admin.dlkadvisory, Author at DLK Advisory

Travel expenses: What you can and cannot claim on your income tax return

Admin 31st March, 2026

Understanding which travel expenses are deductible can save you money and prevent disputes with the ATO. Recent court decisions and ATO guidance have clarified the boundaries, making it crucial to know where you stand.

What travel expenses are generally deductible?
Travel expenses incurred in the course of your work or business operations are deductible under general principles. These may include: motor vehicle expenses, including parking fees and tolls; car rental costs; air, bus, train, ferry and taxi fares; accommodation and meal expenses when work duties require travel; and travel between different work locations that are not your home. The key requirement is that the travel must be undertaken while gaining assessable income and not be private or domestic in nature.

Travel between work locations
You can claim expenses for travelling between work locations, provided neither location is your home. This includes travel between: different workplaces of the same employer; client premises; and other locations where you perform employment duties. However, you cannot claim deductions where you make a private decision to work from another location merely because it’s convenient.

What you cannot claim
Several categories of travel expenses are specifically non-deductible:

Home to work travel
The fundamental rule is that expenses for travelling between home and work are not deductible. Recent court decisions have significantly impacted fly-in fly-out workers. If your employment contract specifies the remote airport as your point of hire, you cannot deduct travel costs from your home airport to the remote workplace airport. The expenses are considered getting to work, not working.

Job-seeking travel
Travel expenses incurred while looking for a job are not deductible, nor are travel expenses for acquiring tools and equipment.

Residential rental property travel
You cannot claim travel expenses related to residential rental properties, including travel to collect rent, inspect properties, or conduct maintenance. This restriction applies unless you’re carrying on a business or are an excluded entity such as a company.

Overseas travel complications
The ATO scrutinises overseas travel expenses carefully, particularly if you’re accompanied by a spouse. Generally, visa costs, passport expenses, and travel insurance are not deductible.

Accompanying relatives
If a relative accompanies you on business travel, their expenses are not deductible unless they’re an employee undertaking separate work or work incidental to yours.

Limited exceptions to the home-work rule
Some exceptions allow deductions for home-work travel: transporting bulky equipment that cannot be securely stored at work; itinerant workers who travel to various locations as part of their employment; and professionals with a recognised base at home, such as some musicians and footballers. A recent case involving a radio presenter working from home during COVID-19 restrictions allowed deductions for travel to studios, though the ATO has appealed this decision.

Substantiation requirements
Remember that claiming deductible travel expenses requires proper record-keeping. For travel involving overnight stays, you’ll need written evidence and potentially travel diaries for trips of six or more consecutive nights.

Get professional advice
Travel expense deductibility involves complex interactions between employment law, tax law, and your specific circumstances. Recent court decisions show how contractual arrangements can significantly impact your tax position. If you regularly incur travel expenses for work, it’s worth reviewing your situation with a tax professional to ensure you’re maximising legitimate deductions while avoiding potential disputes with the ATO.

A reminder for employers as the FBT year draws to a close

Admin 24th March, 2026

Fringe benefits tax (FBT) operates on its own reporting cycle. Instead of following the standard income tax year, the FBT year runs from 1 April to 31 March. With 31 March 2026 approaching, employers may want to review any benefits you’ve provided to your staff during the current FBT period.

Understanding fringe benefits tax
FBT is a tax that applies to certain benefits employers provide to their employees or their employees’ associates. Unlike income tax, which is paid by your individual employees on their earnings, FBT is paid by you as the employer on the value of specific non-cash benefits. These benefits are often described as employee perks. They can include things such as access to a company vehicle, subsidised gym memberships, parking, entertainment expenses, accommodation costs, or the payment of school fees. However, regular salary or wages, approved employee share scheme benefits, and employer superannuation contributions aren’t considered fringe benefits.

Guidance from the ATO explains which items fall within the FBT rules and which may qualify for exemptions. In some situations, a benefit that might normally attract FBT may be excluded.

