2026 Budget: The Big Changes

The Federal Government handed down the Federal Budget on 12 May 2026, with some of the biggest changes to the tax system in years.

For individual workers, the Budget introduces a new Working Australians Tax Offset (WATO), providing a permanent annual $250 tax offset to all eligible Australian workers. This applies to eligible income earned from 1 July 2027, that is, from the 2027/28 income year. Workers will also benefit from a $1,000 instant tax deduction, allowing them to deduct up to $1,000 of work-related expenses without keeping receipts, effective from 1 July 2026.

For property investors, negative gearing for residential property will be limited to new builds from the 2027/28 income year. Existing investments made before 7:30pm AEST on 12 May 2026 are unaffected, with arrangements remaining unchanged for those properties.

Significant changes are also coming to capital gains tax. The 50% CGT discount will be replaced with inflation-adjusted indexation from 1 July 2027 to restore the taxation of real gains, with a minimum tax rate of 30% on realised gains. This will apply to all assets, including pre-CGT assets, except new residential property builds where taxpayers may choose either the old or the new CGT rules. Importantly, the change will be prospective — gains accrued on existing investments prior to the start date will retain the 50% discount where eligible. From 2028/29, discretionary trusts will also face a minimum 30% tax rate, designed to bring tax outcomes for trusts closer to the rates that apply to the vast majority of Australian workers.

For businesses, the Budget delivers several positive measures. The $20,000 instant asset write-off will be made permanent, giving businesses more certainty to invest. A permanent two-year loss carry back will be available for companies with turnover of up to $1 billion from 1 July 2026. Start-ups will also benefit from loss refundability from 1 July 2028, helping new businesses invest and grow in their first two years.

Please contact our office if you have any questions about how these Budget measures may affect you.

Payday Super: How to Manage Super During the Changeover

The ATO is providing guidance to help employers manage the transition from quarterly superannuation to Payday Super, which begins on 1 July 2026. From that date, employers will be required to pay super with each payday rather than quarterly.

During July 2026, employers may need to manage more than one super payment at the same time. This includes the final quarterly super payment for the June quarter, which is due on 28 July, as well as one or more Payday Super payments for July paydays.

Employers who do not finalise their June quarter payments by 28 July 2026 will be required to lodge a Super Guarantee Charge (SGC) statement by 28 August and pay the SGC to the ATO for the June quarter. In this situation, the late payment offset will not be available, and any super payments received on or after 29 July will be applied under the new Payday Super rules — even if the employer intended those payments to cover the June quarter.

From 1 July 2026, employers must calculate, pay and report super guarantee for their employees, including eligible contractors, under the Payday Super rules. This means ensuring that super contributions reach employees’ super accounts generally within 7 business days after payday.

It is worth noting that super for pay runs in July may fall due before the final quarterly payment deadline of 28 July. Contributions received on or before 28 July will be applied to reduce any super owing for the June quarter first, with any remainder then applied under Payday Super. The ATO has confirmed that employers who pay on time under both the quarterly and Payday Super systems will not risk incurring penalties during the transition.

Please contact our office if you would like assistance managing the changeover.

ATO Says: Don’t Delay — Act Now to Transition from the SBSCH

The Small Business Superannuation Clearing House (SBSCH) will permanently close on 1 July 2026. Employers who are still using it have very little time to transition to an alternative service provider, test their new arrangements and resolve any issues before Payday Super begins.

The ATO is urging affected employers to act immediately. Before 11:59pm AEST on 30 June, employers should download all of their SBSCH records, as user access will be closed after that time and it will no longer be possible to view or retrieve any records. Employers should also stop using the SBSCH as soon as possible, test their new payment method, and confirm that their alternative provider is ready to be used for super payments from 1 July.

If you are still using the SBSCH and have not yet arranged an alternative, please contact our office as soon as possible so we can assist you with the transition before the deadline.

ATO Warns of Tax Time Misinformation and Focus Areas

The ATO is warning the community to be wary of incorrect or misleading information this Tax Time, particularly claims promising greater refunds, shortcuts or hacks. The ATO is seeing a rise in tax-related content and tips being shared online and is urging taxpayers to treat unverified advice with caution.

Australians should think carefully before acting on information from third-party sources such as artificial intelligence platforms, online finfluencers, or advice from family and friends. While the ATO acknowledges that AI can be a useful tool, it warns that it can also produce inaccurate advice, noting that your tax return isn’t the place for guesswork.

This Tax Time, the ATO will be paying particular attention to areas where taxpayers commonly make errors. These include work-related deductions and expenses — especially the need to properly apportion expenses between work and private use — and omitted income, including income from side-hustles, cash jobs and rental properties.

