Top tips for tax time success

With the 2026–27 federal budget firmly within its sights, the Australian government has flagged several significant tax shifts focused on cost-of-living relief and planned changes to superannuation. Other changes are being speculated, including controversial potential changes to capital gains tax (CGT).

Personal income tax changes

From 1 July 2026, lower-income earners are set to save, with the tax rate for the $18,201 to $45,000 bracket to drop to 15 per cent from 16 per cent. From 1 July 2027, that rate is scheduled to drop to 14 per cent.

The changes are also designed to address bracket creep's impact on low- and middle-income earners, with the government estimating that they will save the average taxpayer approximately $536 per year once fully implemented (compared to 2024–25).

These changes are intended to supplement other cost-of-living relief from the government, such as energy bill relief, better funding for bulk-billing under Medicare, cheaper medicines, increased rent assistance and working-age payments, among other changes.

For accountants, these legislated future reductions present opportunities for forward planning discussions, particularly around income timing strategies, bonus deferrals, and deductible expenditure where appropriate.

Superannuation

The ATO has confirmed new tax rates for those with more than $3 million in superannuation. From 1 July 2026, an additional 15 per cent tax (for a total of 30 per cent) will apply to earnings on the portion of a super balance that exceeds $3 million.

A further tier for balances over $10 million is also under review. The bills have now been introduced into parliament, however, these measures are not yet law, and there is much debate about their fairness.

Advisers should ensure affected clients are working through different scenarios and their impact.

Separately, the concessional contributions cap for FY26 remains at $30,000. As always, contributions are counted in the year they are received by the fund, making timing critical, particularly for employer contributions processed close to 30 June.

The commencement of Payday Super from 1 July 2026 will require super guarantee contributions (12 per cent) to be received by the employee’s fund within seven business days of payday.

In addition, the ATO’s Small Business Super Clearing House is closing on 30 June.

It is important to ensure clients have alternative clearing arrangements and payroll systems configured well ahead of implementation.

Capital gains tax (CGT)

Recent media commentary has suggested that the Labor government may be considering changes to the capital gains tax (CGT) discount ahead of the federal budget.

Think-tanks (such as the Grattan Institute) have proposed halving the discount to 25 per cent, while others (such as Deloitte Access Economics) have suggested a middle ground of 33 per cent.

Although speculative, the discussion reinforces the importance of reviewing pending asset disposals, succession plans and trust structures. Clients who are expecting significant CGT issues should seek advice early, particularly where transactions may straddle potential legislative change.

Business planning considerations before 30 June

Ahead of year-end, advisers should be prompting clients to consider:

• Significant asset purchases or disposals.
• Entry into or exit from business ventures.
• International expansion activities.
• Vehicle acquisitions and deductibility thresholds.
• For example, the FY26 car cost limit is $69,674. Where vehicles are available for private use, fringe benefits tax implications must be addressed.
• Early engagement allows for structuring decisions that are both commercially sound and tax-effective.
• ATO enforcement and debt management.

The ATO’s stricter compliance stance continues. In FY25, more than 84,000 director penalty notices (DPNs) were issued for unpaid liabilities, underscoring the specific risks for company directors.

From 1 July 2025, ATO general interest charge (GIC) and shortfall interest charge (SIC) are no longer tax-deductible, materially increasing the after-tax cost of tax debt.

The ATO has also signalled a stricter approach to failure-to-lodge penalties and default assessments. Ensuring lodgment compliance is no longer simply administrative hygiene, but a risk management priority.

Trust distributions: documentation remains critical

Recent ATO action against the Goldenville Family Trust reinforces the importance of preparing and executing trust distribution resolutions before 30 June.

In that matter, the Commissioner successfully challenged a distribution resolution created after year-end, exposing the trust to significant tax consequences.

Practitioners should ensure:

• Trust deeds are reviewed annually.
• Distribution strategies are aligned with beneficiary tax profiles.
• Resolutions are prepared and signed prior to 30 June.
• Documentation is retained and consistent with financial statements.

Given the potential for the top marginal tax rate (currently 47 per cent, including the Medicare levy) to apply where distributions are ineffective, timely documentation remains essential.

For advisers

End-of-year planning is most effective when time-sensitive matters are addressed early and supported by robust documentation.

While legislative uncertainty remains in several areas, the broader themes are clear: tighter compliance, structural reform discussions and increasing scrutiny of high-balance taxpayers.

For accounting professionals, proactive client engagement now, rather than reactive adjustments post-30 June, will be central to successfully navigating the evolving tax landscape.

Josh Chye is a tax partner at HLB Mann Judd.