Author: Dev BFeatured

Michael and Rebecca have worked at the same firm for years, sat two desks apart, and have almost identical numbers behind them. Each has around one hundred and fifty thousand dollars they could put toward an investment property in 2026, similar salaries, similar super balances, similar appetite for a bit of debt, and honestly, similar taste in property too, both drawn to the same kind of established, walkable suburb rather than anything flashy. Over coffee recently, they realised they were about to make very different decisions without either of them fully understanding the two completely different tax worlds they were each about to step into. One of them is buying in their own name. The other is buying through her self managed super fund. Neither choice is simply right or wrong, but the gap between them is bigger than either of them expected, and a lot of it comes down to one date, 10 August 2026.

Michael’s Path: Buying in His Own Name

Michael is looking at a two bedroom unit close to a train line, built in the 1990s, already lived in by a string of tenants over the years, priced at a level his one hundred and fifty thousand dollars would cover as a healthy deposit. Before this year’s budget changes, this would have been a fairly ordinary negative gearing story, borrow most of the purchase price, claim the shortfall between rent and expenses against his salary, and rely on the fifty per cent capital gains tax discount when he eventually sold, the same playbook plenty of Australians have followed for the last two decades. That story does not work the same way anymore. Since the May budget reforms, negatively gearing a loss against personal income is now restricted to new build properties bought outside super. Michael’s unit, already lived in, does not qualify, so any shortfall between his rent and his loan repayments simply sits as a loss he cannot use to reduce his salary tax the way his older brother did on a near identical purchase back in 2016. The capital gains treatment has changed too, moving away from a flat fifty per cent discount toward a system that only taxes the inflation adjusted real gain, rather than the full nominal profit, when the property is eventually sold, which generally means a larger tax bill on paper gains that were partly just inflation to begin with, but a smaller one on genuine, real growth in value.

None of that makes Michael’s plan a bad one, it just makes it a different one to the plan his older brother used. If Michael specifically wants the negative gearing benefit back, his real options are to buy a new build instead of an established property, something straight from a developer or recently completed, or to accept that an established property now needs to be assessed purely on its rental yield and long term growth, without leaning on a tax deduction to make the numbers work in the meantime. Plenty of good investment properties still make sense under the new rules, they just need to be judged on different criteria than they used to be.

Rebecca’s Path: Buying Through Her SMSF

Rebecca is looking at a similar kind of property, an established townhouse not far from where she grew up, and her fund has enough of a balance, combined with her one hundred and fifty thousand dollars, to make a purchase like this realistic once a loan is added on top. Her path branches depending on one thing, whether she can exchange contracts before 10 August 2026. If she can, and her fund borrows through an LRBA to help fund the purchase, the arrangement is protected even though the loan ban technically starts a few weeks later, and her fund keeps the concessional tax treatment super is known for, fifteen per cent tax on rental income while she is in accumulation phase, dropping to zero once she moves into pension phase, along with concessional treatment on the eventual sale.

It is worth being precise about what that actually means, because the phrase negative gearing gets used loosely here in a way that overstates the benefit. Any shortfall between Rebecca’s rent and her loan repayments reduces the tax her fund pays on its own income, not the tax Rebecca pays personally on her salary, since a super fund is taxed as its own separate entity, entirely separate from Rebecca’s personal tax return. It is a real benefit, just a narrower and differently shaped one than the personal negative gearing Michael’s older brother used to rely on, and it is worth not confusing the two when comparing the paths on paper.

If Rebecca cannot exchange contracts before 10 August, her options narrow considerably. A new residential LRBA will not be available to her at all, not this property, not any other established residential property, regardless of how good the deal looks. She could still buy the townhouse with cash sitting in her fund, with no loan and therefore no shortfall to offset against anything, simply paying concessional tax on whatever rent comes in from day one. That is a perfectly sound way to hold property inside a fund, it is simply a different shape of investment to a geared purchase, with a smaller initial exposure for the same amount of cash, since there is no borrowed money doing any of the heavy lifting.

What Actually Separates the Two of Them

Strip away the specific property types and the two paths differ in three practical ways rather than one simple better or worse. The first is tax, where Michael’s options outside super now hinge entirely on whether he buys new, while Rebecca’s options inside super hinge entirely on timing relative to 10 August. The second is control over the money. Michael can sell his unit and spend the proceeds on whatever he likes whenever he likes, use it as a deposit on his own home one day, or simply bank the profit. Rebecca’s property sits inside her super, which generally means the money stays locked away until she reaches a normal condition of release such as retirement, a real cost even when the tax treatment along the way is generous, and one that matters far more to some people than others depending on how they feel about their money being out of reach for decades. The third is leverage. Michael can keep borrowing against his own name for future purchases without much restriction, walking into a bank next year and starting the whole process again if he wants to. Rebecca’s ability to borrow again inside her fund for another residential property effectively ends at the same moment her current window does, leaving only commercial property loans or straight cash purchases available to her fund afterwards, which changes how she would need to think about building a portfolio inside super from here on.

If Neither Path Fits, There Are Other Doors

Not everyone reading this has a fund large enough for a direct purchase, or a contract ready to exchange before the deadline, and it is worth knowing there is more than one door even once the LRBA option closes for a particular fund. A direct LRBA is not the only way to gain property exposure inside super. Listed property trusts, essentially shares in a portfolio of properties traded on the share market, let a fund gain exposure to property, including residential and commercial property, without borrowing at all and without the compliance overhead of a bare trust structure. Unlisted property syndicates and pooling arrangements with other SMSFs offer a similar idea on a smaller, more direct scale, several funds combining resources to buy a single property between them, though the legal structuring around this needs to be done carefully to stay compliant and avoid inadvertently breaching related party rules. None of these options replicate exactly what a direct LRBA purchase offers, particularly the leverage, but they are worth knowing about rather than assuming property inside super is now an all or nothing proposition once 10 August has passed.

So which path is actually right for you. Rather than answering that in the abstract, which would mean guessing at numbers that are not actually yours, here are the questions worth sitting with honestly before you decide.

• Do you have a contract that could realistically be exchanged before 10 August 2026, or is that window already closed for you in practice?
• Is the property you are looking at an established one, or would a new build also genuinely suit what you are trying to achieve?
• How comfortable are you having this money effectively locked away until retirement, in exchange for a lower ongoing rate of tax along the way?
• If you are looking at your SMSF, does the property genuinely meet the business real property test we covered in part three, or would it need to be a straight cash purchase instead?
• Have you actually compared the two paths side by side with your own numbers, rather than with Michael’s or Rebecca’s?

Michael and Rebecca ended up making different decisions, and both were reasonable ones once they actually understood what they were choosing between, rather than going with whichever option their friends happened to be talking about at the time. If you want to work through your own numbers rather than a hypothetical pair of colleagues, that is exactly the kind of comparison our team can put together for you, weighing up buying inside your fund against buying in your own name using your actual figures, your actual timeline, and your actual property, so the decision you make is based on your situation rather than someone else’s.

ATO impersonation scams are one of the most common and most damaging financial scams in Australia. Fraudsters pose as ATO officers, often using threatening language and urgent pressure tactics, to trick Australians into handing over their tax file number, bank details, or money. The scale of the problem is significant: the ATO received reports of almost 7,500 ATO impersonation scams in July 2025 alone, with scam activity typically surging during tax time.

In April 2026, the ATO launched a new tool to help Australians protect themselves: a verify call feature built into the ATO app. This feature allows you to confirm, in real time and while still on the phone, whether the call you are receiving is genuinely from the ATO or from a scammer. It is free, takes under 30 seconds, and could prevent you from becoming a victim of fraud.

This article explains how the feature works, how to use it step by step, how to recognise the signs of an ATO scam call, and what to do if you have already given information or money to a fraudster.

The Scale of the Problem: ATO Scams by the Numbers

7,500+ ATO impersonation scams reported in July 2025 alone

1,461 ATO impersonation scam reports in March 2026

30 sec Time the verify call feature takes to confirm a genuine ATO call

According to the ATO’s scam data page, impersonation scam reports have been rising steadily. Scammers are growing more sophisticated, using spoofed phone numbers, fake caller IDs, convincing email templates, and even fake conference calls that appear to involve law enforcement officials. The ATO has noted that impersonation scams tend to peak around tax time, when Australians are actively expecting contact from the ATO about their returns.

ATO Assistant Commissioner Anita Challen, commenting on the launch of the verify call feature, noted: ‘Scammers are becoming increasingly savvy, making it harder for individuals to distinguish between illegitimate and genuine contact.’ The new feature was developed specifically to address this challenge by giving every Australian a fast, reliable way to confirm a call’s legitimacy without ending it.

What Is the ATO App Verify Call Feature?

The verify call feature is a new security tool launched 2 April 2026 as part of the ATO’s Counter Fraud Program. It is built into the free ATO app, available for both iOS and Android devices, and is designed to work while you are still on a phone call that claims to be from the ATO.

When you use the feature, the ATO app checks in real time whether there is an active, genuine ATO call associated with your registered account at that moment. If the call is genuine, a notification appears within 30 seconds to confirm it. If no notification appears, the call is not from the ATO.

The feature sits alongside other existing security tools in the ATO app, which also include real-time notifications when key changes are made to your ATO account, and an account lock function that allows you to immediately lock your account if you suspect unauthorised access.

Full details of the feature are available on the ATO’s media release announcing the verify call launch.

How to Use the Verify Call Feature: Step by Step

#	Step	What to do
1	Download the ATO app	Available free from the Apple App Store or Google Play Store. Search for ‘ATO’ and look for the official Australian Taxation Office app.
2	Register your device	Open the app and complete the device registration process. You will need your myGov credentials. The ATO recommends setting up myID to the highest identity strength available for best protection.
3	Receive a call claiming to be from the ATO	When you receive a phone call from someone who says they are calling from the ATO, do not immediately give out any personal information.
4	Open the ATO app while on the call	While still on the call, open the ATO app on your registered device and log in.
5	Select the Verify Call option	From inside the app, select the Verify Call option. The app will check whether an active, genuine ATO call is registered against your account at that moment.
6	Wait up to 30 seconds	Within 30 seconds, a notification will appear in the app confirming the call is genuine if it is a real ATO call.
7	No notification? Hang up.	If no confirmation notification appears within 30 seconds, the call is not from the ATO. Hang up. Do not provide any personal information. Do not make any payments.

 

Important: Register your device before you need it The verify call feature only works on a registered device. You cannot set it up mid-call. Download the ATO app and complete device registration now, before you ever receive a suspicious call. The ATO recommends setting up your myID to the highest identity strength available to you, to provide the strongest level of protection when signing in.

Genuine ATO Call vs Scammer: How to Tell the Difference

Even before you use the verify call feature, there are important signals that can help you distinguish a genuine ATO call from a scam. The table below summarises the key differences.

Behaviour	Genuine ATO	ATO Impersonation Scammer
Phone caller ID	Displays as No Caller ID	May show a spoofed Australian number or fake ATO number
Requests for personal information	Will not ask for your TFN, password, or bank details via unsolicited call	Will pressure you to provide TFN, bank details, or login credentials
Payment demands	Will never demand immediate payment over the phone or threaten immediate arrest	Commonly threatens arrest, prosecution, or legal action to create panic
Links and attachments	The ATO does not use hyperlinks in unsolicited outbound SMS messages	Often sends SMS or email with links to fake myGov or ATO login pages
Urgency and pressure	Does not pressure you to stay on the line or act immediately	Uses fear and urgency to prevent you from stopping to verify
Verifiability	Genuine calls will trigger the verify call notification in the ATO app	No notification will appear in the ATO app within 30 seconds

A full breakdown of the common features of ATO phone, email, and SMS scams is available on the ATO’s verify or report a scam page.

One rule to remember about ATO phone calls Genuine calls from the ATO display as No Caller ID. If a call appears to come from a specific Australian phone number claiming to be the ATO, it may be a spoofed number. The ATO does not display a recognisable number when it calls outbound. This is an easy first filter before you even use the app.

The ATO’s ‘Stop, Check, Protect’ Framework

The ATO works with the National Anti-Scam Centre, which operates under the ACCC, and promotes a simple three-step framework for responding to any suspicious contact:

• Stop. Do not share your personal information, such as your myGov login, tax file number, or bank account details, with anyone unless you are certain of who you are speaking with and why they need it.
• Check. Before responding to any call or message, ask yourself whether it could be fake. Use the ATO app verify call feature to confirm a phone call. Visit the ATO website directly (never via a link in a message) to check your account status.
• Protect. If something feels wrong, act quickly. Lock your ATO account in the app. Contact the ATO on 1800 008 540 immediately if you have shared information or made a payment. Report the scam even if you did not engage, as it helps the ATO track patterns.

More detail on protecting yourself from scams, including cybersecurity tips for individuals and businesses, is available at the ATO’s how to stay scam safe page.

What to Do If You Have Already Engaged with a Scammer

If you have already received a suspicious call and are concerned you may have shared information or made a payment, the table below outlines the action to take based on your situation.

Your situation	What to do
You gave out personal information (TFN, bank details, login)	Call the ATO immediately on 1800 008 540. Contact your bank or financial institution. Consider placing a credit alert on your file. Report to your local police.
You made a payment to the scammer	Call the ATO on 1800 008 540. Contact your bank immediately to report the payment and attempt to reverse it. Lodge a fraud report with the bank you paid. Report to the Australian Cyber Security Centre at cyber.gov.au.
You received the call but did not engage or pay	Report it to the ATO at ReportScams@ato.gov.au (for emails) or use the online Report a Scam form at ato.gov.au. No payment is required but reporting still matters, as it helps the ATO track scam patterns.
You are unsure whether you were scammed	Call the ATO on 1800 008 540 to check. You can also log in to ATO Online Services via myGov and review your account for any unusual activity.

The ATO’s dedicated scam reporting and assistance line is 1800 008 540. For general scam reporting online, visit the ATO’s verify or report a scam page, or email ReportScams@ato.gov.au for email-based scam reports.

