Year end tax planning 

As we approach the end of the financial year it’s a good time to start thinking about what you could do to minimise your tax liability, as well as other actions required before the end of the financial year (30 June).

There are some things that are new for 2026 and there are things that we talk to clients about every year.

Discretionary trusts

• Trust minutes/resolutions: Trustees of discretionary trusts have to resolve where they would like to distribute their income for the 2026 financial year prior to 30 June 2026. We will discuss distribution strategies with the trustees and assist with the documentation of these ahead of 30 June.
• Careful consideration needs to be had with regards to trust distributions across family groups. The ATO has provided guidance which details their position with regards to this, and where it impacts your group, we will discuss this with you in your year-end tax planning meeting.  Alternatively, you can contact us directly to discuss.

Tax Planning Tips & Information

• Base Rate Entity: The company tax rate for base rate entity companies remains at 25%.
• Asset purchases: If you are an eligible small business (aggregated turnover less than $10 million) you can generally claim an immediate deduction for assets purchased under $20,000, provided the asset is ready for use by 30 June 2026.
• Superannuation (personal): You are able to claim a tax deduction for any personal superannuation contributions up to your $30,000 cap for the 2026 financial year (which includes contributions from your employer). To claim a deduction for these super contributions, you must give your super fund a notice in the approved form and get an acknowledgement from the fund. There are also other eligibility criteria you must meet. If you haven’t used your full cap for the 2021, 2022, 2023, 2024 and 2025 financial years, you may also be able to claim an additional tax deduction for superannuation contributions up to the value of the unused cap for those years. If this is something you would like to utilise, please let us know and we can assess your eligibility and calculate how much can be utilised from prior years. This is the last year that any unused cap amount for 2021 can be utilised.
• Capital Gains Tax: If you have made a capital gain during the 2026 financial year, you may consider realising a capital loss (if appropriate) on another asset to offset the capital gain.
• Cash flow: Vary PAYG instalments for the June 2026 quarter (if appropriate). This is best done in conjunction with an estimate of your 2026 tax position.
• Working from home deductions: You can use the Fixed Rate method and claim a cents per hour amount for the 2026 financial year based on the ATO rate where you worked from home. Make sure you have detailed records that record the total number of hours you work from home and the expense you incur while working from home. You can also use the actual cost method.
• Substantiation: Ensure that you retain receipts or substantiation for any expenses you would like to claim such as those related to your work, self-education, travel and donations.
• Motor vehicle travel: If you travel over 5,000kms in your motor vehicle for work, consider whether you should maintain a logbook or whether you need to complete a new one (to be completed every five years). If you are relying on a logbook prepared from a previous year you also need to record the odometer reading as at 30 June.
• Trading stock: Conduct a stocktake at 30 June, write off any obsolete or damaged stock and choose your stock valuation method. You can use cost, market selling value or replacement value, for each item, and this can be changed each year. If you are an eligible small business entity and your trading stock value has not moved by more than $5,000 you do not have to do a stocktake.
• Superannuation (businesses): Pay your super before 30 June in order to get a tax deduction for the 2026 financial year. Super contributions need to have been received by the superannuation fund by 30 June – confirm with your software/clearing house provider if there are any cut-off dates to ensure this occurs. From 1 July 2026:
  • Super guarantee contributions will be due on payday, you should ensure your payroll systems, cashflow and payment/clearing house processes are ready for this change.
  • Super guarantee contributions will change from an Ordinary Time Earnings calculation to a Qualifying Earnings calculation, in particular, all commissions are expressly included, regardless of whether they were earnt outside ordinary hours.
• Accrued expenses: If you have a presently existing liability to pay an amount at 30 June, even where you may not have an invoice, the amount should be accrued to enable a tax deduction to be claimed in the current year.
• Prepaid expenses: If your business is a small business entity, you are entitled to a tax deduction where expenses covering a period of up to 12 months are prepaid.
• Bad debts: Review and write off bad debts to ensure a deduction in 2026 financial year.
• Bonuses to staff: if you pay bonuses to employees, a simple accrual may not be enough to ensure a deduction at 30 June.  To claim a deduction, you must ensure that you have presently existing obligation to pay the bonus and that it is quantifiable.

