Investing for the next generation

For many, the goal of investing is about creating wealth for a comfortable financial future, as well as a legacy that supports your children and grandchildren for decades to come.

But one of the greatest risks to that legacy can be the challenge of dealing with sudden wealth. When adult children inherit large sums or significant assets without preparation, sometimes the result is family tension, poor decisions or erosion of wealth.

While precise figures vary, research and industry experience consistently show that many families struggle to preserve wealth beyond the second and third generations, largely due to behavioural and governance challenges rather than investment performance.

Building financial literacy

Financial capability is developed over years of exposure, education, and experience.

The Australian Securities and Investments Commission (ASIC) MoneySmart program emphasises that financial literacy is a core life skill, not simply a technical ability.

While an inheritance may be some years off, parents who are expecting to pass on some form of an inheritance, should begin involving their children in financial discussions where appropriate. This might include reviewing investment portfolios together, explaining the complexities of how superannuation works or discussing the rationale behind major financial decisions. Understanding how risk is associated with investing, and ongoing tax obligations is also essential to create the whole picture.

Practical experience is just as important as theory. Allowing adult children to manage a portion of investments, under guidance, can build confidence and accountability. This phased approach reduces the risk of overwhelm later, when financial responsibility increases significantly.

Gifting or loaning?

Another important consideration when supporting the next generation is whether to provide financial assistance as a gift or a loan. The decision has both ethical and practical implications.

Gifting can provide immediate support without the burden of repayment, allowing children to purchase a home, invest or establish a business. But unequal gifting among siblings may create perceptions of favouritism, even if the intention is fair. Clear communication and documentation of the reasoning behind decisions is essential.

Loaning, on the other hand, can maintain a sense of responsibility and fairness.

Loans structured with clear terms can encourage financial discipline and avoid creating dependency. Families often formalise the arrangements with written agreements that set expectations for repayments and interest. There are also taxation and legal considerations.

The Australian Taxation Office may assess certain arrangements differently depending on whether funds are genuinely gifted or loaned. Professional advice ensures that intentions are reflected correctly. Ultimately, the choice between gifting and loaning may come down to the financial maturity of the recipient and your estate plan.

Preparing the next generation beyond money

Financial preparation alone is not enough. Inheriting wealth also involves emotional and behavioural readiness.

Open conversations about wealth, values and expectations are important. This includes explaining the purpose of wealth, whether it is to provide security, support philanthropy or create opportunities for future generations.

Governance structures, such as family meetings, investment committees or advisory boards can also help heirs understand their roles and responsibilities and encourage collaboration.

Philanthropy is another powerful tool for preparing heirs. Involving children in charitable giving decisions can instil a sense of social responsibility. It reinforces the idea that wealth is not solely for personal use, but also a resource to benefit the broader community.

Managing the transition

Gradual transition strategies can ease the adjustment for both parents and children.

This might involve progressively transferring control of assets. For example, adult children may first participate in decision-making, then take on increasing responsibility for managing investments over time. Trust structures are often used for staged distributions, allowing flexibility and protection.

Regular reviews are equally important. As family circumstances change, so too should the plan. Marriage, divorce, business ventures or health issues can all affect how wealth should be managed and transferred.

A legacy of capability

Successful intergenerational wealth transfer is not measured by the size of the inheritance but by the preparedness of those who receive it. Financial literacy, decision-making and open communication are the foundations of lasting wealth. By investing time in educating and including the next generation, families can reduce the risks associated with sudden wealth and create a legacy that endures.

If you’d like to discuss how to prepare your family for a successful wealth transition, we’re here to help.

×

Smart tax and super planning before EOFY

Tax time is just around the corner, so now is the time to make sure you’re prepared for 30 June.

Each year, the ATO highlights its areas of focus. Taking a few minutes now to review these can help you avoid issues when lodging your return.

Work-related deductions under scrutiny

This year, the ATO is focusing on work-related deductions and income that’s not declared on tax returns.

If you are claiming work-related expenses, ensure they meet the ATO’s three golden rules:i

  1. The expense must be directly related to earning your income
  2. You must not have been reimbursed
  3. You must have records to support your claim, such as receipts or a logbook

For working from home expenses, you can use either the actual cost method or the fixed rate method.

Instant asset write-off

The instant asset write-off remains an important tax concession for Australian small businesses in the 2025–2026 financial year. Eligible businesses with an aggregated turnover of less than $10 million can immediately deduct the business portion of eligible assets costing less than $20,000, instead of depreciating them over several years. The asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026.ii

Don’t overlook income

The ATO is also paying close attention to undeclared income. This includes:iii

  • Cash payments
  • Interest income
  • Rental income
  • Earnings from crypto assets

For those with a side hustle, check whether it may be considered a business. All business income, regardless of amount, is assessable and must be declared.iv

If you intend to claim deductions for business expenses related to your side hustle, ensure they are directly connected to earning that income and are supported by receipts.

Time for a portfolio review

Recent market volatility makes this a good time to review your investment strategy.

Checking your capital gains or losses before 30 June allows you to take action where appropriate.

For example, you may consider realising capital losses to offset gains from assets such as shares, property or crypto.

Tax timing strategies

If you have regular deductible expenses, such as investment loan interest or annual costs, it may be useful for some to prepaying them before 30 June to claim a deduction for this financial year.

You may also consider the timing of income expected before 30 June. Deferring income until after the end of the financial year may help reduce your tax liability.

