Author: Glance Consultants

Can the cost of clothing be tax deductible?

Sometimes it can be, but only in limited circumstances.

The tax deductibility of expenditure on clothing is subject to strict ATO guidelines. These cover occupation-specific clothing, compulsory or registered non-compulsory uniforms and protective items.

Conventional clothing

What you can’t claim is the cost of conventional clothing, even where your employer expects you to observe a particular dress style. You might work in an office environment, and your employer expects you to wear a business suit to work, even though you wouldn’t have even bought the suit but for your employer’s dress requirements. While the cost of the suit might seem like a work-related expense, it is not deductible as it is conventional clothing that could also be worn outside of work. This makes it a private expense, even though it relates directly to your employment.

Conventional clothing includes business attire, non-monogrammed black trousers and white shirts worn by wait staff, non protective jeans and drill shirts worn by tradies and athletic clothes and shoes worn by PE teachers.

Occupation-specific clothing

On the other hand, occupation-specific clothing falls on the deductible side of the line, for example a chef’s distinctive chequered pants or a health worker’s blue uniform, including nurses’ stockings and non-slip shoes.

Compulsory uniforms

The cost of clothing that forms part of a compulsory uniform is generally deductible. A compulsory uniform is a set of clothing that identifies you as an employee of a particular organisation. Your employer must make it compulsory to wear the uniform and have a strictly enforced workplace policy in place.

You can only claim a deduction for shoes, socks and stockings if:

» They are an essential part of a distinctive compulsory uniform, and
» The characteristics (the colour, style and type) are an integral and distinctive part of your uniform that your employer specifies in the uniform policy, for example, airline cabin crew members.

You can claim for a single item of clothing such as a jumper if it’s distinctive and compulsory for you to wear it at work. An item of clothing is unique and distinctive if it:

» Has been designed and made only for the employer, and
» Has the employer’s logo permanently attached and is not available to the public.

Just wearing a jumper of a particular colour is not part of a compulsory uniform, even if your employer requires you to wear it, or you pin a badge to it.

Non-compulsory uniforms

You can only claim for non-compulsory work uniforms if your employer has registered the design with AusIndustry. This means the uniform has to be on the Register of Approved Occupational Clothing. Your employer will be able to clarify whether your uniform is registered.

Protective clothing

The cost of protective clothing is deductible, and covers such items as:
» Fire-resistant clothing
» Sun protection clothing with a UPF sun protection rating
» Hi-viz vests
» Non-slip nurse’s shoes
» Protective boots, such as steel-capped boots or rubber boots for concreters
» Gloves and heavy-duty shirts and trousers
» Occupational heavy duty wet-weather gear
» Boiler suits, overalls, smocks or aprons you wear to avoid damaging or soiling your ordinary clothes during your work activities.

Laundry and dry cleaning costs and repairs

You are entitled to a deduction for the cost of cleaning your deductible clothing. If you launder them at home, the Tax Office will allow you a deduction of $1 per load where the load contains only deductible clothing, or 50 cents per load where deductible clothing is mixed with other items.

You are entitled to claim the cost of dry cleaning deductible clothing, as well as the cost of mending and repairs.

Record keeping

You should keep receipts or other documentary evidence of your expenditure on buying, laundering or repairing deductible work clothing. Proof of laundering clothing at home can be in the form of diary entries.

Allowances

If your employer pays you a clothing allowance, this needs to be included in your assessable income, and you can only claim what you have actually spent.

Feel free to come and see us for advice as to whether your expenditure on work

Thinking of a Christmas stay in your SMSF property? Think again!

If your SMSF owns a beach house, country cottage or apartment that feels like the perfect Christmas getaway, this is your friendly end-of-year reminder: you and your family can’t use it over the Christmas and New Year period, not even “just for a week,” and not even if it’s sitting vacant.

It’s one of the most common SMSF traps, and it can lead to serious penalties. Here’s why, in plain English.

Why personal use is off-limits

SMSFs receive generous tax concessions but they come with strict rules. The big one is the sole purpose test. This means your SMSF must exist only to provide retirement benefits to members (and their dependants if a member dies).

Using an SMSF-owned property for a holiday gives you a personal benefit before retirement, which fails that test. The ATO is very clear: residential property held by an SMSF can’t be lived in, stayed in, or used as a holiday home by members or related parties.

“Related parties” covers anyone closely connected to you or the fund, including all fund members, your spouse, children (including adopted children), and wider family like parents, grandparents, siblings, uncles, aunts, nephews and nieces. It also extends to your business partners and any companies or trusts linked to you.

So even if the place is empty for a few weeks and you think “no harm done,” the rules say otherwise.

What if we pay market rent?

This is where people try to get clever and where things still go wrong.

Even if you pay what looks like market rent, leasing residential property to a member or relative is generally prohibited and can trigger other breaches.

One key problem is the in-house asset rule. If your SMSF leases an asset to a related party, that asset is usually treated as an in-house asset, and in-house assets must stay under 5% of the fund’s total value.

Because a holiday home is often a large chunk of an SMSF’s value, renting it to a related party almost always pushes you over that limit, unless your SMSF is extremely large.

And even if you somehow manage to remain under 5%, the ATO may still say the fund was being run partly for your lifestyle, not purely for retirement which brings you right back to the sole purpose test.

The bottom line is that paying rent doesn’t make it okay.

What if we are retired – can we use the holiday home then?

The answer is still no. Reaching preservation age or retiring doesn’t automatically give you the right to stay in or live in a property owned by your SMSF. The property remains a fund asset and using it personally would still be considered personal use of an SMSF asset.

If you want to live in the property after retirement, the usual pathway is to transfer the property out of the SMSF into your own name. This is called an in-specie transfer, which simply means the fund transfers the asset to you personally rather than selling it for cash.

Once the property is in your personal ownership, you can use it without breaching the sole purpose test, because it’s no longer an SMSF asset and you’re not receiving a benefit from the fund.

However, an in-specie transfer can only happen after you’ve met a condition of release, for example, retiring after reaching preservation age, or stopping gainful employment after age 60, meaning you’re legally allowed to access your super.

Alternatively, you may be able to buy the property from the fund yourself, provided the sale is conducted on a genuine arm’s-length, commercial basis.

It’s also important to get advice first, because transferring property out of an SMSF can have tax consequences, including potential capital gains tax (CGT).

What happens if you break the rules?

Breaches around personal use of SMSF assets are treated seriously. Possible consequences include:

» Significant administrative penalties on each trustee
» Being forced to unwind the arrangement
» Trustees being removed or disqualified
» And, at the very worst, the fund losing its complying status (which can mean a huge tax hit).

That’s a steep price for a week at the beach.

What can you do instead?

If your SMSF owns a holiday-style property, the safe approach is simple:
» Rent it to unrelated tenants at market rates, with a proper lease and evidence to support the rent
» Treat it like a real investment, not a family asset
» If you want a holiday there, book somewhere else like any other traveller.

Final word

At this time of year it’s easy to blur the lines between “investment property” and “our holiday place.” But with an SMSF, the lines are firm. If you’re unsure about what’s allowed, how your property is being used, or whether any past use could create an issue, contact us. We can explain the rules in your situation and help you keep your SMSF compliant while protecting your retirement savings.

The 50% CGT discount: More than meets the eye

There is much in the media about how the 50% capital gains tax (CGT) discount has contributed to the housing affordability problem in Australia (although no doubt the problem is a lot more complex than attributing it mainly to any taxation measure or measures).

Nevertheless, the CGT discount looms large for anybody who owns assets that are subject to CGT (and note in this regard a passenger car of any sort – including a vintage car – is not subject to CGT).

However, the 50% discount may even have relevance to your otherwise CGT-exempt home because you may be subject to a partial exemption due to the way you have used it to produce income or in some other cases.

Also, you may inherit a home and not satisfy the requirements for a full CGT exemption!

But the rules for applying the discount are not as straightforward as you would think.

For example, in any case where you make a capital gain you must first apply any prior year or current year capital losses you have before you apply the discount – and this in effect dilutes the value of the discount.

And if the gain arises from the sale of a business asset and if you qualify for the CGT small business concessions, there are other rules to consider before applying the discount (if at all).

Importantly, the full 50% CGT discount is generally not available to foreign residents for assets they acquire after 8 May 2012 (but an apportionment may be applied for any period of residency before becoming a foreign resident).

Further, even if you are a resident when you sell an asset, the 50% discount may be lost to the extent you were not a resident during the period you otherwise owned it.

But these rules are very messy and need to be looked at closely if the need arises.

Note that not all taxpayers can use the discount. For example, a company does not get it (albeit, it has lower tax rate of generally 30%). And superfunds (including SMSFs) are only entitled to a 331/3% discount.

Likewise, not all capital gains qualify for the discount.

Typically, capital gains which arise from granting legal rights to another person or entity do not qualify for the discount – such as gains from granting a restrictive covenant to your employer or granting an easement over land.

Finally, in order to qualify for the CGT discount, you must have owned the asset that gave rise to the capital gain for at least 12 months – and the ATO takes the view that this does not include the day you legally acquired the asset nor the day you sold it.

So, it really means you need to have held the asset for 367 days – or 368 days in a leap year!

As with anything to do with tax, even the CGT discount is not straightforward. So, as always, make sure you seek our advice on any such matters.

Could you be missing out on thousands in lost super?

Most of us keep a close eye on our bank accounts. But superannuation can be easier to lose track of, especially if you’ve changed jobs, moved house, changed your name, or simply set up a new fund and assumed everything followed you.

That’s why the Australian Taxation Office (ATO) has issued a timely reminder. There is now $18.9 billion in lost and unclaimed super sitting across Australia. That’s up $1.1 billion since 2024 and spread across just under 7.3 million accounts.

In other words, a lot of Australians have retirement savings that aren’t currently working for them and some of it could be yours.

WHAT “LOST” OR “UNCLAIMED” SUPER ACTUALLY MEANS

Super doesn’t vanish, but it can go missing from your radar. It typically happens when an account becomes inactive and your super fund can’t contact you, or when you end up with multiple funds over the years.

The ATO also holds certain amounts of super on behalf of individuals, for example, small inactive balances that have been transferred to the ATO, or other unclaimed amounts.

The average amount of lost or unclaimed super is around $2,590 per person. That might not sound life-changing today, but over time it can grow into tens of thousands by retirement.