If you are unsure about what you can claim or what income you need to declare, please contact our office before lodging your return.

New ATO Guidance for Rental Property Owners

The ATO has released updated guidance to clarify how it assesses rental property income and expenses, reflecting changes in the way investors are renting out their properties. This is particularly relevant for clients whose rental property also functions as a holiday home.

Where a rental property that doubles as a holiday home is not used primarily to earn assessable income, taxpayers will not be able to claim deductions for ownership or use expenses. This includes interest expenses, council and water rates, body corporate fees, and capital works and depreciation. In these circumstances, only expenses directly related to earning income — such as advertising costs, cleaning costs after a guest stay, and booking fees and commissions — will be deductible.

The position is different where the holiday home is used mainly to produce income but there is a small portion of private use. For example, if the property was used privately for a week or a few weekends during the off-season when there was no booking or very little chance of one, taxpayers may still be entitled to claim deductions. However, all expenses must be apportioned, and no deduction can be claimed for the period of private use.

If you own a rental property that is also used as a holiday home, please contact our office to discuss how these rules apply to your situation.

On 2 June 2026, the Fair Work Commission (FWC) handed down its 2026 Annual Wage Review decision, lifting modern award minimum wages by 4.75%. If you employ staff covered by a modern award, this affects what you need to pay from the start of the new financial year — so it’s worth understanding now rather than scrambling in July.

The headline numbers

• A 4.75% increase applies to all modern award minimum wage rates.
• It takes effect from the first full pay period starting on or after 1 July 2026 — not necessarily 1 July itself. If your pay cycle starts mid-week, the new rates apply from the start of that pay period.
• The new wage floors are:
  • Ongoing employment: $1,004.90 per week, or $26.44 per hour. This also becomes the new National Minimum Wage — the first time it has sat above $1,000 per week.
  • Entry-level employment (first 6 months only): $978.10 per week, or $25.74 per hour.

The lowest classification is being phased out

As foreshadowed in last year’s review, the FWC is phasing out the C13 classification — the lowest wage rate that applies to ongoing employment in the award system. Removing it lifts the lowest ongoing rate to the figures above. A separate entry-level rate remains for employees in their first six months.

Who this affects

The increase reaches around one in five Australian employees — roughly 2.7 million people — who are paid at award minimums, along with their employers. These workers are concentrated in accommodation and food services, health care and social assistance, retail, and administrative and support services. The majority are women, most work part-time, and more than half are casuals. In short, if you have staff paid at or near award minimums, this almost certainly applies to your business.

Why the Commission landed on 4.75%

The FWC noted that 2025 brought solid economic growth, more jobs and hours worked, and healthy business profits, while wage growth stayed moderate. But inflation rose more than expected in the second half of the year — pushed along by global pressures including conflict in the Middle East — lifting living costs well above the Reserve Bank’s target band and widening the “real wage gap” for low-paid workers.

The Commission chose not to close that gap entirely, judging a larger increase unsustainable for business. Instead, it aimed to ensure award-reliant employees are not worse off in real terms than they were at 1 July 2025 — effectively holding their purchasing power steady rather than going backwards.

What you should do before 1 July

A short checklist to stay compliant and avoid underpayments:

• Confirm which awards and classifications cover your employees. If you’re unsure, this is the first thing to nail down.
• Update your payroll to the new rates from your first full pay period on or after 1 July 2026 — apply it from the correct pay period, not a blanket 1 July date.
• Review annualised or “all-inclusive” salaries. Make sure each still sits above the new award minimum once overtime, penalties and loadings are accounted for. Salaries that were comfortably above the line last year may not be this year.
• Check enterprise agreement rates. If any pay rates in an agreement are tied to the award or the National Minimum Wage, confirm whether they need to move too.
• Update contracts, budgets and cash-flow forecasts to reflect the higher wage cost.
• Don’t overlook on-costs. The increase also flows through to superannuation and anything else calculated on gross wages.

✅ EOFY Preparation Checklist – Small Business Clients

📋 Payroll & STP Finalisation

• Ensure all pay runs for the financial year (up to 30 June) are processed and lodged
• Reconcile total gross wages, PAYG withholding and superannuation in payroll software against general ledger
• Review and correct any pay run errors or amendments prior to finalisation
• Confirm terminated employees are marked as “ceased” in payroll and STP
• Confirm PAYG withholding amounts reconcile with amounts remitted to the ATO throughout the year

🏦 Superannuation

• Ensure all superannuation contributions for Q4 (April–June) are paid and cleared by 30 June to be tax deductible in the current financial year
• Reconcile superannuation payable in the general ledger against payments made to funds

📒 Bookkeeping & Reconciliations

• Reconcile accounts receivable (debtors) ledger — review and write off any bad debts before 30 June
• Reconcile accounts payable (creditors) ledger and confirm outstanding invoices

📦 Stocktake / Inventory

• Conduct a physical stocktake as at 30 June and document the count with either cost, market value or replacement values noted

Are You on the Right Xero Plan?