Broader Steps to Protect Your ATO Account

The verify call feature is a powerful new protection, but it works best as part of a broader set of security habits. The ATO recommends the following steps to keep your account and personal information secure:

• Download the ATO app and register your device now so the verify call feature is ready to use.
• Set up myID at the highest identity strength you can achieve. This is the most secure way to sign into ATO online services.
• Enable multi-factor authentication wherever possible. Even if a scammer obtains your password, multi-factor authentication makes it significantly harder for them to access your account.
• Never click links in SMS messages claiming to be from the ATO. The ATO does not use hyperlinks in outbound unsolicited text messages. Any SMS containing an ATO link should be treated with suspicion.
• Protect your TFN. Only share your tax file number with your employer, tax agent, or bank. Never provide it in response to an unsolicited call, email, or text.
• Keep your devices and software updated. Scammers use viruses and malware that target outdated software on phones, computers, and tablets.
• Monitor your ATO account regularly. Log in to ATO online services via myGov to review your account and check for any changes you did not authorise.

Frequently Asked Questions

Is the ATO app free to download?

Yes. The ATO app is free and available for download from the Apple App Store and Google Play Store. Search for the official Australian Taxation Office app.

Do I need a myGov account to use the verify call feature?

You will need to log in to the ATO app to use the verify call feature. The app connects to your ATO account, and you sign in using your myGov credentials. Setting up myID at the highest available identity strength is recommended for the best protection.

What if I do not have a smartphone?

If you do not have a smartphone or cannot use the ATO app, you can still verify whether an ATO call is genuine by ending the call and calling the ATO directly on 1800 008 540. Do not redial the number that called you. Always look up the ATO’s number independently through the ATO website.

Can scammers fake the verify call notification?

No. The verify call feature works by checking the ATO’s own internal systems to confirm whether a genuine outbound ATO call is active for your account. A scammer cannot trigger this notification because it requires a real ATO call to be registered against your account at that exact moment.

I received a voicemail from someone claiming to be the ATO. Is it real?

The ATO does sometimes leave voicemails. However, you should always verify through official channels before calling back or taking any action. Do not call the number left in the voicemail. Instead, visit the ATO’s verify or report a scam page or call 1800 008 540 to confirm whether the ATO is attempting to contact you.

What types of contact does the ATO use legitimately?

The ATO contacts taxpayers by phone, email, SMS, and post. However, it will never send a link in an unsolicited SMS, never demand immediate payment with threats of arrest, and never ask for your TFN, bank details, or myGov login via an unsolicited message. If any of these things happen, treat the contact as a scam.

How JMB Consultants Can Help

If you have received a suspicious communication claiming to be from the ATO, or if you are concerned that your tax account may have been compromised, acting quickly is essential. The ATO’s dedicated assistance line (1800 008 540) is the right first call. Your tax agent can also help you review your account records and confirm whether any unexpected changes have been made.

At JMB Consultants, we keep our clients informed about the latest changes in Australian tax law, ATO compliance requirements, and digital security tools that affect their tax affairs. If you have questions about any communication you have received that claims to be from the ATO, we are happy to help you assess whether it is genuine.

Contact JMB Consultants to speak with an experienced accountant about your tax account security or any ATO communications you are uncertain about.

Disclaimer: This article is intended as general information only. Scam tactics change frequently. The information above is based on ATO guidance and media releases current as of May 2026. If you believe you have been targeted by a scam, contact the ATO directly on 1800 008 540 and visit ato.gov.au/scamsafe for the most current guidance.

Many Australians know that self-education expenses can be claimed as a tax deduction. What is far less understood is just how strict the rules are about which education qualifies. The ATO requires a clear and specific connection between the course content and your current income-earning activities. General interest, hoped-for career expansion, or a vague claim that a role has evolved are not enough.

A recent case reviewed by the Administrative Review Tribunal illustrates exactly how this plays out when the connection is too weak. The taxpayer was an IT employee who claimed deductions for a range of online courses in sales, marketing, content creation, and entrepreneurship. The ATO disallowed the claims, and the Tribunal agreed. The outcome offers a clear and practical lesson for any Australian employee considering claiming self-education in their tax return.

Case Summary

Source	ATO Practice Update, May 2026
Tribunal	Administrative Review Tribunal
Taxpayer	Employee at a large Australian company in an IT and technical computer services role
Income year	Year ended 30 June 2022
Deductions claimed	Online courses (sales and marketing, content creation, affiliate marketing, entrepreneurship), computer software and hardware, membership fees
ATO decision	All deductions disallowed
Tribunal outcome	Affirmed the ATO’s decision. Deductions disallowed in full.
Reason	No sufficient nexus between the course content and the taxpayer’s actual income-earning activities

The Facts: What Did the Taxpayer Do and Claim?

The taxpayer was employed as a full-time employee at a large company. His substantive role involved providing technical IT and computer services. For the 2022 income year, he sought to amend his tax return by claiming additional deductions for expenses he said he had incurred to develop skills for an expanded version of his role.

Specifically, he claimed that his role had evolved during the year to include marketing and sales responsibilities. He argued that as a result of this evolution, he was required to undertake online courses in those areas. On that basis, he claimed deductions for:

• Online educational and training courses covering online content creation, affiliate marketing, and entrepreneurship
• Related computer software and hardware purchased to support those courses
• Membership fees for platforms and organisations related to his claimed marketing and sales activities

The ATO reviewed the claims and disallowed them in full. The taxpayer challenged that decision before the Administrative Review Tribunal, which affirmed the ATO’s position and rejected the deductions.

Why the Tribunal Rejected the Claims: Two Critical Failures

Failure 1: No written evidence of the role expansion

The Tribunal noted that there was no written confirmation from the taxpayer’s employer that his role had expanded to include marketing and sales responsibilities. There was also no written requirement from the employer that he undertake any self-education courses in those areas.

This is a fundamental issue in self-education deduction claims. A taxpayer’s own assertion that their role has changed is not sufficient on its own. The ATO and the Tribunal require objective evidence, such as a letter from the employer, a revised employment contract, a formal performance review noting expanded duties, or an email trail directing the employee to undertake relevant training.

The absence of any such documentation meant the Tribunal had no basis to accept that the taxpayer’s role had genuinely changed in the way he described.

Practical lesson: document role changes immediately If your employer expands your responsibilities during the year, ask for that change to be confirmed in writing at the time. This could be a brief email from your manager, a revised position description, or a formal letter. Without contemporaneous written evidence, any self-education deductions linked to those new duties are at serious risk of being disallowed.

Failure 2: The course content did not match the actual role

Even setting aside the documentation issue, the Tribunal found a fundamental mismatch between the content of the courses and the nature of the taxpayer’s employment

The taxpayer’s actual work was providing technical IT and computer services. The courses he had enrolled in were about online content creation, affiliate marketing, and entrepreneurship. These are not skills that maintain or improve the knowledge required for technical IT work. They are skills for building an online business or a personal brand, which is a fundamentally different income-earning activity.

The Tribunal found that the expenditure did not bear a sufficient nexus with the taxpayer’s actual income-earning activities. It is worth noting that the courses may have been entirely legitimate for someone whose job genuinely involved digital marketing. But for someone employed in a technical IT services role, they were simply too far removed from the actual work being done.

The nexus requirement explained plainly The ATO’s Taxation Ruling TR 2024/3 on self-education expenses is clear: a deduction is only available if the education maintains or improves the specific skills or knowledge you need for your current income-earning activities, or if it results in an increase in income from those current activities. The keyword is ‘specific’. General professional development or broad business knowledge courses that relate only loosely to your job do not qualify.

The Nexus Requirement: How It Is Tested

The nexus test for self-education expenses applies at the time the expense is incurred. The question the ATO asks is: at the moment you paid for this course, did it have a sufficient connection to the income-earning activities you were engaged in at that time?

The following table shows how the nexus test played out in this case:

Nexus requirement	What it means	Did the IT employee satisfy it?
The self-education must maintain or improve the specific skills or knowledge required for your current employment activities	The courses must directly relate to the work you actually do in your current role, not work you hope to do in a future role	No. The courses covered online content creation, affiliate marketing, and entrepreneurship, not IT or technical computer services.
The self-education must result in, or be likely to result in, an increase in income from your current employment activities	The courses must have a clear connection to earning more income from the job you already hold, not from a separate venture	No. There was no evidence the marketing and business courses would increase income from the IT role, and the employer had given no written confirmation of expanded duties.
There must be a genuine connection between the course content and the income-earning activity at the time the expense is incurred	The connection must exist at the time you pay for the course, not in anticipation of a role change that may or may not occur	No. The taxpayer’s work remained in IT and technical services throughout the 2022 income year. The role shift he described had no written documentation from the employer.

The ATO’s self-education expenses guidance sets out these requirements clearly and includes worked examples showing the kinds of courses that do and do not qualify depending on the role involved.

What Expenses Go Down with a Failed Nexus Claim?

A point that catches many taxpayers by surprise is that when the primary self-education claim fails, the related expenses also fail. In this case, the taxpayer had claimed not just the course fees but also computer software and hardware purchased to support those courses, and membership fees for related platforms and organisations.

Because the courses themselves did not have a sufficient nexus with the taxpayer’s employment, the ancillary expenses connected to those courses also fell away. The deductibility of equipment, software, and memberships tied to a self-education claim depends entirely on whether the underlying course is itself deductible. If the course fails, the supporting costs fail with it.

What Self-Education Expenses Can and Cannot Be Claimed?

The rules apply to all employees across all industries, not just IT. Here is a plain-language summary of the current position.

Self-education expenses you CAN claim

Self-education expenses you CANNOT claim

Course fees, textbooks, stationery, and equipment where the course has a sufficient nexus to your current role Interest on borrowings to fund eligible self-education Accommodation and meals where the course requires you to travel and be away from home overnight Depreciation on equipment used for the course (work-related proportion) Courses in your existing field that maintain or improve specific skills you use in your job Courses where your employer has confirmed in writing that completion will lead to a pay increase or promotion in your current role

Courses in a different field to your actual employment, even if your role has informally expanded Courses in entrepreneurship, affiliate marketing, or online business where your employment is in an unrelated field Any course that enables you to get new employment or change careers Courses that relate only in a general way to your current job without a specific skills connection Hardware and software purchased for a course that lacks the required nexus to your current employment Membership fees for professional bodies unrelated to your current income-earning activities

The ATO provides a self-education expenses calculator on its website that can help you estimate whether and how much you can claim for a given course and the associated expenses.

The Five-Point Checklist Before You Claim Self-Education

Before claiming any self-education expense on your tax return, work through the following questions. If you cannot answer yes to the first two, the deduction is at risk.

Question to ask before you claim	What does it tell you
Is the course directly related to the specific skills and knowledge you use in your current role?	If yes, the connection is likely strong enough. If only generally related, it may not qualify.
Do you have written confirmation from your employer that the course is required or will lead to a pay increase or promotion?	Written documentation from your employer significantly strengthens the nexus. Verbal confirmation alone is not enough.
Does the course content match your actual job description, not an expanded role you hope to take on?	The connection must exist at the time you incur the expense, based on your current duties.
Are the software, hardware, and memberships you are claiming directly used for the eligible course?	Ancillary expenses are only deductible if the course itself qualifies. If the course fails the nexus test, these claims fail, too.
Are you keeping receipts and records of all expenses and documentation showing how each expense relates to your employment?	The ATO requires contemporaneous records. Reconstructing records after the fact is a red flag in an audit.

Common Scenarios Where Self-Education Claims Are Refused

The ATO and the Tribunal have identified several recurring patterns in self-education claims that are regularly denied. TR 2024/3 documents many of these and provides examples. The most common situations where self-education claims fail include:

• Courses too general to the role: A receptionist studying for a business degree, or an IT support worker studying digital marketing, may have broad career aspirations that are legitimate, but the connection to current duties is not specific enough.
• Courses designed to change careers: Any course whose primary purpose is to enable you to enter a different field, or to get your first qualification in a profession, is not deductible. The course must relate to what you are already doing.
• Courses that come before the income-earning activity: If you are between jobs or have not yet started work in the relevant field, the course expense is not deductible because there is no current income-earning activity to connect it to.
• Claimed role expansion without documentation: As demonstrated in the case above, an employee asserting their role has expanded without written employer confirmation is unlikely to succeed in claiming deductions linked to that expansion.
• Courses in entrepreneurship or online business building: These almost always relate to a different income-earning activity (a side business or new venture) rather than the employee’s current employment, making the nexus test very difficult to satisfy.

Frequently Asked Questions

My employer verbally told me to complete a course. Is that enough?

It is much weaker than written confirmation. If your employer directed you to complete a course and you have no written evidence of that direction, you remain at risk if audited. Ask for that direction to be confirmed in writing, even after the fact, as this is better than nothing. Ideally, confirm it before enrolling.

Can I claim a course that only partly relates to my job?

It depends on how strong the connection is for the relevant parts. If the course is a qualification where some subjects clearly relate to your current role and others do not, the ATO may allow a deduction for the eligible subjects or components only. According to the ATO’s self-education expenses guidance, if the self-education is not connected to your current employment income overall but particular subjects or components are, you may be able to claim a deduction for those specific elements.

Can I claim courses I did to improve my chances of promotion?

It depends. If your employer has confirmed that completing the course will result in a promotion or pay increase in your current role, the connection is usually clear enough. If you are simply hoping that a qualification will improve your prospects without any employer commitment, the connection is much weaker and more likely to be challenged.

What records do I need to keep?

You need receipts or invoices for all expenses, records showing how the course connects to your employment (employer correspondence, course outlines, job descriptions), and documentation of any assets purchased for the course and how you calculated the work-related proportion. Keep these for at least five years after you lodge the return in which you claimed the deductions.

Does my employer have to pay for the course for it to be deductible?

No. Self-education expenses are deductible when you pay for them yourself and they meet the nexus requirement. Whether your employer contributes financially is a separate question that affects the amount you can claim but not whether a nexus exists.

How JMB Consultants Can Help

Self-education deduction claims look straightforward on the surface but carry real audit risk when the connection between the course and the current role is not carefully established. The case discussed in this article is a clear example of a claim that appeared reasonable on the taxpayer’s own account but could not be sustained under scrutiny.

At JMB Consultants, we help employees and individuals review their self-education claims before they are lodged, assess whether the required nexus exists, and ensure the supporting records are in order. If you are planning to claim self-education expenses this financial year, or if you have already claimed them and are uncertain whether they meet the ATO’s requirements, we can review your position.

Contact JMB Consultants to discuss your self-education deductions with an experienced tax accountant.

Disclaimer: This article is intended as general information only and does not constitute legal or financial advice. The case summarised is based on information reported in the ATO’s May 2026 Practice Update and does not include a published case citation. The self-education deduction rules described are based on ATO guidance and Taxation Ruling TR 2024/3 current as of May 2026. Individual circumstances vary and you should seek professional advice tailored to your situation before making any deduction claims.

