Estate planning

How to develop an estate planning strategy to deal with your assets in the event of your death.

Estate planning involves developing a strategy to deal with your assets after you die – the legal instruments and structures, such as a will, you put in place to transfer your assets in the event of death.

Tax is a major consideration in estate planning, and strong governance relating to the tax aspects of estate administration can help manage the risks.

Ensure you or your staff have sufficient knowledge and skills to meet your responsibilities. Be prepared to seek assistance from external advisers on more complex tax issues.

Developing an effective strategy

Estate planning may be considered as part of your overall succession plan for your business. You may need to seek specialist advice on the most appropriate estate planning strategy.

Have a process in place to periodically review your strategy in conjunction with your advisers, including your legal, tax, superannuation and financial advisers.

Beware of schemes that claim to have estate planning purposes but are merely tax avoidance arrangements. An effective tax governance framework includes processes for evaluating various arrangements and the tax risks involved.

Preparing a valid will

If someone dies without a valid will, this is called ‘dying intestate’, and their assets are distributed according to the inheritance laws of the states and territories of Australia. In this case there is a risk that the undocumented intentions of the deceased person in relation to their estate may not be fully acted on.

Depending on the marginal tax rates of different beneficiaries, intestacy could potentially lead to an overall imbalance in the distribution of an estate due to higher rates of tax payable by some beneficiaries.

Planning ahead can avoid this result. When preparing a will, the will maker and their advisers can assess opportunities to manage the tax implications for beneficiaries.

Administering a deceased estate

As executor of a deceased estate, you need to understand your tax obligations, including:

  • notifying us that you’ve been appointed as executor
  • lodging a final return, and any outstanding prior-year returns, for the deceased person
  • lodging any trust tax returns for the deceased estate
  • providing beneficiaries with the information they need to include distributions in their own returns and, in certain cases, paying tax on their behalf
  • paying tax on the income of the deceased estate.

Testamentary trusts

A testamentary trust is a trust established under a valid will, but it’s not the same trust as the deceased estate. A testamentary trust functions in a similar way to a discretionary family trust, with certain provisions of the will operating like a trust deed.

Like any trust, a trustee of a well-governed testamentary trust will:

  • properly understand the tax profile of potential beneficiaries in the light of intended tax outcomes
  • lodge a tax return for every financial year that it is in existence
  • maintain proper trust account records (such as trustee resolutions, detailed financial statements and reconciliations), especially where a trustee is streaming capital gains or franked dividends
  • fully document capital gains tax events, cost bases, and rollovers and other concessions claimed.

Depending on who is appointed as the trustee and appointor of the testamentary trust, there may need to be a high level of co-operation between family members to ensure that necessary tax, financial and other information is shared for the trust to operate effectively.

A well governed testamentary trust will ensure that tax outcomes are achieved and, more importantly, complex family or legal disputes can be prevented.

Capital gains tax

Special capital gains tax (CGT) rules apply to the transfer of any CGT assets from a deceased estate. You should seek specialist advice in relation to the CGT implications of passing on or disposing of the assets of a deceased estate.

Keep complete records of CGT assets. These will be needed by the executor and any beneficiary who receives a CGT asset from the estate.

Superannuation and death benefits

Ensure you understand the tax issues around estate planning and superannuation.

For example, the tax impact of distributions made under a binding death nomination is usually one of the major considerations in estate planning.

Assets held by a person in their superannuation fund are not automatically included in their estate. In the absence of a binding death benefit nomination, the trustee has the discretion to pay the benefits of the deceased to any of their superannuation dependents instead of the estate (rather than according to the will, which only deals with the estate assets), and of deferring tax consequences. Where a nomination is in place, the benefits will be paid to the nominated beneficiaries.

It’s good practice to regularly review the need for any nominations to ensure your superannuation benefits will be passed on to your nominated beneficiaries, and that the nominations are valid and effective. Seek advice on the tax implications.