Tax rates are also changing for lower income earners. From 1 July 2026, the rate for income between $18,201 and $45,000 will reduce from 16 per cent to 15 per cent, with a further reduction to 14 per cent the following year.

Super contribution strategies

The end of the financial year is an ideal time to review your super contributions.

If you plan to contribute before 30 June, check when your employer will make their contributions. The introduction of Payday Super means some employers are contributing earlier, which may affect your contribution caps.

For SMSF members, make sure that:

  • All contributions are received by the fund’s bank account by 30 June
  • Minimum pension payments are made
  • Asset valuations are up to date
  • Fund records are current

Be alert for tax time misinformation

The ATO is warning taxpayers to be cautious about the growing wave of tax “tips”, shortcuts and refund claims circulating online.

Content from social media, “finfluencers” and even artificial intelligence tools can sound convincing, but it is not always accurate or relevant to Australian tax law. Acting on this kind of advice can lead to incorrect claims, delays in processing returns and, in some cases, penalties.

Larger refunds, easy deductions or so-called “loopholes” should always be checked against trusted sources.

Ultimately, you are responsible for the accuracy of everything included in your tax return, regardless of where the advice came from.

Taking a few extra minutes to verify information before you lodge can help you avoid costly mistakes and keep your return on the right side of the rules.

Please get in touch if you need any help preparing for the end of the financial year.

Source: https://www.ato.gov.au

×

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. 

×

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

×

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

×

Driving your tax savings for 30 June

Vehicle-related expenses remain one of the most commonly claimed tax deductions for Aussies, and it’s an area where the Australian Tax Office (ATO) frequently finds errors.

With 30 June not far away, now is a good time to check whether you have all your paperwork in place.

Common car claim mistakes

If you use your private vehicle for work-related purposes (such as visiting clients or travelling to different work locations), you are able to claim deductions for your vehicle-related expenses.i

However, many taxpayers incorrectly try to claim trips from home to work, overestimate their car trips for work usage, or claim 100 per cent business use when the travel is partly private.

Other common errors include automatically claiming expenses for ineligible vehicles (such as one-tonne utes) and failing to keep proper records.

Vehicle logbook or cents per kilometre?

When claiming vehicle deductions, you have the choice of either calculating your claim using a logbook, or the cents per kilometre method.

With the logbook method, you are required to track at least 12 weeks of usage to reflect normal travel patterns to make a valid deduction claim. Odometer readings for the start and end of the claim period are also needed.ii

You also need to keep receipts or other records of all expenses (such as fuel and oil, registration, insurance and repairs). A record of the purchase price of the car and your calculation for its depreciation in value is also required.iii

Cents per kilometre method

Under the current rules for this method, you can claim a maximum of 5,000 work-related kilometres per car, with the 2025-26 deduction rate being 88 cents per kilometre.iv

This rate covers all car expenses, including the depreciation in value, registration, insurance, maintenance, repairs and fuel costs. You are not required to retain receipts.

Some taxpayers make the mistake of adding these expenses on top when calculating their deduction claims, but the ATO will not accept the tax claim.

Electric vehicles (EV) and tax

If your car is electric, instead of keeping receipts for fuel and oil, you must keep receipts for electricity from commercial charging stations, evidence for your electricity charging costs at home and odometer readings for the start and the end of the claim period.

Alternatively, you can use the EV home charging rate of 4.2c per kilometre to make a reasonable estimate of your home charging expenses based on your odometer readings.

If you choose to use this rate but you also used commercial charging stations, your commercial charging costs are ineligible for a separate deduction.

Novated leases and salary packaging

Salary packaging a novated car lease is still a popular choice for many employees, as eligible vehicles are purchased using pre-tax salary, reducing the amount of income on which tax is paid.v

Some leases even allow running costs to be included in your lease payments, potentially making both these costs and the purchase price GST-free (the residual value at the end of the lease is subject to GST and cannot be salary packaged).

One drawback with a novated lease is you cannot claim a deduction for your running costs as your employer is deemed the owner of the vehicle during the lease period. You are able to claim additional expenses (such as parking and tolls) associated with work use of the car.

FBT and novated leases

When you drive a car under a novated lease provided by your employer, the ATO considers it a fringe benefit, so you need to consider the potential tax implications.

As your employer is liable for the Fringe Benefit Tax (FBT), some companies pass this cost on to you by taking it from your pre-tax salary.

Novated leases, however, are eligible for an FBT exemption if the car is an eligible EV and the purchase price is below the luxury car tax threshold for fuel efficient vehicles.

If you would like more information about preparing your vehicle deductions for 30 June, contact our office today.

i, ii Trips you can and can’t claim | Australian Taxation Office

iii Expenses for a car you own or lease | Australian Taxation Office

iv Expenses for a car you own or lease | Australian Taxation Office

v Salary sacrificing for employees | Australian Taxation Office

×

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. 
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page. “

×

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

×

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.

×

RBA Announcement – February 2026

At its latest meeting, the Reserve Bank Board announced it was increasing the cash rate to 3.85 per cent.

Please click here to view the Statement by the Monetary Policy Board: Monetary Policy Decision.

We’re watching closely what the banks do with their rates, as some of Australia’s biggest lenders may make changes to their rates.

Please get in touch if you would like to discuss recent rate movements or if you would like to review your finance options.

×