A landmark decision handed down by the Full Federal Court of Australia in April 2026 has confirmed one of the most important and frequently misunderstood principles in Australian tax law: an employee cannot claim their rent as a tax deduction for a home office, even if they were legally required to work from home.

The case, Commissioner of Taxation v Hall [2026] FCAFC 43, arose from the COVID-19 pandemic and the restrictions that forced many employees to work from home during the 2021 income year. The ATO had disallowed the taxpayer’s claims, the Administrative Review Tribunal later allowed them, and then the Full Federal Court reversed the Tribunal’s decision and sided with the ATO.

The ATO has since issued an interim decision impact statement confirming that the decision supports its longstanding views on home office and travel deductions and that it will continue to administer the law accordingly, pending any further appeal.

This article walks through the facts of the case, the legal reasoning of the court, and what the decision means for employees who work from home today.

Case Summary

Case name	Commissioner of Taxation v Hall [2026] FCAFC 43
Court	Full Federal Court of Australia
Decision date	April 2026
Taxpayer	Nathaniel Hall, sports presenter and producer employed by the ABC
Income year in question	Year ended 30 June 2021
Claims made	Proportion of apartment rent (~$5,878) and car expenses (~$1,148)
Tribunal outcome	Both deductions allowed
Full Federal Court outcome	Both deductions disallowed. ATO appeal allowed.

The Background: Who Is Nathaniel Hall and What Did He Claim?

Nathaniel Hall (also referred to in media reporting as Ned Hall) was employed full-time by the Australian Broadcasting Corporation as a sports presenter and producer in Melbourne. During the 2021 income year, his role consisted of two distinct parts:

• The Digital Role: This involved producing content for the ABC Sport Digital Radio station. Due to Victorian Government and ABC directives issued in response to COVID-19, Hall performed this role almost entirely from the second bedroom of the apartment he rented with his wife in Melbourne’s inner eastern suburbs. He had no choice about this arrangement.
• The Live Role: This involved producing live sports broadcasts, mainly NRL football. This role needed to be performed from the ABC’s Southbank Studios, for which Hall was required to obtain travel permits under the pandemic restrictions in place at the time.

Hall’s estimates placed his Digital Role at approximately 75 per cent of his total workload and his Live Role at approximately 25 per cent. On days when he performed both roles, he drove from his home to the ABC studios at Southbank.

Based on this arrangement, Hall made two deduction claims in his 2021 income tax return:

• Occupancy expenses: Approximately $5,878 in rent, being the proportion of his total apartment rent referable to the floor area of the second bedroom used as a home office.
• Car expenses: Approximately $1,148, calculated using the cents-per-kilometre method, for the trips he made between his home and the ABC’s Southbank Studios on days when he performed both roles.

The ATO disallowed both claims. Hall challenged that decision, and the Administrative Review Tribunal initially found in his favour. The ATO then appealed to the Full Federal Court.

What the Administrative Review Tribunal Decided

The Tribunal allowed Hall’s deductions in full. Its reasoning was as follows:

On the rent claim, the Tribunal found that Hall’s home office was effectively his ‘workplace for the year’ because COVID-19 restrictions required him to earn most of his income at home. It concluded that a proportion of the rent was incurred in gaining assessable income and was not purely private or domestic in nature.

On the car expenses claim, the Tribunal accepted Hall’s argument that when he drove from his home to the Southbank Studios on days when he performed both roles, he was ‘at work the entire time’, so his travel was ‘on work’ rather than ‘to work’. On that basis, the Tribunal considered the travel to be deductible.

The Tribunal’s decision attracted significant attention because it potentially opened the door for employees across Australia who had been required to work from home during the pandemic to claim a portion of their rent as a deduction. The Full Federal Court’s subsequent decision closed that door firmly.

What the Full Federal Court Decided and Why

The Full Federal Court unanimously allowed the ATO’s appeal and disallowed both of Hall’s claims. The court’s reasoning on each deduction is worth understanding in detail.

Part 1: The rent claim and the ‘essential character’ test

Australian tax law under section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for losses or outgoings incurred in gaining or producing assessable income, provided the expense is not private or domestic in nature.

The Tribunal had accepted that Hall’s rent had a connection with his income-earning activities. But the Full Federal Court emphasised that this is not the end of the inquiry. The court held that the positive limb and the negative limb of section 8-1 operate cumulatively. That is, even if an expense passes the first test (it is connected with earning income), it must also pass the second test (it is not private or domestic in its essential character).

The court found that the essential character of the rent Hall paid was to secure domestic accommodation for himself and his wife. The COVID-19 restrictions that required him to work from home did not alter that essential character. The rent was, at its core, the cost of having a home. The fact that he used part of that home for work did not transform the nature of the expense.

The key legal principle on occupancy expenses An expense may have a connection to income-earning activities and still be non-deductible if its essential character is private or domestic. The court confirmed that this outcome does not change when working from home is compulsory rather than voluntary. The ATO’s Taxation Ruling TR 93/30 on home office deductions reflects this principle and remains current law following the Full Federal Court’s decision.

Part 2: The car expenses and the ‘to work’ versus ‘on work’ distinction

The second issue before the court was whether Hall’s travel from his home to the ABC Southbank Studios on days when he performed both roles was deductible as a work-related car expense.

The Tribunal had applied the concept that because Hall was working from the moment he left home, his travel was ‘on work’ rather than ‘to work’. The Full Federal Court rejected this approach entirely.

The court affirmed the longstanding principle that travel from a taxpayer’s home to their regular place of employment is travel ‘to work’, not travel ‘on work’. It is a prerequisite to earning income, not an activity undertaken in the course of earning it. This principle applies regardless of whether the employee also performs work duties at home before leaving.

The ATO’s interim decision impact statement confirmed: ‘The Full Federal Court decision confirms that this treatment will not change even if the travel occurs during work hours. The decision also confirms that the circumstances of COVID-19 lockdowns requiring some work to be undertaken at home do not change this outcome.’

Why commuting remains non-deductible The ATO’s position, now confirmed by the Full Federal Court, is that travel from home to a regular place of work is not deductible because these expenses are incurred as a prerequisite to earning income, not in the course of earning it. The ATO Taxation Ruling TR 2021/1 on employee transport expenses sets out these principles in detail and remains authoritative.

What This Means for Employees Who Work from Home Today

The decision in Hall does not affect all working from home deductions. It specifically confirmed that employees cannot claim occupancy expenses such as rent as a tax deduction, and cannot claim travel from home to their regular workplace. However, there are still legitimate deductions available to employees who work from home.

Employees CAN generally claim

Employees generally CANNOT claim

Running expenses using the fixed rate method (70 cents per hour for 2024-25) for electricity, internet, phone, stationery and consumables Decline in value of equipment used for work (desk, chair, computer) claimed separately under the actual cost method Repairs and maintenance of work equipment Cleaning costs for a dedicated home office Phone and internet costs (work-related portion) if not already covered by the fixed rate

Rent, even if you used a room exclusively for work during lockdowns Mortgage interest on your home Council rates, home insurance, or building maintenance Travel from home to your regular place of work (the Tribunal’s concept of ‘on work’ travel was specifically rejected by the Full Federal Court) Any expense whose essential character is private or domestic, regardless of whether working from home was compulsory

The fixed rate method for running expenses

For the 2024-25 income year, employees can claim a fixed rate of 70 cents per hour for each hour they genuinely work from home. This rate covers electricity, gas, internet, phone usage, stationery, and computer consumables. Equipment like a desk or computer is claimed separately.

You do not need a dedicated home office to use this method. You must, however, keep a record of the actual hours you worked from home during the entire income year. The ATO will not accept estimates. Records can be in any form provided they are kept as you go, such as timesheets, rosters, or diary entries.

Full details on how to calculate your working from home deduction are available on the ATO’s working from home expenses page.

Could the Decision Be Appealed Further?

At the time of publication, legal experts have noted that the case received test case funding, meaning the litigation was government-funded due to its significance as a test case on an important area of tax law. This raises the possibility that Hall or another party could seek leave to appeal to the High Court of Australia.

The ATO has stated that pending the outcome of any appeal process, it will continue to administer the law in accordance with the Full Federal Court’s decision. This means the current legal position, as confirmed by the Full Federal Court, applies now. Any change would require a successful High Court appeal.

Note on the status of this decision The Full Federal Court decision in Commissioner of Taxation v Hall [2026] FCAFC 43 is current law as of May 2026. The ATO has confirmed it is applying the decision immediately. If the case is appealed to the High Court, this article will not reflect any changes that may result from that process. If you believe this decision affects deductions you have claimed in prior years, seek professional advice before taking any action.

Frequently Asked Questions

Does this decision affect working from home deductions I claimed during COVID-19?

The Full Federal Court’s decision specifically concerned the 2021 income year. If you claimed similar occupancy expenses such as rent in your own tax returns during COVID-19 years and those returns have not been reviewed, there is a risk that the ATO may look at those claims in light of this decision. If you are concerned, speak with a registered tax agent to assess your position.

Does this decision mean all working from home deductions are gone?

No. The decision specifically addresses occupancy expenses (rent, mortgage interest, insurance, rates) and commuting costs. Running expenses such as electricity, internet, phone usage, and equipment depreciation remain fully deductible to the extent they relate to actual work performed at home.

What if I am self-employed and work from home?

The rules are different for self-employed individuals and business owners. Where a home is genuinely used as a place of business (for example, where no other office or work location is provided), a proportion of occupancy costs may be deductible. The ATO’s guidance on home-based business expenses covers how this applies to sole traders. The rules for employees, as confirmed in Hall, are stricter.

Can I still claim car expenses for travel between two workplaces?

Yes. Travel between two separate workplaces (for example, from one employer’s premises to another’s) is generally deductible as work-related car travel. The Hall decision concerned travel from a home, which the court treated as a private residence rather than a workplace, to a regular employer’s premises. Travel between two separate employer-provided workplaces is a different situation.

What records do I need to keep for working from home deductions?

For the fixed rate method, you need to keep a record of every hour you worked from home during the income year, plus at least one bill for each type of expense covered by the rate (such as an electricity bill and an internet bill). For the actual cost method, you need detailed records of all expenses and a diary or log showing the proportion of work-related use. Keep all records for at least five years.

How JMB Consultants Can Help

The rules around what employees can and cannot claim as working from home deductions are not simple, and the Full Federal Court’s decision in Hall has made the boundaries clearer but also stricter. If you have been claiming home office expenses and are unsure whether your claims are consistent with the current legal position, it is worth having your returns reviewed before the ATO does it for you.

At JMB Consultants, we help individuals and employees review their deduction claims, calculate working from home expenses correctly, and understand how recent court decisions and ATO rulings apply to their circumstances.

Contact JMB Consultants to discuss your working from home deductions with an experienced tax accountant.

Disclaimer: This article is intended as general information only and does not constitute legal or financial advice. The case summary and legal principles discussed are based on publicly available information about Commissioner of Taxation v Hall [2026] FCAFC 43 and ATO guidance current as of May 2026. The case may be subject to further appeal. Individual circumstances vary, and you should seek professional advice tailored to your specific situation before making any deduction claims or amending prior returns.

Growing a business is an achievement. But growth also brings new compliance responsibilities, and one area where Australian businesses frequently fall behind is GST reporting. The Australian Taxation Office has recently flagged that a number of businesses have not updated their GST reporting and accounting methods after exceeding the relevant turnover thresholds.

According to a bulletin published by the ATO in April 2026, the ATO is moving some businesses to the correct GST reporting and accounting methods from 1 July 2026. Businesses affected will be notified, but you do not have to wait for the ATO to act. You can make the switch voluntarily now through Online Services for Business.

This article explains the two key turnover thresholds, what changes at each one, and how to make sure your GST reporting is correct before the ATO does it for you.

The Two Key GST Turnover Thresholds

The rules governing how you report GST depend on your business’s GST turnover, which is broadly the total value of your taxable and GST-free sales, excluding input-taxed sales. There are two thresholds that trigger changes to your reporting obligations.

Threshold 1: $10 million GST turnover. Once your GST turnover reaches $10 million or more, you must switch from Simpler BAS reporting to full BAS reporting, and you must account for GST on a non-cash (accruals) basis.

Threshold 2: $20 million GST turnover. Once your GST turnover reaches $20 million or more, you must report GST monthly instead of quarterly, and you must lodge your BAS online.

These are not optional changes. They are legal obligations that take effect once your turnover crosses the relevant threshold.

GST turnover	BAS reporting method	GST accounting basis	Reporting frequency	BAS lodgment
Under $10 million	Simpler BAS (default)	Cash basis (optional) or non-cash	Quarterly (or monthly if chosen)	Paper or online
$10 million or more	Full BAS reporting (required)	Non-cash (accruals) basis required	Quarterly or monthly	Paper or online
$20 million or more	Full BAS reporting (required)	Non-cash (accruals) basis required	Monthly (mandatory)	Online only (mandatory)

You can see the full breakdown of reporting options on the ATO’s GST reporting methods page.

What Is Simpler BAS and Why Does It Stop at $10 Million?

Simpler BAS is the default GST reporting method for businesses with a GST turnover of less than $10 million. Under Simpler BAS, you only need to report three pieces of GST information on your activity statement:

• G1: Total sales
• 1A: GST on sales
• 1B: GST on purchases

This is straightforward and does not require a detailed GST calculation worksheet. It was designed to reduce the administrative burden on smaller businesses.

Once your GST turnover reaches $10 million, Simpler BAS is no longer available. You must move to full BAS reporting, which requires you to report additional GST labels covering a more detailed breakdown of your sales, purchases, and GST amounts. According to the ATO’s quarterly GST reporting guidance, full BAS reporting gives the ATO more detailed information about your business’s GST obligations and entitlements.

What full BAS reporting actually requires Under full BAS reporting, you report all GST labels on your activity statement, rather than only the three summary labels used in Simpler BAS. This includes labels covering export sales, capital purchases, non-capital purchases, and specific categories of GST credits. If you also have obligations for wine equalisation tax (WET), luxury car tax (LCT), or fuel tax credits, these are also reported in full.

Cash vs Accruals: What Changes at $10 Million

Alongside the shift to full BAS reporting, crossing the $10 million GST turnover threshold also requires a change in how you account for GST. Businesses below this threshold can choose between cash basis and non-cash (accruals) basis accounting. At $10 million and above, the non-cash basis becomes mandatory.

