Author: Glance Consultants

Working from home and occupancy costs

A recent Administrative Review Tribunal (ART) decision on working from home costs during the 2020-21 COVID lockdowns (Hall’s case) may widen the scope for claiming additional deductions for occupancy costs such as rent, mortgage interest, home insurances and rates, but only in specific circumstances. This is on top of the hourly rate most people claim to cover additional energy, phone and internet costs.

Like many others, Mr Hall was forced to work from home in order to do his work, which involved the production of an on-line radio sports program for the ABC in Melbourne. The combination of government-imposed restrictions and the ABC’s own rules meant that during the height of the COVID lockdowns in 2020-21, the spare bedroom in a rented apartment which he used exclusively or nearly exclusively to carry out his role for the ABC was his only place of business.

Importantly, Mr Hall was not running a business from his home. He was an employee working remotely, as over a third of Australian employees still do to some extent these days. While Tribunal decisions are not legally binding, and Hall’s case only applies to the 2020-21 income year at the height of the COVID lockdowns, the decision seems well-reasoned and could arguably be applied more broadly.

While the lockdowns are thankfully well behind us now, the principle governing the Tribunal’s decision is that a proportion of a taxpayer’s rent (or mortgage interest) may be deductible where the employer does not provide a work space and the taxpayer has no alternative but to work from home. This can and does happen even today, well after the masks have been put away.

Who might qualify?

An important factor in the Hall case was that there was no element of choice involved. No workplace was legally available to Mr Hall at the ABC Studios and he had no alternative but to use his spare bedroom to produce his radio sports program. Where an employee works under flexible arrangements by choice (eg, three days from home; two days in the office) the reasoning in Hall’s case is not so easily applied since it would be open to the employee to attend the office every day. You could still make a claim, but it could be difficult to sustain.

On the other hand, where there is no longer an office to attend because the employer has chosen to cut back on rental costs, the only option for the employee is to work from home. In other situations employees might interact exclusively online with externals and other parts of the business because they don’t live in the same State as their employer’s office. Again, such an employee has no place to work from other than their home.

To be eligible for a proportional deduction for occupancy costs, the employee would need to work out of a designated area such as a spare room and use that area exclusively or nearly exclusively as their home office. Just setting up the laptop on the dining room table when the dining room is regularly used for other purposes isn’t enough.

Capital gains tax

Employees who might qualify for a proportional deduction for occupancy costs that includes mortgage interest will need to consider the potential impact on the capital gains tax (CGT) exemption on their main residence before deciding to pursue a claim. The main residence CGT exemption is reduced by the same proportion as the claim for occupancy costs, and a valuation is required at the time the home is first used partly for income-producing purposes.

So a home owner without a mortgage or with only a small mortgage may decide that claiming a proportion of occupancy costs isn’t worth compromising their main residence CGT exemption.

We can help you weigh up the options. An employee who rents, as Mr Hall did, would have no such concerns.

The Commissioner is unlikely to allow occupancy claims

In the meantime, the Commissioner has appealed to the Federal Court and issued a Decision Impact Statement explaining that he disagrees with the Tribunal’s decision. He will continue to apply his longstanding restrictive approach to both occupancy costs and travel claims, pending the outcome of his appeal. That should not deter you from making a claim, however.

In order to avoid the risk of penalties and interest, the best course would be to just claim the normal hourly rate (or actual cost method) to cover additional running costs when lodging your return.

Then, after the notice of assessment has been received, lodge an objection claiming the occupancy costs. That way your rights are protected and you are not exposed to penalties or interest.

There may also be scope to revisit earlier assessments if you were locked down for a period and worked from home using a designated area exclusively or nearly exclusively for that purpose. In the case of earlier assessments it may be necessary to ask the Commissioner for extra time in which to lodge an objection.

We’re here to help you!

We should have a discussion about this issue if:

» your employer requires you to regularly work from home;
» no office space is available for you in which to perform your duties;
» you work from home using a designated space such as a spare room which is used exclusively or nearly exclusively for that purpose; and
» you rent your home or if you are a home owner and you have a substantial mortgage.

 

Super guarantee increasing to 12%

From 1 July 2025, your superannuation guarantee (SG) rate is increasing to 12%. That means more money going into your super from your employer, helping you build a better nest egg for retirement. But what happens if you earn some of your wages before 30 June but get paid after 1 July? Will the higher super rate apply to that pay too? Let’s break it down.

It’s all about when you get paid

The key rule here is that the SG rate is based on when you’re paid, not when you earned the money. So even if you did the work in June, if your pay day is on or after 1 July 2025, your employer has to pay 12% super on those wages.

If you get paid before 1 July 2025, then the old rate of 11.5% applies – if the work was done in July. It all comes down to the date the money hits your bank account.

A quick example

Let’s say George works for XYZ Pty Ltd.

» If George works in June (or even across June and July), but gets paid in July, his employer must pay 12% super on the whole amount.
» If George works in July, but for some reason gets paid in advance in June, only 11.5% super applies.

Your employer will then need to send that super contribution to your fund by the usual deadlines – generally within 28 days after the end of the quarter.

The final step in a long journey

The increase in the SG rate to 12% is the last step in a plan that’s been rolling out over the past few years. Here’s how the SG rate has been increasing:

This is great news for workers, because more super means more savings for retirement, and that can make a big difference later on.

What counts for super?

Super is generally paid on what’s called your ordinary time earnings (OTE). That’s the amount you’re paid for your regular working hours, plus things like commissions, allowances, and shift loadings.

Super usually isn’t paid on things like overtime, reimbursements, and some other specific payments.

Need help?

If you’re unsure whether your super is being calculated correctly, don’t hesitate to ask for help.

Your super is your money for the future, so it’s worth making sure you’re getting everything you’re entitled to.

For employers, if you’re uncertain about how the new super rate applies to your team, or need clarity on which payments count for super, don’t leave it to chance. Getting it right helps you avoid costly mistakes and penalties. We’re here to help both employees and employers understand their super obligations and entitlements, so you can have confidence that everything’s on track.

 

New super facts and figures from 1 July 2025

If you’ve been keeping an eye on your super, you might be wondering whether the contribution limits are increasing this year. The answer is – not yet.

Two key caps that determine how much you can put into super each year will stay the same from 1 July 2025.

Concessional contributions

These are contributions made before tax – like employer contributions, salary sacrifice, or personal contributions that you claim as a tax deduction.

They’re taxed at 15% when they go into your super fund (unless you’re a high-income earner, in which case extra tax may apply). And here’s a bonus – if you haven’t used your full concessional caps in recent years and your total super balance is under $500,000 as at 30 June 2025, you may be able to use the catch-up (carry-forward) rule to contribute more.

Non-concessional contributions

These are contributions made from your after-tax money. You don’t get a tax deduction for these contributions, but they’re a great way to boost your super savings over time.

Plus, if you’re under 75, you might be able to use the bring-forward rule to contribute up to $360,000 in one go by using three years’ worth of caps. Just remember – eligibility rules apply, like your total super balance and whether you’ve used this rule before.

For now, these caps are staying at $30,000 for concessional contributions and $120,000 for non-concessional contributions per financial year.

If you were hoping to contribute even more, you’ll need to wait for a future increase.

So what is changing?

The transfer balance cap

Starting 1 July 2025, the limit on how much super you can move into a tax-free retirement pension account will go up from $1.9 million to $2 million. This limit is called the transfer balance cap. This change means you can transfer more of your super into a tax-free pension when you retire.

The money you withdraw from your super pension (also called an account-based pension) is not taxed if you are 60 or over and the pension’s investment earnings are not taxed either. This can make a big difference to your savings in retirement.

If you haven’t started a pension before, the new cap of $2 million applies to you in full. However, if you’ve already started one, your personal cap may be somewhere between $1.6 million and $2 million, depending on your past pension history.

In the end, this increase is great news for anyone thinking about retirement, giving you more room to grow your super in a tax-free environment.

Why does this matter?

Even though the contribution caps aren’t going up, the increase to the transfer balance cap is a good reminder to check in on your super strategy, especially if retirement is on the horizon.

If you’re still working, now’s a great time to make sure you’re making the most of the current concessional and non-concessional contribution limits to build your super while you can.