Calculating the taxable value of benefits
After identifying which benefits are subject to FBT, the employer must determine each benefit’s taxable value. To do this, the value of the benefit is generally “grossed up”. This step adjusts the value of the benefit to reflect the equivalent salary an employee would need to earn to purchase the item using after-tax income.

Two gross-up rates apply: 2.0802 when the employer can claim a goods and services tax (GST) credit for the benefit; and 1.8868 when no GST credit is available. Where a GST credit is available, the taxable value of the benefit is multiplied by 2.0802, and the FBT rate of 47% is then applied. The employer then lodges an FBT return and pay any tax owing for the year.

Possible tax deductions
While FBT can add an extra compliance step for businesses, there can also be some tax advantages. In many cases, employers who pay FBT can claim an income tax deduction for the amount of FBT paid in the financial year in which the liability arises. Your business may also be able to claim a GST credit and a deduction for the cost of providing the fringe benefit, depending on the circumstances.

Getting ready to lodge
Because the FBT year ends on 31 March, now is an appropriate time to check your business’s records and review any employee benefits provided during the year. Employers who prepare and lodge their own FBT return generally need to do so by 21 May. The deadline may extend to 25 June where the employer is registered as an FBT client with a registered tax agent by 21 May and the agent lodges the return on their behalf.

It’s logbook check-in time

Admin 17th March, 2026

Many taxpayers assume that once they’ve completed a logbook for their car, they’re set for the next five years. However, this common misconception could mean you’re claiming more, or less, than you’re actually entitled to when it comes to work-related car expenses.

When do you need a new logbook?
While logbooks can remain valid for five years, certain life changes require you to start fresh with a new one. Relying on an outdated logbook that no longer reflects your actual work-related travel patterns may result in incorrect claims. You’ll need to create a new logbook if you: change jobs; move to a new house or workplace; or experience changes to your pattern of car use for work purposes, such as taking on a different role or routine that affects your work-related trips.

Using the logbook method for multiple cars
If you’re claiming work-related car expenses for two or more vehicles, you must keep a separate logbook for each car. It’s important to ensure these logbooks cover the same period to maintain consistency in your record-keeping.

Purchasing a new car
If you purchase a new car during the income year and want to continue relying on your previous car’s logbook, you must make a written nomination before lodging your tax return. This nomination needs to state that you’re replacing your original car with a new car and specify the date the nomination takes effect.

Company cars and novated leases
Remember, if your employer provides you with a car or you salary sacrifice a car using a novated lease, you can’t claim work-related car expenses using the logbook or cents per kilometre methods. This is because you don’t own the car.

What records do you need to keep?
When claiming car expenses using the logbook method, you’ll need to maintain several types of records, including:

Odometer records for the start and end of the period you own the car during the income year you rely on your logbook.
Proof of purchase price, or a new lease agreement and lease payment records.
Decline in value calculations.
Fuel and oil receipts, or records of a reasonable estimate of these expenses based on odometer readings.
Receipts from commercial charging stations or evidence showing you incurred additional electricity costs to charge your electric or plug-in hybrid car at home, such as an electricity bill and the calculation of the direct cost to recharge.
Evidence of payment for registration and insurance.
Evidence of payment for servicing, repairs and tyres.

Special considerations for electric and plug-in hybrid vehicles
If you use the home charging rate of 4.2 cents per kilometre for a reasonable estimate of home charging based on odometer readings, you cannot claim any commercial charging costs. For plug-in hybrid vehicles, a specific formula must be used to calculate home charging expenses.

Need assistance?
Keeping accurate logbooks and records is essential for claiming the correct amount of work-related car expenses. If you’ve experienced any changes to your work situation, living arrangements or car usage patterns, now is the time to review whether your current logbook still accurately reflects your circumstances. For more information, visit the ATO’s cars, transport and travel webpage at www.ato.gov.au, or contact our office to discuss your specific situation and ensure you’re claiming correctly.