Example: Reviewing your strategy as circumstances change

As part of your estate planning strategy, you make a binding death nomination to provide for your under-age children who would receive the benefit tax free. You get advice to ensure that the nomination is valid and effective.

You provide for your older children, who would be taxed on receipt of superannuation death benefits, in your will.

After some years, when all of your children are older, you review your strategy and make a new nomination that better suits your family’s tax situation.

Because your personal circumstances change from time to time, it’s important that you regularly review the estate planning and income tax consequences when it comes to the distribution of your superannuation assets to your beneficiaries. Areas that warrant attention include:

  • the distinction between a ‘superannuation dependent’ and a ‘tax dependent’
  • interaction with testamentary trusts
  • effecting the reversion of a pension to spouse
  • realising fund assets for payment to beneficiaries

Feel free to contact us if you have any questions. Source: ato.gov.au
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/newsroom/smallbusiness/ . 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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ATO red flags for property investors

Aussie investors have long had a passion for property investment, but it’s also become a key focus for the ATO when it comes to spotting errors in tax returns.

The ATO estimates it’s missing out on around $9 billion in unpaid taxes by property investors and it’s planning a major crackdown over the next three years on rental property income and expenses reporting.

It will be using AI analysis and extensive data-matching from a variety of sources (such as rental bond and agent information), to identify returns for audit and further investigations.

What is drawing the ATO’s attention?

If you want to avoid attracting attention, it’s worth knowing the ATO’s red flags when it comes to property investor tax returns. They include:

1. Claiming deductions incorrectly

Only claim expenses when your property is genuinely available for rent and be ready to prove it. The ATO may expect to see evidence of both an active marketing campaign and a competitive rental price.i

Claiming 100 per cent deductions for a property used for private purposes at any time – or only available for certain parts of the year – risks closer attention.

Another risky practice is claiming a deduction for a special body corporate levy. Although body corporate levies are claimable for routine maintenance of common property, special levies for capital expenditure cannot be claimed until the capital works are complete.

2. Failing to declare rental income

The ATO is particularly interested in property investors who misreport their rental income and is identifying discrepancies by cross-referencing bank transactions, property records and property transaction databases.ii

Data is also being collected from short-term rental platforms like Airbnb, real estate agents and rental bond authorities to confirm the accuracy of investors’ income reporting, so full disclosure is essential.

The detailed information the ATO now has access to allows it to identify patterns of non-compliance, and individuals who may be underreporting income, or overclaiming expense deductions.

3. Misclassifying capital improvements

Confusing repairs and maintenance with capital improvements is a common error.iii

Remember that repairs (such as replacing a broken window) are deductible but upgrades like a new kitchen or bathroom are capital works that must be depreciated over time.

4. Cherry-picking expense apportionment

The ATO is increasingly taking a close look at jointly owned rental properties to check that both income and expenses are split according to the legal ownership share.

Claims cannot be skewed towards an owner in the higher tax bracket so if you own 50 per cent of a property, you can only claim 50 per cent of the expenses.

Joint investors also need to be aware of the CGT implications when they sell or dispose of a property. The ATO is using its data matching capabilities to identify unreported CGT events.

5. Incorrectly claiming loan interest

Note that only the interest on the investment portion of your loan is deductible. In other words, claiming a deduction for interest payments on a loan that’s been used in part for personal expenses is not on.

If you redraw funds from your investment loan for personal use (such as a holiday or to purchase a new vehicle) only the interest relating to the investment portion is deductible.

Keep clear and detailed records and apportion your interest expenses accurately, or you are likely to face an audit.

How to survive an ATO audit

One of the simplest ways to avoid problems is to keep the claims you make for your rental property investments straightforward and accurate.

Ensure you keep detailed documentation supporting all your claims, so you can prove they are legitimate and correctly calculated.

The ATO has released an updated version of its Rental Properties Guide to assist taxpayers and make sure their returns are correct.

