Preparing your business for the new financial year

Every new financial year comes with a list of must-do tasks, but 2026-27 is bringing  a range of fresh challenges for SMEs arising from the start of Payday Super and  major changes announced in the May Federal Budget.

Following the global trend, the Budget made it clear that tax integrity and transparency is now a key issue, so SMEs need to ensure their tax structures have genuine commercial purpose and are justifiable.

This was further emphasised by the additional $700 million in compliance funding the ATO received for increased audits, data matching and greater scrutiny.i

Practical implications of the Federal Budget

The Budget reforms mark a significant change to the way many businesses have been operating and will require careful reassessment of everything from business structures to the way income is distributed to owners.

The reform requiring the most urgent attention is replacement of the existing 50 per cent CGT discount with inflation-adjusted indexation and introduction of a 30 per cent minimum tax rate for real capital gains from 1 July 2027.ii

Assets purchased and sold before 1 July 2027 will still be taxed under the existing rules, with capital gains made prior to 30 June 2027 calculated under the old rules.

The new rules apply to individuals, trusts, partnerships and companies and affect all CGT assets (including property and shares), managed funds, business assets and private company interests.

A key point to note is the new CGT rules do not impact availability of the four special CGT concessions available when owners exit a SME.

And, following many protests in the wake of the Budget, the government announced further CGT concessions for small businesses.iii

The turnover threshold for the 50 per cent active asset CGT reduction  increased from $2 million to $10 million from 1 July 2027.

Family trusts face tax changes

SMEs using discretionary (family) trusts for income splitting, asset protection and estate planning will need to review the new rules covering these structures, as they may now be less attractive than in the past.

From 1 July 2028, a new 30 per cent minimum rate on the taxable income of discretionary trusts will be introduced.

Trustees will pay the tax at trust level prior to distribution to beneficiaries, with non-corporate beneficiaries receiving non-refundable tax credits for the tax payments.

SMEs currently using these structures should consider whether their trust remains appropriate and if not, begin planning how to restructure into a new vehicle. The government is providing a rollover relief window from 1 July 2027 to 30 June 2030 for trust users restructuring into a company or fixed unit trust.

Meanwhile, since the Budget, the government has announced a carve out for testamentary trusts, exempting them from the minimum tax requirements.iv

The Federal Government recently announced a ban for Self-Managed Superannuation Funds (SMSFs) from using Limited Recourse Borrowing Arrangements (LRBAs) to purchase residential property in the future. Existing LRBAs are not affected.

Change to negative gearing rules

Another Budget change requiring attention relates to negative gearing for residential property investments, which will be limited to new builds from 1 July 2027. Arrangements remain unchanged for assets owned prior to 7.30pm on Budget night.v

Under the new rules, losses from residential property investments can only be offset against residential rental income or capital gains from residential property, not wages or other income. Excess losses can be carried forward.

While residential property investments you hold will be impacted, commercial property, shares and non-residential assets can still be negatively geared.

Payday Super arrives

This financial year represents the first year SMEs will be dealing with the new Payday Super rules.

The key implication relates to business cash flow, particularly if your business has previously been making Super Guarantee contributions quarterly and holding these funds to boost the business’s cash position prior to payment.

SMEs need to ensure they meet the new reporting requirements introduced as part of Payday Super to avoid compliance problems with the ATO.vi

Instant asset write-off change

One of the good news stories from the Budget is the popular $20,000 instant asset write-off is permanent from 1 July 2026.vii

SMEs can now be certain the concession is available and can plan business expenditure accordingly.

Small businesses with an aggregated turnover up to $10 million can immediately deduct eligible assets costing less than $20,000.

If you have any questions, contact our office today. i Federal Budget 2026 | Corrs Chambers Westgarth
ii Small business explainer | Treasury.gov.au
iii,iv Tax reform implementation for small business and startups | Prime Minister of Australia
v Tax reform for workers, businesses and future generations | Prime Minister of Australia
vi Our compliance approach for Payday Super | Australian Taxation Office
vii Tax reform | Budget 2026–27

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Superannuation: more relevant than ever

A range of superannuation changes that came into effect on 1 July 2026, are reinforcing the role of super as one of the most tax-effective investment structures available.

For many investors, it’s not simply that super remains attractive but that the rules continue to change. Understanding these changes can help ensure your strategy takes advantage of available opportunities while staying on track with your financial goals.