A SPECIAL NOTE IF YOU HAVE AN SMSF

If you have an SMSF, this ATO update is particularly worth paying attention to. When you established your SMSF, you might have transferred most of your super across, but kept some behind, for example, to retain insurance cover through another fund.

That means there could still be older super accounts from past jobs or retail/industry funds sitting in your name.

The ATO is urging SMSF members to do a check, because a share of the $18.9 billion in lost and unclaimed super might be yours and could be rolled into your SMSF.

One important practical tip is that if you locate lost super and want to move it into your SMSF, but your SMSF doesn’t show up as a transfer option in ATO online services, it’s often due to the fund’s compliance status. Take a moment to confirm your SMSF is listed as “complying” or “registered” on Super Fund Lookup.

HOW TO CHECK FOR LOST SUPER (IT ONLY TAKES MINUTES)

The ATO has made this super simple (pun intended!).

You can:

1. Log in to myGov and go to ATO online services

2. Navigate to the Super section to view:
» Super held by the ATO
» Any lost or unclaimed accounts

3. Request a transfer to an eligible super account.

Even if you don’t find anything, you’ll at least know everything is where it should be.

SIMPLE HABITS THAT HELP YOU STAY ON TOP OF SUPER

Finding lost super is great but preventing it from happening at all is even better. A few easy habits can make a big difference:

» Keep your details up to date with your fund and the ATO so you stay contactable.
» Check whether you’ve got more than one account.Multiple accounts can mean multiple fees and duplicated insurance.
» Consider consolidating if it suits your situation. Fewer accounts can mean lower fees and easier management but just be sure to check any insurance you might lose before rolling over.
» Read your annual statement. It’s a quick way to confirm contributions, fees, returns, investment mix and beneficiaries.

WHY ACTING NOW MATTERS

Since 2022, the ATO has already reunited Australians with about $5.5 billion in previously unclaimed super.

But there’s still nearly $19 billion waiting to be found.

A few minutes today could translate into a healthier retirement balance later.

FINAL WORD

It’s easy to put super in the “deal with it later” basket, but it’s still your hard-earned money. If you want a hand finding lost super, combining accounts, or moving money into your SMSF, reach out to us. We can guide you through the steps and make sure you’re able to claim any lost super without any hassles.

Who can make a claim against a deceased estate?

In Australia, the law recognises that a will maker may sometimes fail to make adequate provision for close family or dependants. In that situation, certain people can ask the Supreme Court for a share, or a larger share, of the deceased’s estate.

This is usually called a family provision claim or a claim against a deceased estate.

Although each state and territory has its own Act, they all broadly follow the same idea:

» You must be an eligible person, and
» You must show that you’ve been left without adequate provision for your proper maintenance and support.

Who is generally allowed to claim?

The exact list differs slightly by state, but across Australia the following categories are commonly eligible:

1. Spouses and de facto partners

» A husband or wife at the time of death.
» A de facto partner who was living with the deceased in a genuine domestic relationship.

2. Children

» Biological and adopted children are generally eligible in every jurisdiction.
» Step-children may be eligible in some states either directly (for example in Victoria and Western Australia) or where they were financially dependent or part of the deceased’s household.

3. Former spouses or partners
Most states allow a former spouse or domestic partner to claim, usually where there has not already been a full and final family law property settlement, or where there are special “factors warranting” an application.

4. Other dependants
Many Acts also allow claims by:

» Grandchildren who were financially dependent on the deceased or were, in substance, brought up by them.
» Other household members (for example, a step-child, parent, or other relative living in the same household) who were wholly or partly dependent on the deceased.
» A person in a “close personal relationship” with the deceased. This might include a long-term carer or companion providing domestic support and personal care. This is most clearly recognised in New South Wales but similar ideas appear elsewhere.

Because the detail differs, someone who is eligible in one state may not be eligible in exactly the same way in another, so local advice is important.

Being eligible is only the first step

Even if you fit into one of these categories, the Court will not automatically change the will. It must decide whether, looking at all the circumstances, adequate provision has been made for you.

Across Australia, courts generally look at similar factors, such as:

» The nature and length of your relationship with the deceased
» Any obligations or responsibilities the deceased had towards you (compared with other beneficiaries)
» The size and nature of the estate
» Your financial position, health, age and future needs
» Any significant contributions you made to the deceased or their property
» Any gifts or support you already received during the deceased’s lifetime
» Any serious misconduct or long-term estrangement, in appropriate cases.

Judges often talk about “what a wise and just” person, or what the “community” would generally regard as fair in the circumstances would have done, without simply rewriting the will from scratch.

Time limits and next steps

Time limits to make a family provision claim are strict and vary by state. The Court will only extend time beyond these time limits in limited situations.

If you think you may have a claim, it is generally sensible to get prompt advice from a wills and estates lawyer.

Surviving (and maybe avoiding) an ATO audit

This piece is aimed at self-employed clients, so if you’re a salary earner or a retiree you can safely move on to the next item.

For others, it goes without saying that at tax time you should disclose all your assessable income and only claim legitimate business deductions.

Failure to do so exposes you to the risk of penalties and interest on top of the underpaid tax.

And the chances of popping up on the ATO’s radar are not negligible. It runs an active small business compliance program that uses industry benchmarks and other information, including “dob ins” received from community members.

Cash jobs

Offering a discount for cash for a lower price might seem tempting, but it suggests an intention of under reporting income.

Tradies and the like occasionally fall out with their clients, some of whom might then report them to the ATO and those “dob ins” can lead to audits being conducted. The practice remains widespread, but you should avoid doing cash jobs – there’s a good chance they will come back to bite you.

Benchmarks

The Australian Tax Office keeps extensive data of industry benchmarks for many industries, tracking gross income, expenses and profits margins. Its website suggests this data enables you to see how you compare with your peers and perhaps identifies areas for improvement. But it also gives the ATO a way of identifying potential audit cases.

If your trading results are well below the industry average, you might want to think about what some of the reasons for that might be. These could include:

» Ill health suffered by yourself or a close family member
» A long holiday
» Your café or retail business is not in the best location
» Competition from similar businesses operating nearby
» You’re inexperienced or just not a great business person.

Averages are just that, and some businesses will be under while others are over. Having an idea of where you sit on the spectrum and why may help you engage with the ATO if and when the time comes.

Lifestyle factors

Another way of identifying cases suitable for audit is for the ATO to assess whether your apparent lifestyle matches the net income disclosed in your tax returns.

If you drive a flash car, take expensive holidays, have your children in private schools, have had major home renovations done or get around wearing a Rolex while your disclosed income doesn’t support such a level of spending, you might have some explaining to do.

The audit

If, for whatever reason, the ATO isn’t satisfied that the taxable incomes you have disclosed are correct, they can make their own estimate using whatever information is available. Any amended default assessments will generally be based on a bank account analysis, as well as estimates of private spending. They can’t just pluck a figure out of the air, but they don’t have to prove where the discrepancy came from either.

Those without complete and accurate records of both their business and private finances are vulnerable to adjustments that involve double counting, especially from a bank analysis that assumes that every unexplained deposit represents undisclosed income and every unexplained withdrawal was used to fund private expenditure. As often as not the two are offsetting but the taxpayer can’t prove it.

To challenge a default assessment a taxpayer has to show not only that the ATO’s estimate is wrong in some respect – they also have to show what their correct taxable income is. The courts and tribunals are littered with default assessment cases where the taxpayer has failed in this regard, leaving them with a very large tax bill.

Protective measures

Here are some of the practices that might assist you in an ATO audit. Most of them would need to be in place before an audit even starts:

» Keep your private and business accounts separate
» Avoid using cash for business transactions
» Never run private expenditure through your company account
» Keep documentary evidence of gifts, loans and other non-taxable receipts that flow through your bank accounts. Create a written record of such transactions as they occur
» Be prepared to explain any apparent discrepancies between your lifestyle and the income disclosed in your tax returns
» If you have made a mistake or two, consider making a voluntary disclosure when you are notified of the audit but before it starts. This could help reduce penalties
» Ensure you have books of account and bank records that verify the taxable income disclosed in your tax returns.

Come and see us to help get you ready for an ATO audit (or avoid one altogether).

Click to view our Glance Consultants December 2025 Newsletter via PDF

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Christmas and tax

With the festive season fast approaching, business owners will be turning their mind to year-end celebrations with both employees and clients.

Knowing the rules around Fringe Benefits Tax (FBT), GST credits and what is or isn’t tax deductible can help keep tax costs to a minimum.

Holiday celebrations generally take the form of Christmas parties and/or gift giving.

PARTIES

Where a party is held during a working day, on business premises, attended by current employees only and costs less than $300 a head (GST-inclusive), FBT does not apply. However, the cost of the function will not be tax deductible and GST credits cannot be claimed.

Where the function is held off business premises, say at a restaurant, or is also attended by employees’ partners, FBT applies where the GST-inclusive cost per head comes to $300 or more, the costs are tax deductible and GST credits are available.

However, FBT will not apply where the per person cost is below the $300 threshold if it can reasonably be regarded as an exempt minor benefit – ie, one that is only provided irregularly and infrequently. Where FBT does not apply because of the minor benefit rule, the cost will not be deductible and GST credits will not be available.

Where clients also attend, FBT will not apply to the cost applicable to them, but those costs will not be tax deductible and GST credits will not be available.

Where there is a mix of attendees, you may need to keep track of who participated in the function.

GIFTS

First, you need to work out whether the gift itself is in the nature of entertainment – for example, movie or theatre tickets, admission to sporting events, holiday travel or accommodation vouchers.

Where the recipient of an entertainment gift is an employee (or an associate of an employee) and the GST-inclusive cost is below $300, the minor benefit exemption should apply so that FBT is not payable, in which case the cost will not be tax deductible and GST credits are not claimable. For larger entertainment gifts to employees, however, FBT applies, the cost is
deductible and GST credits can be claimed.

Where the gift is not in the nature of entertainment and it falls below $300, the FBT minor benefit exemption should apply – for example, Christmas hampers, bottles of alcohol, pen sets, gift vouchers.

But because the entertainment rules don’t apply, the cost of the gift is tax deductible and GST credits are claimable.