For more information on how to correctly meet your tax obligations for property investments, call our office today.

i Rental property genuinely available for rent | Australian Taxation Office

ii Rental income you must declare | Australian Taxation Office

iii Repair and maintenance expenses | Australian Taxation Office

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Market movements and review video – October 2025

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

Australia’s economy showed resilience in September, with inflation remaining sticky and the RBA holding rates steady at 3.6%.

Despite the August/September period noted for being seasonally weak, markets remain at near record levels.

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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Strategies for an unexpected retirement 

The best time to start planning for retirement is yesterday. 

But the second-best time? Today. 

About two-thirds of Australians retire earlier than they anticipated because of unexpected events such as job loss or redundancy, they need to care for a family member, have a sudden illness or injury, problems at work or a partner’s decision to retire.i 

But, whether you’re in your 50s, 60s, or even beyond, it’s never too late to take meaningful steps toward a more secure and fulfilling retirement. 

The good news is that with the right guidance and a few smart moves, you can still build a retirement plan that reflects your values, supports your lifestyle and gives you peace of mind. 

Where to begin 

Before you make any changes, it’s important to understand your current financial position. This includes: 

  • your superannuation balance 
  • other savings or investments 
  • debts such as your mortgage, credit cards and personal loans 
  • expected retirement income sources including the Age Pension, rental income and part-time work 

Boost your super 

Even if you’re starting later, there are ways to accelerate your super growth using: 

  • Salary sacrifice Contributing pre-tax income into super can reduce your taxable income while boosting your retirement savings. 
  • Personal contributions You may be eligible for a tax deduction or government co-contribution depending on your income. 
  • Catch-up contributions You may be eligible to add to your super but be aware of the caps on contributions.ii 

These strategies can be especially powerful in your 50s and 60s, when your income may be higher and retirement is on the horizon. 

It’s also a good idea to regularly consider your super investment options and review your risk tolerance and time horizon. 

Deal with debt 

If possible, getting your debt under control before you retire is a useful strategy. 

You could consider using your superannuation or other savings or downsize your home to pay off a mortgage or other loans. But first, it’s essential to carefully check the tax impact, the effect on your super and whether any potential government benefits will be affected. 

Reassess your lifestyle goals 

Retirement isn’t just about money, it’s about how and where you want to live, how much travel you’d like to do and if you’d continue to work part-time. 

Clarifying your lifestyle goals helps shape your financial strategy. It also ensures your retirement plan reflects your values, not just your bank balance. 

How much will I really need? 

Aim to create a retirement budget. Estimate your future expenses including housing, food, travel and healthcare and compare them to your expected income. This helps identify any shortfalls and guides your savings strategy. 

You will also need to consider the amount of time you might spend in retirement. This will depend on when you retire (planned or unexpected) and how long you live. This is called longevity risk. Given life expectancy is unpredictable, there is a possibility that your retirement savings may not last throughout retirement. 

Understand your entitlements 

Many Australians are eligible for government support in retirement, including: 

  • Age Pension Based on income and assets, available from age 67 (for those born after 1957). 
  • Concession cards For discounts on healthcare, transport and utilities. 
  • Rent assistance If you’re renting privately and receive the Age Pension. 

Even if you don’t qualify now, you may be able to restructure your finances to maximise future entitlements. 

Review regularly and remain flexible 

Retirement planning isn’t a one-time event. Life changes and so should your strategy. Regular reviews help you: 

  • Adjust for market movements or legislative changes 
  • Update your goals and spending patterns 
  • Ensure your estate planning is current 

Flexibility is key. Whether you retire gradually, take a sabbatical, or pivot to a new venture, your plan should evolve with you. 

Next steps 

Retirement planning is about taking the next step rather than chasing perfection. Whether you’re starting late or simply refining your strategy, every step you take now helps shape a more secure and meaningful future. 

And remember that retirement isn’t an end point. It’s a new beginning even if you retire earlier than you anticipated. With the right plan in place, you can step into this next chapter with clarity, confidence and purpose. 

