market rates of rent, and the expenses incurred are more than the amount of rent received, the ATO expects them to apportion the expenses by limiting them to the amount of rent derived from the property. Where the rental property owner uses the property as a holiday home, they cannot claim ownership and use expenses, such as interest, rates and repairs, unless they 'used or held it for use mainly for producing rental income'. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.

October 2026 - Update

October 5, 2026
ATO focus on PAYG instalments variations The ATO is writing to taxpayers who have varied their PAYG instalments to nil over multiple years, reminding them that the general interest charge may apply where their instalments have been significantly understated. Where varied instalments are less than 85% of the total tax payable, the ATO may impose GIC on the difference and, depending on the circumstances, penalties may also be applied. Taxpayers are advised to maintain appropriate records to support their variation decisions, and review variations where circumstances change. FBT changes for salary sacrificed work-related benefits From 1 April 2027, employers will no longer be able to use the ‘otherwise deductible rule’ to reduce the taxable value of an expense payment fringe benefit provided to an employee where the expense is: work-related; covered by the new $1,000 standard deduction; and provided under a salary sacrifice arrangement. This includes where an employer pays for, or reimburses, work-related expenses, such as home office expenses, home phone or internet expenses, or self-education expenses. However, the otherwise deductible rule can continue to apply where the expense is: not covered by the standard deduction; or covered by the standard deduction but the benefit is not provided under a salary sacrifice arrangement. Further, from 1 April 2027, certain work-related items will no longer qualify for the FBT exemption where they are provided under a salary sacrifice arrangement. These include: portable electronic devices; computer software; protective clothing; and briefcases and tools of trade. Eligible work-related items may still qualify for the exemption where they are not provided under a salary sacrifice arrangement. Further, under the changes, employers may be able to provide an employee with more than one eligible work-related item in an FBT year, even where the items have the same or substantially identical function, and continue to receive the exemption where the items: are mainly used for work purposes; and are not provided under a salary sacrifice arrangement. This repeals the general 'one-item' restriction applying to this work-related item exemption from 1 April 2027. Cents per kilometre method Motor Vehicle claims There are several misconceptions that commonly lead to incorrect claims under the cents per kilometre method for claiming deductions for car expenses. Common errors include: Claiming travel between home and work, which is generally private and non-deductible; Automatically claiming 5,000 kilometres without the appropriate records (for example, being unable to show how the business kilometres were worked out); Claiming car expenses for a vehicle provided under a novated lease through a salary sacrifice arrangement; Separately claiming the decline in value of a car and other expenses when using the cents per kilometre method; and Using both the cents per kilometre and logbook methods for different periods during the same year. Loss carry back rules have returned The re-introduced loss carry back measure has also now become law, applying to income years starting on or after 1 July 2026. Where eligible, companies will broadly be able to carry back a tax loss (revenue in nature) and apply it against tax paid in either, or both, of the previous two income years, basically giving rise to a tax refund for the loss year. ATO extends data-matching programs The ATO is continuing its visa data-matching program, acquiring data from the Department of Home Affairs from the 2027 to the 2029 income years. Under this program, the data collected may include: address and contact history for visa applicants, sponsors and migration agents; histories of visas granted, including visa subclasses; an individual’s visa status at a point in time; details of migration agents, sponsors and education providers; and international travel movements undertaken by visa holders (arrivals and departures). The ATO is also continuing its passenger movements data-matching program for the same period. Under this program, the data collected by the ATO may include names, dates of birth, arrival and departure dates, passport information and status types (including visa status, residency and citizenship status). The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.

