Category: Accountants

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.

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