We’d be happy to help you review your current retirement plan and identify any gaps in retirement goals and create a strategy should you need to retire earlier than expected. 

i Retirement and Retirement Intentions, Australia, 2022-23 financial year | Australian Bureau of Statistics 

ii Understanding concessional and non-concessional contributions | Australian Taxation Office 

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Succession planning that honours the business you built

For many small business owners, the company they’ve built is more than a livelihood, it’s a legacy. Building a successful business takes years of hard work and dedication and when you’re ready to retire or move on to the next chapter of your life, the path isn’t always clear. That’s where succession planning comes in. 

Whether your children have chosen different careers or there’s no obvious successor in sight, succession planning can be one of the most emotionally and financially complex aspects of running a business. 

Recent Australian research shows that most small businesses won’t be passed on to the next generation. In fact, nearly half of SME owners expect that when they retire it will result in the closure of the business or selling to someone outside the family.i 

Only 39 per cent anticipate a family member taking over, and just one-third have a documented succession plan in place. 

Without a clear plan, many business owners find themselves working well past the traditional retirement age. The reasons vary from lack of interest from family, uncertainty about valuation or simply not knowing where to start and the consequences can be significant. 

Who will take over your business? 

Succession planning isn’t just about protecting financial outcomes; it’s also about preserving relationships. When expectations are unclear or decisions are made under pressure, family dynamics can suffer. Open conversations, guided by a shared vision and professional advice, can help avoid misunderstandings and make sure that everyone feels heard. Even if the next generation isn’t stepping in, a thoughtful plan can honour your legacy and reduce stress for those around you. 

A plan also helps the business operate without disruption during change, which is vital for employees, customers, and stakeholders alike. 

Start early for a smoother exit 

The key to a successful business exit is planning early. 

A well-considered succession plan allows you to decide how and when you leave your business, rather than being forced to react to circumstances. 

A federal government succession planning template is a helpful starting point, but it’s just one piece of the puzzle. 

Planning ahead also helps avoid complications with the Australian Taxation Office. Transferring control or assets within a family business can trigger tax consequences, especially if the structure isn’t reviewed in advance. 

A strong succession plan should cover: 

  • whether you’ll retain any ownership or involvement post-transition 
  • how the successor will fund the purchase (if applicable) 
  • contingencies for unplanned events like illness or sudden death 
  • tax implications of asset transfers, CGT, GST, and restructuring 
  • a current business valuation and regular reviews 
  • legal documentation and buy-sell agreements 

If your business involves trusts, shareholder loans, or complex structures, it’s particularly important to seek professional advice. The ATO is actively reviewing transactions involving family wealth transfers, internal restructures, and use of concessions so clarity and compliance are key. Transactions of interest include assets being moved around within a private group; family member interests being restructured; accessing of concessions, exemptions and rollovers; settlement of shareholder/associate loans (Division 7A loans); and transfer of wealth through trusts.ii 

Get good advice 

Succession planning isn’t just about paperwork. Whether you’re preparing your business for sale, transferring ownership to a family member, or simply exploring your options, professional advice can make all the difference. 

We can help you to: 

  • choose the right tax structure 
  • understand the implications of buy-sell agreements 
  • prepare your business for valuation and sale 

If you’d like to start the conversation or review your existing plan, please contact our office. The earlier you begin, the more choices you’ll have and the more confident you’ll feel about your next chapter of your business. 

i Planning for life after business | Business Research and Insights 

ii Areas of focus 2024–25 | Australian Taxation Office 

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Market movements and review video – September 2025

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

Consumer sentiment continues to rise after the latest interest rate cut. 

A higher-than-expected jump in inflation figures may prompt the RBA to keep interest rates on hold at this month’s meeting 

August saw the S&P/ASX 200 edging higher, notching another all-time high. 