September 2026 - Update

September 9, 2026
Payday Super and contractors Businesses generally need to pay super where they engage an independent contractor mainly for their labour, personal effort, skills or time. This can apply even if the contractor: has an ABN; invoices the business for their work; or is described as a contractor in a written agreement. It is not mandatory to report payments made to independent contractors through Single Touch Payroll. However, if a business reports them voluntarily, it must meet the STP reporting requirements, including reporting qualifying earnings and super liability information. Where an independent contractor is entitled to super, the contribution must be paid for each payday and reach their super fund within seven business days after payday. Payday Super timeframe Under Payday Super, contributions must be received by an employee’s super fund within seven business days after payday. To keep on track, the ATO recommends that employers: use the new member verification request to verify that an employee’s super fund details are valid and that the fund can accept a contribution before it is made; check with the relevant payroll provider or clearing house that the fund is responding to MVRs; monitor payments, as funds have three business days to allocate or reject a payment; and if a payment is rejected or returned, act quickly to correct any errors and resubmit to the correct fund. For new employees, or where an employee changes their fund, employers generally have 20 business days to make the initial contribution. $21 billion in lost super The ATO is urging individuals to check whether they have lost or unclaimed super, with more than $21 billion waiting to be reunited with its owners. Super can become lost when an account is inactive and the fund cannot contact the member, often following a change of job, address or phone number. In some cases, the balance may be transferred to the ATO to hold until it can be reunited with the individual. The ATO reports that last year, more than $1.1 billion was returned through consolidations and direct payments to eligible individuals. ATO motor vehicle registries data-matching program The ATO acquires motor vehicle registries data from state and territory authorities from the 2026 to the 2030 income years. The information will be matched against ATO records to identify taxpayers who are not meeting their registration, lodgment, reporting, or payment obligations. The data will also be used to support ATO compliance activities through modelling, risk profiling and case selection. The data collected may include identification details for purchasers, sellers and other relevant parties, together with transaction dates and types, sale prices, market values, vehicle garage addresses, intended use, vehicle specifications and registration details. $1,000 deduction for work expenses From 1 July 2026, employees may choose either the standard deduction for work-related expenses of up to $1,000, or a deduction for the actual work-related expenses they incur. You should continue keeping records for deductible work expenses incurred from 1 July 2026. If, at the end of the 2027 income year, you choose to claim actual expenses, you must have the required written evidence for those expenses. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.

August 2026 - Update

August 4, 2026
Government extends the $20,000 instant asset write-off The Government has recently introduced legislation to extend the $20,000 instant asset write-off for small businesses. If enacted, the changes would set the instant asset write-off threshold at $20,000 for eligible depreciating assets first used, or installed ready for use, for a taxable purposes from 1 July 2026. The changes would also further suspend the 'lock-out rule' until 30 June 2027. Loss carry back rules to be reintroduced The Government has introduced legislation to re-introduce the loss carry back measure for companies from 1 July 2026. If enacted, this will allow most companies to carry back a tax loss and apply it against tax paid in either, or both, of the previous two income years, basically giving rise to a tax refund for the loss year. New restrictions on LRBAs New legislation imposes restrictions on the use of limited recourse borrowing arrangements by SMSFs. LRBAs entered into on or after 10 August 2026 to purchase real property can now only be used to acquire business real property. These changes do not apply if an SMSF: has already entered into an LRBA to finance a real property acquisition before 10 August 2026; or maintains or refinances that LRBA on or after 10 August 2026. 'Business real property' generally means land and buildings used wholly and exclusively in one or more businesses. Division 7A benchmark interest rate The ATO has published a Division 7A benchmark interest rate of 8.77% for the income year ending 30 June 2027, up from 8.37% for the previous income year. The benchmark interest rate is applied when calculating minimum yearly repayments for complying Division 7A loans. ATO scam warning The ATO has received reports of a new email impersonation scam claiming to be from the ATO. The email states that a phone appointment with the ATO has been scheduled and includes appointment details such as the date and time. The email claims that recipients must open an attachment included in the email to securely access relevant services or reschedule the appointment. The attachment contains a link to a legitimate looking myGov sign-in page designed to steal usernames, passwords and other personal information. The ATO has advised recipients not to respond to the email or interact with it in any way. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.

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