Where a gift is made to a client, the $300 FBT minor benefit exemption falls by the wayside, but as long as it is not an entertainment gift and it was made in the reasonable expectation of creating goodwill and boosting future business it should be deductible to the business. GST credits are also claimable, while the amount is uncapped (within reason).

BEST APPROACH FOR EMPLOYEES

Provided partying is not a regular thing in your business, taking employees out for Christmas lunch escapes the FBT net, as long as the cost per head stays below the $300 threshold. While the cost of the function will be non-deductible, and no GST credits are available, that generally has less of a cash-flow impact on the business than the grossed-up FBT amounts.

For employees and their associates, non-entertainment gifts under $300 are a good way to go.

Making a non-entertainment gift costing up to $299 is a very tax effective way of showing your appreciation.

And because the $300 cap applies separately to each benefit, depending on how generous you feel, you could also make a gift costing up to $299 to the partner or spouse of an employee, which effectively doubles the $300 minor benefits cap.

Where the cost of a non-entertainment gift costing up to $299 is not subject to FBT, it will be tax deductible, with an entitlement to GST credits, giving you the best of both worlds.

BEST APPROACH FOR CLIENTS

While FBT is off the table for business clients, making a non-entertainment gift (tax deductible; no dollar limit within reason) is actually much more tax effective than wining and dining a key client (non-deductible entertainment). If you put some thought into what gift to buy a client and perhaps deliver it yourself, you might make much more of an impact than inviting them to share a restaurant meal in their already crowded Christmas calendar.

If you’re not sure and you need help in sorting out the tax treatment of your upcoming holiday celebrations and gifting, don’t hesitate to give us a call.

Reducing your tax bill while topping up your super

Let’s say you’ve just sold the house you inherited from your parents 12 years ago for $1.3 million.

You’ve been renting it out for most of that time, but the property market has been hotting up and you were told by several real estate agents that they could get youa good price. But what about the tax consequences?

At age 50, you’re still working (salary of $120,000 per annum), having returned to the workforce in July 2023 following a five year absence for personal reasons. You don’t expect to retire from paid employment until age 65 at the earliest. Your total super balance on 30 June 2025 was $300,000, sitting in a retail fund.

Your accountant has calculated the net capital gain on selling Mum’s house as $600,000. After applying the 50% CGT discount, this results in a taxable income of $420,000, and a whopping tax bill of $163,538 to go with it. Can anything be done?

Depending on your superannuation history, there may be a legitimate way of taking a big chunk out of that tax bill while topping up your super at the same time.

Concessional super contributions are subject to an annual cap, which is set at $30,000 for the 2025-26 income year. That figure is well above the mandatory employer super guarantee amount for most income levels. Many people don’t go close to using up their concessional contribution caps, which can leave them with carry-forward concessional contributions.

To help people with modest total super balances (below $500,000 on the previous 30 June), the government gives them the option of using some or all of their previously unused concessional contributions cap on a rolling basis for five years – ie, the five previous income years from 2020-21 to 2024-25, plus the current year (2025-26).

Conveniently, the ATO keeps track of your carry-forward concessional contributions balance, which you can look up on myGov.

The beauty of this arrangement is that you can use your catch-up concessional contributions to make personal deductible contributions, which can offset part of the CGT gain from the sale of the inherited property. Instead of being taxed at the top marginal rate of 47%, the amount of the catch-up contribution is taxed at the normal rate of 15% in your super fund, which creates a net saving of 32% on the contributed amount.

It is not unusual for someone to have carry-forward concessional contributions in excess of $100,000, which would take your taxable income down to $320,000, with tax payable of $116,538, or $47,000 less than what your tax bill would be without making the tax deductible catch-up contribution. That tax saving has to be reduced by $15,000 in contributions tax payable by your super fund, for a net saving of $32,000.

Remember, however, that any super contributions you make at age 50 will not be accessible until you reach preservation age (60 if retired or 65 if you’re still working).

If you have other plans for that $100,000 (and you did pocket $1.3 million on the house sale) you will need to weigh up your options. But locking up a small part of the house proceeds seems like a small price to pay for a $32,000 tax saving.

On the other hand, if you have an appetite for putting even more money into your super, you might want to consider also making a non-concessional contribution of up to $360,000. This is not tax deductible and there is no 15% contributions tax when paid into your fund.

That covers the tax side of things but since you have received a life-changing windfall, you should consider getting advice from a licensed financial adviser.

If you find yourself in this situation, come in and see us well before 30 June 2026. If you decide to go ahead with making a catch-up contribution the super fund has to be notified, which we can help you with.

Division 296 tax revisited

Big news for anyone with a large super balance – the government has gone back to the drawing board on the controversial Division 296 tax, and the changes are a big step toward fairness and common sense.

A quick recap

When the Division 296 tax was first announced in 2023, it caused an uproar. The main problem? It would have taxed unrealised gains, that is, paper profits you haven’t actually made yet and set a $3 million threshold that wasn’t indexed meaning it wouldn’t rise with inflation.

After a wave of feedback from the industry, the government has listened. The Treasurer’s new announcement, made in October 2025, fixes some of the biggest issues. The revamped version is designed to be fairer, simpler, and more in line with how tax usually works.

The plan is to start the new system from 1 July 2026, with the first tax bills expected in 2027–28.

What’s changing

Here’s what’s new under the revised Division 296 tax:

» Only real earnings will be taxed. No more tax on unrealised gains as you’ll only pay on earnings you’ve actually made.
» Super funds will work out members’ real earnings and report this to the ATO.
» The $3 million threshold will be indexed to inflation in $150,000 increments, keeping pace with rising costs.
» A new $10 million threshold will be introduced. Earnings above that will be taxed at a higher rate of 40%, and that threshold will also rise with inflation.
» The start date is pushed back to 1 July 2026, giving everyone more time to prepare.
» Defined benefit pensions are included, so all types of super funds are treated the same.

So what does this mean in practice? Think of it as a tiered tax system:

» Up to $3 million – normal super tax of 15%.
» Between $3 million and $10 million – taxed at 30%.
» Over $10 million – taxed at 40%.

Basically, the more you have in super, the higher the tax rate on your earnings above those thresholds.

How it will work

Super funds will continue reporting members’ balances to the ATO, which will figure out who’s over the $3 million mark. If you are, your fund will tell the ATO your actual earnings (not paper gains). The ATO will then calculate how much extra tax you owe.

We don’t yet have the fine print on what exactly counts as “realised earnings,” but it’s likely to mean profits you’ve actually made, similar to how taxable income is treated now.

What’s still up in the air

While these updates make the system much fairer, there are still a few unanswered questions:

» What exactly counts as “earnings”? Will it only include profits made after 1 July 2026, or could older gains that are sold later be included too?
» What happens with capital gains? Super funds usually get a one-third discount on capital gains for assets held over a year, but it’s unclear whether that will still apply.
» How will pension-phase income be handled? Some super income is tax-free when you’re in the pension phase, and we don’t yet know how that will interact with the new rules.
» Can people with over $10 million move money out? If your earnings above $10 million are taxed at 40%, you might want to shift funds elsewhere but the government hasn’t said if that’ll be allowed.

What it means for you

If your super balance is over $10 million, the proposed rules mean that a portion of your superannuation earnings could attract a higher tax rate of up to 40%.

For people with between $3 million and $10 million, the new system could also change how much tax applies to their super earnings, depending on how the final legislation defines “realised gains.”

But don’t rush. These rules aren’t law yet, and if you take your super out, it’s hard to put it back because of contribution limits.

It’s best to wait for the final legislation and get professional advice before making any decision to withdraw benefits from super.

Home Equity Access Scheme: What you need to know

For many older Australians, having wealth tied up in the family home can make day-to-day expenses challenging. The Home

Equity Access Scheme (HEAS) is a government-backed program that allows eligible seniors to unlock some of the value in their home without selling it.

WHAT IS HEAS?

HEAS is essentially a reverse mortgage run by the Australian Government. If you are of age pension age and own real estate in Australia, you can apply for regular loan payments from the government. These payments come in either fortnightly instalments or up to two lump sums per year.

It’s designed to help retirees who may not qualify for a full pension or who need extra income. The loan is secured against your property and is not considered taxable income. You don’t need to make repayments while you’re alive, though interest does accumulate.

WHO CAN APPLY?

You may be eligible if:

» You are age pension age.
» You or your partner own real estate in Australia.
» You receive a part or no pension, or would qualify if not for the assets or income test.
» You’re not bankrupt and your property is properly insured.

Even self-funded retirees can access this scheme, as long as they meet the age and property requirements.

HOW MUCH CAN YOU BORROW?

You can receive:

» Fortnightly payments up to 150% of the full age pension.
» Advance lump sums up to 50% of the annual age pension, taken once or split into two payments every 26 fortnights.

The total amount you can borrow depends on your age and the value of your home. The government uses a formula that includes an age-based component, so older applicants can usually borrow more.

You can also nominate an amount to exclude from your property value if you want to preserve equity and leave something for your family.

WHAT ABOUT INTEREST AND REPAYMENT?

The current interest rate is currently 3.95% per annum (compounding fortnightly). The loan does not need to be repaid until:

» You sell the property.
» You pass away.
» You choose to repay early.

When the loan ends, your estate or surviving partner will repay the debt. The scheme’s “No Negative Equity Guarantee” ensures that you’ll never owe more than your home is worth.

KEY BENEFITS

» No regular repayments required during your lifetime.
» You remain the owner of your home.
» Flexibility to adjust or stop payments.
» Peace of mind through the No Negative Equity Guarantee.

THINGS TO CONSIDER

Before applying, think about:

» How much of your home equity you’re willing to give up.
» The long-term impact on your estate and inheritance.
» Alternative options like downsizing or private loans.
» Making sure your property stays well maintained and insured.

FINAL WORD

HEAS can be a smart way to boost your retirement income while staying in your home. But it’s a long-term decision. If you would like to know more, give us a call so we can weigh your options carefully to make sure it suits your lifestyle and future plans.

Renting your holiday home

With summer just around the corner and beach holiday homes back on the agenda, perhaps it is time to revisit a few tax matters about their use. And the big issue is how you claim expenses if your holiday home is only rented for part of the year.

The ATO takes the view that you can claim expenses for the property based on the extent that they are incurred for the purpose of producing rental income, but you’ll need to apportion your expenses if your property is available for rent for only part of the year.