A changing tax environment

Outside of super, tighter rules around the use of discretionary trusts and closer scrutiny of income distributions have reduced some traditional tax planning flexibility. Combined with the ongoing treatment of capital gains, this has made tax outcomes in non-super structures less predictable for some investors.i In contrast, superannuation continues to provide favourable tax treatment. This is a key reason why super is becoming increasingly important in long-term financial planning.

Payday Super – boost your retirement savings

One of the more practical changes is the introduction of Payday Super, which requires employers to pay super contributions at the same time as wages rather than quarterly.ii While this is primarily an administrative shift, it can have a real impact on individuals’ super balance. More frequent contributions mean compounding begins earlier. Over time, this could lead to improved retirement outcomes.

Higher contribution caps create more opportunities

From 1 July 2026, the concessional superannuation contribution cap (including employer contributions and salary sacrifice) increased to $32,500 from $30,000 in the 2025-2026 financial year.

Non-concessional caps have also increased, from $120,000 in 2025-2026 to $130,000 in the 2026-2027 financial year, enabling larger after-tax contributions. This can be particularly relevant for individuals who have accumulated savings outside super and wish to transfer funds into a more tax-advantaged environment.iii

Carry-forward and bring-forward rules

Two existing rules continue to offer significant opportunities when used effectively.iv

The carry-forward rule allows those with a total super balance below $500,000 on 30 June in the previous financial year to use unused concessional cap amounts from previous years. This can be especially beneficial for those with irregular income patterns, such as business owners or individuals returning to work after a break.

The bring-forward rule allows you to make several years’ worth of non-concessional contributions in one year, subject to eligibility criteria. This can be particularly useful when receiving an inheritance, selling an asset or restructuring investments.

Parental leave contributions

Another important development is the extension of super contributions to government-funded parental leave, introduced last year. It recognises the long-term impact that time out of the workforce can have on retirement savings, particularly for women.v While the financial impact may appear modest in the short term, over time the effect of compounding can be meaningful.

Division 296 tax

One of the more widely discussed measures is the Division 296 tax, which applies an additional tax on earnings associated with super balances above $3 million.vi

While this affects a relatively small proportion of investors, it represents an important shift in the superannuation landscape. The measure is designed to target very large balances, with the objective of limiting the extent of tax concessions at higher levels of wealth.

Transfer Balance Cap increase to $2.1 million

The increase in the Transfer Balance Cap to $2.1 million is another positive development, particularly for those approaching or entering retirement.

This cap determines how much can be transferred into the tax-free retirement phase. An increase allows more capital to benefit from a zero per cent tax rate on earnings, enhancing after-tax income in retirement.

Bringing it all together

Superannuation continues to offer a compelling tax environment, particularly when compared with other investment strategies that are facing increased complexity and scrutiny.

Contribution caps, along with carry forward and bring forward rules, provide multiple pathways to build super balances over time. Changes such as Payday Super and parental leave contributions highlight the benefits of regular, ongoing investment into super and the power of compounding. While new measures such as Division 296 introduce additional considerations, they do not diminish the overall value of super for most investors.

Please get in touch if you’d like to discuss any of these superannuation options.

i Capital Gains Tax and Discretionary Trusts Reform | Treasury.gov.au

ii Payday Super | Fair Work Ombudsman

iii Contributions caps | Australian Taxation Office

iv Carry forward and bring forward rules | ATO

v Paid Parental Leave Superannuation Contribution | ATO vi Better Targeted Super Concessions is law | ATO

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Market movements and review video – July 2026

Stay up to date with what’s happened in the Australian economy and markets over the past month.

June delivered a mixed picture for the Australian economy as the new financial year begins.

Headline inflation eased, but underlying inflationary measures rose to their highest level in almost two years, reinforcing expectations that interest rates may remain higher for longer. 

Domestic data highlighted ongoing structural pressures.

Building approvals remained subdued, signalling persistent constraints on housing supply despite strong demand. Consumer confidence weakened, falling 2.9% to 80.6, returning to pessimistic levels after a brief improvement in May. 

Australian share markets were volatile, with the ASX 200 moving within a narrow range as investors responded to shifting rate expectations and global uncertainty.

Globally, shares delivered strong gains, however, risks remain elevated. In the United States, concerns about policy direction and financial stability unsettled markets, while geopolitical tensions including the on-again off-again ceasefire in the Gulf continued to cause inflationary and supply risks. 

Click the video below to view our update.