Can we give you a hand?

If you would like any further detail on the above, or for an estimate of your tax position for the 2026 financial year, please contact your Holman Hodge advisor.

The information in this email is factual information, and not financial advice. The information is objectively ascertainable information, and is not tailored to your personal circumstances. You should consider obtaining financial advice before making a decision in relation to this information.

The Federal Budget handed down on 12 May 2026 proposes some of the most significant tax reforms in recent decades. There is a clear focus on cost of living relief, alongside structural changes to the taxation of investment income, property, and business structures.

This article outlines the key proposed tax measures and what they may mean in practical terms.

Note: Most measures are proposals only and will require legislation to pass Parliament before becoming law.

1. Changes to capital gains tax (CGT)

• The 50% CGT discount is proposed to be replaced with cost base indexation and a minimum effective tax rate of 30% on capital gains from 1 July 2027. The changes are expected to apply prospectively to gains accruing after that date. While the new framework has been announced, detailed design elements – including transitional valuation methods and the precise treatment of different taxpayer groups – have not yet been confirmed.
• Indexation of the cost base will be based on CPI for assets held for at least 12 months (from 1 July 2027, proposed)
• Applies to individuals, trusts and partnerships
• Companies will not be eligible for indexation
• The existing 1/3 discount for complying superannuation funds will remain
• The exemption for pre-20 September 1985 assets will change to tax post 30 June 2027 growth in value.

What this means in practice:

• Blended CGT calculations may apply for assets held at 1 July 2027
• Valuations as at 30 June 2027 are likely to be important
• Expected choice between valuation and formula-based apportionment methods
• Increased record-keeping requirements
• Reduced benefit of long-term asset holding
• Potential for higher CGT outcomes for investors

2. Changes to negative gearing 

• Negative gearing for residential property generally limited to new builds from 1 July 2027 (proposed)
• Properties acquired (or contracted) before 12 May 2026 expected to be grandfathered
• Net losses will need to be carried forward for deduction against future rental income (including other residential properties held) or residential property capital gains

What this means in practice:

• “New build” expected to focus on genuine new housing supply
• Likely exclusion of knock-down and rebuild projects (unless resulting in additional number of dwellings)
• Managed investment trusts and superannuation funds not expected to be affected
• Other asset classes such as commercial property and shares not impacted
• Investors may need to reassess property strategies
• Bank finance on residential property acquisitions may be more difficult to obtain as loan servicing calculations will cease to recognise the taxation benefit of negative gearing

3. Proposed 30% minimum tax on discretionary trusts 

• Trustees will pay a minimum 30% tax on trust income from 1 July 2028 (proposed)
• Individual beneficiaries receive a non-refundable 30% tax credit
• Corporate beneficiaries will not receive a credit
• Exclusions are proposed for:
  • Fixed and widely held trusts
  • Superannuation funds
  • Charitable trusts
  • Deceased estates
  • Certain primary production income
  • Existing testamentary trust arrangements (at 12 May 2026)

What this means in practice:

• Reduced effectiveness of distributions to lower-income beneficiaries
• Use of corporate beneficiaries likely curtailed
• Review of family group structures may be required
• Limited rollover relief expected for restructuring from 1 July 2027
• Ownership of businesses by trusts (or partnership of trusts) may need to be reconsidered

4. Tax relief for individuals 

• A $1,000 standard deduction for work-related expenses without substantiation.  Donations, Union Fees and Professional association memberships can be claimed in addition.
• A $250 annual tax offset from 2027–28
• Reduced tax rates for income between $18,201 and $45,000 (15% then 14%)
• Increase in Medicare levy low-income thresholds

What this means in practice:

• Simplified deduction claims for many taxpayers
• Option to claim higher actual expenses remains
• Modest tax relief for lower and middle-income earners

5. Business and investment measures 

• Permanent $20,000 instant asset write-off from 1 July 2026
• Reintroduction of loss carry-back rules for eligible companies
• Gradual reduction of FBT concessions for electric vehicles
• Changes to the R&D tax incentive

What this means in practice:

• Continued access to accelerated deductions for small business
• Improved cash flow support via loss carry-back
• Review required for electric vehicle arrangements as FBT will need to be considered in salary packaging arrangements.

