Uncategorized Archives - DLK Advisory

Do you need to declare foreign income in your tax return?

Admin 22nd July, 2026

Have you retired to Australia with a pension from overseas, worked overseas for part of the year, or received income from investments held in another country? If so, it’s worth checking how that income needs to be reported in your Australian tax return.

As a starting point, if you’re an Australian resident for tax purposes, you generally need to declare income you receive from anywhere in the world. This is often referred to as declaring your worldwide income.

Foreign pensions and annuities
Most foreign pensions and annuities are taxable in Australia, even if tax has already been withheld overseas. However, the tax treatment can vary depending on the type of pension and whether Australia has a tax treaty with the other country. In some cases, you may be entitled to reduce the taxable amount.

For example, some foreign pensions have an undeducted purchase price (UPP). Broadly, this reflects personal contributions you’ve made towards the pension or annuity, with part of the pension treated as a return of those contributions.

There are specific rules for some overseas pensions. For example, if you receive a UK State Pension, you may be entitled to a UPP deduction. For a category A pension or category B widow’s pension, the ATO says the deduction can be calculated as 8% of the UK State Pension amount, converted to Australian dollars.

You may also be able to claim a foreign income tax offset if foreign tax has been paid on income that’s also taxable in Australia. This helps reduce the risk of being taxed twice on the same income.

Foreign income, deductions and foreign tax paid must generally be converted into Australian dollars.

Foreign employment income
If you’ve worked overseas, your employment income will often still need to be reported in Australia. Foreign income can also include payments from overseas platforms, such as income received by content creators or freelancers, although the way it’s reported depends on what the payment is for.

Some foreign employment income may be exempt from Australian tax, but only in limited circumstances. These rules are specific and can depend on the type of work, the length of overseas service, the employer and the country involved.

Why this is worth checking
Foreign income mistakes can be costly. If a tax return contains a false or misleading statement that results in a tax shortfall, penalties may apply. The base penalty can be 25%, 50% or 75% of the shortfall amount, depending on whether the issue involved a failure to take reasonable care, recklessness or intentional disregard of the law. Interest charges may also apply.

If you realise something’s been left out or reported incorrectly, it’s usually better to deal with it early. Voluntary disclosure may reduce any penalty.

Where to from here?
Foreign income can involve residency, tax treaties, offsets, exemptions, pension rules and currency conversion. If you receive money from overseas, we can help you get your tax return right by working out what needs to be declared and how the rules apply to your circumstances.

Small business tax time made simpler

Admin 15th July, 2026

Tax time has a habit of sneaking up when you’re focused on running your business, but doing a little groundwork can save stress, reduce the risk of errors and help you check whether any concessions are available. With tax time for the 2025–2026 income year now here, it’s a good time to check your records, review your deductions and speak with your adviser about any changes that may affect your business.

Get your online access sorted

Before you lodge, make sure your digital access and adviser authorisations are in order. This may include checking that your business can access online tax and super services, confirming that the right people are authorised to act for the business, and ensuring your tax professional can access the information they need. Sorting this out early can help avoid delays when lodgment deadlines approach.

Report all income and separate the personal stuff

One of the simplest ways to avoid problems at tax time is to make sure all business income is captured, including cash payments and non-monetary benefits such as goods or services received for your work. Keeping business and personal spending separate will also make life easier. If you’ve used business money for personal expenses, keep good records separating business and personal spending to help prevent issues later.

Practical tests for deductions

When considering tax deductions, keep these three tests in mind: the expense must relate to your business, not private use; if the expense mixes business and private use, only the business portion is claimable; and you need records or receipts to substantiate your claim. There’s also an important change for interest charges. General interest charge and shortfall interest charge incurred on or after 1 July 2025 are no longer deductible. Amounts incurred before 1 July 2025 may still be deductible for the 2024–2025 and earlier income years, depending on the circumstances.

Concessions worth checking

Don’t overlook the concessions available to eligible small businesses, including simplified depreciation rules, immediate deductions for prepaid expenses, and the instant asset write-off. For example, businesses with aggregated annual turnover of less than $10 million that use the simplified depreciation rules may be able to immediately deduct the business-use portion of eligible assets costing less than $20,000, provided the assets are first used or installed ready for use between 1 July 2025 and 30 June 2026.