The difference between these two methods is significant and affects when GST liabilities and credits appear on your BAS.

Cash basis (available under $10M)	Non-cash / accruals basis (required at $10M or more)
You report GST when you receive payment from a customer	You report GST when you issue an invoice, even if payment has not been received yet
You claim GST credits when you pay a supplier	You can claim GST credits when you receive a tax invoice, even before you pay the supplier
Better for managing cash flow in businesses with slower-paying customers	Creates obligations and credits earlier, requiring more active accounts management
Available for businesses with aggregated turnover under $10 million	Mandatory for businesses with GST turnover of $10 million or more

According to the ATO’s guidance on choosing an accounting method, businesses with an aggregated turnover of less than $10 million can use either method. Most larger businesses must use the non-cash method.

What does this mean in practice?

If your business has been using cash basis accounting and you cross the $10 million threshold, the switch to accruals means:

• You will report GST on sales as soon as you issue an invoice, even if the customer has not yet paid
• You can claim GST credits on purchases as soon as you receive a tax invoice, even before you pay the supplier
• Your BAS will reflect outstanding receivables and payables rather than actual cash movements

This can have a meaningful effect on your cash flow, since GST on sales may become payable to the ATO before your customers have settled their invoices. Businesses approaching the $10 million mark should plan for this change in advance, not after the fact.

What Changes at $20 Million: Monthly Reporting

The second threshold is $20 million in GST turnover. At this level, quarterly GST reporting is no longer permitted. You must report and pay GST monthly, and your BAS must be lodged electronically through the ATO’s online services.

According to the ATO’s monthly GST reporting page, the BAS must be lodged and payment made by the 21st day after the end of each monthly reporting period. If the due date falls on a weekend or public holiday, the next business day applies.

For businesses that have been filing quarterly, this change significantly increases the frequency and administrative workload of BAS preparation. Wine equalisation tax, luxury car tax, and fuel tax credit obligations also shift to monthly reporting when this threshold is crossed.

Voluntary monthly reporting is available to all businesses Businesses with GST turnover under $20 million can also choose to report monthly, even though it is not mandatory. The ATO notes that voluntary monthly reporting can assist with cash flow management by spreading GST payments into smaller, more frequent amounts. It can also help keep records more current. See the ATO’s BAS due dates page for lodgment timetables.

What Changes at Each Threshold: A Side-by-Side View

When you cross $10 million GST turnover	When you cross $20 million GST turnover
Move from Simpler BAS to Full BAS reporting Report all GST labels on BAS (not just G1, 1A, and 1B) Switch from cash to accruals (non-cash) accounting for GST WET, LCT, and fuel tax credit reporting if applicable	Move from quarterly to monthly BAS reporting Lodge BAS online (paper lodgment no longer accepted) WET, LCT, and fuel tax credit reporting also shifts to monthly

Why Businesses Miss These Changes

It is more common than you might think for a business to cross one of these thresholds without updating its GST reporting. There are several reasons this happens:

• Growth happens gradually. A business that was comfortably under $10 million two years ago may have crossed the threshold without a formal review of its GST obligations.
• The ATO does not always notify immediately. The ATO uses your recorded GST turnover to determine your reporting method, and this figure may not always reflect your actual current turnover if you have not updated your records.
• Bookkeeping systems are not always reviewed alongside growth. A payroll or accounting software setup that worked at $5 million in turnover may not automatically flag that different GST rules now apply.
• The distinction between GST turnover and aggregated turnover is overlooked. Some businesses may have an aggregated turnover above $10 million but a GST turnover below it, or vice versa. These are different measures, and the rules apply to GST turnover specifically.

The ATO has now confirmed it is actively addressing this issue. According to its April 2026 bulletin on GST turnover, businesses that have exceeded the relevant thresholds but have not updated their methods will be moved to the correct reporting and accounting basis from 1 July 2026. Affected businesses or their tax professionals will be notified.

What Happens If You Have Been Using the Wrong Method?

If your business has been using Simpler BAS when full BAS was required, or reporting quarterly when monthly reporting was mandatory, you may have an obligation to correct past BAS lodgments. The practical impact depends on the extent and duration of the non-compliance.

In some cases, using the wrong method may mean you have understated or overstated GST liabilities. The ATO may require amended BAS lodgments and, depending on the circumstances, penalties or interest may apply for amounts that were reported incorrectly.

The earlier you identify and correct these issues, the better your position. Voluntarily switching before the ATO forces a change from 1 July 2026 demonstrates good faith and gives you more control over the transition process.

What to review before 1 July 2026 Check your current GST turnover against the $10 million and $20 million thresholds. If you are near either threshold or have recently crossed one, confirm with your accountant whether your current BAS reporting method and accounting basis are correct. If they are not, make the switch voluntarily through Online Services for Business or by contacting the ATO on 13 28 66.

How to Voluntarily Switch Your GST Reporting Method

According to the ATO’s guidance on when and how to report and pay GST, you can change your GST reporting method by:

• Logging in to Online Services for Business and updating your GST reporting settings.
• Calling the ATO on 13 28 66 to notify them of your current turnover and request the appropriate method change.
• Working through your registered tax agent or BAS agent who can make the change on your behalf.

The timing of the switch matters. If you change your reporting period early in a lodgment period, such as at the start of a quarter or a new financial year, the change generally takes effect immediately. Changes made mid-period typically take effect from the start of the next quarter or year.

If your GST turnover has reached $10 million or more, the ATO’s guidance on GST reporting methods confirms that when you contact them to update your turnover, they will move you to full reporting from the start of the next financial year.

Frequently Asked Questions

What is the difference between GST turnover and aggregated turnover?

GST turnover is broadly the value of your taxable and GST-free sales, excluding input-taxed sales and some other amounts. Aggregated turnover also includes the annual turnovers of entities connected with or affiliated with your business. The GST reporting thresholds apply to GST turnover specifically, but aggregated turnover is relevant to other concessions and thresholds.

What if my GST turnover fluctuates above and below $10 million?

Once your GST turnover reaches $10 million and you are moved to full BAS and accruals accounting, the ATO will generally keep you on the full reporting method. If your turnover subsequently falls below $10 million, you can contact the ATO to request a return to Simpler BAS. The ATO will then either move you to Simpler BAS from the start of your next tax period or place you on GST instalments if eligible. See the GST reporting methods page for details.

Do other tax obligations also change when I move to monthly GST reporting?

Yes. If your GST turnover reaches $20 million and you move to monthly BAS reporting, your obligations for wine equalisation tax, luxury car tax, and fuel tax credits also shift to a monthly reporting cycle. PAYG withholding can also be aligned with monthly reporting if you choose.

Can I switch to monthly GST reporting voluntarily before I reach $20 million?

Yes. Monthly GST reporting is available to any GST-registered business regardless of turnover. The ATO notes that it can help with cash flow by spreading payments into smaller monthly amounts. Contact the ATO or speak to your tax agent if you are considering this option.

What if the ATO notifies me that it is changing my method from 1 July?

If the ATO notifies you that it will be moving your business to the correct reporting method from 1 July 2026, you should take that notification seriously and review your accounts with your accountant. If there are historical BAS lodgments that were made under the wrong method, now is the time to identify and correct them before the ATO conducts its own review.

How JMB Consultants Can Help

Understanding which GST reporting method applies to your business and making the right changes at the right time is not always straightforward, particularly when your turnover is close to a threshold or fluctuates across financial years.

At JMB Consultants, we review our clients’ GST turnover regularly to ensure their BAS reporting method and accounting basis remain correct as their business grows. If you are unsure whether your business is using the right method, or if you have received a notification from the ATO about a reporting change, we can help you assess your position, make any necessary corrections, and prepare your business for the correct obligations going forward.

Contact JMB Consultants to discuss your GST reporting obligations with an experienced accountant.

Disclaimer: This article is intended as general information only and does not constitute legal or financial advice. GST rules are based on ATO guidance current as of May 2026. Individual circumstances vary, and you should seek professional advice tailored to your situation before taking action or changing your GST reporting method.

The Federal Budget 2026-27 delivered on 12 May 2026 contains a broad set of changes that affect how individuals are taxed on their income, how small businesses manage capital expenditure and tax losses, how discretionary trusts will be taxed from 2028, and how the FBT treatment of electric cars is being restructured. There is also significant investment in the ATO’s compliance capabilities and a global minimum tax measure affecting multinational groups.

At JMB Consultants, we review every budget announcement carefully against the source material and translate it into clear, accurate guidance for our clients. This blog covers every relevant measure from the 2026-27 Budget in the order in which it appears in the budget summary, with exact figures, effective dates, and worked examples drawn directly from the budget.

This blog draws directly from the Federal Budget 2026-27 summary as released on 12 May 2026. All dates, thresholds, and dollar amounts reflect the announced measures exactly. Where legislation is still in draft form, that is noted.

Part 1: Minimum 30% Tax on Discretionary Trusts (from the 2029 Income Year)

What Is Being Introduced?

The government will introduce a minimum 30% tax on discretionary trusts. From 1 July 2028 (that is, from the 2029 income year), trustees will be required to pay a minimum tax of 30% on the taxable income of discretionary trusts.

This is a fundamental change to how discretionary trusts have been used for tax planning in Australia. Under the current system, a trustee has full discretion to direct income to beneficiaries in the most tax-effective proportions each year, typically distributing more to lower-income family members who pay tax at lower marginal rates. The new minimum tax removes this income-splitting advantage by ensuring that at least 30% tax is paid on all trust income, regardless of who receives the distributions.

How the Minimum Tax and Credits Work

Under the new system:

• Trustees will pay a minimum tax of 30% on the taxable income of the discretionary trust.
• Beneficiaries other than corporate beneficiaries will receive non-refundable credits for the tax payable by the trustee. A non-refundable credit reduces the beneficiary’s personal tax liability but cannot generate a cash refund if the credit exceeds the liability.
• Corporate beneficiaries will be assessed on the trust income to which they are entitled without being able to claim credits for the tax paid by the trustee. This removes the effectiveness of directing discretionary trust income to a bucket company as a tax-planning strategy.

Worked Example: What the Numbers Look Like

The following table compares how $180,000 of trust income would be taxed under the current rules versus the new minimum tax for a family distributing to two adult children:

	Current Rules (before 2029 income year)	New Rules (from 2029 income year, i.e. 1 July 2028)
Discretionary Trust Taxable Income	$180,000	$180,000
Distribution to Adult Child A (marginal rate 15%)	$90,000 taxed at 15% = $13,500	Trustee pays 30% on full $180,000 = $54,000 total trustee tax
Distribution to Adult Child B (marginal rate 30%)	$90,000 taxed at 30% = $27,000	Beneficiaries (non-corporate) receive non-refundable credits for trustee tax. Child A’s credit cannot be refunded if it exceeds personal tax.
Total Tax Paid Under Each System	$40,500	$54,000 minimum (income-splitting benefit eliminated for lower-income beneficiaries)
Additional Tax Under New Minimum Tax	N/A	$13,500 more in this example

Source: Federal Budget 2026-27, Budget Paper No. 2, Statement 4: Tax Reform | ATO: Tax Reform – Minimum Tax on Discretionary Trusts (not yet law) | Budget 2026-27: Tax Reform Page  Note: This measure is not yet law. The example uses the 2026-27 income year 15% tax rate for the lower-income adult child (income $18,201 to $45,000). Actual outcomes depend on each beneficiary’s complete income, applicable offsets, and full tax position. This illustration does not constitute tax advice.

Which Types of Income Are Excluded from the Minimum Tax?

The minimum tax will not apply to all types of income within a discretionary trust. The following categories of income are excluded:

• Primary production income.
• Certain income relating to vulnerable minors, as defined.
• Amounts to which non-resident withholding tax applies.
• Income from assets of discretionary testamentary trusts that existed at the time of the announcement.

Which Trust Types Are Not Affected?

The minimum tax applies specifically to discretionary trusts. The following trust types are excluded from the new rules entirely:

• Fixed trusts.
• Fixed testamentary trusts.
• Complying superannuation funds.
• Special disability trusts.
• Deceased estates.

Rollover Relief for Restructuring: A Three-Year Window from 1 July 2027

The government will provide expanded rollover relief for three years from 1 July 2027. This allows small businesses and others that wish to restructure out of a discretionary trust into another type of entity, such as a company or a fixed trust, to do so without triggering immediate capital gains tax or other adverse tax consequences.

The three-year window runs from 1 July 2027 to 30 June 2030. Given that the minimum tax takes effect from 1 July 2028, trustees who wish to restructure before the new rules apply have approximately 12 months to complete a restructure before the minimum tax hits. Those who prefer to restructure during the relief period but after the minimum tax begins have the full three years.

Restructuring from a discretionary trust into a company or fixed trust involves legal, stamp duty, and accounting considerations beyond just the CGT rollover. It is not a process that can be completed quickly without proper planning. We recommend discretionary trust operators begin their review immediately.

The minimum tax applies from 1 July 2028 (the 2029 income year). If you operate a discretionary trust and wish to restructure out of it under the rollover relief, the window opens on 1 July 2027. Do not wait until 2029 to begin this review.

Part 2: Tax Measures Affecting Individual Australians

4.1 New $250 Working Australians Tax Offset from the 2028 Income Year

The government will introduce a $250 Working Australians Tax Offset with effect from the 2028 income year (that is, from 1 July 2027). This new offset will provide a permanent annual tax reduction for Australians who earn income from work, specifically:

• Salary and wages as an employee, and
• Business income earned by sole traders.

A tax offset reduces your tax payable dollar for dollar. Unlike a deduction, which saves you tax equal to the deduction multiplied by your marginal rate, an offset of $250 saves every eligible working Australian exactly $250 in tax regardless of their income level. This is a permanent measure, not a one-year payment.

4.2 New $1,000 Standard Deduction for Work-Related Expenses from the 2027 Income Year

The government will introduce a standard tax deduction of up to $1,000 for work-related expenses, effective from the 2027 income year (that is, from 1 July 2026). Draft legislation and explanatory materials have been released for public consultation under the title Treasury Laws Amendment Bill 2026: standard deduction for work-related expenses.

The standard deduction applies to Australian tax residents who earn income from work. The key features are:

• Taxpayers who claim up to $1,000 in work-related expenses will not need to itemise or substantiate those expenses individually.
• Individuals who incur work-related expenses greater than the $1,000 maximum standard deduction can continue to claim their actual expenses in the usual way, with full substantiation as required under existing rules.
• Charitable donations, union membership fees, professional association membership fees, and other non-work-related deductions can still be itemised separately and claimed on top of the standard deduction.