And if you’re approaching retirement, consider how the higher transfer balance cap could open up more tax-free opportunities for your pension savings. It might be worth thinking about whether you should contribute more to your super now to make the most of it later.

Need help?

Super can be complex, but you don’t have to work it all out on your own. If you’d like help understanding these changes or planning your next steps, get in touch with us. We’re here to help.

 

Age Pension means test changes: What they mean for you

Starting 1 July 2025, Age Pension means test thresholds will increase, potentially boosting eligibility and payments for retirees.

These changes, announced by the Department of Social Services, aim to keep pace with inflation and living costs. Here’s a quick overview of how these changes may impact you.

What are the Age Pension means tests?

The Age Pension, available to residents aged 67, uses income and assets tests to determine eligibility and payment amounts. The test that results in the lower pension payment applies. If your income or assets exceed certain thresholds, you may not qualify for a pension or only receive a part pension. From 1 July 2025, these thresholds are rising, meaning more people may qualify for a full or part pension, and current part-pensioners could see higher payments.

Income test changes

The income test assesses earnings from sources like wages, interest, dividends and rental income. Centrelink uses deeming rates (currently 0.25% for the first $62,600 for singles or $103,800 for couples, and 2.25% above these) to estimate income from financial assets like bank accounts, managed funds and shares. The deeming rate from 1 July 2025 had not been confirmed at the time of writing.

From 1 July 2025, the income test thresholds will increase slightly as illustrated in the table below.

From 1 July singles can now earn $218 per fortnight ($5,668 yearly) for a full pension, and up to $2,516 ($65,416 yearly) for a part pension. Each dollar above the lower threshold reduces pension entitlements by 50 cents for singles and by 25 cents for partner for couples.

This does not consider the Work Bonus which lets pensioners earn up to $300 per fortnight from work without affecting their pension.

Assets test changes

The assets test evaluates your assets such as shares, bank accounts, investment properties, etc. However, it excludes your family home. The new thresholds from 1 July 2025 are illustrated in the table below.

From 1 July a single homeowner may receive the full age pension if their assets are below $321,500 and a part-pension if their assets are below $704,500.

A couple who are homeowners may have up to $481,500 in assets (combined) to receive the full age pension and may receive a part-pension if their assets are below $1,059,000. Non-homeowners can have more assets before their pension is reduced.

What this means for you

The changes to the Age Pension means test thresholds could significantly impact your retirement income, depending on your financial situation. The increased income and asset thresholds mean more retirees may qualify for the Age Pension or receive a
higher part pension.

Remember that your Age Pension entitlement is determined by the lower of the income and asset test. If either test results in zero, you’re ineligible.

If you would like to learn more about your Age Pension entitlements give us a call.

 

Changes to deductibility of interest on ATO debts

An important reminder: Interest incurred in income years starting on or after 1 July will no longer be deductible, regardless of whether the debt relates to an earlier income year.

However, interest charged by the ATO that was incurred before 1 July 2025 can still be claimed as a deduction this tax time.

Therefore, if you have overdue tax debts please arrange an appointment with us so we can discuss what options you have to pay these debts in the most expedient manner. This could include various payment plans arranged with the ATO. And while general interest charge (GIC) will still accrue, paying off the debt will decrease the amount of interest charged.

Therefore, it is more important than ever for you to keep on top of ATO obligations to avoid unnecessary costs. This can also include trying to make it easier to have funds available when it’s next time to pay. For example, we can discuss setting aside GST, pay as you go withholding and super from your business’s cash flow.

 

Selling shares? Beware of all the CGT rules!

With Trump’s tariffs causing big sell downs on share markets around the world, it is important to understand a few key things about how capital gains (and capital losses) from the sale of shares are treated for CGT purposes in Australia.

For a start, it is crucial to know what the cost – or specifically the “cost base” – of the shares are in order to calculate the assessable capital gain (or loss). This cost base will include relevant brokerage fees.

And for shares received under a dividend reinvestment scheme (DRIP), the cost base will be the value of the dividend which has been applied to buy shares in the company.

Importantly, where only some of the shares in a parcel of shares are sold it will be necessary to identify exactly which of those shares have been sold – in circumstances where you may have acquired the shares at different times for different costs. In this regard, usually some form of “identifier” (ASX or company etc) is attached to the shares.

But where it is not, the ATO allows you to choose which parcel of shares have been sold – provided you keep records of this so that there is no doubling-up or reselling of the same parcel of the same shares again later on down the track. And of course, this may allow you to choose which shares you sell in a tax-effective manner.

Of course, the CGT discount is available to reduce the amount of your assessable capital by 50% if you have owned the shares for 12 months – or 365 days to be precise. And in an interesting bit of nitpicking, the ATO takes the view that this does not include the day on which you bought the shares and the day on which you sold them!

Another important thing to understand is how exactly you calculate your “net” capital gain for the income year that is to be included in your assessable income.

And the key thing to note here is that any capital losses of the taxpayer from either the immediate year or prior years must first be applied to any capital gain/s of the taxpayer before applying the 50% CGT discount – and this will mean that there is a bigger net capital gain (if any) to be assessed (as opposed to if the discount was applied first).

However, where there is more than one capital gain from a particular source, the taxpayer can choose which capital gain it will apply the capital loss against first. And, usually, the best result in this case is to apply the capital loss to a gain that is not eligible for the CGT discount.

But where there are a number of capital gains and losses to be netted this process can get complicated – and our advice will be invaluable in this case.

Finally, beware of engaging in “wash sales” in the current volatile market – and this broadly occurs where you sell the shares to, say, realise a capital loss and then buy them back soon after in order to obtain some tax advantage. This ATO treats wash sales as tax avoidance.

So, if you are selling shares, see us first so we can help you do so in the most tax-effective method relative to all your circumstances.

 

Click to view our Glance Consultants July 2025 Newsletter via PDF

 

 

 

 

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.

Contact our friendly team of trusted advisors on 03 98859793 or at enquiries@glanceconsultants.com.au to discuss your needs and our full service offering.

Get on the front foot for your 2024-25 tax return

Here are some more detailed tips relating to a couple of common claims that often attract ATO scrutiny.

 

Working from home

A lot of people are still regularly working from home for at least part of the week. If you do, you are entitled to a deduction for the additional costs you incur. To be eligible to make a claim it is not necessary to set aside an area exclusively for business or employment related use. A shared dining table is all you need.

Except in very unusual cases, deductions are not available for occupancy costs such as mortgage interest, rent, rates and insurances.

Most people make their claim using the fixed rate method, which is 70 cents per hour for 2024-25. The fixed rate method covers home and mobile internet costs, mobile and home phone costs, power and gas charges and stationery and computer consumables.

Under the fixed rate method, you can also claim depreciation and repairs for assets used such as desks, office chairs and laptops, where those items cost more than $300. This is on top of the 70 cents per hour.

Alternatively, you could use the actual cost method, but that requires more detailed records and receipts.

We can help you to legitimately maximise your claim, but before you can claim anything, you need to have:

• A record of the hours worked from home. This has to be maintained for the entire 2024-25 financial year – you can’t just keep a detailed record for a representative period and apply it for the full year.
• One current sample invoice for each of the costs the fixed rate method is intended to cover – internet costs, phone costs, energy bills. It’s important to take copies of those invoices now and file them with your tax records rather than scramble around looking for them when the ATO comes asking for them in a few years’ time.

 

Use of your own vehicle for business or employment related purposes

For starters, any reimbursement you receive from your employer, either on a cents per kilometre basis or a flat amount, is assessable in your hands and will be shown on your payment summary. Not everyone who uses their own car for work is reimbursed in this way, however, and you are still entitled to make a claim, in spite of not receiving any reimbursement.

There are two alternative ways of claiming a deduction for business or employment related car use – the cents per kilometre method or the logbook method. For those who use the cents per kilometre method (which only applies to claims of up to 5,000 kms) the process is pretty simple – just multiply the kilometre figure by 88 cents. So if your business or employment related use was 4,000 kms, your 2024-25 claim would be $3,520.

Under the cents per kilometre method, you don’t need to keep a full-blown logbook that tracks every journey. However, the ATO may ask you how you came up with the claimed distance, especially where you’re pushing up against the 5,000 km threshold.