Please get in touch if you’d like assistance with your personal financial situation.

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Tax-deductible expenses for sole traders to watch for

Are you a sole trader? Here are some tips on deductible expenses to watch for.

If you haven’t spoken to us or your bookkeeper about EOFY matters yet, it might be a good idea to give us a call.

After all, you’ve done the thinking and the work, and are probably desperate to keep a little more of that hard-earned profit. However, being self-employed, you must first understand the nature of your expenses.

What deductions can I claim as a sole trader?

You can claim expenses that are directly related to earning your taxable income. Private and personal expenses, such as after-school care or home loan interest payments, cannot be claimed.

The expenses you can claim — and when you claim them — depends on the type of asset purchased or service engaged. Operating expenses for a sole trader can usually be claimed in the year they occur, while capital expenses must be claimed over time.

Business vs personal expenses

Expenses that are usually not deductible

  • Entertainment expenses
  • Traffic fines
  • Private or domestic expenses, such as childcare fees or clothes for your family
  • Expenses relating to earning income that is not assessable, such as money you earn from a hobby
  • The GST component of a purchase if you can claim it as a GST credit on your business activity statement

Expenses that may be deductible

  • Wages
  • Office stationery
  • Computer or laptop that is used for business
  • Machinery and equipment
  • Motor vehicle expenses
  • Advertising
  • Business travel
  • Bills, like insurance and phone

How can a sole trader pay less tax?

1. Claim operating expenses when you incur them

Operating expenses are also called revenue expenses because they help generate income, and they can be claimed in the financial year you incur them. Examples of claims that can be made in the year they are incurred include:

  • Salaries, wages, overtime payments, allowances and bonuses
  • Advertising and promotional expenses
  • Electricity, phones, gas and stationery
  • Business travel costs
  • Asset maintenance and repair costs
  • Parking fees (but not fines)

2. Prepay some expenses this year to reduce taxes

Pay in advance and bring the deduction forward to this year. If you have a healthy cashflow, you can prepay your:

  • Business loans (prepay on fixed rates 12 months in advance)
  • Office and equipment lease payments
  • Business insurance
  • Business related subscriptions
  • Business travel, seminars and conference bookings
  • Telephone and IT services

Tip: Two birds with one stone — See if you can combine the benefit of bringing forward the tax deduction and getting a discount for paying your supplier in advance.

For every small business looking for a tax deduction, there will most likely be a service provider or salesperson looking to boost their sales results before June 30.

3. Consider capital expenses (asset purchases)

It’s important to mention that a small business that purchases an asset costing less than $6500 can still claim 100 percent of the cost in the actual year the expense is incurred.

Even if you have not paid for the item yet, sole traders can still claim as long as you are invoiced before 30 June.

Larger capital acquisitions that have an expected life longer than one year, such as IT servers, vehicles and expensive plant and equipment, must be claimed over a number of years.

These items are claimed via accelerated depreciation of the capital value, with 15 percent claimed in the first year (even if purchased in the last month of the year) and 30 percent each year thereafter.

Examples of capital expense assets that must be depreciated over time include:

  • Motor vehicles
  • Computers, servers, printers and copiers
  • Office and warehouse fixtures and fittings
  • Plant and equipment

4. Claim the instant asset write-off

Sole traders are eligible to claim the instant asset writeoff, which allows small businesses to claim immediate deductions for new or second-hand plant and equipment asset purchases like cars, office equipment and tools.

Before making any big purchases, check the instant asset write-off eligibility criteria and threshold, because these can change. Check your business’s eligibility and apply the correct threshold amount depending on when the asset was purchased, first used or installed ready for use.

Check the ATO website for the latest information on thresholds.

5. Bite the bullet and write off any bad debts

A bad debt is a taxable sale you made that has been unpaid for 12 months or more, with no chance of it being recovered.

You must keep written notes that the debt has been written off and why. Discuss this with your accountant, as there may be GST consequences.

6. Use concessional contributions to superannuation

Make sure to use your own superannuation allowance of up to $25,000 for those under 60, and $35,000 for those over 60.

Remember that if your spouse works in the business even part-time then you can still contribute up to their limit, but make sure to allow for any employer contributions from other jobs.

7. Do a stocktake

It might be time to call in the kids, parents and friends to help you identify damaged and/or obsolete stock items that can be written down in value or written off completely.

This reduces the value of your trading stock and, as a result, lowers your taxable business profit.