Payday Super – what business owners and employees need to know

Admin 10th March, 2026

From 1 July 2026, one of the most significant superannuation compliance reforms in decades will take effect. Known as “Payday Super”, the change will require employers to pay Super Guarantee (SG) contributions at the same time as wages, rather than quarterly. The reform is designed to reduce unpaid super, improve retirement outcomes and strengthen regulatory oversight through real time reporting to the Australian Taxation Office (ATO).

What is changing?
Under the current system, employers must pay SG contributions at least four times per year. From 1 July 2026, employers will be required to pay super within seven business days of paying employees their wages. This effectively aligns super payments with each payroll cycle. While the SG rate remains at 12 percent, the timing of contributions will change significantly. The Government’s objective is to reduce the estimated billions of dollars in unpaid super each year by improving transparency and earlier detection of non-compliance.

What business owners need to know

Cash flow management will need adjusting – Many businesses currently benefit from holding super payments until quarterly due dates. Payday Super removes that flexibility. Employers will need to ensure funds are available at each pay cycle, which may require more detailed cash flow forecasting and tighter budgeting controls.
Payroll systems must be compliant – Businesses will need payroll software capable of processing and reporting super contributions in real time through Single Touch Payroll. Employers should consult their payroll providers early to confirm system readiness and implementation timelines.
Increased compliance visibility – Because contributions will be reported more frequently, late or missed payments will be easier for the ATO to detect. Penalties under the Superannuation Guarantee Charge regime will continue to apply where obligations are not met.
Clearing house arrangements may change – Some small businesses currently use clearing house services to distribute contributions to multiple funds. Employers should confirm whether their existing arrangements remain appropriate under the new framework.

What employees need to know

More frequent super contributions – Instead of waiting until the end of each quarter, employees should see super contributions deposited shortly after each pay period. This allows for greater visibility and earlier identification of missing payments.
Potential long-term benefit from earlier investment – Receiving contributions sooner means funds are invested earlier, which may enhance long term compounding returns.
Greater transparency – The reform is intended to make super entitlements more secure. Employees should continue to monitor their super accounts regularly to ensure contributions are being received correctly.

Why this reform matters
Unpaid super has been a persistent issue in Australia’s retirement system. By aligning super payments with wage payments, Payday Super aims to strengthen compliance, improve retirement savings outcomes and create a fairer system for workers. While the change increases administrative responsibility for employers, it also provides greater certainty and protection for employees. With the commencement date approaching, both businesses and workers should begin preparing now to ensure a smooth transition to the new requirements.

Investment property owners: 5 tax return errors that trigger ATO follow up

Admin 3rd March, 2026

Owning an investment property can be tax effective, but it’s also one of the ATO’s most closely monitored areas at tax time. Each year, the ATO uses third party data and targeted reviews to identify common mistakes made by landlords. Here are five errors that most often trigger ATO follow up and how to avoid them.

1. Over claiming repairs that should be capital works
Confusing immediate repairs with improvements. Incorrectly claiming kitchen, bathroom or structural upgrades. Repairs and maintenance can be claimed for work that remedies, or prevents, defects, damage or deterioration arising from using the property to earn income. These expenses are generally deductible in the year they are incurred. By contrast, capital works are structural improvements, alterations or extensions that go beyond merely fixing wear and tear. If the work improves the function or value of the property, it is likely to be capital in nature. Capital works are usually claimed at 2.5% over 40 years (subject to specific exceptions).

2. Incorrect interest deductions
Not apportioning interest where loans are partly private. Claiming 100% interest after personal redraws. If a loan is used for both private purposes and rental property expenses, the interest must be apportioned. You can only claim the portion that relates to the rental property. This applies whether the mixed use arises when the loan is first taken out or later through refinancing or redraws. Interest must continue to be apportioned over the life of the loan, and interest on amounts used for private purposes is never deductible.