So you will need to have a diary of some sort that shows how you have estimated the kilometres being claimed – anything to prove you haven’t just plucked the figures out of thin air.

People sometimes get confused about what qualifies as business or employment related car use.

You can make a claim where:

• you travel to locations that are not your usual workplace;
• you have no fixed workplace and travel from site to site;
• you carry tools or equipment which are bulky and cannot be securely stored at your workplace;
• you drive to see customers or suppliers;
• you drive to seminars or to a second job.

 

Non-deductible travel includes situations where:

• you drive to and from your regular workplace;
• your employer pays your car expenses directly.

The logbook method is the alternative to the cents per km method. As the name implies, you need to keep a detailed logbook, but only for a representative period of twelve weeks to work out your business related use. Provided your pattern of car usage remains broadly the same, the resulting business use percentage is good for five years, after which you have to repeat the process. The logbook method might be more appropriate where your business or employment related car use is well over 5,000 kms.

For each journey, the logbook needs to show the date of the trip, the starting and finishing odometer reading, the distance travelled and the reasons for the journey. Where you are completing your logbook for the 2024-25 financial year, you need to complete the logbook entries during that year, after each trip. The logbook should come up with a business percentage, which can then be applied to all the costs associated with running the car, including depreciation. Receipts, invoices or other documentary evidence has to be maintained to verify the actual expenditure being claimed.

Car logbooks are available from Officeworks and most stationers, and can also be ordered online.

We can help you with the record keeping and logbook requirements.

 

Proposed Division 296 tax: Key issues and implications

The proposed Division 296 tax, which is proposed to start on 1 July 2025, introduces an extra 15% tax on superannuation earnings above a $3 million super threshold. Everyone supports a fair and sustainable superannuation system, but the new tax is unpopular for many reasons.

Two big reasons people don’t like the new tax is that the:

• Tax will apply on asset growth even if the asset hasn’t been sold
• $3 million dollar threshold will not be adjusted with
  inflation

Let’s look at how the tax will apply on asset growth. The new 15% tax will apply on your super fund ‘earnings’ on the proportion of your super balance that exceeds $3 million. You might think that earnings are simply the profits you have made or locked in but that is not the case when it comes to this tax. Instead, earnings are based on how much your super balance has increased over the year. This includes ‘paper gains’ or increases in the value of assets not yet sold. This is a problem because your assets might be higher this year but may be lower when you sell them. In that case you have paid tax on ‘unrealised’ growth even though you didn’t make a profit. In fact you may subsequently sell the asset for a loss.

Another problem with taxing asset growth before the asset is sold is that you or your fund may not have the cash to pay the tax.

In that case it is likely that you will be forced to sell an asset you were not planning to sell just to pay the new tax.

Only ‘earnings’ attributable to assets over $3 million are subject to the additional 15% tax. The threshold might sound high but with inflation the threshold in today’s dollar value will fall. A young person entering the workforce today can expect to pay Division 296 in the future unless this threshold is adjusted for inflation.

Keep in mind that this new tax has not yet been legislated and it may be premature to withdraw money from super to avoid the tax.

If you are concerned about how Division 296 tax may impact your retirement savings give us a call and we can help you understand its implications and explore strategies to optimise your superannuation.

 

The CGT exemption for land adjacent to a home

The rules surrounding the circumstances in which a home will be fully exempt from capital gains tax (CGT) are quite extensive – and complex.

One crucial one is that the exemption is only available for a home and “adjacent land to the extent that the land was used primarily for private or domestic purposes in association with the dwelling.”

There are some key things to know about this adjacent land requirement.

Firstly, it only applies where the adjacent land is no greater than two hectares – but excluding the land immediately under the home. And two hectares is roughly the old five acre block – and it is pretty big, being 20,000 square metres ie, 200 metres by 100 metres. (Step it out around your neighbourhood and you will see how big.)

Of course, there would be few homes in major metropolitan cities that would approach this block size – albeit it may be an issue for homes on the rural outskirts of such cities.

In the case where adjacent land exceeds two hectares, a full CGT exemption on the sale of the home is not available and some sort of partial capital gain arises on a pro-rata or valuation method. And the ATO is quite generous on how this can be calculated.

Secondly, the adjacent land must be “used primarily for private or domestic purposes in association with the dwelling”. This would include where a granny flat is erected on the adjacent land and a child, a relative or other person lives in it rent-free (or only pays outgoings – and not arm’s length or commercial rent).

Likewise, it would include where adjacent land has other structures on the land such as a large shed, a pool and cabana, a tennis court – provided again that the land and these structures on it are “used primarily for private or domestic purposes in association with the dwelling”.

But what constitutes “primarily for private or domestic purposes…”?

The ATO has a ruling on this issue which broadly provides that “primarily” requires a judgment as to time (and/or area) of land that the land was so used.

So, if for example a home that was owned for 30 years originally had a shed on a small part of it in which the owner carried on a small “shed” activity for a year, it should be possible to conclude that the land was used “primarily” for private or domestic purposes.

But otherwise, only a partial CGT main residence exemption is available to the extent that the adjacent land was not so “used primarily for private or domestic purposes in association with the dwelling”.

Thirdly, the adjacent land need not be immediately surrounding the home. It could for example, include vacant land on a separate title across the road or next door (or such land that has a dwelling or other building on it) – as long as it is “used primarily for private or domestic purposes in association with the dwelling.”

However, the further the distance between the relevant land and the land on which your home is situated the less likely it is that the relevant land is “adjacent” land.

Finally, and importantly, if you sell (or gift or transfer) any part of adjacent land separately from the whole of your home and adjacent land (eg, on its subdivision) then no CGT main residence exemption is available for any capital gain or loss you make on this transaction. And this is because the exemption applies to the home in totality – which includes all of the adjacent land.

This issue also arises in relation to dual occupancy arrangement where the new dual occupancy dwelling may be sold separately from the original home. However, the ATO has detailed guidelines on how the CGT rules apply in these circumstances.

If any of these scenarios apply to you come and get some advice from us – if only for peace of mind’s sake.

 

30 June 2025 Tax & Super Checklist

With the end of the financial year coming up, now’s a great time to get on top of your tax and super. A little planning before 30 June can help you make the most of any opportunities to reduce tax, boost your super, and avoid last-minute surprises. This checklist outlines key things to consider and action before the financial year wraps up. It’s a simple way to stay on track and finish the year with confidence.

Need help? We’re here to help you make the most of EOFY tax and super opportunities. Contact us to discuss what options might work best for your situation.

 

Click here to view our Glance Consultants June 2025 Newsletter via PDF

 

 

 

Good CGT records can save you money

Congratulations! Your investment has done well, and you’re cashing in. You’re happy, and so too is the ATO. That substantial capital gain has brought wealth and a hefty tax bill. Sharing might be part of the deal but when it comes to your hard-earned profits, you might prefer to keep the ATO’s share to a minimum. Keeping good records will help do this. Here are tips to help you hold onto more of your windfall and avoid that hefty tax bill.

How much did your investment really cost?

Good record-keeping is essential; it helps your accountant ensure that you pay no more tax than you must. You probably already know that what you get paid for your investment isn’t necessarily your gain.

Basically your ‘gain’ on an investment is what you get less what it cost you, but do you really know what it cost you?

The most obvious cost to keep a record of is the asset purchase price or ‘acquisition cost’ but there are some lesser-known costs that are often forgotten.

Keep records of anything falling under these four categories as well:

1. Incidental costs of acquisition

These are costs directly associated with acquiring the asset, including such things as:

» Fees paid to brokers, auctioneers, or accountants
» Stamp duty paid on the purchase
» Advertising costs incurred when acquiring the asset
» Conveyancing fees or conveyancing kit costs
» Brokerage fees if buying shares

2. Non-capital ownership costs

You can sometimes add certain ownership costs to your cost base if they weren’t previously claimed as tax deductions. These include:

» Interest on money borrowed to acquire the asset (but again only if it has not already been used as a deduction on income)
» Maintenance, repair, or insurance costs
» Rates or land tax (if the asset is land)

3. Capital expenditure on improvements

Your expenses covering things to increase or preserve the value of the asset are also relevant. Some examples include:

» Costs incurred for zoning changes, whether successful or not
» Capital improvements, such as renovations or structural changes

4. Costs of establishing, preserving, or defending ownership

Hopefully you don’t have too many legal expenses but if you do they too can be taken off the gain. If you have incurred costs related to defending your ownership in court or any legal fees incurred in a dispute over title keep a record of them as they will reduce the gain.