8. Be sensible

As a sole trader, your focus should be on managing your tax and not looking at measures that will put your business under cash flow pressures in the coming years, just to achieve a short-term tax advantage.

Buying unnecessary assets, upgrading cars or paying higher super contributions are pointless if it means your business will face cash flow issues.

As you enter a new financial year, consider speaking to us about whether you should be moving to a corporate structure going forward.

There’s an app for that

You’re not just a sole trader or freelancer, you’re the finance department, marketing head, coffee runner and admin ninja. If finance isn’t your forte, hand over the reins and let tech play CFO.

The app Solo by MYOB can help you automate GST, track expenses​ and prep your business for tax time. You can even download reports from Solo to share with us or your bookkeeper. Translation: less stress, more doing the work you love.

Source: MYOB
Reproduced with the permission of MYOB. This article by MYOB Subject Matter Experts was originally published at https://www.myob.com/au/resources/post/taxdeductible-expenses-for-sole-traders-to-watch-for
Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.
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2026-27 Federal Budget: The TAX take away

Jim Chalmers’ fifth Budget included significant tax reforms with the package billed as “the most significant tax reform package in more than a quarter of a century”.

While Australian workers and small businesses are likely to be happy, property investors and those with discretionary (family) trusts face new rules and tax rates that will require careful review.

The package was announced against a backdrop of global uncertainty and demographic change, with the Treasurer emphasising the tax reforms represent a key component in the government’s response to intergenerational inequality and challenges to national resilience.

Tax offset and instant deduction for individuals

Over 13 million workers will benefit from a new annual $250 Working Australians Tax Offset from 1 July 2028. This will increase the effective tax-free threshold for workers to $19,985.

The offset is in addition to announced cuts to the lowest tax rate on 1 July 2026 – when the rate drops to 15 per cent – and on 1 July 2027 (14 per cent).

The Budget included a new $1,000 instant tax deduction for work-related expenses from 2026-27, reducing paperwork requirements for employees claiming these deductions.

Incentives for business

With cash flow a key issue for smaller businesses, the Budget included measures to make the popular $20,000 instant asset write-off permanent from 1 July 2026.

It also permanently reinstated loss carry backs. From 2026-27, eligible companies making a loss in the current income year will be able to use the loss to obtain a refund against tax paid in the prior two income years.

From 2028-29, small start-ups will be able to access cash flow support through a refund for tax losses in their first two years of operation, up to the value of fringe benefits tax (FBT) and withholding tax paid on employee wages.

Businesses will gain flexibility to opt in to monthly PAYG instalments from 1 July 2027 and will receive a 25 per cent FBT discount for eligible electric cars over $75,000 from the same date.

Incentives for venture capital and R&D

From 1 July 2027, tax incentives for venture capital will be expanded through changes to the Early-Stage Venture Capital Limit Partnership and Venture Capital Limit Partnership programs.

The offset for experimental core R&D will also be increased by around 25 to 50 per cent, together with an increased turnover threshold for the refundable offset and a new $200 million maximum expenditure cap.

Negative gearing reforms

Two significant changes to existing tax rules for property investments were announced in the Budget.

Negative gearing will no longer be available for established residential properties from 1 July 2027. For all properties held prior to Budget night, the existing tax arrangements will remain unchanged.

Investors who purchase new builds will still be able to deduct their losses from other income.

Purchasers of established housing after the Budget announcement, however, will only be able to deduct losses against residential property income. Unused losses can be carried forward to future years but will no longer be deductible against other income (such as wages).

CGT discount rule changes

Another major change is replacement of the current 50 per cent capital gains tax discount with cost-based indexation from 1 July 2027.

The government is also introducing a minimum 30 per cent tax rate on capital gains starting on the same date.

The CGT change will only apply to gains arising after 1 July 2027, with investors in new builds given a choice of the 50 per cent CGT discount or the new arrangements.

Minimum tax rate for discretionary trusts

The tax change likely to generate the most criticism is a new minimum taxation rate of 30 per cent for discretionary trust distributions from 1 July 2028.

The new rate will not apply to fixed trusts, super funds, special disability trusts, deceased estates and some types of farming income.

Rollover relief will be available for three years from 1 July 2027 to assist small businesses and others wishing to restructure in light of the new rules.

Information in this article has been sourced from the Budget Speech 2026-27 and Federal Budget Support documents.   It is important to note that the policies outlined in this article are yet to be passed as legislation and therefore may be subject to change. 