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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Planning is key as SMSFs enter new phase

Self-managed superannuation funds (SMSFs) have long been associated with older Australians and small business owners looking for greater control over their retirement savings.

But recent data suggests the sector is undergoing a quiet transformation.

Alongside tax reforms and persistent compliance challenges, younger people are slowly moving into the SMSF space. While 85 per cent of SMSF members are 45 years or older, there’s been significant growth in members aged between 25 and 34 years from just 2.4 per cent two years ago to around 10 per cent now.i

Almost 8,000 new SMSFs were established in the three months to the end of March 2025 with the number of new members increasing by 13,000. Australia’s SMSFs hold an estimated $1.02 trillion in assets with 26 per cent invested in listed shares and 16 per cent in cash and term deposits.ii

A new tax era

The new Division 296 super tax, due to apply from 1 July 2025, is aimed at those with total superannuation balances exceeding $3 million. An extra 15 per cent tax will apply to earnings on the portion of a member’s balance above $3 million, effectively lifting the tax rate on those earnings to 30 per cent.

What makes Division 296 particularly contentious is the inclusion of unrealised gains. For example, a share portfolio the SMSF holds has seen positive returns. Trustees may face tax liabilities on paper profits, even if assets haven’t been sold. This may cause issues for SMSFs holding illiquid assets such as property or farmland that has increased in value.

SMSF Australia and other industry bodies have raised concerns about fairness, complexity and the potential for unintended consequences.

Trustees with high balances should begin planning now before 30 June 2026, to consider asset rebalancing, contribution strategies and the timing of withdrawals. SMSF Australia recommends obtaining advice about your specific circumstances.iii

The advice gap

Despite the increasing complexity of SMSF regulation, the vast majority of trustees continue to operate without professional advice. While the number of SMSFs using financial advisers has grown to 155,000, up from 140,000 in 2023, some 483,000 are not using a financial adviser.iv

This could lead to costly mistakes, especially when navigating contribution caps, pension strategies or related-party transactions. SMSF Australia says that while there’s no legal requirement to obtain advice from a licensed financial planner, “unless you have the skills and expertise to do this yourself, it is certainly conventional wisdom to do so”.v

The compliance burden

Every SMSF must undergo an annual audit by an approved SMSF auditor. This includes verifying the fund’s financial statements and ensuring it is compliant with super laws. Trustees are also required to value all fund assets at market value as at 30 June each year, using objective and supportable data.

For property and other complex assets, valuations can be time-consuming and costly. The ATO recommends using qualified independent valuers when assets represent a significant portion of the fund or are difficult to assess. Auditors may request evidence such as comparable sales, agent appraisals or formal valuation reports.vi

Failure to maintain accurate records or provide sufficient documentation can result in audit delays, contraventions or penalties. Trustees must also ensure their investment strategy is regularly reviewed and documented, particularly when starting pensions or making significant contributions.

Looking ahead

As the SMSF sector evolves, trustees face a dual challenge: adapting to new tax rules and maintaining rigorous compliance. For those considering an SMSF – or already managing one – the message is clear. Getting financial advice can give you peace of mind when the rules are regularly changing.vii

With Division 296 to contend with and a younger demographic stepping in, the sector is poised for both growth and greater scrutiny.

Whether you’re a seasoned trustee or just starting out, now is the time to review your fund’s structure, seek expert guidance and ensure your paperwork is in order. The future of SMSFs may be more dynamic than ever, but it will also demand greater diligence.

Contact us if you have any questions.

i Highlights: SMSF quarterly statistical report March 2025 | Australian Taxation Office

ii Self Managed Superannuation Funds – SMSF quarterly statistical report March 2025 – Data.gov.au

iii Understanding Div296 I How will taxation of unrealised gains work

iv New SMSF trustees propel uptake of financial advice, but $1 trillion sector still has significant advice gaps | Vanguard Australia

v What are the rules for Financial Planners giving SMSF Advice? – SMSF Australia

vi SMSF administration and reporting | Australian Taxation Office

vii About SMSFs | Australian Taxation Office

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RBA Announcement – August 2025

At its latest meeting, the Reserve Bank Board announced it was lowering the cash rate from 3.85 per cent to 3.60 per cent.