What should you consider now? 

• Property investment strategies
• Capital gains exposure
• Trust and ownership structures
• Business structure and asset ownership
• Salary Packaging arrangements involving electric vehicles

Final comments 

• Many measures commence from 1 July 2027 or later, allowing time for planning
• All measures remain subject to legislation and may change
• Further updates will be provided as details are confirmed

Please contact your Holman Hodge adviser for further information.

What Small Businesses Need to Know

From 1 July 2026, superannuation must be paid much closer to when people are paid. This change, known as Payday Super, does not change who is entitled to super, but it does change when super must be paid.

For many small and family businesses, the main risk will be contractor payments, particularly where contractors are paid through accounts payable rather than payroll.

What Is Changing?

Currently, super is commonly paid quarterly, although some employers pay more frequently.

From 1 July 2026:

• Super must be paid each time a worker is paid
• The contribution must generally reach the super fund within 7 business days of payment, subject to limited exceptions
• This applies to employees and to contractors who are treated as employees for super purposes

The biggest change is timing. The rules about who gets super stay the same.

Does This Apply to Contractors?

It can.

If a contractor is already treated as an employee for superannuation guarantee (SG) purposes, super is payable and Payday Super applies. Calling someone a contractor or paying them on invoice does not remove the obligation.

Why Contractors Are Higher Risk

Contractors are often paid in ways that sit outside normal payroll processes, for example:

• Payment on invoice
• Milestone or one-off payments
• Payments approved by managers rather than payroll

Under the old quarterly system, there was time to fix issues. Under Payday Super, deadlines can be missed within days if payroll is not aware of the payment.

What Is a Payday for Contractors?

For contractors subject to SG, the key date is the Qualifying Earnings day (QE day). This is the day you pay the contractor amounts that attract super.

Each payment can start a new 7-business-day deadline, even if payments are irregular.

What Are Qualifying Earnings?

From 1 July 2026, super is calculated on Qualifying Earnings rather than Ordinary Time Earnings (OTE).

In practical terms for most small businesses, Qualifying Earnings include amounts that are currently superable under OTE, plus certain additional payments such as all commissions and salary sacrifice amounts that would have been qualifying earnings if not sacrificed.”

For many employers, what attracts super will not change.   However, some payments such as commissions may now be captured more consistently.  The main change is that super must be calculated and paid for each payment, not quarterly.

Why Large or Irregular Payments Matter

Contractors are often paid larger, less frequent amounts. If these payments are not checked for super at the time they are made, it is easy to miss the new deadline.

Example

This example is illustrative only.

A contractor is classified as an employee for SG purposes and is paid through accounts payable.

On 3 October 2026, the business pays a $12,000 invoice that includes amounts subject to super. That date is the QE day. Super must reach the contractor’s super fund within 7 business days.

If payroll is notified late, the business may already be non-compliant.

The Real Issue Is Process

Most failures will not be deliberate. They will occur because:

• Payroll does not see contractor payments in time
• Responsibilities are unclear
• Accounts payable and payroll processes are not aligned

What You Should Review Now

Before 1 July 2026, businesses should review:

• Which contractors are subject to super
• How contractor payments are approved and processed
• Whether payroll sees SG-relevant payments before they are made
• Who is responsible for checking super at payment time

Important Notes

• From 1 July 2026, the Payday Super regime replaces the existing Superannuation Guarantee Charge statement process with a voluntary disclosure framework. Where super is paid late, an employer may make a voluntary disclosure before ATO assessment, which can significantly reduce uplift penalties. Under the new rules, late‑paid super amounts included in the Superannuation Guarantee Charge are generally deductible when paid. However, administrative uplift amounts, statutory penalties and any general interest charge remain non‑deductible.
• Superannuation for the June 2026 quarter is due for payment by 28 July 2026. Care should be taken to manage the cash flow impact of the superannuation regime change.