Standard Deduction in Practice: Three Scenarios

The table below shows how the standard deduction applies in different situations:

Scenario	Before 1 July 2026	From 1 July 2026 (New Standard Deduction)
Work expenses of $400, no receipts kept	Can only claim $300 (ATO safe harbour limit)	Claim $1,000 standard deduction, no receipts required
Work expenses of $750, all receipts kept	Claim $750 with full substantiation	Claim $1,000 standard deduction (better outcome, no substantiation needed)
Work expenses of $1,400, all receipts kept	Claim $1,400 with full substantiation	Continue to claim $1,400 in the usual way (standard deduction does not apply)

Source: Federal Budget 2026-27, Budget Paper No. 2, Statement 4: Tax Reform | Budget 2026-27: Cost of Living Measures | Treasury Laws Amendment Bill 2026: Standard Deduction for Work-Related Expenses (Consultation) | ATO: Work-Related Deductions  Note: Scenarios are illustrative only. The $1,000 standard deduction is subject to draft legislation released for consultation and is not yet law. The current ATO $300 safe harbour without receipts is a practical compliance position, not a statutory deduction. Actual deductibility depends on individual employment circumstances.

If your actual work-related expenses are anywhere between $300 and $1,000, the new standard deduction means you can claim more without any additional record-keeping from 1 July 2026. If you typically claim less than $300 because you have not kept receipts, the standard deduction is a significant improvement.

4.3 Previously Announced Tax Cuts: 2027 and 2028 Income Years

The Budget confirmed the government’s previously announced and already-legislated income tax cuts. These are not new announcements but are now confirmed as government expenditure:

• The current 16% tax rate (applying to income between $18,201 and $45,000) will be reduced to 15% from 1 July 2026.
• The 15% rate will be further reduced to 14% from 1 July 2027.

The full personal income tax rates across three income years, as set out in the budget, are shown in the following table. Note that rates do not include the Medicare Levy.

Taxable Income Threshold	2025-26 (Current)	2026-27	2027-28
$0 to $18,200	Tax-free	Tax-free	Tax-free
$18,201 to $45,000	16%	15%	14%
$45,001 to $135,000	30%	30%	30%
$135,001 to $190,000	37%	37%	37%
$190,001 and above	45%	45%	45%

Source: Federal Budget 2026-27, Budget Paper No. 2, Statement 4: Tax Reform | ATO: Tax Rates for Individuals | Budget 2026-27: Cost of Living Measures  Note: Rates shown are income tax rates only. They do not include the Medicare Levy (generally 2%). The 2025-26 rates reflect current law. The 2026-27 and 2027-28 rates are already legislated.

4.4 Medicare Levy Low-Income Thresholds Increased by 2.9% from 1 July 2025

The government will increase the Medicare levy low-income thresholds for singles, families, seniors, and pensioners by 2.9% from 1 July 2025. The updated thresholds, which apply in the 2025-26 income year, are:

• Singles: increased from $27,222 to $28,011.
• Families: increased from $45,907 to $47,238.
• Single seniors and pensioners: increased from $43,020 to $44,268.
• Families with seniors and pensioners: increased from $59,886 to $61,623.
• For each dependent child or student, the family income threshold will increase by a further $4,338, up from the previous amount of $4,216.

Australians whose income falls below the applicable threshold pay no Medicare Levy. Those with income between the lower and upper threshold pay a reduced levy. Above the upper threshold, the full 2% levy applies. The 2.9% increase means that more low-income Australians will either be fully exempt or will pay a reduced levy in 2025-26.

4.5 Private Health Insurance Rebate: Age-Based Uplift Removed from 1 April 2027

The government will remove the age-based uplift of the Private Health Insurance Rebate from 1 April 2027. Currently, individuals aged 65 and above are entitled to a higher rebate percentage on their private health insurance premiums compared to younger policy holders. From 1 April 2027, all eligible PHI holders will receive the standard rebate rate, regardless of age.

Australians aged 65 and above who hold private health insurance should review their premium and rebate position before April 2027 to understand the change in their net out-of-pocket cost.

Part 3: Tax Measures for Small and Medium Businesses

5.1 Permanent $20,000 Instant Asset Write-Off from 1 July 2026

From 1 July 2026, the government will permanently extend the $20,000 instant asset write-off for small businesses with annual turnover of less than $10 million. This measure has been renewed on a year-by-year basis in previous budgets. Making it permanent removes the uncertainty that has affected small business capital expenditure planning.

Key points from the budget:

• Assets valued at less than $20,000 can be immediately deducted in the year of purchase.
• Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated over time.
• The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years after opting out will continue to be suspended until 30 June 2027.

Worked Example: Instant Asset Write-Off

Asset Cost (GST exclusive for GST-registered businesses)	Tax Treatment from 1 July 2026
$12,000	Full $12,000 deducted immediately in year of purchase. Tax saving at 25% small business rate = $3,000.
$19,900	Full $19,900 deducted immediately. Tax saving at 25% = $4,975.
$20,000 or more	Asset cannot be written off immediately. Placed into the small business simplified depreciation pool and depreciated over time.

Source: Federal Budget 2026-27, Budget Paper No. 2, Statement 4: Tax Reform | ATO: Instant Asset Write-Off for Small Business | ATO: Simpler Depreciation Rules for Small Business  Note: Asset costs shown are GST-exclusive for GST-registered businesses. For businesses not registered for GST, the GST-inclusive cost is used. Tax savings are calculated at the 25% small business tax rate applicable to companies with aggregated turnover under $50 million. The $20,000 threshold applies per individual asset, not in aggregate.

5.2 Reintroducing Loss Carry Back for Companies from 1 July 2026

For tax years commencing on or after 1 July 2026, companies with aggregated annual global turnover of less than $1 billion will be able to carry back a tax loss and offset it against tax paid up to two years earlier, generating a refund of previously paid tax.

The two key limitations set out in the budget are:

• Loss carry back applies to revenue losses only. Capital losses are not eligible for carry back.
• The refund is limited to the company’s franking account balance. A company with a nil or low franking account balance will not be able to access the full loss carry back benefit.

For companies that paid significant tax in the 2024-25 or 2025-26 income years and are now experiencing a loss year in 2026-27 or later, this measure can generate a material cash refund from the ATO. The measure applies from tax years commencing on or after 1 July 2026.

Example: A company with $300,000 of tax losses in 2026-27, having paid $400,000 in tax in 2024-25, could potentially carry back the full $300,000 loss and obtain a refund, subject to the franking account balance limit. This is a significant cash flow benefit for businesses experiencing a cyclical downturn.

5.3 Loss Refundability for Small Start-Up Companies from 1 July 2028

For tax years commencing on or after 1 July 2028, start-up companies with aggregated annual turnover of less than $10 million that generate a tax loss in their first two years of operation will be able to utilise that loss to generate a refundable tax offset.

The refundable tax offset is limited to the value of fringe benefits tax and withholding tax on wages paid in respect of Australian employees in the loss year. This design ties the benefit directly to businesses that are employing Australian workers, encouraging early-stage companies to invest in people and in R&D-related activity.

This measure applies from 1 July 2028 and does not apply retrospectively to earlier loss years. It is available only in the company’s first two years of operation.

5.4 Dynamic PAYG Instalment Calculations from 1 July 2027

The government will provide $10.9 million to the ATO to expand its pilot of dynamic PAYG instalment calculations and to expand access to monthly payments.

From 1 July 2027, small and medium businesses will be able to opt in to reporting and paying PAYG instalments monthly and to using an ATO-approved calculation embedded in their accounting software to calculate and vary their instalments. This is designed to align tax payments more closely with real-time business activity, reducing the risk of over- or under-paying throughout the year.

Taxpayers with a demonstrated history of non-compliance will be required to report and pay PAYG instalments monthly rather than quarterly. This is a compliance requirement, not an opt-in, for those businesses.

5.5 Temporary Reduction of Fuel Excise and Heavy Vehicle Road User Charge

The government has temporarily reduced the excise and excise-equivalent customs duty rates applying to most fuel products, and the road user charge for heavy vehicles, for three months from 1 April 2026.

The specific reductions announced in the budget are:

• Excise rates have been reduced by a total of 60.9%, equating to a 32 cents per litre reduction for petrol and diesel.
• The road user charge for heavy vehicles has been reduced from 32.4 cents per litre to zero for the same three-month period.

This is a temporary measure. Businesses with fuel-dependent operations, vehicle fleets, or transport and logistics activity benefit from direct cost relief during the three-month window. The reductions do not extend beyond the announced period unless the government makes a further announcement.

5.6 Research and Development Tax Incentive Reforms from 1 July 2028

The government is reforming the R&D Tax Incentive to simplify it and better target support for genuine business R&D. From 1 July 2028, the following changes will apply:

• The offset for core R&D expenditure will be increased by around 25% to 50%, through a 4.5 percentage point increase in core R&D offset rates.
• The intensity threshold will be reduced from 2% to 1.5%.
• Eligibility of supporting R&D expenditure for the R&D Tax Incentive will be removed. Only core R&D activities will qualify.
• Growing firms will be able to retain access to the refundable tax offset for longer, as the turnover threshold for the highest offset rate is increased from $20 million to $50 million.
• For firms below the $50 million turnover threshold, older firms’ eligibility for the higher offset rate will be maintained while limiting refundability to firms under 10 years of age.
• The maximum R&D Tax Incentive expenditure threshold will be lifted from $150 million to $200 million.
• The minimum expenditure threshold will be lifted from $20,000 to $50,000. Research activities valued below this amount will be required to be undertaken with a registered Research Service Provider or Cooperative Research Centre.

Businesses that currently claim the R&D Tax Incentive for supporting R&D expenditure need to review their programmes now. From 1 July 2028, supporting R&D expenditure will not be eligible. Only core R&D activities will qualify for the incentive. Reclassification and restructuring of R&D programmes may be required.

5.7 Small Business Debt Helpline and Mental Health Coaching Extended

The government will provide $8.2 million over three years from 2025-26 to extend two programs available to small business owners:

• The Small Business Debt Helpline financial counselling program.
• The NewAccess for Small Business Owners mental health coaching program.

Both programs are extended to 30 June 2027. These are free services available to Australian small business owners. If your business is facing financial difficulty or you are experiencing the pressures of business ownership, these services are available and confidential.

Part 4: Reducing the FBT Concession for Electric Cars

From 1 April 2029, a permanent 25% discount on FBT will be available for all electric cars valued up to and including the fuel-efficient luxury car tax threshold, implemented through a 15% rate in the statutory formula. Prior to this date, specific transitional arrangements apply.

The Five Transitional Rules: What Applies When

The budget sets out five specific transitional rules that determine which FBT treatment applies to which electric car arrangement. All five are set out below:

Rule 1: Arrangements already in place are protected.

All eligible electric cars will retain the FBT discount rate that was in place when the arrangement commenced. If a car is already provided to an employee under an existing arrangement, that arrangement continues under its original FBT treatment.

Rule 2: Full exemption preserved for arrangements before 1 April 2029 (cars up to $75,000).

All electric cars valued up to and including $75,000 that are provided before 1 April 2029 will continue to be eligible for a 100% discount on FBT, implemented through a 0% rate in the statutory formula. The full exemption is preserved for these arrangements.

Rule 3: Reduced discount for higher-value cars between 1 April 2027 and 1 April 2029.

Electric cars valued above $75,000 and up to and including the fuel-efficient luxury car tax threshold that are provided between 1 April 2027 and 1 April 2029 will be eligible for a 25% discount on FBT, implemented through a 15% rate in the FBT statutory formula.

Rule 4: No special FBT treatment for cars above the fuel-efficient luxury car tax threshold.

The existing 20% statutory rate will continue to apply for all other cars, including electric cars costing more than the fuel-efficient luxury car tax threshold. The FBT concessions do not apply to electric cars above this value.

Rule 5: Reportable fringe benefits are calculated differently from the actual FBT position.

Reportable fringe benefits will continue to be determined for eligible electric cars as if a 20% FBT statutory formula rate or the cost basis method applied. This means that even where the actual FBT is zero or reduced, the reportable fringe benefits amount uses the 20% rate for the purposes of income tests and other tax calculations.

Summary Table: Electric Car FBT by Scenario

Car Value	Arrangement Date	FBT Discount	Statutory Rate in Formula
Up to and incl. $75,000	Provided before 1 April 2029	100% discount (full exemption)	0%
Above $75,000 up to and incl. fuel-efficient luxury car tax threshold	Provided between 1 April 2027 and 1 April 2029	25% discount	15%
Up to and incl. fuel-efficient luxury car tax threshold	Provided from 1 April 2029 onward	25% discount (permanent from this date)	15%
Above fuel-efficient luxury car tax threshold (all electric cars)	Any date	No special discount	20% (standard statutory rate)

Source: Federal Budget 2026-27, Budget Paper No. 2, Statement 4: Tax Reform | ATO: Electric Car Discount – More Sustainable FBT Treatment (not yet law for 2029+ changes) | ATO: FBT Rates and Thresholds (incl. fuel-efficient luxury car tax threshold) | Budget 2026-27: Tax Reform Page  Note: The fuel-efficient luxury car tax threshold is updated annually by the ATO. Always verify the current threshold at ato.gov.au/tax-rates-and-codes/fringe-benefits-tax-rates-and-thresholds before applying these rules. All eligible electric cars retain the FBT discount rate that was in place when their arrangement commenced (transitional Rule 1). Reportable fringe benefits for eligible electric cars are determined as if a 20% FBT statutory formula rate or cost basis method applied, regardless of the actual rate.

Employers considering new electric car salary packaging arrangements should act before 1 April 2029 for cars valued at $75,000 or below to lock in the full FBT exemption. New arrangements entered after that date for eligible cars will attract the 25% discount (15% rate) rather than the full exemption.

Part 5: Protecting the Tax System Against Fraud

The government will provide $86.3 million over four years from 1 July 2026, and $9.7 million per year on an ongoing basis from 2030-31, to deliver Phase 2 of the Counter Fraud Strategy. This investment is designed to modernise the prevention and detection of fraud in the tax and superannuation systems.