You’ve identified all the costs, but can we further reduce the gain?

That capital loss you made earlier in the year wasn’t nice but there is a silver lining: it can offset that gain. If that’s not enough to wipe out the gain, dig deeper into your records.

Was there any unused loss in a prior year? We can use that too!

Keep note of when you bought it

If you bought that asset prior to 20 September 1985, yippy no CGT! If you bought it over 12 months ago only half the net gain (after costs and losses) is assessable. So, if you’re thinking of selling an asset but haven’t held it for a year, consider hanging on to it just that little bit longer.

Good CGT records… 

This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.

FINAL THOUGHTS

By understanding what the costs are and keeping thorough records, you can legally minimise your CGT liability. Speak to us about what things you should keep records of to take full advantage of any applicable deductions and exemptions.

 

Concessional Super Contributions vs Mortgage Paydown: What’s the smarter move?

If you have some extra cash, you might be deciding whether to make a concessional contribution to your super fund or use it to pay down your mortgage, whether on your home or holiday house. Both strategies have advantages, but the right choice depends on your personal situation. Let’s take a closer look at the options.

 

Option 1: Pay down your mortgage

Putting extra money towards your mortgage helps reduce non-deductible debt ie, debt carrying interest that isn’t tax deductible. This strategy can be particularly appealing if you value certainty or plan to free up cash flow soon. Key advantages include:

» Guaranteed savings: every extra dollar paid directly reduces your interest costs. For example, on a 5% loan, an additional $10,000 payment saves you $500 a year. This is essentially a risk-free 5% return.
» Increased equity: reducing your loan balance builds equity in your property, which can improve your financial flexibility if you need to borrow against it or decide to sell.
» Improved cash flow and peace of mind: with a smaller loan, your minimum repayments shrink, giving you more breathing room and financial security.

The downside is that unlike super contributions, there are no immediate tax benefits. Over the long term, investment returns from a well-diversified super portfolio often exceed typical mortgage interest rates.

Option 2: Concessional super contributions

Concessional super contributions, like salary sacrifice or personal deductible contributions, boost retirement savings and cut personal tax. They’re especially appealing for people near retirement. Super may be partly or fully accessible after 60 at which time withdrawals are generally tax-free and can be used to repay loans whilst also having enjoyed a tax break on contributions.

Key advantages include:

» Tax benefits: contributions are taxed at 15% in super (or 30% for some high-income earners), often below your marginal rate.
» Long-term growth: super investments in growth assets, plus a concessional tax rate of 15% on asset income in super, can significantly grow your retirement savings.

The downside is that funds are locked away until age 60 and are generally unavailable for emergencies. Market fluctuations, such as those seen recently, may also impact your superannuation savings.

Case study

Brian has $10,000 (after tax) of surplus cashflow each year. He is considering using this surplus cashflow to pay down his mortgage on a holiday home or making a personal deductible contribution to super. He is 55, plans to fully retire at 60 and is on the 39% tax bracket (including Medicare Levy). His mortgage is incurring interest at 5.6%.

Option 1: Pay down mortgage

If Brian makes an additional $10,000 one-off mortgage repayment each year for the next five years, he will have about $56,000 less debt than he would otherwise have. This reduction includes the interest that would have been accrued but for the reduction in the loan over the five years.

Option 2: Make concessional super contribution

If Brian can forgo $10,000 of after tax cashflow he can potentially make a personal deductible contribution of approximately $16,390 and be in the same after-tax cashflow position. As he is paying 39% tax, a $16,390 deductible super contribution will reduce his tax by $6,390 meaning his cashflow only reduces by $10,000 per annum.

Let’s assume a net super contribution of $13,930 ($16,390 less 15% contributions tax) is invested each year into super for the next five years. Let’s also assume his super grows at 5.6% net per annum.

In this case Brian will have about $78,000 more in super than what he would otherwise have but for the deductible super contributions. After five years Brian is aged 60 and if he is also retired, he is free to withdraw any amount of super, tax-free, to pay down remaining debt.

THE VERDICT

Chat with us to find out which option suits you best. There is no one-size-fits-all answer. Paying down your mortgage offers security and peace of mind. Making extra concessional super contributions can deliver powerful tax benefits and long-term growth in retirement savings.

Whether you’re focused on financial flexibility now or building wealth for later, we’re here to help you weigh the pros and cons and make the most of your money.

 

Writing a will in a tax-effective manner

When a person writes a will they usually leave their assets to their children – and usually in equal shares. And when they first write their will their children may be young – and they may also be relatively young when they later update it. However, there is a potential capital gains tax (CGT) issue lurking here.

In this increasingly globalised world, when the children do inherit the assets, they may be living overseas. In this case, if they are considered a foreign resident for tax purposes at the time they become entitled to the assets of the estate (or their share of them), instead of the roll-over applying, it will trigger an immediate CGT liability for the deceased in their final tax return. And this will usually be paid by the executor from estate assets – thereby diminishing the amount of the estate that would otherwise be available to the beneficiaries.

And in this case the amount of the capital gain (or loss) is determined by the asset’s market value at the time of the deceased’s death and the deceased’s cost for CGT purposes.

However, there is a very important carve out from this rule. It does not apply if the bequeathed asset is Australian real estate (or other “taxable Australian property” as defined). This is because such assets always remain subject to CGT – regardless of the residency status of the taxpayer. Moreover, any dealings in them can usually be traced by the ATO (especially in the case of land).

However, the rule would, for example, apply to shares on the ASX and ordinary investment units in unit trusts.

Note that there are special rules that apply to shares in a company or units in unit trust where more than 10% of the shares or units are owned and more than 50% of the value of the assets of the company or unit trust is real property. (But these rules can be very complex.)

The upshot of all this is that when writing your will it is important to get good tax advice so that it can be structured and documented in a tax-effective way – and, broadly speaking, this will entail giving your executor a high degree of flexibility in how estate assets will be distributed among your beneficiaries.

However, if you are already locked into a will and you find yourself in this situation, there are a few things you can do to ameliorate the effect of this rule.

And by the way, in writing a will it is probably not a bad idea to give your executor the power to grant someone a right to occupy your home after your death. This is because it is another potential way to access the CGT exemption for an inherited home.

So, if you are writing your will or looking at updating one, come and have a chat to us about it first so that we can take you through some of the ins-and-outs of writing it tax-effectively.

 

Binding Death Benefit Nominations Explained

When it comes to superannuation, many people assume that their retirement savings will go to their loved ones when they pass away. Sadly, this isn’t always the case. Unlike other assets that are covered by your will, your superannuation is handled separately, and if you want to ensure it goes to who you want, you need a binding death benefit nomination (BDBN).

 

What is a binding death benefit nomination?

A BDBN is a formal instruction you give to your superannuation fund, telling them who should receive your super when you die. The fund must follow your instructions if your nomination is valid. This gives you certainty that your money will go to who you want.

If you don’t have a binding nomination, your super fund will decide who gets your money. This means your super could be distributed differently from what you intended. Without a valid nomination, your fund will usually follow set rules and laws about dependants.

The three-year expiry rule

A BDBN generally expires every three years. This means you need to renew it regularly to keep it valid. If your nomination expires and you haven’t updated it, your super fund will decide who gets your money when you pass away.

To avoid this, many people set reminders to review their nomination every few years. Major life events such as marriage, divorce, or having children are also opportune times to review your BDBN.

Non-lapsing binding nominations

Some super funds offer non-lapsing binding nominations, which do not expire. Once you make a valid non-lapsing nomination, it remains in place unless you choose to change or cancel it.

However, not all super funds offer this option, and each fund has its own rules about how non-lapsing nominations work. It’s important to check with your fund to see if you can make one and whether any conditions apply.

Binding nominations in SMSFs

If you have a self-managed super fund (SMSF), the rules around BDBNs can be different. Unlike large super funds, where trustee discretion is limited by the rules of the fund and superannuation laws, SMSFs can have more flexibility.