Payday super’s here

Payday super started on 1 July 2026. Employers now need to pay super guarantee for each payday, with contributions generally required to be received by employees’ super funds within seven business days after payday. Super guarantee is now calculated using the new concept of qualifying earnings, so check your payroll, STP reporting and super payment processes are up to date.

Looking ahead

The ATO also has practical small business tax time resources, including its 2026 Tax Time toolkit for small business, with guidance on common issues such as deductions, record keeping, business and private expenses, and changes for the new income year. Reviewing these can help you identify questions and opportunities to discuss with your tax professional before lodging. Every business is different, and the right approach depends on your circumstances. Please contact our office to discuss how these tax time obligations, concessions and new changes apply to your business. We can help identify issues early, confirm your eligibility for concessions and ensure your return reflects your situation correctly.

Why your super insurance might not cover what you expect

Admin 1st July, 2026

If you have a superannuation account, there’s a reasonable chance you also hold life insurance through it – possibly without realising. Almost 10 million superannuation accounts have insurance attached to them, yet many members can’t say what they’re covered for, how much it costs or whether it actually suits their needs. Before assuming your default cover has you sorted, it’s worth unpacking some common misconceptions.

Misconception 1: “Everyone gets cover automatically”
Insurance through super doesn’t start automatically if you’re a new member aged under 25 or your balance is under $6,000, unless you contact your fund and ask for it, or you work in a dangerous job where your fund gives you automatic cover. If you’re younger or just starting out, you may have no safety net at all unless you opt in.

Misconception 2: “Default cover will be enough”
Default cover is a starting point, not a tailored solution. In particular: default cover may be lower than, or different from, cover available outside super; eligibility rules and exclusions can apply; and cover can stop if your account becomes inactive, your balance is too low, you change funds (unless arrangements are made to transfer or replace it) or you reach an age limit. When reviewing your insurance, check whether there are exclusions or whether you’re paying a loading – this is a percentage increase on the standard premium charged to higher-risk people such as those with a high-risk job, a pre-existing medical condition, or those classified as smokers. If your fund has classified you incorrectly, you may be paying more than necessary.

Misconception 3: “My cover follows me when I switch funds”
Often, cover won’t follow you. If you switch superannuation funds, your insurance policy may not be portable, meaning the cover you had can lapse once you’re no longer a member. Some funds allow you to transfer your policy to personal ownership, but this may require health checks and the insurer could charge more to continue the cover. Consolidating accounts can also unintentionally cancel valuable cover, so always check before you act.

Misconception 4: “If I stop contributing, nothing changes”
Cover can change if your account isn’t active. By law, super funds cancel insurance on accounts with no contributions for at least 16 months. Some funds have their own rules and cancel insurance if your balance is too low. Your fund will typically attempt to notify you before changes happen, so it’s important to keep your contact details updated.

Misconception 5: “More accounts means more protection”
Holding multiple super accounts may simply mean multiple premiums quietly draining your retirement savings. If you have more than one super account, you may be paying premiums on more than one insurance policy, which reduces your retirement savings. Claim outcomes can vary between policies, and benefits aren’t always cumulative. Consider whether you need more than one policy, or whether you can get cover through one fund.

Misconception 6: “It’s always the cheapest option”
Premiums may be lower because super funds buy cover in bulk, but that doesn’t always translate to the best value. Cover may not be enough, or may change over time, and it also may not be cheaper than insurance you can buy elsewhere.

Where to from here?
Superannuation and insurance can be complex. Before you assume your default cover’s doing the job, speak with your professional adviser to review your policy, premiums and any gaps, so you know exactly what you’re paying for and whether it still fits your circumstances.

Tax hacks, half-truths and what the ATO’s watching

Admin 23rd June, 2026

Scrolling social media for a quick tax win? You’re not alone, but you may be heading for trouble. With the end of the financial year approaching, the ATO has issued a clear warning: incorrect claims are firmly on its radar this tax time, and it has outlined the key areas it’ll be watching when returns start landing.

The misinformation problem

The ATO is urging the community to be wary of incorrect or misleading information, particularly claims promising bigger refunds, shortcuts or hacks. A lot of the bad advice doing the rounds is coming from third-party sources: AI tools, social media “finfluencers”, and even well-meaning family and friends, who may unintentionally pass on information that simply doesn’t apply to your circumstances.

ATO Assistant Commissioner Anita Challen has cautioned taxpayers to be especially careful with information drawn from AI platforms, noting, “AI can be helpful, but it often draws from a broad and inconsistent range of sources, which can lead to inaccurate advice”.