The measures announced in the budget include:

• Enhanced ATO capability to detect and prevent fraud in real time across the tax and superannuation systems.
• Additional fraud protections for individual taxpayers.
• Expanded live monitoring of fraudulent account access, applying to tax agents, businesses, and in relation to high-risk superannuation changes.
• New ATO powers to pause the recovery of tax debts from taxpayers who are victims of fraud by a tax agent or other tax intermediary, and to waive those debts in appropriate circumstances.
• New powers for the ATO to recover paused or waived debts directly from the tax intermediaries responsible for the fraud.
• Expansion of existing garnishee powers to include jointly held assets in circumstances where those arrangements are being used to frustrate the ATO’s debt recovery actions.
• The government will also progress further targeted exceptions to tax secrecy provisions and enhancements to tax regulators’ information-gathering powers, to support integrity and effective administration of the tax system.
• Additional targeted compliance activities over two years from 2026-27 to address fraud, including specifically in relation to R&D Tax Incentive claims.

Part 6: Global Anti-Base Erosion Rules

The government will amend Australia’s global and domestic minimum tax legislation, which was introduced in 2024, to implement the side-by-side package agreed by the OECD and G20 Inclusive Framework on Base Erosion and Profit Shifting on 5 January 2026.

This measure applies to large multinational enterprises operating across multiple jurisdictions and is part of the broader global effort to ensure a minimum effective tax rate of 15% on multinational profits in each jurisdiction where those profits arise. The amendments to Australia’s existing legislation are designed to align our domestic rules with the internationally agreed approach confirmed in January 2026.

Australian businesses that are subsidiaries of large multinational groups, or that have international operations, should review how the amended rules interact with their existing tax positions, transfer pricing arrangements, and intragroup financing structures.

Frequently Asked Questions

Q: I earn $38,000 from my job. How much will I save from the income tax cuts?

A: Under the current 2025-26 rate, income between $18,201 and $38,000 is taxed at 16%. From 1 July 2026, that drops to 15%, saving you $198 on that portion. From 1 July 2027, it drops to 14%, saving you a total of $396 compared to 2025-26. From the 2028 income year, you also receive the $250 Working Australians Tax Offset, bringing your total annual saving to $646 compared to the current year.

Q: I usually claim $500 in work-related expenses but do not keep receipts. What changes from 1 July 2026?

A: From 1 July 2026, you can claim the $1,000 standard deduction without any receipts or substantiation, provided you are an Australian tax resident earning income from work. This doubles your effective deduction from $500 to $1,000 without any change in your record-keeping obligations.

Q: My family discretionary trust distributes income to my adult children each year. What do we need to do before 2028?

A: From 1 July 2028 (the 2029 income year), the trustee of your discretionary trust will pay a minimum 30% tax on all taxable trust income. Your adult children as non-corporate beneficiaries will receive non-refundable credits for that tax, but if their marginal rate is below 30%, the credit cannot be refunded. The income-splitting benefit for lower-income beneficiaries is effectively eliminated. We strongly recommend reviewing your trust structure with our team before 1 July 2028. Rollover relief for restructuring is available from 1 July 2027.

Q: Our company made losses last year after two profitable years. Can we get a refund of tax already paid?

A: If your company has aggregated annual global turnover of less than $1 billion and the loss year commences on or after 1 July 2026, you may be able to carry back the revenue loss and offset it against tax paid in the prior two years. The refund is limited to your franking account balance. Contact our office to assess the specific amount you may be entitled to.

Q: Our company is a new start-up and we expect to make losses in year one and year two. Can we get a refund?

A: From 1 July 2028, start-up companies with aggregated annual turnover under $10 million that generate losses in their first two years of operation can generate a refundable tax offset. The offset is limited to the value of FBT and withholding tax on wages paid to Australian employees in the loss year. This measure does not apply to years before 1 July 2028.

Q: My small business bought $18,000 of equipment this year. Can I write it off immediately?

A: From 1 July 2026, the $20,000 instant asset write-off is permanent. If you are a small business with annual turnover under $10 million and the asset (at GST-exclusive cost for GST-registered businesses) is under $20,000, you can claim the full deduction in the year of purchase. An $18,000 asset qualifies.

Q: We provide an electric car to our sales manager valued at $68,000. What FBT applies?

A: If the arrangement commences before 1 April 2029, the car is valued at $75,000 or below, and it qualifies as an eligible electric car, the full 100% FBT discount applies (0% statutory rate). The arrangement will retain this 0% rate for its duration under Rule 1 of the transitional provisions. Note that reportable fringe benefits will still be calculated as if the 20% statutory rate or cost basis method applied, which may affect the employee’s income test results.

Q: We are currently claiming the R&D Tax Incentive for supporting R&D activities. Are we affected?

A: Yes. From 1 July 2028, eligibility of supporting R&D expenditure for the R&D Tax Incentive will be removed. Only core R&D expenditure will qualify. If your claims include a significant supporting R&D component, you should review and reclassify your R&D programme before 1 July 2028. The minimum expenditure threshold also increases from $20,000 to $50,000, with activities below that amount required to be conducted with a registered Research Service Provider or Cooperative Research Centre.

Q: I have a private health insurance policy. Will my rebate change when I turn 65?

A: From 1 April 2027, the age-based uplift in the Private Health Insurance Rebate will be removed. Australians aged 65 and above who are currently entitled to a higher rebate percentage will revert to the standard rebate rate from that date. If you are approaching age 65 or are already eligible for the higher rebate, review how this will affect your net premium from April 2027.

How JMB Consultants Can Help You

Whether you need to understand the impact of the tax rate cuts on your personal return, plan your small business asset purchases around the permanent instant asset write-off, review a discretionary trust structure before the 2029 income year minimum tax applies, or model the FBT position of an electric car arrangement, JMB Consultants has the expertise and the depth of experience to guide you through every one of these measures.

Our principal Neeraj is a CPA Australia member with over 15 years of accounting and tax advisory experience, spanning individual taxation, business structuring, trust and SMSF advice, and compliance. We provide personalised, clear, and reliable advice to clients across Australia including Melbourne, Glen Waverley, Wantirna South, and surrounding areas.

To book a consultation, visit jmbtax.au or reach out through our contact page.

Official Sources and Further Reading

The content in this blog is sourced directly from official Australian Government and ATO publications. All measures described are based on the 2026-27 Federal Budget announced on 12 May 2026. Note that announced measures are not yet law unless stated otherwise. Always refer to current ATO guidance before making tax decisions.

Federal Budget 2026-27: Official Government Sources

1. Federal Budget 2026-27: Main Page | https://budget.gov.au/ The official 2026-27 Federal Budget website including all papers, overviews, and downloadable documents.
2. Federal Budget 2026-27: Tax Reform Page | https://budget.gov.au/content/04-tax-reform.htm Official page covering all tax reform measures: income tax cuts, WATO, standard deduction, CGT/negative gearing, trust minimum tax, R&D, electric car FBT, and instant asset write-off.
3. Federal Budget 2026-27: Cost of Living Measures | https://budget.gov.au/content/02-cost-of-living.htm Official budget page detailing the $1,000 standard deduction, income tax rate reductions, $250 Working Australians Tax Offset, and fuel excise reduction.
4. Federal Budget 2026-27: Budget Paper No. 2 (Budget Measures) | https://budget.gov.au/content/bp2/index.htm The full Budget Paper No. 2 containing technical details of all announced revenue and expenditure measures for 2026-27.
5. Federal Budget 2026-27: All Budget Documents | https://budget.gov.au/content/documents.htm Index of all budget papers and supporting documents. 

ATO: New Legislation Pages (Announced Budget Measures)

1. ATO: Tax Reform – Minimum Tax on Discretionary Trusts | https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/tax-reform-introducing-a-minimum-tax-on-discretionary-trusts ATO’s official page on the announced 30% minimum tax on discretionary trusts from 1 July 2028, including rollover relief provisions. Measure is not yet law.
2. ATO: Tax Reform – Better Targeting the R&D Tax Incentive | https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/tax-reform-better-targeting-the-research-and-development-tax-incentive ATO’s page on the announced R&D Tax Incentive reforms effective from 1 July 2028, including changes to offset rates, intensity thresholds, and expenditure caps.
3. ATO: Electric Car FBT Changes – More Sustainable Treatment | https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/electric-car-discount-more-sustainable-fbt-treatment-of-electric-cars ATO’s official page on the transitioning of the electric car FBT exemption to a permanent 25% discount from 1 April 2029, with transitional arrangements.
4. ATO: Tax Reform – Negative Gearing and CGT | https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/tax-reform-boosting-home-ownership-reforming-negative-gearing-and-capital-gains-tax ATO’s page on the negative gearing quarantine and CGT discount replacement announced in the 2026-27 Budget. Measure is not yet law.

ATO: Individual Tax Guidance

1. ATO: Work-Related Deductions | https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-expenses Current ATO guidance on work-related expense deductions, including substantiation requirements. This page reflects current law and will be updated as the $1,000 standard deduction is legislated.
2. ATO: Medicare Levy | https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy ATO guidance on the Medicare levy including income thresholds, reduced levy amounts, and exemptions.
3. ATO: Tax Rates for Individuals | https://www.ato.gov.au/tax-rates-and-codes/tax-rates-for-individuals Current and legislated future personal income tax rates for Australian tax residents.
4. ATO: Private Health Insurance Rebate | https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/private-health-insurance-rebate ATO guidance on the PHI Rebate including current age-based tiers and how to claim. Will be updated when the age-based uplift removal is legislated.

ATO: Small Business and Company Tax Guidance

1. ATO: Instant Asset Write-Off for Small Business | https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/depreciation-and-capital-expenses-and-allowances/simpler-depreciation-for-small-business/instant-asset-write-off ATO guidance on the instant asset write-off including eligibility, the $20,000 threshold, and how to calculate the deduction.
2. ATO: Simpler Depreciation Rules for Small Business | https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/depreciation-and-capital-expenses-and-allowances/simpler-depreciation-for-small-business Overview of the simplified depreciation rules for small businesses including the small business pool and re-entry provisions.
3. ATO: Loss Carry Back Tax Offset (Companies) | https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/tax-losses/loss-carry-back-tax-offset ATO guidance on the loss carry back provisions for companies including eligibility, calculation, and franking account balance limits.
4. ATO: R&D Tax Incentive | https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/research-and-development-tax-incentive ATO’s main page on the Research and Development Tax Incentive under the current rules. The announced reforms from 1 July 2028 are covered on the new legislation page above.
5. ATO: PAYG Instalments | https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/payments-for-businesses/payg-instalments ATO guidance on PAYG instalments for businesses including how to vary instalments. Will be updated as the dynamic PAYG calculation opt-in is implemented from 1 July 2027.

ATO: FBT Guidance

1. ATO: Electric Cars FBT Exemption | https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/types-of-fringe-benefits/fbt-on-cars-other-vehicles-parking-and-tolls/electric-cars-exemption ATO’s page on the current electric car FBT exemption. This page reflects pre-2027 rules and will be updated as the budget changes are legislated.
2. ATO: FBT Rates and Thresholds | https://www.ato.gov.au/tax-rates-and-codes/fringe-benefits-tax-rates-and-thresholds Current FBT rates, the 20% statutory formula rate for cars, and the fuel-efficient luxury car tax threshold relevant to the electric car FBT changes.
3. ATO: FBT on Cars, Other Vehicles, Parking and Tolls | https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/types-of-fringe-benefits/fbt-on-cars-other-vehicles-parking-and-tolls Comprehensive ATO guidance on FBT as it applies to car fringe benefits, including statutory formula method and employee contributions.

ATO: Trusts

1. ATO: Trusts – Main Page | https://www.ato.gov.au/businesses-and-organisations/trusts ATO’s main page on trusts covering tax treatment, registration, reporting, distributions, and compliance.
2. ATO: Trust Income | https://www.ato.gov.au/businesses-and-organisations/trusts/trust-income-losses-and-capital-gains/trust-income ATO guidance on how trust income is assessed and distributed to beneficiaries under the current rules.

Small Business Support Services

1. Small Business Debt Helpline | https://sbdh.org.au/ Free, independent, and confidential financial counselling for Australian small business owners in financial difficulty. Phone: 1800 413 828, available Monday to Friday 9am to 5:30pm AEST.
2. Small Business Debt Helpline via business.gov.au | https://business.gov.au/expertise-and-advice/small-business-debt-helpline The official business.gov.au page for the Small Business Debt Helpline, including information on what the service covers.
3. Beyond Blue: NewAccess for Small Business Owners | https://www.beyondblue.org.au/get-support/newaccess-mental-health-coaching/newaccess-for-small-business-owners Free mental health coaching program for small business owners, operated by Beyond Blue. Phone: 1300 945 301.

Treasury: Draft Legislation and Consultation

1. Treasury: Treasury Laws Amendment Bill 2026 – Standard Deduction Consultation | https://treasury.gov.au/consultation/c2026-604736 Treasury’s consultation page for the Treasury Laws Amendment Bill 2026 which introduces the $1,000 standard deduction for work-related expenses from 1 July 2026. Draft legislation and explanatory materials are available here.
2. Treasury: Budget 2026-27 Tax Measures | https://treasury.gov.au/budget/2026-27 Treasury’s main page for 2026-27 Budget tax measures including links to consultation materials, exposure draft legislation, and explanatory documents.

Note on legal status: All budget measures described in this blog and these references are based on announcements made on 12 May 2026. Unless explicitly confirmed as law by the ATO, measures are announced policy subject to Parliamentary legislation and may be amended before enactment. The ATO updates its ‘new legislation’ pages as measures progress through Parliament. Verify the current status of any measure at ato.gov.au/about-ato/new-legislation before relying on the announced details for tax planning or decision-making.

High fuel costs are putting real pressure on Australian businesses, particularly those in transport, logistics, agriculture, and other fuel-dependent sectors. In response to the National Fuel Security Plan announced by the Australian Government on 30 March 2026, the ATO has introduced a targeted package of support measures for businesses that are genuinely struggling to meet their tax payment obligations because of fuel costs.

This support is temporary. According to the ATO’s fuel response page, the support package runs for three months, from 1 April 2026 to 30 June 2026. If you believe your business is eligible, you need to act before that window closes.

This article explains what support is available, who can access it, how to apply, and what conditions must be met to keep a payment plan in place and have interest remitted.

What Is the ATO Fuel Response?

On 30 March 2026, the Australian Government announced the National Fuel Security Plan, a package of measures designed to address the impact of high fuel prices on individuals and businesses. As part of this plan, the ATO was tasked with administering several temporary tax measures, including a 32 cents per litre reduction in fuel excise and changes to fuel tax credit rates.