Some key differences include:

» No automatic expiry: In many SMSFs, binding nominations do not expire unless the trust deed specifically states otherwise. This is different from retail and industry super funds, where nominations often expire after three years.

» Customised rules: The rules about binding nominations in an SMSF depend on the trust deed, which is the legal document that governs the fund. Many SMSFs allow non-lapsing nominations, while others may require regular updates. Also, some
SMSFs allow cascading nominations ie, instructing the fund to pay a death benefit to a secondary beneficiary if the primary beneficiary predeceases the member.

» Trustee control: Since SMSF trustees are usually fund members themselves, there can be potential conflicts of interest when deciding how to distribute super benefits. A well-structured binding nomination can help prevent disputes among
family members.

If you have an SMSF, it’s crucial to check your trust deed and ensure your nomination aligns with the fund’s rules.

Who can you nominate?

When making a binding nomination, you can’t just choose anyone – you must nominate one or more ‘eligible beneficiaries’. These include your:

» Spouse (including de facto and same sex partners)
» Children (including adopted or stepchildren)
» Financial dependants (such as someone who relies on you financially)
» Interdependents – someone you share an interdependent relationship with (such as a person you live with, have a close bond with, and where one or both of you provide financial assistance, domestic support, and personal care)
» Legal personal representative (your estate, so your super is distributed according to your will)

If you nominate someone who isn’t eligible, your nomination will be considered invalid, and the super fund trustee will decide who receives your super.

How to make a valid binding nomination

To ensure your nomination is legally binding, follow these steps:

1. Check your fund’s rules: Different funds have different requirements for binding nominations.
2. Complete the required form: Your super fund will have a specific binding nomination form you need to fill out.
3. Nominate a dependant or legal personal representative.
4. Ensure the proportions add up to 100%.
5. Sign and date it in the presence of two independent witnesses (over 18 and not beneficiaries).
6. Submit the completed form to your super fund.

Final thoughts

A BDBN is an essential tool for ensuring your superannuation is distributed according to your wishes. If you don’t have one in place, or if yours has expired, your super fund may decide who gets your money – and it might not be who you intended.

Whether you choose a standard nomination with a three-year expiry, a non-lapsing nomination, or an SMSF-specific arrangement, keeping your nomination up to date is key. Take the time to review your super fund’s rules and ensure your hard-earned super goes to the ones you love.

 

Small-scale subdivision and property development

So, you have decided to knock down your home and to build a couple of townhouses instead – and maybe live in one (but will just wait and see how things pan out). Likewise, you may have decided to subdivide your large backyard to do a similar thing.

In another case, you may have bought yourself a large block of land down the coast or in the country on which to build a holiday home (or your dream retirement home), but have now decided to build some houses on it to sell as the market is hot in that region. (And you know how to manage a project; you have been doing it all your working life.)

In all of these scenarios, the ATO may take the view that you are engaging in small scale property development and that, as a result, your profits from this activity should be taxed as ordinary business profit (and possibly at the top rate of tax), and not just merely as a concessionally taxed capital gain.

Furthermore, where you may have “ventured” land into a property development project, the capital gains tax (CGT) laws will apply to capture any capital gain (or loss) made on that land up until that time (but provided the land was not exempt from CGT, such as in the case of a home).

But there is one big advantage in being taxed as a property developer – you can generally claim your deductible costs each year as you incur them, and particularly interest on any money borrowed for the venture.

On the other hand, if you are merely subdividing part of your backyard and selling it you will only be subject to CGT in respect of any gain or loss you make – and, what’s more, you can’t claim the CGT exemption for a home in this case.

And in the case of a knockdown-rebuild of a home, where you move back into and make it your home in the required time periods, there will generally be no CGT consequences (albeit, one day the ATO may look more closely at this this rule if it considers it to be badly exploited).

In relation to GST, it generally doesn’t apply to small-scale property developments unless you’re operating a business and registered for GST – or to put it another way, for one-off projects, GST is unlikely to apply, but subdividing and selling multiple lots could push you into GST territory.

But the application of GST to small-scale property developments is a complicated area.

In short, the issue of how small-scale property development activities are taxed is complex – and will depend on the exact circumstances of the case.

It’s vital to come and speak to us if you are considering undertaking such activity – or have already done so.

 

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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.

We may need to talk about your family trust

You may have read about a recent court decision affecting some family trusts. In a case called Bendel, published on 19 February 2025, the Full Federal Court unanimously held that the private company beneficiary of a discretionary trust has not made a “loan” or “financial accommodation” to the trust merely by not calling for the payment of its trust distribution.

This item only applies to clients with business structures involving trusts that have private corporate beneficiaries where the private company has not called for payment of a trust distribution, thereby creating an unpaid present entitlement (UPE).

It’s a fine distinction, but Full Court said that in order for there to be a loan there has to be an obligation to repay an amount, which does not apply to a UPE as there is no legal obligation to repay anything.

Since 2010 the ATO has been operating on the basis that a UPE owing by a trust to a corporate beneficiary is a loan for the purposes of the Division 7A rules. These rules catch disguised distributions made by private companies to their shareholders or associates.

If the “loan” remains unpaid at the time of lodgement of the company’s tax return, the UPE amount is treated as an unfranked dividend in the hands of the trust unless the company and the trust enter into a complying loan agreement involving both capital and interest payments. This avoids the deemed dividend outcome but usually involves some tax costs and can also create funding and compliance issues for the trust.

The ATO has responded to the Full Court’s decision by seeking special leave to appeal to the High Court. The outcome of the special leave application may not be known for some months, and if special leave is granted there is unlikely to be a decision much earlier than Christmas.

In the meantime, the ATO has revised its earlier Decision Impact Statement (DIS) by announcing that it will continue to apply its existing practice of treating UPEs as loans, in defiance of the Full Court’s decision. This is not the first time the ATO has felt entitled to ignore the law of the land, and it is not something taxpayers could hope to get away with.

Even if its High Court challenge is unsuccessful, the ATO could approach the government for a law change. The previous Coalition government announced in the 2018-19 Budget that it would legislate to make it clear that corporate UPEs are caught under Division 7A. To date, nothing has been done by either side of politics to follow through on that announcement but, depending on what happens in the High Court, a legislative response cannot be ruled out.

If the Full Court’s decision stands (a big if) there will be major implications for discretionary trusts with corporate beneficiaries.

In the longer term, it would make the funding of discretionary trusts a lot easier, while also reducing compliance costs.

In view of all this uncertainty, there is the question of what to do about 2023-24 UPEs. While taxpayers would be within their rights to rely on the Full Court’s decision by not converting those UPEs into complying loan agreements, there are risks associated with that course of action which we need to discuss with you. A safer approach might be to follow the Commissioner’s approach for now and lodge objections to protect your rights.

A decision needs to be made one way or the other by the time the relevant company returns are due for lodgement, which isn’t far off.

 

Selling property? Buyers must withhold and pay the ATO!

If you’re selling property in Australia and you’re a foreign resident, there are important tax rules you need to know.

Recent changes mean that buyers must withhold 15% of the property’s market value and pay it to the ATO, unless the seller provides a residency clearance certificate.

What’s changed?

From 1 January 2025, all property sellers must prove their residency status by obtaining a clearance certificate from the ATO. If they don’t, the buyer is legally required to withhold 15% of the sale price and remit it to the ATO. This rule is designed to ensure foreign residents don’t avoid capital gains tax (CGT) withholding obligations. The government now assumes all property sellers are foreign residents unless they provide an ATO-issued clearance certificate proving otherwise.

How does the withholding rule work?

If you’re buying property from a foreign resident, you must:

■ Withhold 15% of the purchase price (for contracts from 1 January 2025).
■ Register as a withholder with the ATO before settlement.
■ Pay the withheld amount to the ATO before the sale is finalised.

For contracts entered before 1 January 2025, the withholding rate is 12.5%, but only applies to properties worth over $750,000.

If you’re a foreign resident selling property in Australia, you’ll receive a tax credit for the withheld amount when you lodge your Australian tax return.

What if the property is your former home?

Even if the property was your main residence, foreign residents can’t claim the main residence CGT exemption when selling Australian real estate. This means that any capital gain from the sale is fully taxable in Australia.