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Selling the family home and navigating aged care costs

The transition of a parent or relative into residential aged care can be one of the most emotionally and financially challenging moments a family will face.

Beyond the personal upheaval, a number of issues need to be dealt with quickly including how to fund the Refundable Accommodation Deposit (RAD), how to cover daily care fees and what to do with the family home.

On the plus side, selling the home can suddenly transform someone’s financial position from “cash poor” to “cash rich”. But for those relying on the Age Pension, the sudden spike in assets has major implications for pension eligibility, aged care means testing and ongoing fees.

Understanding how the rules work can make all the difference in turning a potentially damaging financial outcome into a sustainable aged care funding solution.

Making the move

Usually, a person’s home is exempt from the Age Pension assets test but once it’s sold, the cash is then assessed as an asset and that may reduce the pension payments.

There are a number of exemptions to this rule. For example, if you leave your home to enter aged care due to illness, your home may be exempted from the assets test for up to two years. And, it won’t be counted as an asset if your partner is still living there.i

In addition to the Age Pension means test, the types of fees and how much you pay for an aged care home bed also depend on an assessment of your income and assets. The aged care means test considers both your income and assets to determine how much government subsidy you receive and what you will pay in care fees.

Options for managing the proceeds of a sale

Once the family home is sold, the sudden boost in cash can feel overwhelming. But, with good advice, the funds can be used to improve cashflow, reduce ongoing costs and preserve as much of the pension and aged care subsidy as possible.

Here are some of the options:

1. Paying the refundable accommodation deposit (RAD)

Paying the full RAD means you don’t pay the daily accommodation fees (DAP), which can be hundreds of dollars per day. But, be aware, that a refundable lump sum is counted as your asset in the aged care means assessment, even if it is paid by a family member. This means that paying a lump sum can affect your fees. On the other hand, a RAD may improve Age pension eligibility for some people. ii

2. Paying a part RAD and part DAP

It doesn’t have to be all or nothing. You could pay some of the accommodation deposit and then pay a reduced daily fee. The advantage is that you have access to the cash for living and medical expenses.

3. Making a downsizer super contribution

For those aged over 55, up to $300,000 can be contributed to super after selling the family home, which may be a more tax-effective environment. There is no maximum age on making a downsizer contribution despite normal super rules preventing most voluntary contributions after age 75.

Your super balance is also assessed as part of the means test for both the Age Pension and aged care fees.

4. Renting the home instead of selling

This option might suit those who want to keep the property in the family. While the rental income will be counted as part of the income test, depending on how you pay for your aged care accommodation, there may be some exemptions from means testing.

In a nutshell, selling the family home can affect both the Age Pension and aged care means testing, increasing costs and reducing entitlements.

The key is in using the new funds wisely. With careful planning, families can navigate this transition in a way that protects income, manages fees and ensures the person entering aged care has the resources they need.

With so many complex and time‑sensitive decisions to make during an already emotional period, getting the right advice can be critical in helping families make informed choices and avoid costly mistakes. Please give us a call if you’d like more information.

i Real estate assets – Age Pension | Services Australia

ii Understanding aged care home accommodation costs | My Aged Care

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Is your trust structure still right for you?

Family trusts remain one of the most flexible and tax-effective structures used by Australian families and small business owners. But wealth grows, family situations evolve, tax rules shift and businesses expand over time – and all these changes can affect whether your existing trust deed is still fit for purpose.

So, as we approach the end of financial year, it’s a good time to review your trust arrangements.i

There are many reasons for taking another look at your trust, including:

  • The trust deed no longer reflects your financial or family priorities.
  • Distributions are not as tax-effective as they once were
  • Your list of beneficiaries hasn’t been updated with new partners, children or grandchildren
  • The trustee may not be appropriate now because of age or illness
  • Administration may now be a burden and outweigh the original advantages

There are also some triggers that mean you may need to consider a more complex, or even a completely different structure, and these can include the following:

A significant increase in investment or business income

A basic trust may struggle to distribute income efficiently if there are fewer adult beneficiaries; the beneficiaries are already in high marginal tax brackets; or family circumstances have changed (children have grown and are now earning higher salaries).

You are accumulating assets across multiple entities

If investment portfolios, rental properties or business activities have expanded, a more sophisticated structure may provide better asset protection, simpler management or clearer succession pathways.