It’s easy to set up a Xero subscription and never look at it again. But your business changes over time, and your plan should keep up with it. We often see clients sitting a tier or two above what they actually need, paying for features and payroll slots that go unused. With Xero’s prices also set to rise from 1 July 2026, now is a sensible time to check that your plan still fits.

The good news is that working out the right plan usually comes down to just a few questions about how you run your business.

What actually decides your plan

Most of the cost difference between Xero’s plans comes down to four things:

• How many people you pay through payroll (count everyone, including casuals). This is the single biggest driver.
• How many invoices and bills you process each month. The entry-level plan has caps; the others don’t.
• Whether you invoice or pay in foreign currencies.
• Whether you need to track profitability project by project.

If none of these have changed since you signed up, there’s a fair chance you’re on the wrong plan.

The four plans at a glance

All prices are in AUD and include GST. Every plan includes bank feeds and reconciliation, GST tracking and BAS lodgement, Hubdoc for capturing bills and receipts, automated superannuation, and unlimited users (so adding us as your accountant costs nothing extra).

Ignite — $35

The entry-level plan covers the essentials: sending invoices and quotes, entering bills, bank reconciliation, BAS and a basic cash flow forecast. The catch is the caps — 20 invoices and 5 bills a month, and payroll for just one person. If you’re a sole trader without employees and your volumes are low, this is all you need. The moment you’re regularly bumping into those limits, or you take on a second person to pay, it’s time to move up.

Grow — $75

Grow removes the invoice and bill caps entirely and lifts payroll to two people. It also adds expense claims and performance dashboards. This is the right home for most small businesses with one or two staff. Worth noting: the jump from Ignite to Grow is a meaningful one in dollar terms, so it’s worth confirming you genuinely need unlimited invoicing or that second payroll slot before stepping up.

Comprehensive — $100

Comprehensive raises payroll to five people and adds two things Grow doesn’t have: multi-currency (essential if you buy or sell in foreign currencies — there’s no workaround on the lower plans) and a longer cash flow forecast with deeper analytics. If you have three to five people on payroll, or you deal in other currencies, this is your minimum.

Ultimate — from $130

Ultimate is built for larger or more complex operations. It covers payroll for 10 (with higher tiers for 20, 50 and 100), and adds Xero Projects for tracking profitability job by job, along with advanced KPI reporting and industry benchmarking. If you don’t track projects and don’t have a bigger payroll, you’re unlikely to need this.

A quick way to check

Run through these in order — the first one that applies points to your plan:

1. More than 5 people on payroll? → Comprehensive (up to 5) or Ultimate (up to 10).
2. Invoice or pay in foreign currency? → Comprehensive at minimum.
3. Need to track profit per project? → Ultimate.
4. Two people on payroll, or sending more than 20 invoices a month? → Grow.
5. None of the above, and you’re a one-person operation? → Ignite.

Worth a few minutes

It only takes a moment to open your Xero subscription and see which plan you’re on. If it’s higher than the questions above suggest you need, you may be able to downgrade and save — keeping in mind you can move to a less expensive plan one month after your last upgrade.

If you’d like us to review your plan for you, just get in touch.

Xero Raises Australian Subscription Prices from 1 July 2026

Xero has announced price increases across all its Australian subscription plans, citing ongoing investment in new product capabilities. The changes apply to both new and existing subscribers from 1 July 2026, with increases ranging from $2 to $28 per month depending on your plan.

All prices are in AUD and include applicable taxes. The increases are proportionally larger at the higher tiers — Ignite subscribers face a modest 5.7% rise, while Ultimate 50 and 100 subscribers are looking at around an 11–12% increase.

Existing discounts and promo codes will continue to be honoured at the new price until they expire. However, the multi-organisation discount will be removed from 1 July 2026, which is particularly relevant for accounting practices or business owners managing multiple Xero subscriptions who have been benefiting from that discount. Optional add-ons are unaffected by the changes.

The new pricing will appear on invoices from 1 July 2026. To check which plan you’re on, log in and look under the Subscription column in your account settings.