In fact, foreign residents are always subject to CGT on property they own in Australia – whether or not they live here.

How do you know if the seller is a foreign resident?

As a buyer, you don’t have to investigate the seller’s residency status yourself. Under standard property contracts, the seller must declare whether they are a foreign resident and provide an ATO clearance certificate if required.

If the seller doesn’t obtain a clearance certificate, the buyer must withhold 15% of the purchase price and pay it to the ATO.

Your solicitor or conveyancer will typically handle this process.

Are there any exceptions?

Yes. In some cases, the ATO may allow a reduced withholding amount – or even none at all. This happens when:

■ The foreign resident seller obtains a variation certificate from the ATO.
■ The seller is exempt from Australian tax (eg, a foreign charity).
■ A CGT rollover applies, such as in a property transfer due to a marriage breakdown.
■ The property is jointly owned by an Australian and a foreign resident – a situation becoming more common in today’s global world.

Other assets affected by these rules

It’s not just real estate – the foreign resident CGT withholding rules also apply to other assets that are closely connected to Australia such as “significant interests” in private unit trusts and companies. Whether you’re a buyer or seller, understanding these rules is crucial to avoid unexpected tax obligations. If you’re unsure how these changes affect you, get in touch with us for expert advice.

 

Three great reasons to start a Transition to Retirement Pension

Thinking about easing into retirement but still need a steady income? Want to trim your tax bill while growing your super? Or maybe you’d love to knock down some debt before you stop working? If you are 60 or over, you can do just that.

 

Who can start a super pension?

Using your super to start a pension can help give you the cashflow needed to reach your financial goals. Not everyone is allowed to start a pension but if you are 60 or over, you can. Once you retire or turn age 65 you can unlock the flexibility an account-based pension has to offer. This includes no maximum limit on how much you can take out— so long as you draw a minimum pension.

If you’re between 60 and 65 and still working, you may not qualify for a fully flexible account-based pension. However, you can start a Transition to Retirement (TTR) pension instead. While a TTR pension has some limits—like a maximum annual withdrawal of 10% of your starting balance—it can still be a powerful tool to help you achieve your financial goals. If you’re looking to supplement your income, reduce tax, or boost your super, a TTR pension could be the solution you need!

Let’s look at three typical goals.

1. Replace income while cutting back on work

Want to work less but keep the same income? A TTR pension can help!

As retirement approaches, many people start reducing their work hours—but that can mean a drop in income. By using a TTR pension, you can replace lost wages with tax-free withdrawals from your super.

Meet Theodore

Theodore (age 63) is a town planner. As Theodore nears retirement, he decides to cut back his work hours by one day a week.

That means earning less—but thanks to a TTR pension, not taking home less. His taxable income drops by $25,000, but since his pension withdrawals are tax-free, he only needs to draw $17,000 to maintain the same after-tax cashflow. Less work, lower tax, and the same income—sounds like a win, right?

2. Reduce tax and boost your super

Theodore works less and pays less tax. He is a winner but his super balance isn’t. Perhaps you would prefer more super and less tax.

A TTR pension can free up extra cash so you can salary sacrifice more into super. This means swapping taxable salary (which could be taxed at up to 47%) for concessional super contributions, which are taxed at just 15%.

Meet Matilda

Matilda (age 62) is a marine biologist and earns $160,000 per year. She starts a TTR pension with $100,000 in super and withdraws $7,075 tax-free from her pension. To receive the same amount after tax Matilda would need to earn $11,600. The extra tax-free cash from her TTR allows her to salary sacrifice $11,600 into super. The result? She saves $4,525 in personal tax and her super grows by an extra $2,785 (after super tax). That’s a win-win!

3. Pay your debt off sooner

Have some unwanted debt? A TTR pension can help you clear that debt sooner—so you can enter retirement stress-free.

Meet Simon

Simon (age 60) is a self-employed shopfitter and has $300,000 in super and a $300,000 mortgage on a holiday home (6% interest). He makes monthly repayments of $3,330 and the loan will be extinguished in 10 years (age 70).

He wants to be debt-free at retirement (age 65) so commences a TTR pension and draws down $2,470 per month ($29,640 annually). He uses the extra cashflow to make additional monthly repayments of $5,800 ($69,600 annually).

The result? Simon pays off his loan in 5 years age 65 – saving him interest and giving him peace of mind in retirement.

Is a TTR Pension right for you?

Commencing a TTR pension to reach your financial goals can be a great strategy, but it’s not for everyone. It’s important to weigh the benefits against the long-term impact on your super savings.

To make sure you’re making the right move, speak to your financial adviser. Your adviser can help you with your financial goals, be it to lower your tax, build your super, pay down debt or retire sooner!

Commencing a TTR pension to reach your financial goals can be a great strategy, but it’s not for everyone. It’s important to weigh the benefits against the long-term impact on your super savings.

 

FEDERAL BUDGET: STOP PRESS

In a shrewd tactical move by the government ahead of its election announcement, the modest personal tax cuts announced in the 25 March 2025 Budget have been hurriedly passed into law, as has the Bill extending the small business $20,000 Instant Asset Write-off threshold to 30 June 2025 (but not beyond that date).

The tax cuts reduce the marginal tax rate on the $18,200 to $45,000 tax bracket from 16% to 14% in two stages from 1 July 2026 and 1 July 2027, giving taxpayers up to an extra $268 a year in their pocket to start with, rising to $536 after the second stage kicks in..

 

Employees vs. Contractors: What sets them apart

The Australian Taxation Office (ATO) has recently revised its guidance on differentiating between employees and independent contractors. This change follows several court rulings that clarified the criteria for determining whether a worker is genuinely an employee or an independent contractor.

Whether you’re a worker or a business owner, understanding these differences is crucial, as they have an impact on tax, superannuation, and workplace entitlements.

Why does the difference matter?

How a worker is classified – either as an employee or a contractor – impacts who is responsible for paying taxes, providing benefits like superannuation and leave, and who carries legal responsibilities.

Misclassifying a worker can lead to serious financial consequences, including unpaid entitlements and penalties from the ATO.

Key differences between employees and contractors

The primary difference lies in how the worker interacts with the business:

■ Employees work in the business and are part of its operations.
■ Contractors work for the business but maintain their own separate operation.

The contract between the business and the worker is crucial in determining a worker’s classification. While day-to-day work practices play a role, the legal rights and responsibilities outlined in the contract hold the greatest significance.

The ATO’s most important considerations are laid out in Table 1 on the following page. Superannuation and contractors

Even if someone is considered a contractor, they might still be entitled to superannuation if:
■ They’re paid mainly for their labour.
■ They work as a sportsperson, artist, entertainer, or in a similar field.
■ They provide services for performances or media production.
■ They do domestic work for over 30 hours per week.

Workers who are always employees

Some workers are always considered employees, no matter what. This includes apprentices, trainees, labourers, and trades assistants.

Apprentices and trainees work while completing recognised training to earn a qualification, certificate, or diploma. They might be full-time, part-time, or even school-based and usually have a formal training agreement.

Most of these workers are paid under an award, meaning they have set pay rates and conditions.

Businesses hiring them must follow the same tax and superannuation rules as they do for other employees.

Companies, trusts, and partnerships are always contractors

If a business hires a company, trust, or partnership (rather than a person) it’s always considered a contracting arrangement. However, people working for that entity could still be employees of that entity, rather than the business hiring the services.

Why this matters to you?

For workers, knowing your status helps ensure you receive the correct pay and benefits. For businesses, classifying workers correctly helps avoid fines and ensures compliance with tax and employment laws.

If you need more details or want to check your situation, reach out to us for more information. Proper classification today can prevent costly mistakes in the future.

 

Concessional contributions: Can there be too much of a good thing?

A fantastic way to grow your retirement savings and shrink your tax bill is through concessional contributions (CCs) to super. But more is not always better and like Goldilocks and her porridge, it pays to get things just right.

 

The basics of concessional contributions

Extra CCs can be made through salary sacrifice or as personal deductible contributions (PDCs). These contributions reduce your taxable income and are taxed at 15% inside super rather than your personal tax rate. That’s a win—especially if you’re on a higher income!

When do concessional contributions lose their tax advantage?