The trust is being used as part of a broader family wealth strategy

As intergenerational wealth becomes a priority, a traditional discretionary trust might not offer enough flexibility in some areas such as estate planning, managing capital gains or managing assets for vulnerable beneficiaries.

You are preparing for the sale of a business or major asset

A review is critical if a trust is to be involved in the sale of shares, business assets or property. Different structures can affect access to CGT concessions, including the small business CGT concessions.

Next steps

The good news is there are several ways to adjust the trust structure without starting from scratch, including:

Amending the trust deed –  Many deeds allow for amendments to bring the document up to date such as modernising distribution provisions, clarifying beneficiary classes or updating powers given to trustees.

Changing the trustee –  If the trustee is no longer appropriate, a change can be made to appoint someone more suitable or a corporate trustee to improve governance and reduce risk.

Updating beneficiaries or redefine classes –  Some trust deeds allow for updating the list of beneficiaries or adjusting who can receive distributions. This can help ensure the trust continues to serve the family as it is today, not as it was decades ago.

Winding up the trust –  If the trust is no longer useful, it may be best to wind it up to reduce costs and complexity, although capital gains tax and stamp duty implications will need to be carefully managed.

Changing the structure – Depending on your goals, alternatives such as a company structure or a self-managed super fund may be more suitable.

Consider hybrid or testamentary arrangements – Where estate planning is involved, testamentary trusts or hybrid structures might offer more control or flexibility, particularly if supporting future generations is your priority.

Why you might add a corporate beneficiary

Another option is to use a corporate beneficiary (often called a “bucket company”), which is commonly used to cap tax on trust distributions at the corporate tax rate.ii

Here are signs it may be time to introduce a corporate beneficiary:

  • Your trust’s beneficiaries are approaching higher marginal tax brackets
  • You need an entity to hold retained earnings
  • You want more flexibility in managing year-to-year tax outcomes
  • You are planning business or investment growth

As your financial affairs become more sophisticated, having a corporate beneficiary can expand the range of future planning options including reinvestment strategies, gearing, or structures such as corporate groups or family investment companies.

 Whether your wealth is growing, your family is changing or your business is expanding, taking time each year to review your trust structure ensures you remain aligned with your objectives and compliant with tax law.

A review now can save tax, reduce risk and set your family up for greater flexibility in the years to come and we are here to assist.

i Trusts | ATO ii Can a Company Be a Trust Beneficiary in Australia? | Sprintlaw

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What are the SMSF investment restrictions?

About SMSF investment restrictions

SMSFs are complex, here we have outlined some of the restrictions to help you before you make any decisions on self-managed super fund (SMSF) investment. You must ensure you understand any restrictions on SMSF investments to avoid any penalties.

There are some exceptions, however, generally your SMSF must not:

  • lend or provide financial assistance to members or related parties
  • acquire assets from members or related parties
  • use collectables and personal use assets in a way that provides a present-day benefit
  • allow trust distributions owing to the SMSF to remain unpaid
  • breach the in-house asset rules
  • borrow money.

No one associated with your SMSF should get a present-day benefit from its investments.

If you don’t comply with the investment restrictions, the ATO may take a range of actions, including:

  • imposing penalties
  • making the fund non-complying
  • disqualifying you as a trustee
  • prosecution of trustees.

Who are related parties?

A related party of your SMSF includes:

  • all members of your fund
  • associates of fund members, which include
    • the relatives of each member
    • the business partners of each member
    • any spouse or child of those business partners
    • any company or trust the member or their associates control or influence
  • standard employer-sponsors (employers who contribute to your SMSF for the benefit of a member under an arrangement between the employer and a trustee of your fund)
  • associates of standard employer-sponsors, which include
    • business partners and companies or trusts the employer controls (either alone or with their other associates)
    • companies and trusts that control the employer
    • relatives of an employer sponsor.

A relative is any of the following:

  • a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the member or their spouse
  • a spouse of the member and any individual specified above.

Loans and financial assistance

Your SMSF can’t provide loans, or direct or indirect financial assistance, to a member or a member’s relative. For example, you can’t use your SMSF as guarantor for a loan for a member or a member’s relative.

Loans must:

  • be in the best interests of the members
  • comply with the SMSF’s investment strategy
  • be conducted on a commercial arm’s length basis.

If you run a business through your SMSF, you also can’t overpay a member or relative of a member for their services. If you employ a member or a relative of a member, their salary or wage must not be higher than the standard salary for that type of role.