3. Claiming deductions during private use periods
Holiday homes or mixed-use properties. Property not genuinely available for rent. You can’t claim deductions for interest or other expenses for periods when the property is used privately, even if the private use is brief. To claim deductions, the property must be rented or genuinely available for rent. A property may not be genuinely available if it is advertised only through limited channels, offered only during periods of very low demand, or subject to unreasonable conditions such as above market rent or overly restrictive tenant requirements. Repeatedly refusing suitable tenants without valid reasons can also indicate the property is being held for personal use rather than income producing purposes.

4. Poor record keeping and lack of substantiation
Missing invoices or relying on estimates. No evidence supporting apportionment calculations. You must keep records of your rental income and expenses for at least five years from the date you lodge your tax return. If a dispute with the ATO arises during that period, you must retain relevant records until the dispute is resolved.

5. Not reporting all rental related income
Insurance payouts, letting fees or short-term rental income. Data matching with banks and property platforms. Rental related income includes more than just rent. It can also include bond money retained for unpaid rent or damage, letting or booking fees from cancelled reservations, and insurance payouts, whether for property damage or loss of rent. Disaster relief payments received in relation to a rental property may also be assessable. The ATO now cross checks data from banks, state land registries, insurers, rental bond authorities and digital platforms, making errors easier to detect than ever.

If you own an investment property, getting your tax return right is critical. Before lodging, speak with your accountant to review your rental income, deductions and records. Small mistakes can lead to unexpected ATO scrutiny.

The ATO’s focusing on small businesses in 2026: are you ready?

Admin 24th February, 2026

The ATO is encouraging small businesses to start 2026 strong by taking proactive steps to avoid compliance issues that could lead to penalties or enforcement action. Don’t forget we’re here to help you get your tax processes running smoothly.

Why this matters now
Small business tax debts have grown to over $50 billion nationally, and the ATO is accelerating efforts to collect unpaid taxes. It warns that many businesses run into avoidable problems simply because they haven’t maintained proper records, reported all income or managed cash flow effectively. Part of the estimated $27.2 billion small business income tax gap stems from these preventable mistakes, making it crucial for business owners to understand the ATO’s focus areas and take corrective action early.

Key areas of concern
The ATO has identified several critical compliance risks that small businesses should address: late lodgments and unpaid tax debts, which can trigger firmer recovery actions; poor cash flow management, particularly failing to set aside funds for GST and PAYG withholding obligations; inadequate record keeping, especially businesses still using the “shoebox of receipts” strategy; unreported income, particularly from cash transactions; and superannuation guarantee obligations, which should especially be top-of-mind with payday super changes coming in July 2026.

Simple steps to stay compliant
The good news is that most compliance issues are preventable with some basic habits. For example:

Set up separate accounts: Keep dedicated bank accounts for GST collections and PAYG withholding. Don’t be tempted to use these funds to boost cash flow, as this creates bigger problems when obligations fall due.
Lodge and pay on time: Mark your calendar for all lodgement deadlines and payment due dates. If you can’t meet a deadline, contact us or the ATO early to discuss options rather than ignoring the problem.
Keep accurate records: Move away from paper-based systems and embrace digital record keeping. The ATO app offers useful features like myDeductions and business performance check tools for sole traders.
Report all income: Ensure you declare all business earnings, including cash payments. The ATO receives data from multiple sources and conducts audits to identify unreported income.
Prepare for payday super: From 1 July 2026, employers must pay superannuation guarantee contributions each payday rather than quarterly. Review your payroll systems now to ensure you’re ready for more frequent payments.

Getting professional help
The ATO strongly recommends engaging a registered tax practitioner who understands your business. That’s where we come in! Above all, avoid relying on informal advice from friends or social media for tax guidance. Professional support can help you navigate complex areas and prevent costly mistakes.

ATO support available
The ATO also provides resources to help small businesses stay compliant, including a record keeping evaluation tool, a cash flow kit with templates and planning tools, online services for checking lodgment status and managing debts, a payday super checklist, and multilingual support through the Translating and Interpreting Service.

