Quarterly Newsletter: September 2026

Government's Tax Reform Package

The Government has recently legislated several of the tax reform measures announced in the 2026 Federal Budget (and in later media releases). These include, among other things:

• Replacing the CGT discount with cost base indexation and a 30% minimum tax on gains accruing from 1 July 2027 (including gains on pre-CGT assets);

• Increasing the small business turnover threshold for the 50% active asset reduction from $2 million to $10 million;

• Limiting negative gearing for residential property to new residential dwellings from 1 July 2027 (subject to transitional rules); and

• Introducing the Working Australians Tax Offset from 1 July 2027, and the $1,000 instant tax deduction for work-related expenses from 1 July 2026.

After a round of consultation, the Government has also announced further proposed measures, broadly including (among others):

• A new targeted CGT discount for investors in innovative start-ups;

• Barring SMSFs from utilising future limited recourse borrowing arrangements ('LRBAs') to acquire residential property; and

• Exempting income of discretionary testamentary trusts from the minimum tax proposed for trusts.

ATO Warning on Home Occupancy Expense Claims

The ATO has identified that some taxpayers are incorrectly claiming rent, mortgage interest and other occupancy expenses as part of their work-from-home expenses.

To claim occupancy expenses, a taxpayer must be able to demonstrate that:

• the area of their home they used for work purposes is a 'place of business';

• if they are an employee, it was necessary for them to work from home because their employer did not provide an alternative 'place of business' to work from; and

• the nature of their income-earning activities requires them to have a 'place of business'.

Factors that may indicate whether an area has the character of a 'place of business' include whether the area is:

• clearly identifiable as a 'place of business';

• not readily capable of private or domestic use;

• exclusively or almost exclusively used for carrying on a business; and

• used regularly for client or customer visits.

Taxpayers who are eligible to claim occupancy expenses can claim a portion of those expenses based on floor area, the period they worked from home, and their ownership of the property.

Payday Super and independent contractors

The ATO is reminding businesses that Payday Super changes when super contributions must be paid, not who is entitled to receive them.

Businesses generally need to pay super where they engage an independent contractor mainly for their labour, personal effort, skills or time.

This can apply even if the contractor:

• has an ABN;

• invoices the business for their work; or

• is described as a contractor in a written agreement.

Where an independent contractor is entitled to super, the contribution must be paid for each payday and reach their super fund within seven business days after payday.

It is not mandatory to report payments made to independent contractors through Single Touch Payroll ('STP'). However, if a business reports them voluntarily, it must meet the STP reporting requirements, including reporting qualifying earnings and super liability information.

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Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.