Acquiring assets

Your SMSF can’t acquire an asset from a related party unless the price reflects the market value and is:

  • a listed security (for example, shares, units or bonds listed on an approved stock exchange)
  • business real property
  • an asset specifically excluded from being an in-house asset.

You must also ensure the market value of your fund’s in-house assets doesn’t exceed 5% of the total market value of your fund’s assets.

Crypto assets and private company shares are not listed securities and can’t be acquired from a related party.

If an asset is not acquired or sold at arm’s length, all or part of any income from the transaction may be non-arm’s length income and taxed at the highest marginal rate.

To help you comply with the requirements, use the valuation guidelines for self-managed super funds.

Collectables and personal use assets

Where your fund invests in collectables and personal use assets, this must be for genuine retirement purposes, not to provide any present-day benefit.

Assets such as artwork, boats, jewellery, vintage cars and wine are described as collectables and personal use assets.

Natural diamonds (including pink diamonds), when held in loose form, are not considered collectable or personal use assets. As such, they do not have specific storage and insurance requirements. However, for these types of assets it is recommended trustees:

  • hold adequate insurance
  • consider storage arrangements.

‘Diamonds held in loose form’ means they cannot be mounted, integrated into or used as an item for adornment or other purposes which would be inconsistent with the holding of the diamond in loose form for investment purposes.

Collectables and personal use assets can’t be:

  • used by or leased to a related party (if leased to an unrelated party it must be at arm’s length)
  • stored or displayed in the private residence of a related party (this includes all parts of the land the residence is situated on and all buildings on that land, such as garages or sheds)
  • displayed in any other premises owned by a related party (they can be stored there provided they’re not visible to clients and employees).

You must keep a written record of the reason for deciding where to store the assets.

Collectables and personal use assets must be insured. You should consider the availability and cost of insurance before investing in them. Items must be insured within 7 days of the fund acquiring them and the fund must be listed as the owner and beneficiary of the policy.

These assets can be sold to related parties provided the sale is at market value as determined by a qualified, independent valuer.

Unpaid trust distributions

If your SMSF is entitled to a distribution from a related trust but you allow it to remain unpaid, you may contravene the:

  • in-house asset rules
  • arm’s length rule
  • sole purpose test.

In-house assets

You are restricted from having in-house assets that comprise more than 5% of the market value of the SMSF’s total assets.

An in-house asset is any of the following:

  • a loan to a related party of your fund
  • an investment in a related party of your fund
  • an asset of your fund that is leased to a related party, such as business equipment or machinery.

Any lease must be made on an arm’s length basis and reflect the market value.

If at the end of the financial year your SMSF’s in-house assets exceed 5%, you must prepare a written plan to reduce in-house assets to 5% or below. This plan must be prepared before the end of the following financial year. Trustees must also ensure the plan is carried out.

There are some exceptions to in-house assets, including:

  • business real property that is leased between your fund and a related party of your fund
  • some investments in related non-geared trusts or companies.

The in-house asset rules for assets owned before 11 August 1999 were defined differently. If your SMSF owns assets that were acquired before this date, you should review your fund’s investments to ensure you are complying with the current rules.

Decrease in asset values due to COVID-19

Some SMSFs may have experienced a decrease in asset values due to the economic impact of COVID-19. If this resulted in a breach of the in-house asset rules as at 30 June 2020, or the in-house assets being more than 5% of the total assets, the fund was required to prepare and implement a rectification plan by 30 June 2021.

Business real property

Business real property generally means land and buildings used wholly and exclusively in a business. It’s an exception to the in-house asset and related party acquisition rules.

If business real property contains a dwelling for private or domestic purposes such as a farm, it can still meet the requirements of being used wholly and exclusively in a business if:

  • any dwelling used for private or domestic purposes is in an area of land no more than 2 hectares, and
  • the main use of the whole property is not for domestic or private purposes.

Running a business in an SMSF

If running a business through an SMSF, it must be:

  • allowed under the trust deed
  • operated for the sole purpose of providing retirement benefits for fund members.

The rules governing SMSFs prohibit or limit some activities available to other businesses, such as entering into credit arrangements or having overdrafts.

You should get professional advice before running a business through your SMSF.