Take action now
Don’t wait for problems to escalate. The ATO emphasises that engaging early is always better than dealing with consequences later. Implementing these simple steps and seeking professional advice now means you can focus on growing your business in 2026 rather than worrying about compliance issues. Contact our office to discuss how we can support your business and help ensure you’re meeting all your tax obligations properly.

Main residence exemption for inherited properties – the “right to occupy” rules

Admin 17th February, 2026

Have you inherited a property from a deceased estate and wondered whether you’ll be eligible for the main residence capital gains tax (CGT) exemption when you eventually sell it? A new draft tax determination from the ATO clarifies what it means to have a “right to occupy” a dwelling under a deceased person’s will and explains when beneficiaries and trustees of deceased estates can access the CGT main residence exemption. Draft Taxation Determination TD 2026/D1 is open for public comment during February 2026, so there may be changes before it’s finalised, but it aims to provide certainty for taxpayers, executors and those preparing wills.

The main residence exemption for inherited properties
Generally, if you inherit a property from a deceased estate, you may be able to disregard a capital gain or capital loss when you sell it, if certain conditions are met. One of the potential conditions (among other alternatives) is that from the date of the deceased’s death until you dispose of your ownership interest in an inherited property, the dwelling must have been the main residence of an individual who had a “right to occupy it under the deceased’s will”. This rule is particularly important if the dwelling isn’t sold within two years of the deceased person’s death and it’s not the main residence of a surviving spouse or the beneficiary of the dwelling.

What does “right to occupy under the deceased’s will” actually mean?
The ATO’s position is that the right to occupy must be expressly granted in the terms of the will itself to a specifically named individual. The following situations won’t satisfy the requirement: where the right to occupy arises from a separate agreement between beneficiaries and the executor or trustee, such as a deed of arrangement; where the executor or trustee has broad discretion under the will to grant a right to occupy to any individual, and exercises that discretion in favour of someone; where the right to occupy is granted under a testamentary trust deed, even if that deed is annexed to the will; where an individual continues to occupy the property after a specified period granted in the will has expired.

What about court orders?
There is one important exception: if a family provision order is made by a court granting a right to occupy, this will be treated as if the right was granted under the deceased person’s will.

Time-limited rights to occupy
If the will grants a right to occupy for only a limited period and the individual continues to occupy the property beyond that time, the full CGT main residence exemption will not be available. However, a partial exemption may apply.

Why does this matter?
The key takeaway is that if you want a beneficiary to be able to access the main residence exemption when they eventually sell an inherited property, the will must specifically name the person who resides in the dwelling after the deceased person’s death and grant them an express right to occupy. Informal arrangements or discretionary powers won’t be sufficient. Practically, this means executors should review the will early, document who lives in the home and why, and keep clear records of dates of occupancy and any periods when the property is rented. Those facts often determine whether the exemption is full, partial or unavailable, and can save disputes later significantly.

What should you do?
If you’re involved in administering a deceased estate, are a beneficiary of one, or are currently reviewing your own estate planning arrangements, it’s an excellent time to speak with your tax adviser about how these rules may apply to your specific circumstances.

Time is running out for small business superannuation clearing house users

Admin 10th February, 2026

If you’re one of the thousands of small businesses using the Small Business Superannuation Clearing House (SBSCH), you need to act now. The service will permanently close on 1 July 2026, giving you just five months to transition to an alternative payment method.

What’s happening?
The SBSCH closure is part of the government’s payday super reforms, which aim to modernise how employers pay superannuation. This service has been a lifeline for small businesses, allowing them to make a single payment that gets distributed to all their employees’ super funds. From 1 July 2026, the SBSCH will no longer process payments or allow access to historical records. If you’re currently using the service, you can continue until 11:59 pm AEST on 30 June 2026.