How Holman Hodge Can Help

Holman Hodge can assist with reviewing contractor arrangements, identifying Payday Super risks, and helping you put practical processes in place before 1 July 2026.

Please contact your Holman Hodge adviser if you would like assistance.

When most people think about estate planning, they think about a will.

A will is important. It determines what happens to your assets when you pass away. But in over 30 years of advising pharmacy owners and their families, I’ve seen time and again that a will, on its own, is not enough.

Estate planning is not only about what happens after death. It is also about managing important changes that can happen while you are still living.

Wills don’t deal with loss of capacity

One of the biggest misconceptions is that a will covers all contingencies. It doesn’t.

A will only operates after death. It does not deal with a situation where you are alive but no longer able to make decisions due to illness, accident or cognitive decline.

Without an Enduring Power of Attorney (POA), your family might need to apply to a tribunal or court to manage your affairs. This process can be slow, costly, and emotionally draining, especially when your family is already under stress.

Similarly, in business structures such as pharmacy partnerships, the death or incapacity of a partner can have significant implications. If the documentation isn’t clear, surviving partners and families can find themselves navigating uncertainty at precisely the wrong time.

Good planning means ensuring that:

• You have an appropriate Enduring Power of Attorney in place
• Your partnership or shareholder agreements deal with incapacity and death
• Your personal and business structures align.

Giving while you live 

At a recent presentation, I spoke about something I strongly believe in: “give while you live.”

Many people accumulate assets throughout their lifetime with the intention of passing them on. There is nothing wrong with that. But there can be significant benefits in providing support earlier, when it can make the greatest impact.

Helping a child purchase a home, assisting with education costs, or supporting a business opportunity can be life-changing at the right time.

There are also practical advantages:

• You can see the benefit of your giving
• You establish a clear and consistent pattern of intention
• You reduce the size of your estate and potential complexity later.

Where estates are contested, a demonstrated history of giving can help show that your will reflects a long-standing pattern rather than a sudden decision.

From a tax perspective, Australia does not have an inheritance tax. However, gifting can have implications depending on the type of asset and your circumstances. For example, transferring certain assets may trigger capital gains tax events and Division 7A issues. Centrelink and aged care assessments can also be impacted by gifting under deprivation rules.

This is not an argument against giving. It is simply a reminder to plan your giving carefully.

Retaining enough for aged care 

While generosity is admirable, prudence is essential.

Aged care is often more expensive than people expect. Entry into a residential aged care facility typically involves:

• A refundable accommodation deposit (often a significant lump sum and commonly referred to as ‘RAD’)
• Ongoing daily care fees and living costs.

Many facilities offer payment arrangements or ‘loan’ style options, but these can become expensive over time. In most cases, if you can pay the entry costs yourself, often by selling your home, you will have more certainty and flexibility.

I have seen families hold onto a home on the assumption that the person entering care will return. In reality, this is rare. Clear-headed decisions at this stage can reduce financial pressure later.

The key is balance: support your family while you are alive, but retain sufficient assets to maintain your own dignity and quality of care.

Identity, documentation and practicality 

Another increasingly common issue is proof of identity.

Banks must follow strict ‘Know Your Client’ rules. If your identification is outdated, inconsistent, or hard to verify, access to your funds can be delayed or restricted, even if there is no wrongdoing.

For those who no longer drive or travel, obtaining a government-issued Proof of Age photo ID can be a simple but powerful step. This is best done at the time of (or before) surrendering a Drivers Licence and/or expiry of your passport.

Consistency across names, trusts, bank accounts and legal documents is also essential. Small inconsistencies can create disproportionate complications.

Trust structures themselves require careful review. Changes in tax rates, trustee arrangements or beneficiary circumstances can affect how income is distributed and taxed. These structures should not be left untouched for decades.