The key is, you remain responsible for what’s on your return. Taxpayers are accountable for ensuring the information they or their agents give the ATO is accurate, regardless of whether it came from a mate, a website or a chatbot. Penalties and interest can apply where claims can’t be substantiated.

Focus area 1: work-related expenses

Overclaimed work-related deductions are once again under the microscope. As Ms Challen put it, “don’t fall into the trap of thinking if you intentionally claim a little more than you are entitled to, it’ll fly under the radar and that the ATO won’t notice”.

Every work-related claim must meet three tests: the expense must directly relate to earning your income; you must have paid for it yourself and not been reimbursed; and you must have a record, such as a receipt, invoice or logbook, to back it up.

If you work from home, the fixed rate method lets you claim 70 cents for every hour worked from home, which already covers running costs such as internet, phone usage, electricity and stationery. A common mistake is “double-dipping” – using the fixed rate and then separately claiming items it already includes.

Keeping a clear record of your hours worked from home throughout the year will make this far easier to substantiate. Ms Challen has indicated that taxpayers who think they’ve overclaimed in previous years should lodge an amendment, or speak to their tax professional about amending prior year claims before the ATO comes knocking.

Focus area 2: omitted income

The ATO is also reminding taxpayers to declare all sources of income on their return, including side-hustles, cash jobs, interest and rental income. With extensive data matching now in place across banks, sharing economy platforms and property managers, undeclared income is far more visible to the ATO than many people realise.

The flip side is that legitimate deductions are often broader than expected. The ATO’s occupation and industry specific guides – or a quick chat with a registered tax professional – can help you identify everything you’re properly entitled to claim.

Speak to us before you lodge

A dodgy tip from TikTok or an AI chatbot can quickly turn into an ATO review, an amended assessment or worse. Before you lodge this year, please contact our office. We’ll help you claim everything you’re properly entitled to, and keep you well clear of the ATO’s compliance radar.

Your end-of-financial-year payroll checklist

Admin 16th June, 2026

The upcoming end of the financial year means it’s time to ensure all your employee payroll and super records are accurate and up to date.

Keeping on top of reporting means you can meet your legal obligations and ensure a smooth year-end for your business and employees.

Here’s a handy checklist for this hectic time of year.

PAYG

Ensure this year’s pay data is cut off after the last pay to be received by staff by 30 June 2026. Check and delete any tax variations ceasing as of 30 June 2026. Enter any new tax variations applying from 1 July 2026.

Revise termination worksheets used for redundancies to the new tax-free limits and employment termination payment (ETP) cap. Take care: if an employee’s terminated by 30 June but paid on or after 1 July, the new rates and thresholds apply.

Review staff who left in 2025–2026, particularly after 31 March 2026, checking whether they’ll have reportable fringe benefits (RFB) for the 2026–2027 income year. If so, you need to maintain their Single Touch Payroll (STP) record and complete the RFB field at next income year-end.

Identify any RFB amounts exceeding the disclosure threshold. Where disclosure applies, consider giving employees a written explanation to minimise queries about income statements.

Check that any staff overpayments are reversed out of wages and coded as loans before finalising in STP. Ensure wages appear in the correct income year. Payments arriving on or after 1 July 2026 should appear in the 2026–2027 income year.

Submit STP annual reporting by selecting the final event indicator to “true” for all staff by 14 July 2026. Review changes to pay rates or salary sacrifice arrangements applying from 1 July. Award rate increases usually apply to the first full pay from 1 July.

Review whether 2026–2027 may result in 53 weekly pays or 27 fortnightly pays, in which case staff can elect to have additional tax withheld. This may also affect super, including salary sacrifices, for staff tracking the concessional limit ($32,500 for 2026–2027).

Update your payroll software for the PAYG withholding tax tables applying from 1 July 2026.

Superannuation

Note that the super guarantee rate remains 12% for the 2026–2027 income year. Ensure reportable employer superannuation contributions appear correctly at the STP reportable employer super contributions (RESC) field.

Check whether the maximum super contribution base applies to high-income employees. For 2026–2027, with payday super, this base becomes an annual figure of $270,830 in qualifying earnings.

Ensure payroll software, clearing house and super payment processes can support payday super from 1 July 2026. From then, you must pay employees’ super guarantee on payday, to be received by their super funds within seven business days, unless an extended timeframe applies.