Moreover, it has to be genuinely available for rent! The ATO says that factors that may indicate a property isn’t genuinely available for rent include:

» It’s advertised in ways that limit its exposure to potential tenants; eg, the property is only advertised at your workplace or on restricted social media groups.
» The location, condition of the property, or accessibility of the property mean that it’s unlikely tenants will seek to rent it.
» You place unreasonable or stringent conditions on renting out the property that restrict the likelihood of securing renters; eg, setting the rent above the rate of comparable properties in the area, requiring prospective users to give references for short holiday stays and conditions like “no children” and “no pets”.
» You refuse to rent out the property to interested people without adequate reasons.

The ATO also requires you to apportion your expenses if you charge less than market rent to family or friends to use the property. And in this case, the general rule is that you can only claim expenses up to the amount of rent derived – so that you have a tax-neutral outcome.

Importantly, the ATO also says that it may not be appropriate to apportion all expenses on the same basis. For example, expenses that relate solely to the renting of your property are fully deductible and you don’t need to apportion them based on the time the property was rented out. Such expenses include real estate commissions and the costs of advertising for tenants.

And again, you can’t claim a deduction for expenses that relate to periods when the property is not genuinely available for rent or periods when the property is used for a private purpose or for the part of the property that isn’t rented out – eg, the cost of cleaning your holiday home after you, your family or friends have used the property for a holiday, or a repair for damage.

Oh, and finally just a word on selling the property.

If you have never lived in it as your home, then you will be subject to CGT if you sell it (unless you bought it before 20 September 1985). And this will be the case regardless of whether you only used it as a holiday home or you partly rented it as well.

Importantly, in calculating the capital gain you can include in its cost all the non-deductible costs of owning or holding the property such as mortgage interest, insurance, repairs, council rates, etc, – and even the cost of having the lawns regularly mown. However, you will need to have kept appropriate records of these expenses if you wish to use them.

And of course, you are entitled to the 50% CGT discount to reduce the amount of any assessable gain.

These then are some of the important factors you need to keep in mind about tax and holidays homes.

But there are a lot more things that you need to know. So, come have a chat to us if you want some help.

Using your home to produce income

In contrast to holiday homes, what happens where you use all or part of your home to produce assessable income? Well, there will be important capital gains tax (CGT) consequences – the most important of which is that you will be likely to lose some of your CGT exemption on the home. However, the rules about possible partial CGT exemptions on homes are quite complex and they will depend on how exactly you used your home to produce assessable income.

For example, in the simple case, if you vacated your home and rented it for a period of up to six years you can choose to use the “absence concession” to continue to treat it as your CGT-exempt home during this period of absence.

In other words, you won’t lose your CGT exemption at all in this case.

But there is one important proviso: during this period of absence no other home can qualify as your CGT-exempt home.

Nevertheless, applying this rule is not entirely straightforward. There are important considerations to bear in mind.

On the other hand, if you only use a part of your home to produce assessable income then you cannot use this absence rule and in most cases you will generate a partial CGT liability on your home. This will typically occur when for example you rent a room in the home, carry on a business from part of the home (eg, a professional practice) or construct a granny flat and rent it out.

But note that if you only rent part of the home to a friend or a relative and do not charge commercial rent, you will not trigger this rule about losing part of your CGT exemption as you have not used the home to produce assessable income.

Also note that because you have used part of your home to run a business, you may be eligible to apply the CGT small business concessions to reduce, eliminate, or roll over any capital gain arising from the business use of your home.

However, it is not as easy as it seems to qualify for these concessions – and our advice should be sought on any such matter.

There is also another important rule which is often overlooked when a home is first used to produce assessable income – and that is that the home will be considered to have been reacquired for its market value at that time. This will help reduce the amount of the assessable capital gain that is calculated.

And finally, the 50% CGT discount is available to reduce the amount of any assessable gain from using part of your home to produce any form of assessable income – as long as you have owned it for at least 12 months.

So if you have this type of CGT issue in relation to probably your most valuable asset, come speak to us first before selling your home.

Click to view Glance Consultants November 2025 Newsletter via PDF

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From 1 July 2026, a major shift is coming in how superannuation contributions are made by employers in Australia — and it’s vital for businesses to understand what’s changing. Here’s what your firm needs to know to get ahead.

What’s changing?

Currently, most employers remit superannuation contributions under the Superannuation Guarantee (Administration) Act 1992 on a quarterly basis. Under the new reforms – commonly referred to as “payday super” – employers will be required to make super contributions at the same time as wages or salary payments are made (that is, each payday).

Key obligations include:

• Ensuring super contributions are received by the employee’s super fund within seven business days of the employee’s pay day.

• Reporting via payroll systems (such as Single Touch Payroll, or STP) both the qualifying earnings and the corresponding super liability.

• Adjusting the definition of earnings for super contributions to the new “qualifying earnings” concept, which aligns closely with ordinary time earnings.

Why is this happening?

The main goals behind payday super are:

• Reducing unpaid superannuation: The Australian Taxation Office (ATO) estimates billions of dollars in super go unpaid each year.

• Helping employees grow their super sooner: More frequent contributions mean earlier compounding investment returns for employees.

• Improving compliance and transparency: Closer alignment between payroll and super payments makes it easier for the ATO to detect and act on late or missing contributions.

What this means for employers

For businesses, these reforms bring both challenges and opportunities.

Cash-flow & timing
Because contributions must now align more closely with each payday, employers will need to ensure their payroll-to-super payment processes are fast and reliable. Late or incorrect payments may trigger penalties or additional scrutiny.

Systems and processes
Payroll systems will need reviewing and, in many cases, upgrading. Employers should ensure wage codes are correct, clearing houses or super funds can process contributions quickly, and that STP reporting is accurate.

Risk of non-compliance
The ATO has indicated that risk categories (low, medium, high) will be applied during the first year of implementation. Employers who make genuine attempts to comply and correct errors promptly will likely be treated more leniently.

Small business impact
Smaller employers may experience greater cash-flow pressure or face higher administrative costs as they transition to the new rules. Planning ahead will be crucial.

What steps should you take now?

To be ready for payday super, employers should:

• Review payroll and super workflows to ensure contributions can be made within the new timeframe.

• Audit wage codes and payroll categories to confirm they correctly map to super obligations.

• Upgrade systems and liaise with providers to confirm their readiness for more frequent payments.

• Check STP and reporting accuracy to ensure all required data fields are up to date.

• Plan for cash-flow adjustments, especially if you’ve been paying super quarterly.

• Train payroll and HR teams so they understand the changes and can respond quickly to issues.

• Monitor legislative updates, as further details may emerge before the 2026 start date.

While payday super will require preparation and adaptation, it also offers an opportunity for employers to modernise payroll systems, reduce compliance risk, and improve employee satisfaction.

At Glance Consultants, we help employers navigate evolving superannuation and payroll requirements with confidence. If your business needs assistance reviewing payroll processes, assessing compliance risks, or preparing for the upcoming payday super reforms, our experienced team is here to help.

Protecting your super from scams

With more than $4 trillion in superannuation, it’s no surprise scammers see it as a goldmine. ASIC has warned Australians to be on high alert after a rise in pushy sales tactics and false promises designed to lure people into risky super switches.

Since your super is one of the biggest investments you’ll ever make, protecting it is crucial. Here’s what you need to know to keep your nest egg safe.

Why scammers target super

Superannuation accounts often hold large balances, which makes them a prime target. Fraudsters know that many people don’t regularly check their super fund or may feel uncertain about whether they’re getting the best deal. This makes them vulnerable to slick sales pitches that promise “better returns” or “lost super recovery.”

ASIC has noticed a rise in schemes where consumers are encouraged to switch super funds quickly, often through high-pressure phone calls, clickbait advertising, or “free” online super health checks.

The red flags to look out for

Not every call or offer about super is a scam, but there are some big warning signs to watch out for:

» High-pressure tactics – being told you must act immediately. Remember, a genuine super opportunity won’t disappear overnight.
» Cold calls or unexpected emails/messages, especially if you’ve never contacted the provider before.
» “Free super health checks” or prizes – these are often advertised through social media or websites.
» Offers to “find lost super for free” – while this sounds helpful, scammers often use it as a hook. (Tip: you can safely track down lost super yourself via the ATO.)
» Unlicensed advisers – people giving advice without proper authorisation.
» Mostly phone-based dealings – with little or no opportunity to meet a qualified financial adviser in person.
» Promises of guaranteed or high returns – if it sounds too good to be true, it probably is.

Why these tactics are dangerous

These schemes don’t always look like traditional scams. In fact, they often feel legitimate. A salesperson may sound knowledgeable, polite, and genuinely interested in helping you. Some even refer you to an adviser during the call to make the process seem credible.

The catch? The investments may be complex, high risk, or poorly explained. Even experienced investors can find it hard to spot the pitfalls. Once you’ve switched your super, it can be very difficult and sometimes impossible to reverse the decision.

How to protect yourself

Here are a few simple steps you can take to keep your retirement savings safe:

1. Don’t rush. Take your time when making decisions about super.
2. Hang up on pressure. If you feel pushed or uncomfortable, end the call.
3. Check credentials. Make sure anyone giving financial advice is licensed with ASIC.
4. Do your own research. Use trusted resources like ASIC’s Moneysmart website to learn about your options.
5. Talk to your accountant or adviser. Before making changes, get independent advice from someone who knows your situation and isn’t tied to the sales pitch.
6. Be cautious online. Avoid clicking on random ads or pop-ups offering “free” super reviews.

The bottom line

There can be legitimate benefits to switching or consolidating super, but only after careful consideration of the risks and fees involved. The key is to make sure any decision is made on your terms, not under pressure from a cold call or pushy salesperson.

Your super is too important to risk on false promises. Stay alert, ask questions, and if you’re ever unsure, speak with us before making any changes.

Family trusts are great, but beware of disadvantages

The tax advantages of using a family trust are well known – in particular, the ability to split income among family members so that a lower effective tax rate applies to the income. This is unlike the case where one person derives all the income or the trust itself is liable to pay tax on it.

A family trust, like a company, is also a good way to protect assets from potential creditors in the case of financial trouble – or from other parties as the need may arise (eg, when a family member gets married and may be gifted property or money to buy a house).