It is important to ensure the sole purpose test is not breached. Issues that attract our attention include those where:

  • the trustee employs a family member (we look at things like the stated rationale for employing the family member and the salary or wages paid)
  • the ‘business’ is an activity commonly performed as a hobby or pastime
  • the business run by the fund has links to associated trading entities
  • there are indications the fund’s business assets are available for the private use and benefit of the trustee or related parties.

Contact us if you have any questions regarding your SMSF, we’re here to help. Source: ato.gov.au April 2025
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/self-managed-super-funds-smsf/smsf-investing/restrictions-on-smsf-investments/what-are-the-smsf-investment-restrictions.
Important: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 
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Got a side hustle? Don’t forget your tax

With the ongoing cost-of-living squeeze, record numbers of Aussies are supplementing their income with side hustles.

But before you dive into a new gig, it’s important to understand some of the tax essentials that come with running a small business.

Whether you’re monetising online content creations, or running bootcamp sessions, the ATO may consider that you’re running a business and expect you meet your tax obligations.

Are you running a business?

Under the current tax rules, if you earn money through continuous and repeated activities to make a profit, it’s likely you are considered to be carrying on a business.i

Income from genuine hobbies is non-assessable, but income from a business must be declared in your tax return.ii

Business operators face a range of obligations including applying for an Australian Business Number (ABN) and registering for pay as you go (PAYG) withholding if you hire any employees.iii

There is no legislative definition of “carrying on a business” but the ATO provides information and questions to help you decide:

Step 1: Identify relevant, related activities, including:

  • keeping records
  • obtaining and maintaining licences and permits
  • renting out premises or goods
  • providing goods or services.

Step 2: Are the activities a business?

  • Do you intend to be in business?
  • Do you intend to make a profit and is there a realistic chance of doing so?
  • Is the size or scale of your activity enough to make a profit?
  • Are the activities repeated and continuous?
  • Are your activities planned, organised and carried out in a business-like manner?

Accurate recordkeeping from the start

It’s important to set up a recordkeeping system from day one to track your income and expenses accurately.

You’re legally required to keep records of all transactions relating to your tax, superannuation and registration obligations when you start, run, sell, change or close a business.iv

Records need to be kept for five years,and you must be able to show the ATO your records if required.

Claiming genuine business-related expenses

If your side hustle is a business, all income must be declared, regardless of the amount.

The good news is you can claim tax deductions for business expenses, provided you keep receipts and the expenses directly relate to earning side hustle income (including the cost of managing your tax affairs).

If your annual turnover exceeds $75,000, you must register for Goods and Services Tax (GST) and pay all the GST collected on your taxable sales to the ATO every quarter.v

Managing cashflow

Good recordkeeping also helps you monitor the financial health of your business and know whether your business is running at a profit or loss.

It’s crucial for managing cashflow. One of the most common reasons small businesses fail, is losing control of their cash position and unable to pay their bills on time.

ATO data matching

If you are only earning small amounts, it might be tempting to assume the ATO won’t notice if you don’t report your side hustle income. But side hustles are now an important ATO surveillance target.vi

More than 600 million transactions are reported to the tax office each year. The ATO receives and matches data from banks, payment systems, government agencies, share registries, cryptocurrency service providers and building and construction payments.

Impact on government benefits

Extra income from your side hustle can also affect your eligibility for government benefits such as the Family Tax Benefit or Child Care Subsidy. It may also affect how much Medicare Levy surcharge you pay and when you are required to start repaying a HECS/HELP debt.

If you need help getting your side hustle onto a solid business footing, contact our office today.

i Are you in business? | Australian Taxation Office

ii What to include in your business’s assessable income | Australian Taxation Office

iii PAYG withholding | Australian Taxation Office

iv Overview of record-keeping rules for business | Australian Taxation Office

v GST – Goods and Services Tax | Australian Taxation Office

vi Side hustles are front of mind this tax season | Australian Taxation Office

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Market movements and review video – March 2026

Stay up to date with what’s happened in the Australian economy and markets over the past month.

Escalating conflict in the middle east marked the end of February.

The month delivered mixed signals for the Australian economy.

The unemployment rate held steady, wage growth continued to edge higher, while household spending softened.

Inflation continues to be an issue. While the CPI remained steady, trimmed inflation increased slightly and the February 0.25% cash rate hike added pressure to mortgage holders.

Reporting season added its usual volatility to the share market and the ASX hit several record highs towards the end of the month, supported by solid corporate results, even as global markets remained cautious.

Click the video below to view our update.

Please get in touch if you’d like assistance with your personal financial situation.

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