The April to June 2026 quarter remains in the existing quarterly super system. Make sure June quarter super is paid in time to meet 30 June for tax deductibility and 28 July for super guarantee obligations.

Payroll tax and WorkCover

Review which states and territories staff are employed in and make sure you have the appropriate payroll tax and WorkCover registrations in place.

File a copy of the lodged FBT return to use for payroll tax and WorkCover annual returns. Revenue authorities will usually request it during audits.

Obtain details of any contractor arrangements to be included. Note any changes in required payroll tax and WorkCover declarations for the new financial year.

If the business is part of a group of employers for payroll tax purposes, check if entities have left or joined the group. Review payroll tax office websites and state/territory budget announcements for rebates or incentives available in each jurisdiction.

Five super moves to consider before 30 June 2026

Admin 10th June, 2026

The end of financial year’s creeping up and it’s a great time to review whether you need to take superannuation action before 30 June 2026. Here are a few moves that could make a meaningful difference.

Check your concessional contributions cap

Concessional contributions are generally before-tax contributions, including employer super guarantee and salary sacrifice contributions. They also inc lude personal after-tax contributions claimed as a deduction.

The 2025–2026 general concessional contributions cap is $30,000. This applies across all your super funds combined. If you make concessional contributions exceeding the cap you’ll owe extra tax, so take care with year-end contributions.

If your total super balance on 30 June 2025 was under $500,000, you may be able to carry forward unused concessional contribution cap amounts from the previous five financial years, increasing your 2025–2026 concessional contributions cap.

Maximising personal tax-deductible contributions can be useful if your annual income’s higher than usual (and you could use a bigger deduction), or you need to boost your super.

Lodge a notice of intent before claiming personal deductions

If you want to claim a tax deduction for personal super contributions, plan ahead! You need to give your fund a valid notice of intent to claim or vary a deduction and receive the fund’s acknowledgement before claiming in your tax return.

It’s also important to submit your notice to your super fund before rolling over any super, withdrawing super amounts, starting a pension or splitting contributions with your spouse. These can all affect the notice validity and what contributions you can deduct.

Make sure contributions reach your fund by 30 June

Don’t assume a super contribution counts as soon as it leaves your bank account. Contributions only count towards a yearly cap when your super fund receives them.

A payment initiated on 30 June may not land in the fund’s account until July, pushing it into next financial year. Allow several business days for processing and check on your fund’s cut-off times.

Consider co-contributions and spouse contributions

Eligible low and middle-income earners who make after-tax personal contributions before 30 June may qualify for a government super co-contribution.

The maximum $500 co-contribution’s generally available if you earn under $47,488 in 2025–2026 and contribute $1,000. The co-contribution reduces if you earn more, and you won’t qualify if you earn over $62,488. Any contributions claimed as deductions don’t qualify for co-contributions.

You don’t need to apply separately for a co-contribution. Make sure your super fund has your tax file number, and the ATO will work out the entitlement with your lodged tax return.

You may also be able to claim a tax offset up to $540 if you contribute up to $3,000 to your spouse’s super and their income’s below $37,000. The offset reduces if their income’s between $37,000 and $40,000.

Check your minimum pension payments

If you’re retired and drawing an account-based pension, you must withdraw at least the annual mandatory minimum amount as pension income before 30 June, or your pension could lose its tax-free status.

This is important for all types of funds, and particularly if you’re a self-managed super fund (SMSF) member, as you’re personally responsible for your fund’s legal compliance.

If you’ve paused payments, withdrawn non-pension lump sums, or started a pension part-way through the year, confirm you’ve received enough pension income before 30 June to avoid unexpected consequences.

Are you ready?

The best approach to super planning depends on your income, age, super balance, employment circumstances, contributions and retirement plans. Remember, getting professional advice for your situation is always a good idea.

Could your super insurance have been cancelled without you knowing?

Admin 2nd June, 2026

Taking extended leave from work might seem like a straightforward decision, but it could have unexpected consequences for your superannuation insurance coverage that many Australians remain unaware of.

The 16-month rule you need to know:

Since July 2019, superannuation funds have been required to cancel insurance cover for accounts that remain inactive for 16 consecutive months, unless members specifically elect to maintain their coverage. An account becomes inactive when it hasn’t received any amounts – including employer contributions, personal contributions, or rollovers – for 16 consecutive months. The moment a contribution or rollover is received, the 16-month countdown resets.