So, even though a home held by a family trust is not entitled to the capital gains tax (CGT) main residence exemption, there may be other non-tax benefits that carry greater weight.

A family trust can also be used to help in business succession matters, for example, where farmland is held by a family trust where successive generations of a family can continue to farm it for their benefit.

Of course, to effectively use a family trust you need to have assets it can hold or acquire. It is of no use in trying to obtain tax advantages in respect of personal services income per se. You need for it to be able to hold assets – and preferably good income producing assets.

However, for all their benefits there are a few demands associated with using a family trust.

For a start, if you wish to “stream” capital gains and/ or franked dividends to certain beneficiaries – so that they retain their character as concessionally taxed amounts in the beneficiary’s hands – then there are some complex rules that must be followed.

And if they are not followed properly you can end up getting a tax result far removed from what you intended. Oh, and the trust deed must allow streaming of gains (so you may need an updated deed).

Secondly, if a trust has capital losses it cannot, unlike a partnership, distribute those losses to beneficiaries.

They instead remain in the trust – and furthermore can only be used to reduce future taxable income or capital gains if certain “continuity of ownership” tests are met. And this often involves the need to make an irrevocable family trust election which locks the trust into distributing all its income to certain beneficiaries only.

Thirdly, contrary to common knowledge, distributions to children are not tax-effective in that they are usually taxed at penalty rates which equate to the top tax rate in most cases (albeit, you do get the benefit of a tax-free threshold of some $700).

Fourthly, trusts do not generally last forever (although in some state jurisdictions it is possible). At some stage the trust has to be wound up (usually after 80 years) and assets held by the trust have to be distributed to certain beneficiaries. And this can often trigger a CGT liability (and a large one at that). Just ask Gina Rhinehart and her family.

And there is also the question currently before the High Court of whether a company will be liable for Div 7A tax in respect of “unpaid present entitlements” made to it by a trust. This too is a hot issue in relation to if and how to use a family trust effectively for tax purposes.

So, the issue of whether to use a family trust is not always straightforward. Therefore, if you intend to use one, or think your current one needs some revisions, come and chat to us.

THE CGT RETIREMENT EXEMPTION CONCESSION: What a boon!

If you run a small business and sell it – or some of its asset(s) – and make a capital gain, the CGT “retirement exemption” may be invaluable to reduce or eliminate the tax payable on the gain.

The funny thing is that you don’t have to retire to use the CGT retirement exemption. Rather, it just means if you are under 55 years of age you have to pay the exempt gain into your superannuation (and the amount is exempt from the non-concessional contributions cap). On the other hand, if you are 55 years of age or over you can take the gain in your hands tax-free.

Furthermore, if you are under 55 and have to pay it into super, you could use the related rollover concession to defer the taxation of the gain for two years – and this may allow you then to use the retirement exemption for the reinstated gain when you are 55 years or over.

However, there is a limit on the amount of capital gain that is entitled to the retirement exemption.

You only have a lifetime exempt limit of $500,000 – whether you take it into your hands tax-free or you put it into super (or you take it as a stakeholder payment in a company or trust where a company or trust make a gain).

It should also be noted that if you are going to use the CGT small business concessions (and there are four specific concessions which can be used, including the “15 year exemption” and the “50% reduction”), then if you meet the conditions for the 15 year exemption, it must be used in preference to any other concession. And one of the advantages of this concession is that it exempts the whole capital gain (regardless of how big it is) – unlike the retirement exemption which is subject to the lifetime limit of $500,000.

Crucially, there are special rules that apply if a company or trust makes the gain and you wish to use the retirement exemption.

And if you don’t meet these rules – especially the payment rules – then the retirement exemption is not available at all. These payment rules are, broadly, that the payment must be made to the relevant stakeholder by seven days after the company or trust lodges its return.

And another great thing about the concession in this case is that the payment of the exempt gain to a stakeholder does not have to be in proportion to their interest in the company or trust. This allows excellent tax planning opportunities.

These are just a few of the “ins and outs” about using the retirement exemption. But there are also important eligibility rules to be met in the first place.

So, if you are thinking of selling your small business come speak to us first so that we can help you maximise the benefit of the concession, and make sure you qualify for them in the first place.

Helping your kids buy their first home using super

If you want to give your children a head start on saving for their first home, the First Home Super Saver Scheme (FHSSS) is worth considering. It offers a tax-effective way for young people to grow a deposit more quickly and is open to anyone who meets the eligibility rules and has never owned property.

What is the First Home Super Saver Scheme?

The FHSSS allows first-home buyers to make voluntary contributions into their super fund and later withdraw those funds, plus earnings, to put toward a home deposit.

Here’s how it works:
» They can contribute up to $15,000 per financial year, and up to a maximum of $50,000 across all years in voluntary contributions.

» These contributions can be either:
– Concessional contributions (CC) such as salary sacrifice or personal deductible contributions
– Non-concessional contributions (NCC) which is after-tax money contributed from their own savings for which no deduction will be claimed

Children 18 or over can apply to withdraw the total voluntary contributions up to $50,000, plus notional earnings (currently 6.61%) on these contributions, to buy their first home. Whilst children must be at least 18 to withdraw an amount for their first home, they can start saving earlier.

Why use super to save for a home?

One advantage of using the FHSSS is the tax savings. Contributions made by way of personal deductible contributions or salary sacrifice reduce taxable income, which can mean less tax to pay.

In addition, any investment earnings on those contributions are taxed at only 15% inside super, compared to the saver’s marginal tax rate. When the funds are withdrawn under the FHSSS, the assessable portion is taxed at the saver’s marginal tax rate, but with a 30% offset applied. This means less tax and more savings to put toward a deposit.

All this can mean more money is saved compared to saving in a regular bank account.

How parents can help

If your child is working and has a super fund, you can give them money, which they can then contribute themselves to their super fund. They may claim a tax deduction on the contribution and this may boost their after-tax income. Alternatively, they may choose not to claim a tax deduction. If your child is earning a low income and makes a personal after-tax contribution to super, they may be eligible for a government co-contribution of up to $500.

Whilst this is a nice freebie, it cannot be withdrawn under the FHSSS, as it is not a personal contribution.

Important note: You cannot contribute directly on your child’s behalf. The ATO requires the contribution to come from your child’s own bank account to be eligible for the FHSSS withdrawal.

When your child is ready to buy their first home, they apply through myGov to find out the maximum amount they can access under the scheme. Once they have this determination from the ATO, they can then request to withdraw up to that amount to use as part of their deposit.

The FHSSS comes with strict eligibility rules and timeframes, so it’s important to get the details right.

If you’re thinking about helping your child save a deposit this way, give us a call. With some forward planning and the right contribution strategy, your child could boost their savings, cut down their tax bill, and step into their first home sooner.

Tax on redundancy payments explained

If you’re made redundant, you may receive a lump sum payout. While this can provide financial breathing room, it’s important to understand how that money is taxed. Not all parts of a redundancy payment are taxed the same and how it is taxed can make a big difference to what you actually take home.

If your position is terminated, you might receive various payments, including:
» Unused annual or long service leave
» Payment in lieu of notice
» A severance payout
» Additional “ex-gratia” or goodwill payments

Some of these are taxed as regular income, others may be taxed concessionally and some may even be tax-free if it is treated as a ‘genuine redundancy’ amount.

What is a genuine redundancy?

A redundancy is considered genuine if your role no longer exists and is not being replaced. You must also be under age 67 at the time of termination to access tax-free benefits. If you’re dismissed due to poor performance or you resign voluntarily, it doesn’t count as a genuine redundancy.

Tax-free threshold for genuine redundancy

If your redundancy is genuine, part or all your payout can be received tax-free. For the 2025–26 financial year, the tax-free amount is $13,100 + $6,552 for each full year of service. For example, if you’ve worked 10 years, your tax-free threshold is: $13,100 + ($6,552 × 10) = $78,620

Any payment above that amount may be taxed as an employment termination payment (ETP).

How are ETPs taxed?

ETPs can include payments like severance pay, golden handshakes, or unused sick leave. How these are taxed depends on your age and how much you receive.

If you’re under 60, payments under the ETP cap ($260,000 in 2025–26) are taxed at up to 30%. If you’re 60 or older, the rate drops to 15%. Anything above the cap is taxed at 45%.

On top of the ETP cap, there is also a ‘whole-of-income cap’ that applies to high income earners.

This cap limits how much certain termination payments can qualify for concessional tax treatment.

Unused leave is taxed differently

Payments for unused annual or long service leave are taxed at different rates depending on whether your termination is a genuine redundancy or not.

Generally, these are taxed at a maximum rate of 30% if it is a genuine redundancy. If you resign or retire, your unused leave payments will generally be taxed at your marginal tax rate, plus Medicare levy.

Some tips to reduce tax

You may be able to contribute part of your redundancy payment to super and claim a tax deduction, especially if you have unused concessional cap space from previous years. The catch-up rules allow you to use any unused portions of the concessional contributions cap (currently $30,000) from the past five financial years, as long as your total super balance was under $500,000 at the previous 30 June.

This strategy can help offset the taxable portion of your redundancy payment, lowering your overall tax bill while boosting your retirement savings.

Key message

Redundancy payments can be complex, with different components taxed in different ways. Knowing the rules and using strategies like super contributions can make a big difference to what you keep.

If you’re facing redundancy and want to understand your options, give us a call. We can help you plan ahead, minimise tax, and make the most of your payout.

Car claims for electric vehicles

Working out the cost of electricity used to run your electric vehicle (EV) where you use the vehicle for business purposes and you use the logbook method for making your claim for car expenses is a little more complex than monitoring the cost of fuel used to run an all petrol vehicle. You need to keep certain records and make some choices along the way.

But first, a quick look at some of the basic rules around tax claims for the business use of cars, including EVs.

What trips are eligible?

Costs incurred in running your car for business purposes can be deducted using one of several methods. The term “business purposes” includes:

» Attending meetings or conferences away from your usual place of work
» Collecting supplies or delivering items
» Travel between two separate places of work (eg, for a second job)
» Travel from your home or your usual place of work to an alternative worksite (eg, a client’s office or worksite), and
» Itinerant work, where the job requires you to work at more than one location each day before going home.

