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

×

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.

×

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.
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.

×

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. 

×

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

×

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.

×

Prepare for an SMSF shake-up in 2026

Self-managed superannuation fund (SMSF) trustees always have a lot on their to-do lists but the first few months of 2026 are likely to be busier than usual.

Topping the list is preparing for the introduction of Payday Super and the Better Targeted Superannuation Concessions on 1 July 2026.

Payday Super is a change to when you make your employees’ Superannuation Guarantee (SG) payment. From 1 July 2026, the SG must be paid to an employee’s super fund on payday and be received by the fund within seven business days. If you are taking on new employees or paying to a new super fund, these funds must be received within 20 business days.i

Employers are considered to have made a contribution when the fund receives it, not when they pay it, so SMSFs need to have the necessary systems set up and in place from 1 July.

Who’s affected?

The ATO has warned SMSF trustees that Payday Super should not be ignored.

If you are a business owner and pay contributions for yourself or your employees into an SMSF, the fund will be receiving more contributions and there will be increased administration requirements to deal with payment timing and record keeping.

The strict timing rules also come with tougher penalties and any delay may incur a Super Guarantee Charge, which is not tax deductible.

New clearing house partners

SMSFs also need to be prepared for closure of the ATO’s Small Business Superannuation Clearing House (SBSCH) from 1 July 2026.ii

Employers currently using the SBSCH should take immediate action to find an alternative. You could check your accounting software and payroll packages, which may already include super functions, or look at the options offered by commercial clearing houses or other software providers.

Failing to prepare for the SBSCH closure means you may risk a fine.

SuperStream updates

Payday Super’s 1 July start date will also usher in changes to contributions messaging within the SuperStream system, the electronic standardised format employers must use to make super contributions.iii

Changes include clearer error messaging and are designed to reduce employee contributions being rejected by the receiving super fund.

SMSF trustees need to ensure their internal systems are updated and ready to cope with the SuperStream changes, as timely and correct contribution payments are a key goal of the new rules.

According to ATO deputy commissioner Emma  Rosenzweig, one of the most common SMSF errors in this area is where the Electronic Service Address (ESA) was never activated with the provider or is no longer active.

This error means the employer receives a SuperStream error message but does not receive the matching refunded super contribution.

Prepare for earlier contributions

The ATO is encouraging employers not to wait until 1 July to start making Payday Super contributions to help improve the transition.

SMSFs should also ensure they are able to receive contributions via the New Payments Platform (NPP), as employers who currently use direct debit are being encouraged to move to faster payment methods such as EFT and NPP.

With contributions flowing in more regularly – rather than quarterly – it may also be timely to reassess your SMSF’s investment strategy and portfolio allocation to ensure it remains suitable for the shift in contribution flows.

High balance tax changes

Another thing to be mindful of is from 1 July 2026, SMSFs will need to be prepared for the commencement of the government’s much delayed Better Targeted Superannuation Concessions.iv

These new rules are intended to reduce tax concessions for individuals with a Total Super Balance (TSB) above $3 million.

Under the new rules, people with higher super account balances will face a higher 30 per cent concessional tax rate on the proportion of earnings corresponding to their TSB between $3 million and $10 million.

With a higher TBC in place for 2025-26, SMSFs should consider the implications of the new tax regime prior to making any pre-30 June contributions and potentially breaching the indexed thresholds in future financial years.

If you need help preparing your SMSF for the upcoming changes, contact our office today.

i Spotlight on… Payday Super | Australian Taxation Office

ii The Small Business Superannuation Clearing House is closing | Australian Taxation Office

iii SuperStream for employers | Australian Taxation Office

iv Better targeted superannuation concessions | Australian Taxation Office

×