CCs typically save you tax but there’s a point where they stop working in your favour. This happens when your taxable income drops to the effective tax-free threshold—the level where you don’t pay any tax anyway.

For the 2024/25 financial year, the effective tax-free threshold for a single person (without the Senior Australian Pensioner Tax Offset or SAPTO) is $22,575. This includes the standard tax-free threshold of $18,200 plus the Low-Income Tax Offset (LITO).

If your taxable income falls below this, making CCs won’t save you any tax—because you weren’t paying any in the first place!

What is YOUR effective tax-free threshold?

Knowing your effective tax-free threshold will help you decide how large or small your CC should be. This of course assumes you have your cashflow sorted!

The table following illustrates the effective tax-free thresholds that may apply to you depending upon your circumstance.

If your taxable income is already below your threshold, making CCs won’t reduce your tax further—but they will be taxed at 15% inside super. This means you’re losing 15% for nothing and you might be better off considering making after-tax “non concessional contributions” which aren’t subject to this “contributions tax.”

Don’t forget your catch-up concessional cap!

Haven’t been maxing out your concessional cap in previous years? No worries! If your total super balance is under $500,000, you can make extra catch-up contributions using your unused cap amounts from the past five years. You might even be eligible for up to $162,500 in catch-up CCs! That can really get your taxable income down—but remember don’t go overboard!

Watch your concessional cap and other tips

Don’t forget your employer will make CCs via super guarantee and these will also count towards your concessional cap.

Exceeding your concessional cap can mean extra tax and be an administrative headache. Also if you are on a higher income your CCs may be subject to an additional 15% tax in the form of “Division 293” tax. Play it smart and get advice!

 

Click to view Glance Consultants April 2025 Newsletter via PDF

 

 

Just as new financial strategies emerge from the government, the 2025–26 Federal Budget, unveiled by Federal Treasurer Dr. Jim Chalmers, presents significant updates that could impact you and your financial decisions. Delivered on 25 March 2025, the Budget is articulated around five core priorities, focusing on crucial aspects such as cost-of-living relief, housing development, and education investments. As you review these changes, pay special attention to the new personal tax cuts, increased Medicare levy thresholds, restrictions on foreign ownership of housing, and proposed reductions in student debts.

One of the standout features of the Budget is the introduction of two new personal tax cuts, which aim to enhance your financial comfort. Starting from 1 July 2026, the marginal tax rate for single taxpayers earning between $18,201 and $45,000 will decrease from 16% to 15%. Furthermore, this rate will further decrease to 14% from 1 July 2027. This progressive easing on your tax obligations could offer you substantial savings over the coming years.

The Budget also addresses healthcare affordability. It proposes an increase in the Medicare levy low-income thresholds for singles, families, and seniors, effective from 1 July 2024. This adjustment aims to ensure that more Australians can access vital healthcare services without financial strain. By raising the threshold, you may find it easier to navigate your healthcare costs.

If you’re carrying a student loan, you can look forward to a significant change as well. Starting on 1 July 2025, student loan debts will be reduced by 20%, coupled with reforms to the repayment system. This is designed to alleviate some of the financial burdens that student debt can impose on fresh graduates and those still in education.

Special attention is given to housing in this Federal Budget, with a ban on foreign individuals purchasing existing homes. This measure could impact the housing market by potentially making more properties available to Australian residents, offering you increased opportunities for home ownership. Additionally, the government plans to delay the enactment of certain tax measures until proper legislation is in place, ensuring that changes are implemented thoughtfully.

Further modifications relate to tax administration and compliance. The Australian Taxation Office (ATO) has been allocated $999 million over four years to extend its tax compliance activities, which may affect the way you engage with tax filings. Additionally, rules surrounding managed investment trusts are set to be amended, ensuring legitimate investors like you maintain access to concessional withholding tax rates starting from 13 March 2025.

Not-for-profits will also see an update, with an updated list of deductible gift recipients, providing you with more options if you choose to support charitable organizations. On the indirect taxes front, you should note that there will be a pause on indexation for draught beer excise, lasting two years from August 2025, as well as increases in excise remission caps for alcohol manufacturers, again effective from 1 July 2026.

To wrap up, the 2025–26 Federal Budget offers a comprehensive snapshot of how government policies could influence your personal finances and everyday life. By being informed and aware of these changes, you can better navigate your financial future in the year ahead.

 

Please check the following link for our PDF report on the 2025-2026 Budget:

Federal Budget PDF 2025-2026

 

 

It’s important to stay on top of your reporting obligations, as the Australian Taxation Office (ATO) is set to begin issuing penalties for overdue taxable payments annual reports (TPARs) starting from 22 March. If you haven’t lodged your TPAR for the 2024 financial year or previous years and have received three reminder letters from the ATO, you may be at risk of incurring penalties.

If your business pays contractors for services that fall under the taxable payments reporting system (TPRS), you are required to lodge a TPAR by 28 August each year. This requirement applies to businesses engaged in sectors such as building and construction, courier services, cleaning, information technology, road freight, as well as security, investigation, or surveillance services.

In the previous year, the ATO issued approximately $18 million in penalties to over 11,000 businesses for late or non-compliance in TPAR submissions. This demonstrates the seriousness with which the ATO views compliance with these reporting requirements.

One of the key purposes of the TPAR is to ensure that contractors report their income accurately. The ATO uses the data collected through these reports to pinpoint contractors who might be under-reporting their income. This data matching enables a fairer landscape for all businesses, ensuring that those who adhere to the regulations are not at a disadvantage against those who do not.

If you find that your business no longer needs to lodge a TPAR—perhaps because you simply do not pay contractors anymore—you can submit a non-lodgment advice (NLA) form. This form allows you to officially indicate that you are exempt from future TPAR requirements. Make sure to act promptly, as proactively addressing this matter can prevent any unwanted penalties.

In addition to monitoring TPAR compliance from businesses, the ATO also uses this data to scrutinize the tax returns filed by contractors. If they identify discrepancies, such as omitted or misreported income, the ATO may reach out to you directly or contact your tax professional. They may ask you to amend your tax return to ensure accuracy and compliance.

Through these measures, the ATO aims to level the playing field, encouraging honesty and transparency within the contracting workforce. While fulfilling your reporting obligations may seem daunting at times, it’s important to stay organized and timely in your submissions to avoid the penalty repercussions.

To summarize, ensure that your TPARs are lodged correctly and by the due date, especially if your business pays contractors for applicable services. If you need guidance on how to lodge your TPAR or how to submit an NLA form, consider consulting with your tax professional. Staying compliant not only protects your business from penalties but also contributes to a fairer taxation system for everyone involved.

Contact Glance Consultants today if you have any queries or need help with your business 

Salary Sacrifice vs Personal Deductible Contributions: And the winner is…

Super is a great way to save for retirement. It offers an opportunity to invest in long-term growth assets and enjoy generous tax concessions along the way. For those wanting to make extra contributions and reduce their personal tax bill, there are two options:

■ Salary sacrifice, and
■ Personal deductible contributions (PDCs).

Both have their benefits, and choosing the right method depends on your cash flow, flexibility needs and personal preference.

Let’s break them down.

What are salary sacrifice and personal deductible contributions?

1. Salary sacrifice

Your employer deducts a portion of your pre-tax salary and contributes it to your super fund.

2. Personal deductible contributions (PDCs)

You make voluntary contributions from after-tax money and later claim a tax deduction when you lodge your tax return.

Salary sacrifice

Benefits of salary sacrifice

■ Timing – Salary sacrifice contributions reduce your taxable income immediately, meaning your employer will withhold less tax and you will immediately enjoy the tax saving. PDCs provide a tax deduction when you lodge your tax return meaning you do not get the tax benefit until later.

■ Discipline – Salary sacrifice is automatic and helps maintain savings discipline.

■ Simplicity – Salary sacrifice can be much simpler and less administrative. PDCs require you to submit paperwork to the super fund known as a “notice of intent” form. This paperwork must be submitted within strict timeframes. With salary sacrifice you do not need to worry about such paperwork.

When salary sacrifice is a winner

Salary sacrifice is a winner for employees who:

■ Prefer a “set-and-forget” approach to growing their super.

■ Have regular income and want a simple way to contribute.