Travel between your home and your usual place of work is only deductible in quite limited circumstances – eg, when transporting bulky equipment to and from a worksite.

Cents per kilometre up to 5,000 business kilometres per year

For many taxpayers, the statutory safe harbour rate of 88 cents per kilometre for the 2025-26 income year for up to 5,000 business kilometres can be the best way of claiming their car expenses. It gets you a deduction of up to $4,400 without having to keep any receipts.

The cents per kilometre method covers all car expenses, including depreciation, registration and insurance, repairs and maintenance, and fuel costs. If you use this method, you can’t add any of these costs on top of the cents per kilometre amount.

The cents per kilometre method applies to EVs (including plug-in hybrids – PHEVs) as well as petrol-only cars.

If you use this method, you will need to keep records that show how you have worked out your business-related kilometres. That can be done by way of a travel diary that covers the entire income year. You also need to show that you own or lease the car.

Logbook method

The cents per kilometre method will not always be optimal for everyone. If you have a high percentage of business use of the car, the logbook method may well give you a better result. But you will need to keep receipts or other evidence of all your car expenses, as well as completing a logbook for a representative and continuous 12-week period.

The logbook needs to show the destination and purpose of each business trip, as well as the total kilometres travelled. It also needs to show the opening and closing odometer readings for the logbook period.

The percentage of business use is worked out using the logbook and is applied to the total costs attributable to running the car.

The logbook can be relied upon for five years, unless your pattern of use changes significantly (eg, if you move house or the nature of your job changes).

If that happens, you will have to complete a new 12-week logbook.

Having completed the logbook, and for a non-electric car, you then need to keep receipts for fuel and oil expenses, or make a reasonable estimate of those expenses based on opening and closing odometer readings, standard fuel use by your car (per the manufacturer) and average petrol prices for the income year (per the Australian Institute of Petroleum website). You should also keep receipts or other evidence of what you’ve spent on registration and insurance, repairs and maintenance, lease payments and interest charges. You should also have a record of the cost of the car and show how you have worked out your depreciation claim.

You then apply your business use percentage to the total running costs and there’s your claim for car expenses.

Electric vehicles

EVs are typically charged at both commercial charging stations and using home chargers.

You need to keep a record of the cost of using commercial charging stations, which should be straight-forward enough. For home charging, however, the electricity usage for charging EVs is combined with the total electrical consumption of the household, and cannot generally be separately identified.

Unless your EV is capable of reporting the percentage of home charging, the best basis for claiming electricity costs is to use the Commissioner’s home charging rate of 4.2 cents per kilometre to the total distance travelled by the EV during the year of income. The 4.2 cents per kilometre home charging rate covers all electricity costs for the EV, so if you use this method, you cannot also claim the cost of using commercial charging stations.

Where you are able to determine the home charging vs commercial charging station percentage, you can work out the total number of kilometres attributable to your home charging, multiplying those kilometres by the 4.2 cents EV home charging rate and then adding any commercial charging station costs.

You must still keep receipts substantiating your commercial charging station costs, keep an electricity bill and record your opening and closing odometer readings. Having calculated your electricity costs you add it to all the other car running costs (including depreciation) and claim the business proportion as per your logbook.

Plug-in Hybrids (PHEV)

PHEVs are trickier than EVs since they use petrol as well as electricity. The ATO has come up with a seven-step method statement for calculating the combined petrol and electricity costs applicable to a PHEV which we won’t bore you with here.

What you need to keep for our lodgement meeting are:

» Your PHEV’s actual petrol and oil costs for the period
» Opening and closing odometer readings, and
» Your PHEV’s Condition B test cycle fuel economy figure (per the manufacturer).

We will do the rest and ensure you are claiming your legitimate entitlement.

Click here to view Glance Consultants October 2025 Newsletter via PDF

Superannuation is a cornerstone of Australia’s retirement system, ensuring employees build financial security for their future. For employers, paying super correctly and on time is not optional – it’s a legal requirement. Recently, the Australian Taxation Office (ATO) has made it clear it will be stepping up compliance efforts and cracking down on businesses that fall short of their superannuation obligations.

So, what does this mean for your business, and how can you stay on the right side of the law?

Why the ATO Is Taking Action

The ATO has found that many employees across Australia have been missing out on their rightful superannuation payments. In recent years, enforcement action has led to hundreds of millions of dollars in unpaid super being recovered and transferred into workers’ retirement savings accounts.

This increased scrutiny is partly driven by the fact that unpaid super is not just a financial issue – it impacts employees’ long-term security and trust in their employers. For the ATO, ensuring compliance is about protecting workers’ rights while also maintaining fairness across the business community.

Your Superannuation Obligations

As an employer, you are legally required to:

• Pay super for eligible employees earning $450 or more before tax in a calendar month (though this threshold is being phased out).
• Pay the correct super guarantee (SG) rate, currently set at 11.5% of ordinary time earnings from 1 July 2024, and scheduled to rise to 12% by 1 July 2025.
• Make payments on time, at least quarterly, by the due dates set by the ATO.
• Submit payments through a compliant clearing house or SuperStream system to ensure they are processed correctly.

Failing to meet these obligations can result in significant penalties, including the Superannuation Guarantee Charge (SGC) – a costly alternative to simply paying super on time.

The Consequences of Non-Compliance

The ATO is investing in data-matching technology and real-time reporting to detect unpaid super quickly. Through tools like Single Touch Payroll (STP), the ATO can now compare payroll data with superannuation fund records, making it far easier to spot discrepancies.

If your business is found to be non-compliant, you could face:

• Liability for the SGC, which includes the unpaid super, interest, and an administration fee.
• Additional penalties for repeated or serious breaches.
• Reputational damage that may impact staff retention and recruitment.

Simply put, the cost of non-compliance far outweighs the cost of staying on top of your obligations.

How to Protect Your Business

Being proactive is the best approach. Here are some practical steps to ensure your business stays compliant:

1. Review your payroll systems to ensure calculations are accurate and aligned with the latest SG rates.
2. Check employee eligibility regularly, especially with changes to legislation.
3. Pay super contributions well before the due date to allow for clearing times.
4. Conduct regular audits of your superannuation payments to catch errors early.
5. Seek professional advice if you’re unsure about your obligations.

The ATO’s crackdown on unpaid superannuation is a timely reminder that compliance is critical for all Australian businesses. Beyond avoiding penalties, paying super correctly builds trust with your team and contributes to their long-term financial wellbeing.

At Glance Consultants, we work with businesses across Australia to streamline payroll, ensure superannuation compliance, and prepare for upcoming legislative changes. If you’re unsure whether your business is meeting its obligations, now is the time to act.

Get in touch with our team at Glance Consultants today to safeguard your business and your employees’ futures.

Economic roundtable wash up

Thanks for all those great ideas – we’ll take it from here.

That’s pretty much how last month’s economics/productivity roundtable wound up, with the government firmly in control of what tax policy measures might or might not be introduced down the track.

Apart from consulting with the States on a model for imposing road user charges on electric vehicles, which was already in the pipeline, there were no breakthrough tax ideas coming out of the roundtable process that are going to be implemented immediately (other than the two tiny personal tax cuts the government took to the May election and, of course, the 15% slug on large superannuation balances).

So far, at least, successive governments have been reluctant to make wealthier older Australians pay more tax, but could this be about to change?

Both the PM and the Treasurer have been somewhat coy about this.

In spite of the slim policy pickings coming out of the roundtable, Treasurer Chalmers may have planted the seeds for perhaps taking some targeted tax changes to the next election, provided such changes are supported by the broader community.

There seemed to be consensus among roundtable participants that the tax system needs to be re-examined through the lens of intergenerational equity. This will mean different things to different people, but without making politically risky changes to the GST or the tax treatment of the family home, younger working Australians can only be helped through the tax system by cutting back some of the concessions enjoyed by wealthier mainly older Australians or plunging the country even further into debt.

We would expect that between now and the next Federal election there will be continuous advocacy by civil society groups to cut back or eliminate certain tax benefits that are enjoyed disproportionately by higher income earners. This group would be the same people who already pay a disproportionate share of income taxes under our highly progressive personal income tax scales.

The wish list of changes you are likely to hear about include:

• negative gearing on rental properties;
• the CGT discount;
• the taxation of trusts;
• superannuation.

There could also be changes aimed at older Australians by way of the social security system, for example the deeming rate applied to financial assets for pension eligibility and the pension treatment of the family home.

This is a very cautious government (particularly the PM), in spite of the very substantial majority it enjoys in the Parliament. But who knows? With Millennials now slightly exceeding Boomers as a demographic, community sentiment could shift and the government might consider making some cautious moves in some of these contentious policy areas.

There is also a proposal to implement responsible measures (probably meaning tax neutral) to help boost business investment.

The two main policy levers in that area are some form of investment allowance or juicing up the Instant Asset Write Off (IAWO) rules. Investment allowances are very expensive in revenue terms as they are available in relation to capital investments businesses would have made anyway. They may act as an incentive at the margin and most businesses wouldn’t knock one back, but they should probably only be resorted to in a recession. A substantial increase in the IAWO turnover and asset cost thresholds would be welcome and, unlike an investment allowance, only creates timing differences.

In the meantime, the Productivity Commission’s (PC) controversial proposal to drop the corporate rate to 20% for entities with a turnover of less than $1 billion might have trouble getting off the ground.

It is coupled with a 5% cashflow tax, which means you can only avoid it if you keep investing in capital equipment, and there are only so many utes a business will want to buy.

And the small print shows the PC is proposing to achieve neutrality as between debt and equity financing by not taxing interest income nor allowing interest deductions at the corporate level. This will have huge implications for financing, as most incorporated businesses are net borrowers.

Finally, the PC report fails to consider the flow-on effects on distributions. Under the dividend imputation system most resident shareholders receiving distributions from a 20% company will just pay more top-up tax, with the net result of collecting slightly less company tax but more personal tax.

So, no major surprises, but keep an eye on what happens in the lead up to the next election.

With Millennials now slightly exceeding Boomers as a demographic, community sentiment could shift and the government might consider making some cautious moves in some of these contentious policy areas.

What to do if you exceed your super contribution caps

Superannuation is a great way to save for retirement, but the government sets strict limits on how much you can contribute each year. These limits are called contribution caps. If you go over them, you could face extra tax. But don’t panic – here’s what you need to know and the steps to take if this happens.