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

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

You will be notified directly by your bank if and when they change their interest rate.

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

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Market movements and review video – August 2025

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

Interest rates and tariffs continue to influence markets globally.

After the RBA’s surprise move to leave rates on hold at its July meeting, soft inflation data has paved the way for a future rate cut.

The ASX 200 climbed to a fresh record high during the month of July. Wall Street also recorded all-time highs as tariffs begin to be locked in and AI investment takes off.

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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New financial year, new super rules 

With a new financial year underway, now’s the time for small business employers to check they’re across the latest changes to super obligations – from Superannuation Guarantee (SG) increases to updated balance contribution caps. 

Here’s a brief roundup of the super changes you need to be aware of from 1 July 2025. 

SG rate rises to 12% – what it means for you 

A key change small business employers need to be aware of is the increase in the SG rate to 12 per cent. 

This means you need to contribute a minimum of 12 per cent of your employees’ ordinary time earnings to their chosen super account. (Obviously, if your eligible employees have a higher percentage listed in an award or employment agreement, you need to pay this higher amount).i 

You should ensure all super and payroll calculations reflect the increased rate. 

Employees making voluntary contributions or salary-sacrificing should be encouraged to review their super arrangements to avoid exceeding their annual contributions caps. 

Make sure no employee is missed 

Now is a good time to check you are paying SG for all eligible employees. Before 1 July 2022 you didn’t have to pay SG for workers earning less than $450 a month. But you now have to pay super, regardless of how much they earn. 

Generally, all employees must be paid super, despite their employment status. This includes full-time, part-time and casual workers, temporary residents such as backpackers, company directors and family members. 

If an employee is under 18 years, SG must still be paid when they work more than 30 hours in a week. 

Reduced SG base for high-income employees 

The higher SG rate also affects the indexed maximum super contribution base used to determine the maximum quarterly limit for a high-income employee’s earnings base. 

From 1 July 2025, the quarterly maximum super contribution base is $62,500, which means the maximum SG payment amount per quarter is $7,500. The new limit is a decrease from the 2024-25 quarterly limit of $65,070. 

As an employer, you are not required to pay SG on the part of your employee’s earnings above this quarterly limit, so review your payroll settings to ensure they reflect the reduced cap. 

Annual contributions caps remain stable 

While knowing these super changes is important, it’s also essential to know what is not changing on 1 July 2025. 

The annual concessional contributions cap remains at $30,000, while the non-concessional contributions cap stays at $120,000. This means the three-year bring-forward cap also remains at $360,000 (The bring-forward rule allows those who are eligible to pay up to three years of after-tax super contributions in one year).ii 

While you’re not responsible for tracking employees’ contribution caps, it’s important to understand them because they may affect staff making voluntary contributions or salary sacrifice arrangements. 

Suggest that employees track all contributions entering their account and consider adjusting their super arrangements if they are nearing their annual cap. 

Balance caps increase 

The other key changes to be aware of is the increase in the general transfer balance cap (TBC) from $1.9 million to $2 million from 1 July 2025. The TBC is the limit on the total amount of super that can be transferred to the retirement phase. 

The total super balance cap (TSB), which includes all of an employee’s super and retirement phase accounts, is also increasing to $2 million. This cap is used to determine eligibility for non-concessional contribution and bring-forward arrangement amounts, carry-forward concessional contributions, spouse tax offsets and government co-contributions. 

The cap increases do not directly affect employers, but they may influence an employee’s decision on making additional super contributions or moving into retirement. 

If you would like more information about the new super obligations for 2025-26, contact our office today. 

i Super guarantee | Australian Taxation Office 

ii Concessional contributions cap | Australian Taxation Office 

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