For businesses specifically, the ATO has also introduced a targeted payment support program for those that cannot meet their current tax obligations due to the increased cost of fuel. This program provides three types of relief, each with its own conditions and application process.

The ATO has stated that during this period, its compliance approach will be guided by careful consideration of taxpayers’ circumstances and the current environment. You can read the full detail on the ATO’s media release on the fuel response.

What Support Is Available? The Three Types of Relief

Support type	What it means for you	Condition to qualify
Flexible payment plan	Pay your tax debt in up to 36 equal monthly instalments, with no upfront payment required	Must be unable to meet current payment obligations due to high fuel costs
GIC remission	Interest that has built up from your application date to your third monthly instalment can be remitted by the ATO	Must pay all 3 monthly instalments and bring lodgments up to date within 3 months
Additional GIC and penalty remission	High fuel costs treated as a relevant factor in requests for further remission of interest and penalties	Apply through ATO online services and demonstrate impact of fuel costs
PAYG instalment variation	Reduce the amount of tax you prepay quarterly if your taxable income has fallen due to fuel costs	Apply via activity statement or contact the ATO through online services

1. Flexible payment plan arrangements

The most significant element of the fuel response is streamlined access to a new temporary payment plan. Unlike a standard ATO payment plan, this arrangement includes:

• Longer payment terms: You can repay your tax debt in up to 36 equal monthly instalments.
• No upfront payment required: Standard payment plans often require a payment upon setup. The fuel response plan waives this.
• Direct debit arrangement: Repayment is set up via direct debit from an Australian bank account, credit card (Visa, Mastercard, or Amex), or debit card. Note that a credit card surcharge may apply.
• GIC remission included: If you meet the conditions (see below), the ATO will remit general interest charge that has accrued from the time of your application through to the third monthly instalment.

You can read the full conditions of the ATO fuel response payment plan on the ATO’s website.

2. Remission of the General Interest Charge (GIC) and other penalties

The General Interest Charge (GIC) is the interest the ATO applies to unpaid tax debts. It compounds daily, which means the longer a debt remains unpaid, the more interest accumulates. Under the fuel response program, the ATO will:

• Automatically remit GIC accrued from the date of your payment plan application through to the date of the third monthly instalment, provided the conditions are met.
• Treat high fuel costs as a relevant factor in any additional or separate requests for remission of GIC and other penalties.

This does not mean all GIC is waived automatically. The remission applies only to the specific period described above and only if you meet the payment and lodgment conditions. You can read more about how GIC is calculated and remitted on the ATO’s website.

Important: GIC that accrued before 1 July 2025 If you claimed a deduction for GIC incurred before 1 July 2025 and the ATO subsequently remits that GIC, you must report the remitted amount as interest income in your tax return for the year the remission is granted. GIC incurred on or after 1 July 2025 is no longer deductible, so no corresponding income reporting is required if that GIC is later remitted.

3. Varying PAYG instalments

Pay as you go (PAYG) instalments are amounts you prepay throughout the year toward your expected income tax liability. If high fuel costs have reduced your taxable income, you may be paying more than you will actually owe at year end. The ATO is supporting eligible businesses to vary their PAYG instalment amount downward to better reflect their current expected income.

According to the ATO’s PAYG instalment variation guidance, you can vary your instalments if your total instalments for the year will be more or less than your expected tax. The varied amount or rate then applies to all remaining instalments for that income year, or until you make another variation.

There is an important caution here. If you underestimate your instalment amount, you may face GIC on the difference between your varied instalments and the amount you actually owe at year end. The ATO expects a genuine attempt to estimate your liability correctly. Where possible, seek advice before varying your instalments to make sure your estimate is reasonable.

Who Is Eligible for the ATO Fuel Response Payment Plan?

The ATO has not published a detailed list of industry codes or specific business types that qualify. The program is open to businesses that can demonstrate they are genuinely unable to meet their tax payment obligations as a result of high fuel costs. The following conditions apply to enter and maintain the plan:

• The business must be unable to meet current tax payment obligations due to the impact of high fuel costs
• The business must not currently be subject to ATO legal action in relation to outstanding debt (businesses in this situation may not be eligible)
• The business must be able to enter a direct debit arrangement
• The business must be able to repay its total debt across a maximum of 36 equal monthly instalments

To keep the payment plan in place and access GIC remission, two ongoing conditions must be met:

1. Pay all three monthly instalments as agreed under the payment plan.
2. Bring all outstanding lodgments up to date within three months of the payment plan being set up. The ATO may cancel the payment plan if lodgments remain outstanding after this period, and GIC remission will not proceed without up-to-date lodgments.

Priority obligations: employees come first Regardless of any payment plan arrangement with the ATO, your obligations to your employees must continue. The ATO specifically notes that businesses should continue to pay employee wages and ensure employee super guarantee entitlements are paid as a priority. You should also continue paying your creditors so they can meet their own employee obligations.

How to Apply: Step-by-Step

Applications are made through ATO Online Services for Business. Sole traders should use Online Services for Individuals. If a registered tax or BAS agent is applying on your behalf, you will need to confirm they have authority to act for you.

Step	What to do
1	Log in to ATO Online Services for Business (or Online Services for Individuals if you are a sole trader)
2	From the Home page, locate the Fuel response alert and select Check options
3	Assess your eligibility and notify the ATO of your interest in a tailored payment plan
4	Indicate whether you intend to vary your PAYG instalments as part of the application
5	Save and print a copy of your submission for your records
6	The ATO will contact you with more information and next steps (submitting the form does not confirm a payment arrangement)

 

Note: Submitting the application form does not confirm a payment arrangement Completing the online notification form means you have expressed interest. The ATO will contact you or your representative with more information and the next steps. Do not stop making payments or assume your debt is deferred until the ATO confirms your arrangement in writing.

What About Businesses Already on a Standard Payment Plan?

If your business already has a standard ATO payment plan in place and is experiencing difficulty because of fuel costs, you can still apply for the fuel response payment plan as a separate or replacement arrangement. The ATO encourages affected businesses to reach out through Online Services or through their registered tax agent.

For businesses that do not qualify for the fuel response plan but are still experiencing financial difficulty, the ATO’s existing support options remain available. These include standard payment plans, lodgment and payment deferrals, and penalty and interest remission on a case-by-case basis. A full overview of ongoing support options is available on the ATO’s tax support for businesses page.

Frequently Asked Questions

Does the fuel response payment plan cover all types of tax debt?

The ATO’s guidance does not restrict the plan to specific tax types. It is designed for businesses unable to meet general payment obligations due to fuel costs. If you are unsure whether your specific debt is covered, contact the ATO or speak to your tax agent before applying.

Will applying affect my credit rating or ATO compliance record?

Applying for a payment plan is a normal and supported process. It does not in itself affect your credit rating. The ATO’s compliance approach during this period is designed to be supportive of businesses making genuine attempts to meet their obligations.

What if I miss an instalment?

Missing an instalment can put your payment plan at risk of cancellation. If the plan is cancelled, any GIC that would have been remitted may no longer be waived. Contact the ATO or your tax agent as soon as possible if you anticipate difficulty meeting an instalment.

Can my accountant or tax agent apply on my behalf?

Yes. A registered tax or BAS agent can submit the application on your behalf using the agent online services portal. You need to ensure they have the appropriate authority to act on your account before they do so.

What happens after 30 June 2026?

The ATO fuel response payment plan is only available by application until 30 June 2026. The ATO has stated it will continue to assess the situation and update its support options if the program is extended or changed beyond that date. You can monitor updates at the ATO fuel response page.

Act Now: The Window Closes on 30 June 2026

If your business is eligible for this support, there is very little time left. The application window closes at the end of June 2026, and the ATO has made clear that the program will not automatically continue beyond that date.

The key actions to take before the deadline are:

• Review whether your business qualifies based on the conditions outlined above.
• Bring all outstanding lodgments up to date so you can access GIC remission if your plan is approved.
• Log in to ATO Online Services and check the Fuel response alert on your home page.
• Consider whether to vary your PAYG instalments if your taxable income has fallen.
• Speak to your accountant or tax agent before applying, particularly if you are unsure about how a payment plan will affect your broader financial position.

How JMB Consultants Can Help

Navigating ATO payment arrangements and interest remission requests requires careful attention to detail. A missed lodgment, an incorrect instalment amount, or a misunderstanding of the conditions can result in your plan being cancelled or your GIC remission being denied.

At JMB Consultants, we work with Australian businesses to manage their ATO obligations, review their PAYG instalment amounts, and prepare and submit requests for payment plans and penalty remission. If you think your business may qualify for the fuel response support package, we can help you assess your position and submit an accurate application before the 30 June deadline.

Contact JMB Consultants to speak with an accountant about your options before the window closes.

Disclaimer: This article is intended as general information only and does not constitute legal or financial advice. The details summarised here are based on ATO guidance and media releases current as of May 2026. Tax support measures can change. You should seek professional advice tailored to your specific circumstances before taking action.

The Federal Budget 2026-27, delivered on 12 May 2026, introduces two of the most consequential reforms to Australia’s property investment tax framework in decades. The first is the replacement of the 50% capital gains tax discount with a cost base indexation model, effective from 1 July 2027. The second is the quarantining of rental losses on established residential properties purchased after 7:30 PM AEST on 12 May 2026, effective from 1 July 2027.

These two changes do not operate in isolation. Together they alter the tax profile of residential property investment from acquisition through to disposal. Every property investor in Australia, whether currently holding assets or considering new purchases, needs to understand exactly what has changed, what transitional protections apply, and what decisions need to be made before 1 July 2027.

This blog covers every measure in the budget that directly affects property investors and capital asset holders, drawing directly from the budget announcements. Worked examples are included to illustrate the real dollar impact.

Two critical dates: The negative gearing quarantine applies to established residential properties acquired after 7:30 PM AEST on 12 May 2026. The new CGT rules apply to gains accruing on or after 1 July 2027. Both are already in effect or imminent.

Part 1: Replacing the 50% CGT Discount with Cost Base Indexation

What Is the 50% CGT Discount and Why Is It Changing?

Since 1999, Australians who hold an asset for more than 12 months have been entitled to reduce the capital gain on sale by 50% before including it in their assessable income. This has been one of the most significant tax concessions in the Australian system, benefiting individuals, trusts, and partnerships who invest in shares, property, and other assets over the long term.

From 1 July 2027, the government is replacing this 50% discount with a cost base indexation system and introducing a 30% minimum tax on net capital gains. These changes apply to all assets, including pre-CGT assets, held by individuals, trusts, and partnerships.

How the New Indexation System Works

Under cost base indexation, the original cost of an asset is adjusted upward in line with inflation over the holding period. Only the real gain (the amount by which the sale price exceeds the inflation-adjusted cost base) is assessable as a capital gain. The 30% minimum tax then applies to that net capital gain.

This approach is designed to tax only genuine economic gains rather than gains that simply reflect inflation. For assets held over long periods in high-inflation environments, indexation can reduce the taxable gain significantly compared to taxing the full nominal gain.

Worked Example: Comparing the Two Systems

The table below compares outcomes under the current 50% discount and the new indexation system for a property investor in the 37% tax bracket, selling a property held for approximately 10 years:

	Current Rule: 50% CGT Discount	New Rule from 1 July 2027: Indexation + 30% Minimum Tax
Original Purchase Price	$500,000	$500,000
Indexed Cost Base (15% CPI over hold period)	Not applicable	$575,000
Sale Price	$850,000	$850,000
Gross Capital Gain	$350,000	$350,000
Discount or Indexed Gain Applied	50% discount = $175,000 assessable	Indexed real gain = $275,000 assessable
Tax at 37% Marginal Rate	$64,750	$101,750 at 37% = but 30% minimum applies
30% Minimum Tax Check	No minimum tax applies	30% x $275,000 = $82,500 minimum
Final Tax Payable (approximate)	$64,750	$101,750 (37% exceeds 30% minimum)

Source: Federal Budget 2026-27, Budget Paper No. 2, Statement 4: Tax Reform | ATO: Tax Reform – CGT and Negative Gearing | Budget CGT and Negative Gearing Factsheet (PDF)  Note: Dollar figures are illustrative examples based on the announced rules. The 15% CPI uplift is assumed for the indexation example and does not represent a forecast. Actual indexed cost base will use ATO official CPI index figures at the time of sale. Individual outcomes vary based on marginal tax rate, holding period, and actual inflation. These figures do not constitute tax advice.

In this example, a taxpayer in the 37% bracket pays more tax under the new system because 37% of the indexed gain ($101,750) exceeds the 30% minimum ($82,500). However, for taxpayers in the 45% bracket with assets held over very long high-inflation periods, indexation may sometimes produce a better outcome than the 50% discount did. Individual modelling is essential.

Transitional Arrangements: Protecting Existing Gains

The government has confirmed that the new rules will only apply to capital gains accruing on or after 1 July 2027. This transitional protection is significant for anyone who already holds investments with embedded gains.

The specific transitional rules are:

• The 50% CGT discount will continue to apply to gains that accrued before 1 July 2027. Only the post-1 July 2027 portion of a gain is subject to the new rules.
• Capital gains on pre-CGT assets (assets acquired before 20 September 1985) that accrued before 1 July 2027 will remain exempt from CGT.
• Assets that are sold prior to 1 July 2027 will continue to be subject to the existing rules in their entirety.

New Residential Properties: A Choice Between Systems

Investors who purchase new residential properties will have the flexibility to choose between the two systems when they eventually sell. They can elect either:

• The 50% CGT discount under the existing rules, or
• Cost base indexation combined with the 30% minimum tax.

This choice is a meaningful planning opportunity for new residential property investors. The better option will depend on the inflation rate experienced during the holding period, the investor’s marginal tax rate at the time of sale, and the size of the gain. Our team at JMB Consultants can help model both scenarios.

Income Support and Age Pension Recipients Are Exempt

Income support payment recipients, including Age Pension recipients, will be exempt from the 30% minimum tax on net capital gains. This exemption protects lower-income Australians and retirees who may realise capital gains from the sale of investments but who are not in a position to absorb a 30% minimum tax on those gains.

Assets Sold Before 1 July 2027: No Change

Assets that are sold prior to 1 July 2027 will continue to be subject to the existing CGT rules in full. If you are considering the timing of a disposal, selling before that date means the old rules apply without any transitional splitting. This is not necessarily the right decision for every investor, but it is a factor that deserves consideration as part of a broader review.