Understanding the caps

There are two main caps you need to keep in mind:

1. Concessional contributions cap
» These are contributions made before tax, such as employer super guarantee (SG) payments, salary sacrifice, and personal contributions you claim a tax deduction for.
» For the 2025/26 financial year, the cap is $30,000 per year.

2. Non-concessional contributions cap
» These are contributions made from your after-tax income, like personal contributions where you don’t claim a tax deduction.
» The cap is $120,000 per year, or up to $360,000 if you use the “bring-forward” rule (this allows you to contribute three years’ worth at once if you’re under 75).

What happens if you go over?

If you exceed either cap, the ATO will issue an excess contribution determination notice outlining your options for resolving the excess. This letter will explain what happened and tell you how much tax you’ll need to pay on the excess amount.

Your options if you exceed the concessional cap

If your concessional contributions go over the $30,000 cap, the excess amount is added to your taxable income. This means you’ll pay tax on it at your normal income tax rate, but you’ll get a 15% tax offset because your super fund has already paid tax on that money.

You have two choices:

» Withdraw up to 85% of the extra amount from your super to help cover the extra tax, or
» Leave the money in your super and pay the extra tax from your own pocket. Keep in mind, if you leave it in, the extra amount will also count towards your after-tax (non-concessional) contribution limit.

Either way, the ATO will calculate how much tax you owe, so there’s no guesswork on your part.

Your options if you exceed the non-concessional cap

If you exceed the non-concessional cap, the ATO will give you two choices:

1. Withdraw the extra contributions out
» You can withdraw the excess contributions plus any earnings they made.
» The earnings are taxed at your usual income tax rate, but you’ll get a 15% tax offset to reduce the bill.
» No extra penalty tax applies if you take the money out.

2. Leave the excess contributions in your super fund:
» You’ll pay a 47% tax on the excess amount.
» This option is rarely beneficial which is why most people choose to withdraw the extra amount to avoid the big tax hit.

Tips to avoid going over the caps

» Track your contributions: Check with your
employer and super fund to see how much has been paid in each financial year.
» Consider timing: Contributions count in the year your super fund receives them, not when you make them.
» Watch the bring-forward rule: If you use it, you can’t make more non-concessional contributions for the next two years.
» Use ATO online services: You can link your myGov account to the ATO to see real-time contribution information.

The bottom line

Exceeding your super caps can be stressful, but the ATO has a process to help you manage it. Understanding your options and acting quickly when you receive a letter will help you reduce extra tax and keep your retirement savings on track. Remember, if you’re unsure what to do, come and talk to us – we’re here to guide you through it.

CGT and off-the-plan purchases

If you buy a property in an off-the-plan purchase, there are some important CGT issues to be aware of – especially in the context that an off-the-plan purchase may not actually settle until many months or even years after the initial contract is signed.

The first thing to note is that assuming the off-the-plan purchase does proceed to settlement, then the completed property is considered to have been acquired for CGT purposes at the time (and in the income year) in which the original contract was signed – and not in the year of settlement.

And this has some important practical consequences.

The first is that for the purposes of accessing the 50% CGT discount (in the case where the property does not become your CGT-exempt home), you are taken to have acquired the property when the off-the-plan contract was signed.

And this gives you ample time to satisfy the 12-month holding rule – including where you may even sell the property within 12 months after settlement of the contract.

Secondly, and importantly, any capital gain or loss will arise in the income year in which you enter the sale contract (eg, the 2023 income year) and not in the income year that you settle that contract (eg, the 2025 income year). And this is the case even if, as is not uncommon, this contract of sale is entered into before the original off-the-plan purchase is even settled.

In short, as long as the contract is settled, the key date for determining when property is acquired (or disposed of) is the date (ie, the income year) the contract is entered into – regardless of whether settlement takes place in the next income year or in a later income year.

This means that the income year in which any capital gain or loss is returned on the sale of the property is the income year in which you enter the off-the-plan contract – even though the settlement does not take place until another income year.

However, in this case the Commissioner has a generous policy so that the taxpayer does not have to immediately return any gain in that income year – but only once the proceeds on settlement are received. And then they can go make and amend that prior year return accordingly.

Also, in the case where the off-plan purchase is to become your home, the requirement of the “building concession” must be met in order for the property to eventually be considered your CGT-exempt home.

Finally, it is important to understand that the CGT rules that apply in off-the-plan purchases are different from those that apply to an option agreement – which instead is treated a separate legal transaction with separate CGT consequences.

It is only if the option is exercised that the transaction is merged into one transaction and the CGT rules then apply in a different way.

What happens if you don’t have a valid will?

When someone passes away without a valid will, this is known as intestacy. In this situation, the law in each state and territory sets out a formula for how your estate is divided. These rules often follow a standard order – spouse first, then children, then other relatives, but they may not align with what you would have wanted.

Who usually inherits the intestate estate?

If you have a spouse and no children, your spouse will ordinarily receive the whole estate. If you have a spouse and children, whether the children receive anything depends on whether they are also the children of your spouse, as well as the laws of your state.

If you do not have a spouse or children, your estate may pass to your parents, then to siblings, and then to the next of kin, but this can vary between states.

If there are no surviving and eligible relatives, the state you live in will typically receive the estate.

Family provision

Note that even when an estate is distributed under intestacy laws, certain family members or dependants may still be able to apply to the court if they feel they have been left without proper provision. These are called family provision claims.

Eligible people – typically a spouse, partner, child, or someone dependent on the deceased, can ask the court to adjust the distribution. This process is separate from intestacy and can apply whether or not there is a will.

Exceptions to intestacy laws

Your super fund may decide which of your eligible beneficiaries receives your super, or it may pay the benefit to your estate. If your super fund allows for binding death benefit nominations, you can direct payment to an eligible beneficiary. Life insurance payouts on policies you personally own can also be directed in accordance with your wishes and may not necessarily form part of your estate. Remember jointly-owned property typically passes to the surviving joint owner.

Estate administrator

Who handles the paperwork if there’s no will? Instead of an executor named by you, the court appoints an administrator. This is often your partner or next of kin, who will collect assets, pay the estate’s debts and expenses, and then distribute the balance under the local intestacy law. Administrators step into a formal legal role and their authority begins once the court makes the grant.

Funeral and burial arrangements

One of the most pressing questions after a death is who decides on funeral arrangements. If there is no will appointing an executor, the right to organise the funeral and burial usually follows the same order as for administering the estate. It lies with the person who has the highest claim to be the administrator, typically the surviving spouse or de facto partner, or if none, the next of kin.

KEY POINT

Dying without a will means giving up control over who manages your estate, who inherits from it, and even who decides on your funeral arrangements. While intestacy laws provide a safety net, they may not reflect your personal wishes or the needs of your loved ones. Making a valid will ensures your estate is handled the way you want and spares your family unnecessary uncertainty and stress.

Deductibility of self-education expenses

Many people spend their own money on attending courses that will hopefully make them more employable and maybe earn a higher income. That’s a good thing – a workforce that is more highly skilled can lead to higher productivity, which is something that’s been in the spotlight of late.

It’s not always clear when self-education expenses are tax-deductible, and there can sometimes be a fine line between what is and isn’t deductible.

Self-education has to have a sufficient connection to earning your employment income. This will be the case if it either:

» maintains or improves the specific skills or knowledge you require for your current employment activities; or
» results in, or is likely to result in, an increase in your income from your current employment activities.

Self-education expenses incurred when a person is not employed (or self-employed) isn’t deductible.

What courses of study are eligible?

» An apprentice hairdresser working at a hair salon four days a week attending TAFE for one day is learning things at TAFE which will improve their hairdressing knowledge and skills.

» A person with a Diploma in Nursing and working as an enrolled nurse under the supervision of Registered Nurses is undertaking a Bachelor of Nursing which, on completion, is likely to increase their income as a nurse.

» A system administrator enrols in and pays for a course on how to use a particular programming language. On completion, their employer gives them a pay rise. The cost of the course is deductible since it resulted in an increase in income from the person’s current employment activities.

» A pilot working for a domestic carrier takes an aircraft conversion course to upgrade his certification to fly his employer’s international aircraft so that he will be paid more. The course qualifies as self-education since it will upgrade his qualifications and is likely to increase in his income.

What courses of study are ineligible?

» If the person studying for a Bachelor of Nursing (above example) had been working as a personal care worker instead of enrolled nurse, the necessary nexus between the course of study and their current employment activities would not be present.

Personal care workers assist patients with everyday tasks such as showering, dressing and eating. The skills and knowledge required to carry out those duties are not the same as those required to carry out a nurse’s duties.

» There was a case recently where a person who was qualified as a dentist in Romania but was working as a dental technician and studying to qualify for registration as a dentist in Australia. Despite positive comments from her employer, the Administrative Appeals Tribunal held that the two jobs were very different and the dentistry course of study was not linked closely enough to her current role as a dental technician. This would not be an uncommon situation, with many new arrivals working in roles that are well below their foreign qualifications.

» Courses designed to gain new employment are not eligible. A teacher’s aide undertaking a Bachelor of Education working with a primary school teacher and performing non-teaching duties would not qualify for a deduction since teaching students is very different from working as a teacher’s aide.

» Personal development and self-improvement courses are not generally closely enough related to a person’s current income earning activities to qualify for a tax deduction.

What deductions are allowable?

It is important that any reimbursements received from your employer are offset against any claims, and you will also need to maintain documentary evidence to substantiate your claims. And it wouldn’t hurt to have a positive statement from your employer about how participating in the course will affect the performance of your current employment duties.

Subject to the necessary connection to your existing income earning activities being established, the following deductions may be allowable:

» Tuition, course, conference or seminar fees.
» General course expenses, including text books, journals.
» The decline in value of depreciating assets – apportionment may be needed in some cases.
» Car and other transport expenses – this can range from an Uber to a nearby university to a return airfare to Paris to complete that MBA.
» Accommodation and meal expenses for when you have to be away from home overnight.
» Interest on borrowings to fund any of these outlays.

Self-education can be a tricky area, but that shouldn’t stop you from making legitimate claims. We can help you with that.