Who can still use the SBSCH?
Until its closure, the SBSCH will only be available to existing registered users with either: 19 or fewer employees; or an annual aggregated turnover of less than $10 million. The service is no longer accepting new registrations, so if you’re not already signed up, you’ll need to find an alternative payment method immediately.

What you need to do now
The ATO recommends making the January to March 2026 quarter your last quarter using the SBSCH. This gives you a buffer to establish your new payment process before the service closes permanently. Your immediate priorities should be: Choose your alternative payment method. Check if your existing payroll software already includes super payment functions. Many modern payroll systems offer integrated superannuation payments that meet SuperStream requirements. Alternatively, you can use commercial clearing houses or online payment services offered by some large super funds.

Download your records before 1 July 2026. This is crucial, because once the service closes, your transaction history and employee details will be permanently inaccessible. You’ll need these records for future audits and employee queries. To download your payment history, navigate to the Payment Instruction tab, select the Historical tab, choose your date range and save the print-friendly version. For employee details, go to the Employees tab, filter your results and print to PDF. Switch early to avoid problems. By transitioning before the deadline, you’ll have an established process in place and reduce the risk of late payments for the April to June 2026 quarter.

Finding alternatives
The ATO’s SuperStream Product register lists certified payroll software and service providers that can handle your super payments. Many of these solutions offer additional features like automated calculations, compliance reporting and integration with your existing accounting systems. Large super funds often provide online payment portals, and commercial clearing houses offer similar services to the SBSCH but with enhanced features and ongoing support.

Don’t wait until the last minute
With the last quarterly super payments due on 28 January and 28 April, you need to have your new system operational well before the SBSCH closes, and before payday super starts. The transition period also allows you to test your new process and resolve any issues before they become urgent.

Get professional help
Choosing the right super payment solution depends on your business size, payroll complexity and existing systems. The transition also presents an opportunity to review your entire payroll and super compliance processes. Contact our office to discuss the best alternatives for your business and ensure a smooth transition that keeps you compliant with your super guarantee obligations.

High income earners – you could be paying an extra 15% tax on your super contributions

Admin 3rd February, 2026

If you earn close to or over $250,000, or receive a large lump sum payment during the year, there’s an additional tax lurking in the background that could unexpectedly impact your superannuation strategy.

What is Division 293 tax?
Division 293 tax is an additional 15% tax that applies to certain superannuation contributions when your income exceeds the high income threshold of $250,000. This tax targets what are called “low tax contributions” – essentially your concessional contributions within your annual limit, such as employer contributions and personal after-tax contributions for which you’ve claimed a tax deduction. When this tax applies, the total tax on these contributions jumps to 30% – comprising the standard 15% contributions tax paid by your super fund, plus the additional 15% Division 293 tax that you pay personally.

How is it calculated?
The Division 293 tax applies to the lesser of: your low tax contributions for the year; and the amount of your income that exceeds $250,000. If your regular income sits below $250,000 but adding your low tax contributions pushes you over the threshold, the extra tax only applies to the portion of contributions that exceed the threshold.

A practical example
Consider Sarah, whose taxable income is $230,000 for 2025–2026. Her low tax contributions total $30,000, bringing her Division 293 income to $260,000. Since this exceeds the $250,000 threshold by $10,000, Sarah’s taxable contributions under Division 293 are $10,000 (the lesser amount). Her additional Division 293 tax bill is $1,500 (15% of $10,000).

What counts as income for Division 293 tax purposes?
The income calculation is broader than your regular taxable income. It includes: taxable income (excluding any First Home Super Saver released amounts); amounts subject to family trust distribution tax; reportable fringe benefits total; total net investment losses (including negative gearing losses and net rental property losses); and your low tax contributions. This comprehensive definition means that common tax reduction strategies like negative gearing and salary sacrificing to super generally won’t help you avoid Division 293 tax. Even though these strategies reduce taxable income, these components are be added back into Division 293 income as net investment losses and low tax contributions.