Key planning question: For any asset with a large embedded gain, it is worth modelling three scenarios: sell before 1 July 2027 under existing rules; sell after 1 July 2027 with a split treatment; and continue to hold long-term under the new system. Contact JMB Consultants to model your specific position.

Part 2: Foreign Resident CGT Concession for Renewables

Separate from the reforms to the main CGT discount, the government has introduced a time-limited, targeted concession within the foreign resident CGT regime for investment in Australia’s renewables sector.

The concession applies to foreign investors who dispose of certain renewable energy infrastructure assets. The transitional arrangement runs from the first day of the next quarter after Royal Assent of the relevant legislation until 30 June 2030. This measure is designed to encourage foreign capital into the renewable energy transition by reducing the CGT friction on exits from eligible infrastructure investments during the transition period.

Part 3: Reforming Negative Gearing for Established Residential Properties

How Negative Gearing Currently Works

Negative gearing is the situation where the deductible costs of holding an investment property (mortgage interest, property management fees, council rates, insurance, repairs, and depreciation) exceed the rental income the property generates. Under current tax law, that net rental loss can be offset against any other income, including salary and wages, which reduces the investor’s total taxable income and therefore their overall tax liability for the year.

This has been a widely used strategy among Australian property investors, particularly in periods of high mortgage rates when interest costs push more properties into a net loss position.

What the Budget Changes from 1 July 2027

From 1 July 2027, losses from established residential properties will only be deductible against:

• Rental income from residential properties, or
• Capital gains derived from residential properties.

Excess losses that cannot be absorbed against residential property income in a given year will be carried forward and can be offset against residential property income in future years. The losses do not disappear, but they are quarantined from salary income, business income, and non-property capital gains.

Worked Example: The Real Tax Impact

The following table compares a negatively geared investor holding a pre-budget property against one who purchased an established property after 12 May 2026:

	Pre-Budget Property (Contract before 7:30 PM 12 May 2026)	Post-Budget Established Property (Acquired after 7:30 PM 12 May 2026)
Annual Rental Income	$24,000	$24,000
Annual Expenses (interest, rates, management fees)	$40,000	$40,000
Net Rental Loss	$16,000	$16,000
Offset Against Salary Income?	Yes, deductible in full against all income (existing rules apply until disposal)	No. Loss is quarantined. Carried forward to offset future residential property income only.
Salary Income	$120,000	$120,000
Taxable Income in Year 1	$104,000 ($120,000 less $16,000 loss)	$120,000 (no offset available)
Approximate Tax Saving (at 30% bracket)	$4,800 tax reduction	$0 tax reduction in year 1

Source: Federal Budget 2026-27, Budget Paper No. 2, Statement 4: Tax Reform | ATO: Tax Reform – Negative Gearing and CGT (not yet law) | Budget CGT and Negative Gearing Factsheet (PDF) | ATO: Tax Rates for Individuals  Note: Dollar figures are illustrative only. Tax saving calculated at the 30% marginal rate applicable on income from $45,001 to $135,000. Actual tax outcomes depend on the full income position, applicable offsets, Medicare Levy, and other deductions. This example does not constitute personal tax advice.

Which Properties and Investors Are Caught by the New Rules?

The quarantining measure applies to established residential properties acquired from 7:30 PM AEST on 12 May 2026. The following table sets out which properties are inside and outside the new rules:

Properties subject to the new quarantining rules (acquired after 7:30 PM AEST 12 May 2026):

• Established residential properties (existing houses, apartments, units, townhouses) purchased after the budget time cut-off.

Properties exempt from the new rules (existing rules continue):

• Properties acquired prior to 7:30 PM AEST on 12 May 2026, including properties under binding contracts that had not yet settled as at that time. The existing negative gearing rules apply to these properties until they are eventually sold.
• Eligible new build properties. Newly constructed residential properties are fully exempt from the quarantining changes.
• Properties held in superannuation funds, including self-managed superannuation funds.
• Properties held in widely held trusts.
• Build-to-rent developments.
• Properties owned by private investors who are supporting government housing programs.

Investors with Multiple Rental Properties

For investors holding more than one residential property, the quarantined losses from a negatively geared property can be offset against the positive rental income from other residential properties in the same pool. Only the net loss that cannot be absorbed within the residential property income pool is carried forward. This gives multi-property investors more flexibility to manage their quarantined losses than investors holding a single property.

The New Build Exemption: A Significant Distinction

Because eligible new build properties are fully exempt from the quarantining rules, purchasing a new residential property after 12 May 2026 continues to provide full negative gearing deductibility against all income, in the same way as established properties did before the budget. This is a deliberate policy choice by the government to direct investor activity toward housing supply rather than competition for existing stock.

New build investors will also have the option to choose between the 50% CGT discount or indexation treatment when they eventually sell, as noted in Part 1 of this blog.

Contract holders: If you entered a binding contract to purchase an established residential property before 7:30 PM AEST on 12 May 2026 and settlement has not yet occurred, you are protected. The existing negative gearing rules apply to your property until you sell it.

How the CGT Changes and Negative Gearing Changes Work Together

For an investor who purchases an established residential property after 12 May 2026, both reforms will apply simultaneously. During the holding period, net rental losses will be quarantined and cannot reduce other income. When the property is eventually sold after 1 July 2027, the accumulated quarantined losses can be applied against the capital gain, but that capital gain will itself be assessed under the new indexation and 30% minimum tax framework rather than the 50% CGT discount.

This dual effect means the tax profile of post-budget established property investment is materially different from what Australian investors have experienced for the past 25 years. A holistic review that models both annual cash flow and the eventual exit tax position is now an essential step for any investor considering a purchase.

Part 4: Extended Ban on Foreign Purchases of Established Residential Dwellings

The government will extend the temporary ban on foreign purchases of established residential dwellings by two years and three months, until 30 June 2029. The ban was originally implemented for two years from 1 April 2025.

For Australian resident investors, this extension reduces competitive pressure from foreign buyers on established residential property stock. It is most relevant to capital city markets and high-demand suburban areas that have historically attracted foreign buyer interest. While this does not directly affect the tax obligations of Australian residents, it is a material factor in the supply and demand dynamics of the residential property market over the medium term.

Part 5: Strengthened ATO Compliance and Fraud Prevention Powers

The government will provide $86.3 million over four years from 1 July 2026, and $9.7 million per year on an ongoing basis from 2030-31, to deliver Phase 2 of the Counter Fraud Strategy. This investment significantly expands the ATO’s capacity to detect and prevent fraud in real time and has direct relevance for property investors and their advisers.

Key features of the enhanced compliance framework relevant to property investors and individual taxpayers include:

• Enhanced real-time fraud detection and prevention capabilities across the tax and superannuation systems.
• Additional fraud protections for individual taxpayers.
• Expanded live monitoring of fraudulent account access, applying to tax agents, businesses, and high-risk superannuation changes.
• New ATO powers to pause the recovery of tax debts from taxpayers who are genuine victims of fraud by a tax agent or other tax intermediary, and to waive those debts in appropriate circumstances.
• New powers to recover paused and waived debts directly from the tax intermediaries responsible for the fraud.
• Expansion of existing garnishee powers to include jointly held assets in circumstances where those arrangements are being used to frustrate debt recovery.
• Further targeted exceptions to tax secrecy provisions, and enhancements to tax regulators’ information-gathering powers to support compliance and effective tax administration.
• Additional targeted compliance activities over two years from 2026-27, including specifically in relation to R&D tax incentive claims.

For property investors who have historically relied on their tax agent for lodgements and compliance, the new protections for taxpayers who are victims of intermediary fraud provide greater recourse in cases where an agent has acted incorrectly. At the same time, the expansion of ATO’s real-time data-matching and compliance activity means that errors, omissions, and incorrect claims are more likely to be identified and queried.

Frequently Asked Questions

Q: I bought my rental property in 2019. Does the 50% CGT discount still apply when I sell?

A: Yes, but only for the portion of the gain that accrued before 1 July 2027. For the gain accruing after that date, the new indexation and 30% minimum tax rules will apply. Assets sold prior to 1 July 2027 continue to be subject to the existing rules in their entirety.

Q: I have a contract to purchase an established property now. Does the negative gearing quarantine apply to me?

A: If you entered into a binding contract before 7:30 PM AEST on 12 May 2026, you are exempt from the quarantining rules until you eventually sell that property, even if settlement has not yet occurred. If your contract was entered after that cut-off, the new rules will apply from 1 July 2027.

Q: Does negative gearing disappear completely under the new rules?

A: No. Net rental losses on affected established properties are not eliminated. They are quarantined, meaning they can only be offset against rental income or capital gains from residential properties. Excess losses carry forward indefinitely. They cannot reduce your salary or other non-property income in the year the loss arises.

Q: My SMSF holds a residential investment property. Does the negative gearing change apply?

A: No. Properties held within superannuation funds, including self-managed superannuation funds, are excluded from the negative gearing quarantining rules.

Q: I want to buy a new apartment off the plan. Will the new rules affect me?

A: Eligible new build properties are exempt from the negative gearing quarantining rules regardless of when they are purchased. You retain full negative gearing deductibility against all income. When you sell, you will also have a choice between the 50% CGT discount and cost base indexation. Confirm with your adviser whether the specific property qualifies as an eligible new build under the ATO’s criteria.

Q: I receive the Age Pension. Does the 30% minimum CGT tax apply to me?

A: No. Income support payment recipients, including Age Pension recipients, are specifically exempt from the 30% minimum tax on net capital gains.

Q: Should I sell my investment property before 1 July 2027?

A: This depends entirely on your individual circumstances: the size and age of the embedded gain, your marginal tax rate, your income in the year of sale, your future investment plans, and the ongoing performance of the asset. It is not a one-size-fits-all decision. JMB Consultants can help model the comparison between selling before and after 1 July 2027 for your specific property.

Q: How is the pre-1 July 2027 portion of a gain separated from the post-1 July 2027 portion?

A: The ATO is expected to issue guidance on the methodology for apportioning gains between the two periods. The most likely approach is an annual straight-line or market value based apportionment. We will update clients as this detail is confirmed through the legislative process.

How JMB Consultants Can Help

The Federal Budget 2026-27 has fundamentally changed the tax framework for property investors. If you hold investment properties, are considering a purchase, or have assets with significant embedded capital gains, these reforms require you to reassess your strategy before 1 July 2027.

At JMB Consultants, our principal Neeraj is a CPA Australia member with over 15 years of accounting and tax advisory experience including deep expertise in property investment tax planning, capital gains structuring, trust taxation, and SMSF compliance. We help clients across Melbourne, Glen Waverley, and throughout Australia to turn complex tax changes into clear, personalised action plans.

To book a consultation, visit jmbtax.au or contact us through our website.

Official Sources and Further Reading

The content in this blog is sourced directly from official Australian Government and ATO publications. All measures described are based on budget announcements made on 12 May 2026. Note that measures described as proposed or announced are not yet law unless stated otherwise. Always refer to the most current ATO and Treasury guidance before making any tax decisions.

Federal Budget 2026-27: Official Government Sources

1. Federal Budget 2026-27: Main Page | https://budget.gov.au/ The official Australian Federal Budget website for 2026-27, including all budget papers, factsheets, and overview documents delivered on 12 May 2026.
2. Federal Budget 2026-27: Tax Reform Page | https://budget.gov.au/content/04-tax-reform.htm The official budget page covering all tax reform measures including CGT changes, negative gearing reform, discretionary trust minimum tax, electric car FBT, and the Working Australians Tax Offset.
3. Federal Budget 2026-27: CGT and Negative Gearing Tax Explainer (PDF) | https://budget.gov.au/content/factsheets/download/tax-explainers-negative-gearing-capital-gains-tax.pdf The official Treasury factsheet with detailed worked examples on the CGT and negative gearing reforms, including transitional arrangements and the impact on different investor profiles.
4. Federal Budget 2026-27: Budget Documents and Budget Papers | https://budget.gov.au/content/documents.htm Full set of Budget Papers including Budget Paper No. 2 which contains the detailed descriptions of all revenue and expenditure measures.
5. Federal Budget 2026-27: Cost of Living Measures | https://budget.gov.au/content/02-cost-of-living.htm Official budget page covering the income tax cuts, $1,000 instant tax deduction, and other cost-of-living measures announced in the 2026-27 Budget.

Australian Taxation Office: New Legislation

ATO: Tax Reform – Negative Gearing and CGT Reform | https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/tax-reform-boosting-home-ownership-reforming-negative-gearing-and-capital-gains-tax The ATO’s official page on the announced CGT and negative gearing changes. Notes that these measures are not yet law and will be updated as legislation progresses.

Australian Taxation Office: Capital Gains Tax

1. ATO: Capital Gains Tax – General Guidance | https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax The ATO’s main CGT guidance page covering how CGT currently works, including the discount rules, cost base, and asset types. This page reflects current law and will be updated as the announced reforms are legislated.
2. ATO: CGT Discount for Individuals | https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/capital-gains-tax-discount The ATO’s guidance on the current 50% CGT discount for individuals holding assets for more than 12 months. This reflects the current rules, not the proposed changes.

Australian Taxation Office: Negative Gearing and Rental Properties

1. ATO: Rental Properties and Deductions | https://www.ato.gov.au/individuals-and-families/investments-and-assets/residential-rental-properties The ATO’s main page on residential rental properties, including what deductions are currently available and how rental income and losses are treated. This page reflects current law.
2. ATO: Rental Expenses You Can Claim | https://www.ato.gov.au/individuals-and-families/investments-and-assets/residential-rental-properties/rental-expenses-you-can-claim Detailed ATO guidance on allowable rental property deductions including interest, repairs, depreciation, and management fees under the current rules.

Other Official Sources

1. Prime Minister of Australia: Tax Reform Statement | https://www.pm.gov.au/media/tax-reform-workers-businesses-and-future-generations The Prime Minister’s official statement on the tax reform package announced in the 2026-27 Budget, including CGT and negative gearing reforms.
2. Treasury: Budget Paper No. 2 – Budget Measures | https://budget.gov.au/content/bp2/index.htm The official Budget Paper No. 2 which contains the full technical description of all budget measures including the CGT reforms, negative gearing changes, and foreign buyer ban extension.

Note on legal status: Measures described in this blog are based on budget announcements made on 12 May 2026. Unless explicitly stated as law, these are announced measures subject to Parliamentary legislation and may change before enactment. Always verify the current status of any measure with the ATO at ato.gov.au or through a registered tax agent before making decisions.