Planning for transition, not just death 

Over the years, I have shared in the triumphs and setbacks of many client families. The most successful transitions are rarely accidental. They are the result of early conversations, documented intentions and structured planning.

Estate planning is not morbid. It is responsible.

It is about:

• Protecting your family
• Preserving your business legacy
• Reducing conflict
• Maintaining control for as long as possible.

A will is an important starting point. But it is only one part of the broader picture.

If you have not reviewed your estate plan recently, including your powers of attorney, business agreements, gifting strategy and aged care funding, now may be a good time to do so.

Because transition is inevitable. Planning for it is optional.

For more information about this topic, you’ll find my article on Estate planning – where to start? A good next step is to get in touch.

About the author 

Graeme Hodge is Founder and Director at Holman Hodge. He has been providing personalised advisory services to pharmacy enterprises and groups for more than 30 years. The longevity of his client relationships has seen him share the triumphs and support the setbacks of both their business and personal lifecycle, developing his specialty of life and business transition.

What Division 296 means for your retirement savings

Changes to Australia’s superannuation tax rules are now law and, while they don’t affect everyone, they could have a meaningful impact on those with larger super balances. From 1 July 2026, the introduction of Division 296 means higher taxes will apply to earnings on superannuation balances above a set threshold. With plenty of commentary – and confusion – around what this change means, it’s important to understand who is affected, how the tax works, and whether it could influence your long-term retirement planning.

The Division 296 superannuation tax passed both houses of Parliament on 11 March 2026 and is expected to become law following royal assent.

What is Division 296 tax?

Division 296 is a new tax that targets individuals with a total combined superannuation balance exceeding $3 million. New tax rates will be applied to superannuation earnings, with those above $3 million taxed at 30% and those above $10 million taxed at 40%. Individuals may choose to release the tax from their superannuation fund or pay it themselves.

The following table shares the new, tiered tax rate thresholds:

The $3 million and $10 million thresholds will be indexed with inflation in increments of $150,000 and $500,000 respectively.

Date of effect

The tax applies to earnings from the 2026-27 financial year.

To make the new superannuation tax rules easier to understand, it can help to look at a real‑world example. This example shows how Division 296 may apply to someone with a higher super balance, even when they have planned carefully and acted within the rules.

Example:

Like many of our clients, Sarah has spent years building her superannuation, with the goal of a comfortable retirement. By contributing consistently over time, she has grown her superannuation to $4 million. During the year, her super balance increases by $200,000 due to investment growth.

As 25 per cent of her balance exceeds the $3 million threshold, Division 296 is triggered, and 25 per cent of the earnings ($50,000) are subject to the additional 15 per cent Division 296 tax.

This results in an additional tax of $7,500.

While the changes won’t affect most Australians, Sarah’s example illustrates how the new tax works in practice and why understanding the details can provide confidence and peace of mind when reviewing your own retirement position.

Unrealised Capital Gains

The legislation allows a “cost base reset” election at 30 June 2026. This means that the new Division 296 tax will apply only to future growth, not to investment gains built in prior years.

Importantly, this reset applies only for Division 296 purposes and does not change the cost base for Capital Gains Tax purposes.

The election must be made in the 2027 superannuation fund tax return.

Transitional Provisions

For the first year of operation (2026–27), special rules apply:

• The taxable proportion will be based on the member’s total super balance at 30 June 2027.
• The opening balance at 1 July 2026 is not used in determining the taxable proportion for that year.

From the 2027–28 financial year onwards, the standard calculation method will apply (the greater of the opening or closing Total Superannuation balance).

This may provide an opportunity to withdraw funds or sell assets with large unrealised losses during the 2026–27 year to reduce or eliminate Division 296 exposure.

What you should do now

In many cases, paying the Division 296 tax may be preferable to reducing your superannuation balance to avoid it, so it is important to carefully consider any strategy.

Speak to your Holman Hodge adviser about undertaking a review of your specific circumstances to determine what works best for you.