A few traps to look out for
If you receive a lump sum payment in the year, these payments are included in your taxable income in the year of payment, regardless of which year they actually relate to. This means the taxable amount of a redundancy payment, or payments of unused annual leave or unused long service leave, could unexpectedly push you over the $250,000 threshold in the year you receive them. Sometimes the ATO may disregard or reallocate certain super contributions due to ‘‘special circumstances’’. While this may help you avoid excess concessional contributions tax, the contributions will still count towards the $250,000 threshold in the year they are actually received (although any excess concessional contributions are excluded). The maximum Division 293 tax isn’t necessarily capped at $4,500 (15% of the standard $30,000 concessional contributions cap). If you have unused concessional contribution capacity from previous years under the carry-forward rules, larger contributions could attract proportionally higher Division 293 tax.

Take action
If you’re approaching or exceeding the $250,000 income threshold, it’s crucial to factor Division 293 tax into your superannuation strategy. The timing of contributions, salary sacrifice arrangements and other income decisions all play a role in managing this additional tax burden. Contact our office to discuss how Division 293 tax might affect your situation and explore strategies to optimise your superannuation contributions.

Student loan debts: what you need to know about the latest changes

Admin 28th January, 2026

If you’re among the more than three million Australians with a student loan, there’s welcome news that could significantly lighten your financial load. A major debt reduction has been rolled out, alongside changes to how and when you repay your loan. Understanding these changes could put thousands of dollars back in your pocket and reduce your annual repayments.

The 20% debt reduction explained
The Australian Government’s legislation to reduce student loan debt by 20% is now being applied, with the ATO having commenced processing the reductions. The 20% reduction is applied to your student debt balance as at 1 June 2025, before indexation was applied, with the 2025 indexation recalculated on the reduced debt amount. This means if you had a debt of $27,600 on that date, approximately $5,520 will be wiped from your balance. The reduction applies to all types of student loans, including: HELP loans (including HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP and OS-HELP); VET Student Loans; Australian Apprenticeship Support Loans; Student Startup Loans; and other student support loans.

What you need to do
The good news is that you don’t need to take any action. Most people were due to receive their reduction before the end of 2025; however, more complex reductions may not be processed by the ATO until early 2026. The ATO will notify individuals when it has applied the 20% reduction to your loan account, with the notification sent via SMS, email or your myGov inbox. You should continue to lodge your tax returns as usual. There’s no benefit in delaying lodgment, as the reduction is based on your debt balance as at 1 June 2025.

Understanding potential refunds
If your loan account is in credit after the reduction is applied, you may receive a refund. If you have outstanding tax or other Commonwealth debts, the ATO will apply your credit to these debts first. Your refund will then be sent to your nominated bank account, so make sure your bank details are up to date to avoid any delays.

Changes to repayment thresholds
From 1 July 2025, significant changes have been made to how student loan repayments work. The minimum repayment income needed to make a compulsory repayment has increased to $67,000 for the 2025–2026 income year (from $54,435 in 2024–2025). Compulsory repayments have moved to a marginal repayment system, meaning they’re only calculated on the part of your income above $67,000 (instead of your total repayment income). This is a significant change that will reduce annual repayments for most people. For example, someone earning $70,000 will save approximately $1,300 per year in repayments. If your repayment income is $179,286 or more, your compulsory repayment will continue to be 10% of your total repayment income, meaning you won’t be worse off because of the shift to marginal rates.

Tax implications
These changes have important tax implications. If you’re an employee, you may have less tax withheld from your pay towards a compulsory repayment. Any additional amounts already withheld may be refunded to you when you lodge your 2026 tax return, provided you have no outstanding tax or other Commonwealth debts. If you pay tax in instalments, these changes won’t be applied until 1 July 2026. You’ll receive any extra tax you paid in the 2025–2026 income year as a refund in your 2026 tax assessment, if you have no outstanding debts. For more information about how these changes affect your specific situation, speak with your professional tax adviser to understand the full impact on your financial position.