■ Want to ensure their contributions are made gradually over the year to benefit from “dollar cost averaging”. This reduces the risk of “going all in” at the peak of the market.

Personal deductible super contributions

Benefits of personal deductible super contributions

■ Availability – Salary sacrifice is only available to employees. If you are not employed, you can’t salary sacrifice. Instead, you might able to make a PDC to super.

■ Flexibility – PDCs offer greater flexibility, allowing you to contribute lump sums at any time during the financial year.

■ Reversibility – After making the contribution and submitting paperwork to claim the deduction you might change your mind.

Perhaps you have insufficient income to justify claiming a deduction and would prefer that contribution not be subject to the 15% “contributions tax”. It may be possible to “reverse” the contributions tax and not claim the deduction, but unless you have retired or met a condition of release the contribution will remain “stuck” in super.

When personal deductible contributions are a winner

PDCs are a winner for people who:

■ Want greater control over when and how much they contribute.

■ Have variable income or expect a large one-off payment (eg, bonus, inheritance, asset sale).

■ Are self-employed or receive income from multiple sources.

■ Want to contribute additional amounts closer to the end of the financial year to maximise their tax deduction.

Enjoy the best of both worlds:

Combining salary sacrifice and PDCs

Many people use both strategies to maximise their super contributions efficiently. For example:

■ Setting up salary sacrifice to contribute steadily throughout the year.

■ Making a PDC at the end of the financial year if additional concessional contribution (CC) cap space is available.

■ Adjusting contributions based on unexpected income or bonuses.

Conclusion

Salary sacrifice and PDCs each have their advantages, and the right choice depends on your employment, cash flow and personal preference.

By speaking to your adviser as to how each method works, you can make informed decisions to optimise your retirement savings while also reducing your tax bill.

 

Beware of Bitcoin gains!

If you own Bitcoin, or any other crypto currency, you may have been the beneficiary of Donald Trump’s election as President last November – which saw Bitcoin prices jump by almost 50% almost immediately after the election (and certainly in the following weeks).

And if you decided to take advantage of this and realise your gain by selling your Bitcoin you may have a capital gains tax (CGT) problem, and a nasty one at that (albeit, it is only a tax problem – it is not a “no-profit” problem!) .

So, if you have made a capital gain, you should consider a few things.

Firstly, the Tax Office’s data matching capabilities regarding the buying and selling of Bitcoin are very extensive (and very good) – so, any idea of just not declaring your gain would bring with it big risks.

Secondly, like anything to do with tax, keep good records of your dealings with Bitcoin: it is both a legal requirement and will help you manage your tax affairs.

Thirdly, if you also have capital losses from your dealings in Bitcoin (or any other CGT assets) in either this income year or previous ones, you can use those losses to reduce any assessable capital gains from Bitcoin – and this will result in less tax being payable.

And the same rules applies to using any current or prior-year “revenue” or trading losses you have from any other activities.

They too can be used to reduce your capital gains from Bitcoin.

Fourthly, and importantly, like most capital gains from other assets, you are entitled to use the 50% discount to reduce the amount of assessable capital gain – provided you have owned the Bitcoin for more than 12 months.

Finally, don’t forget that if you become a foreign resident for tax purposes you will be deemed to have sold your Bitcoin for its market value at the time you left the country – or the CGT rules will subject you to Australian CGT if you sell it while you are overseas. (And don’t forget about the ATO’s extensive data matching capability in this regard!)

However, all this assumes you aren’t in the business of trading in Bitcoin. If this were the case you would generally be taxed on your profits as ordinary business or other income – without the benefit of the accompanying concessions.

The other thing to be wary of is that the ATO has specific guidelines about how it treats Bitcoin and these can be difficult to apply to a particular situation.

So, if you have a “Bitcoin problem”, come and speak to us about it – and we will help you get things right (and maybe even find a legitimate way to reduce the ultimate tax payable on it).

 

Is an asset you own used in another person’s business?

Did you know that if you own an asset (eg, land or a factory or even a trademark) that someone else uses in carrying on a small business then you might be entitled to the CGT small business concessions when you sell the asset?

And these concessions can either entirely or partially eliminate any capital gain you make on selling it (or at least defer it).

This can occur for example when your asset is used by, say, your spouse or a child under 18 in their own business (or one that you may be involved in also) – such as where that small commercial property you own (or own jointly with your spouse) is used by your spouse in, say, that art frame, photography or accounting business etc that he or she carries on.

Typically, this concession can also apply where an asset you own is used in say the business carried on by a family company or family trust in which you have a relevant interest – although the rules can get a bit complicated where you are only a beneficiary in that family trust.

These rules can also apply in “reverse” – so that an asset owned by family company or family trust that is used in the business carried on by a relevant shareholder or a relevant beneficiary can also qualify for the CGT small business concessions (eg, farmland).

Importantly, these rules apply whether or not you lease the asset to that other person (or entity) that carries on the business.

Interestingly, the rules can also apply in appropriate circumstances where a testamentary trust continues to carry on the business that was carried on by the deceased – although in that case it may be easier to access the concessions by having the executor or beneficiary (or surviving spouse) sell the relevant business asset within two years of the deceased’s death.

These rules that allow an asset owned by one person to qualify for the CGT small business concessions where they are used by another person (or entity) in their business are only permissible where the parties are either “affiliates” or “connected entities” of each other (as defined under the tax law).

Suffice to say, whether or not persons or entities are “affiliates” or “connected entities” of each other for the purposes of the CGT small business concessions can be difficult to determine – and will depend on the exact circumstances of the relevant parties.

So, if you think you are in this situation – or propose to start a small business and intend to use assets owned by someone else in that business – speak to us first so that we can help you get the optimal CGT outcome.

 

FBT Checklist 2024-25

With the due date for FBT returns coming up, the following non-exhaustive checklist may prove useful in determining whether an employer has an FBT liability in the first place.

Although it will generally fall to your accountant to prepare the FBT return from your software file or other records, all of the instances where you have provided employees and/or their associates (eg, spouse) with a potential fringe benefit may not always be apparent to them. To assist you in bringing these potential benefits to the attention of your accountant, following is a general checklist to refer to.

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Click to view the Glance Consultants March 2025 Newsletter via PDF

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt, when managed responsibly, can be an effective tool for the following purposes:

• Financing Expansion
• Buying Equipment
• Smoothing out Cash Flow

However, poorly managed debt has the potential to create devastating financial distress. As such, we’ve put together some of the most important debt management tips:

Know Your Debt Situation

You need to first know your current debt situation. This involves listing all your debts, including:

• Loans
• Lines of Credit
• Credit Cards
• Any Unpaid Bills to Suppliers (Trade Credit)

Calculate key ratios such as the debt-to-asset ratio, which is the total debt over total assets, and the debt-to-equity ratio, which is the total debt over owner’s equity. This will give you the leverage status within your organisation.

Create a Realistic Budget and Cash Flow Projection

Having a realistic budget and cash flow projection is also crucial to managing your debt. This involves the following: 

• Projection of Income and Expenses
• Estimating your Expected Income and Expense over a Specific Period (month-to-month or quarter-over-quarter)

Most importantly, ensure your budget has decent provision for taking care of debt servicing on 

Time by budgeting for the activity.

Payback Debts

Prioritise by interest rate and pay off high-interest debt first to save long-term interest costs. Consider the collateral supporting the loans. Secured loans, such as loans against company assets, may involve a greater risk of losing assets in case of default.

Notify the Lenders

If you see difficulties in making your repayments, contact your lenders as soon as possible. They might consider renegotiating changed conditions, such as longer loan terms, or reduced repayments in The short term..

Some lenders also have specific programs which will assist businesses in financial stress, so enquire about hardship assistance.

Monitor and Review Regularly

Managing debt is an ongoing activity. You need to monitor your level of debt, cash flow, and financial performance on a regular basis.

Always change your budget and debt management concepts as necessary .

Seek Professional Advice

Don’t be afraid to seek help. Accountants may help you analyse your finances and prepare a budget. They will also make certain relevant suggestions regarding debt management. Financial advisors will help you about debt consolidation, refinancing, etc.

Getting on top of your business’ debt doesn’t have to be scary. Glace Consultants can help you devise a plan to address your debt. Don’t delay- contact our staff now for a discussion.