Click to view Glance Consultants September 2025 Newsletter via PDF

Running a business in Australia can be exciting and rewarding, but it also comes with financial challenges. One of the most common reasons small and medium-sized businesses struggle – or even fail – is poor cash flow management. While many business owners focus heavily on profit, it’s cash flow that determines whether you can pay your bills, meet payroll, and continue to grow. This is where cash flow forecasting becomes a game changer.

What is Cash Flow Forecasting?

Cash flow forecasting is the process of predicting how money will flow in and out of your business over a certain period – usually weekly, monthly, or quarterly. It helps you estimate future income and expenses, so you can see whether your business is likely to have enough cash to cover obligations or whether shortfalls may occur.

Unlike profit and loss statements, which look at performance over time, a cash flow forecast focuses on timing – when money will actually land in your bank account versus when it will leave.

Why Cash Flow Forecasting Matters

1. Identifies Cash Shortfalls Early
   Forecasting gives you advance warning of upcoming gaps between income and expenses. If you know a shortfall is coming, you can prepare by adjusting payment terms, organising short-term finance, or chasing outstanding invoices.
2. Supports Better Decision-Making
   Whether you’re planning to hire staff, invest in equipment, or launch a new product, a forecast can show if your business can afford the move without risking solvency.
3. Improves Relationships with Lenders and Investors
   Banks and investors want to see that you have control over your finances. A well-prepared cash flow forecast demonstrates professionalism and increases the likelihood of securing funding.
4. Helps Manage Seasonal Fluctuations
   Many Australian businesses – such as retailers during Christmas or construction companies during wet seasons – face seasonal highs and lows. Forecasting helps you plan for these cycles so you can smooth out cash flow and avoid surprises.
5. Reduces Stress and Uncertainty
   Running a business can be overwhelming when you’re unsure if you’ll have enough to cover expenses. Forecasting provides clarity and peace of mind, allowing you to focus on growth instead of firefighting financial crises.

Tips for Effective Cash Flow Forecasting

• Update Regularly: Forecasts should be living documents. Update them weekly or monthly to stay aligned with actual results.
• Be Realistic: Overestimating sales or underestimating costs can make forecasts unreliable. Use conservative assumptions.
• Monitor Debtors Closely: Track when customers actually pay, not just when invoices are issued.
• Use Technology: Cloud-based accounting software can automate much of the process, making forecasting easier and more accurate.

How Glance Consultants Can Help

At Glance Consultants, we know that cash flow forecasting can feel daunting, especially when you’re busy running day-to-day operations. Our team works with Australian businesses to set up accurate, practical forecasts that support smarter decisions. We can also provide ongoing advice, helping you adjust strategies when circumstances change.

Cash flow forecasting is more than just a financial exercise – it’s a survival tool. By giving you visibility over your future cash position, it empowers you to avoid pitfalls, seize opportunities, and build a resilient business.

If you’d like to take control of your cash flow and safeguard your business, contact Glance Consultants today.

As a small business owner in Australia, you’re likely focused on keeping your operations running smoothly, managing cash flow, and staying on top of your tax obligations. But with increasing sophistication in cybercrime and scams, it’s crucial to add another task to your list—protecting your business from tax scams.

The Australian Taxation Office (ATO) has warned businesses about the rise in tax-related fraud, especially during key periods like tax time. Scammers target small businesses by impersonating the ATO, exploiting gaps in cybersecurity, and taking advantage of time-poor operators. Here’s how to identify common scams and protect your business from falling victim.

Common Tax Scams to Watch Out For

Fake ATO Phone Calls or Emails
Scammers often pose as ATO representatives, claiming you owe a tax debt or that your ABN is at risk of being cancelled. They may demand urgent payment, often via untraceable methods like gift cards or cryptocurrency.

Red flag: The ATO will never threaten you with arrest, demand immediate payment, or ask for your financial details via email or SMS.

Phishing Emails and Texts
These messages often look official, using ATO branding and logos. They’ll ask you to click on a link to claim a refund, lodge a form, or update your information.

Red flag: These links typically lead to fake websites designed to steal your personal or financial data.

Business Identity Theft
Scammers can steal your business identity using your ABN or TFN and lodge false returns or claim refunds in your name.

Red flag: Unexpected ATO correspondence, unfamiliar tax transactions, or returns lodged that you didn’t authorise.

How to Stay Safe

Verify Communications
If you receive a suspicious message or phone call, don’t act on it immediately. Hang up or delete the message and contact the ATO directly through official channels to confirm the legitimacy.

Keep Your Systems Secure
Ensure your accounting software, anti-virus programs, and firewalls are up to date. Regularly change passwords and educate your staff about cyber risks and secure handling of financial data.

Use a Registered Tax or BAS Agent
Working with a registered accountant or tax agent, like Glance Consultants, means you have professional oversight and advice, reducing your exposure to fraudulent schemes. We can also act as a buffer between you and scammers by managing correspondence with the ATO.

Check ABN and ATO Records Regularly
Log in to your ATO Online Services or Business Portal to monitor activity. Regular checks can help you spot unauthorised changes early.

If You Think You’ve Been Scammed

Act fast. Contact your accountant or tax agent immediately. Report the scam to the ATO and, if financial loss is involved, notify your bank and the Australian Cyber Security Centre.

Stay Vigilant with Glance Consultants

Tax scams are becoming harder to spot, but staying informed and proactive is your best defence. At Glance Consultants, we help small businesses like yours navigate tax time with confidence and security. If you’re unsure about any ATO communication or need help strengthening your financial defences, we’re here to support you.

Need help? Contact Glance Consultants today.

If you’re a small business owner operating through a company, you’ve probably wondered: “Can I just transfer money from the company account to my personal one?”

The short answer? Technically yes – but not without tax consequences.

That’s where Division 7A (Div 7A) of the Australian tax law comes in. It’s one of the most commonly encountered – yet often misunderstood – areas of tax compliance for business owners. So, let’s break it down in simple terms.

What is Division 7A?

Division 7A is a set of provisions within the Income Tax Assessment Act that prevents private companies from making tax-free payments or loans to shareholders (or their associates). These rules ensure that funds taken out of a company are either treated as dividends or managed as formal loans, both of which have tax implications.

Why is this important?

Here’s the key takeaway: Money in your company belongs to the company – not you personally.

Even though you might own the business, the company is a separate legal entity. That means withdrawing company funds for personal use can attract serious scrutiny from the ATO.

The company itself may pay tax at the corporate rate of 25%, but when profits are distributed to you as a shareholder, they must generally be declared as dividends and taxed at your personal marginal tax rate – which could be as high as 45% with franking credits attached (company tax already paid).

Division 7A exists to prevent individuals from bypassing this by simply “borrowing” money from the business.

So, what happens if you take money from your company?

If you, or someone connected to you, takes money out of the company without proper structure, Division 7A could deem that amount an unfranked dividend, meaning it will be included in your taxable income – with no franking credits attached.

That’s a costly mistake.

Your Two Options Under Division 7A

If you take funds from your company for personal use, here’s what you can do to stay compliant:

1. Declare a Dividend

• Treat the amount as a dividend and declare it in your personal tax return.
• You’ll pay tax on the full amount at your marginal rate (less any franking credits).

2. Put a Compliant Loan Agreement in Place

• Create a formal loan agreement that meets Division 7A conditions.
• Repay the loan over:

• • Seven years if unsecured, or
  • 25 years if secured by a mortgage over real property.

• Make minimum annual repayments, including interest (e.g., 8.27% for FY2024).

For many small business owners, Option 2 is the preferred route as it provides more flexibility and defers the tax liability over time.

Using Div 7A with Paper Dividends: A Smarter Strategy

To avoid dipping into personal funds for loan repayments, many directors use a “paper dividend” strategy.

Each year, instead of repaying the loan out of pocket, the company declares a dividend that matches the required loan repayment. That dividend is then used to meet the Division 7A repayment obligation.

This approach can:

• Give you access to the funds upfront;
• Spread out the tax burden over several years;
• Allow income streaming (through a discretionary trust) to lower-tax-rate beneficiaries, where appropriate and compliant.

Case Study: How Division 7A Works in Practice

Let’s consider John, who owns 100% of her company, ABC Pty Ltd.

At the end of FY2024, the business has $400,000 in retained earnings. John transfers $100,000 to her personal account to pay his mortgage – without declaring it as a dividend.

His bookkeeper records the transaction as a director’s loan.

Without a compliant loan agreement, the ATO would treat this amount as an unfranked dividend. That means John could face a personal tax bill of up to $45,000.

Instead, his accountant recommends:

• Setting up a Division 7A loan agreement over seven years;
• Making annual minimum repayments (including interest);
• Declaring a paper dividend each year to cover the repayment.

In Year 1, the minimum repayment is $19,385. Rather than paying this out-of-pocket, ABC declares a fully franked dividend of that amount. John pays tax on the dividendwith the benefit of franking credits, defers the tax impact, and keeps the cash.

Even better, because the company is held via a family trust, part of the dividend is allocated to John’s retired mother – who is in a much lower tax bracket. This reduces the overall family tax bill.

Over seven years, John receives the cash today, spreads out the tax burden, and optimises who pays the tax.

Final Thoughts from Glance Consultants

Division 7A is more than just a tax technicality – it has real implications for how business owners access profits from their companies.

When used correctly, Division 7A loan arrangements can be a powerful tax planning tool.
When misunderstood or ignored, they can trigger unexpected and significant tax liabilities.

If you’re considering moving funds between your company and personal accounts – or have already done so – it’s essential to have an experienced accountant on your side to ensure you remain compliant and tax-efficient.

At Glance Consultants, we help small business owners navigate the complexities of Division 7A and create smart, compliant strategies to manage company profits effectively.

Explore Our 2025 Tax Planning Guides

We’re excited to share the 2025 Glance Consultants Tax Planning Guides with you. Designed for both individuals and business owners, these guides provide practical strategies to help you reduce your tax liabilities and maximise your deductions.

Access the 2025 Glance Consultants Tax Planning Guides here:

• Glance Consultants – 2025 Tax Planning Tips for Individuals
• Glance Consultants – 2025 Tax Planning Tips For Businesses

If you would like to book in for a tax planning consultation for FY 2024-2025 or require specialist tax and business advice, please click on Bookings.

Alternatively, you can contact our friendly team on 03 9885 9793 or email us at enquiries@glanceconsultants.com.au to book in with one of our trusted accountants.