When this commonly occurs:

Inactive periods leading to cancelled insurance frequently affect people during significant life events, such as: extended parental leave beyond paid entitlements; career breaks or sabbaticals; periods of unemployment or study; and working overseas without Australian superannuation contributions. Many Australians discover their insurance has been cancelled only when they need to make a claim or receive their annual statement.

The notification process:

Your superannuation fund must send insurance inactivity notices before cancelling coverage. These notices are sent when your account has been inactive for 9, 12, and 15 months – essentially giving you warnings at 7 months, 4 months and 1 month before cancellation. However, these notices are only effective if your fund has your current contact details. If you’ve moved house, changed email addresses, or haven’t updated your details, you might miss these critical communications.

How to protect your coverage:

To maintain insurance during periods of account inactivity, you must provide written notice to your fund electing to keep your coverage. This is often called “opting in”. Once you’ve opted in, the election remains valid until you tell your fund you no longer want insurance. Remember, cover can still end for other reasons, including age limits, insufficient balance to pay premiums, policy terms or trust deed requirements, or if you request cancellation. The opt-in process varies between funds, so check your fund’s specific requirements. Some funds accept online elections, while others require signed paper forms.

Additional restrictions on coverage:

Insurance cannot be offered through your super fund in other circumstances, including for: accounts where the balance has never reached $6,000, unless the member elects to have cover; and accounts where the member is aged under 25, unless the member elects to have cover, or is covered by a dangerous occupation exception.

Regular account monitoring:

The Australian Financial Complaints Authority (AFCA) recommends regularly checking your superannuation statements and maintaining current contact details with your fund. This ensures you receive important notices about your account status and insurance coverage. You can monitor your superannuation through ATO online services, which displays all your accounts. The service flags accounts with insurance coverage, but you should check directly with each fund to confirm whether insurance cover applies and whether it may be at risk of cancellation.

What if coverage is cancelled?

If your insurance has already been cancelled due to inactivity, you may be able to apply for new coverage, though this could involve health assessments and waiting periods. Some funds offer reinstatement options for recently cancelled policies.

Take action now:

Review your superannuation accounts to check whether you have insurance coverage and consider whether you need to opt in to maintain it during any planned career breaks. Contact your superannuation fund to update your contact details. If you’re planning extended leave, discuss your options before your account becomes inactive. Consider speaking with a qualified financial adviser to review your superannuation and insurance arrangements, particularly if you’re planning major life changes that could affect your contribution patterns.

Understanding your super contribution options

Admin 20th May, 2026

Navigating the types and limits of superannuation contributions can feel like decoding a complex puzzle. But understanding the difference between concessional and non-concessional contributions is crucial to maximising your retirement savings while avoiding unnecessary tax penalties.

What are concessional contributions?

Concessional contributions are generally made from your before-tax income and include: employer super guarantee contributions; and salary sacrifice contributions. Concessional contributions also include: after-tax personal contributions you claim as a tax deduction; paid parental leave super contributions; and after-tax contributions from certain third parties to your super fund – including parents and friends, or your spouse who lives separately and apart on a permanent basis. Note that spouse contributions and contributions from parents to children under the age of 18 are not concessional contributions. Concessional contributions are taxed at 15% within the fund (with the tax paid from your contributions), making this an effective way to reduce your overall tax burden while building retirement savings. The annual limit on concessional contributions for 2025–2026 is generally $30,000, depending on your total superannuation balance and other factors.

What are non-concessional contributions?

Non-concessional contributions come from amounts that have already been taxed and don’t attract additional tax unless you exceed the cap. These include: spouse contributions (where your spouse isn’t your employer); contributions for a child under 18 (if the contributor is not the child’s employer); personal contributions from your after-tax salary that you don’t claim as a personal tax deduction; excess concessional contributions not released from your fund; and most transfers from foreign super funds. The annual limit on non-concessional contributions for 2025–2026 is generally $120,000, depending on your total super balance and other factors.

Special exclusions to take into account

Certain contributions don’t count towards your non-concessional cap: contributions of certain CGT exempt sale proceeds from your small business; personal injury payments; downsizer contributions from home sales; government co-contributions; and re-contributions of COVID-19 early release amounts. Apart from government co-contributions, you must specifically request these exclusions using the appropriate forms before or when making contributions.

The importance of contribution caps

Your superannuation enjoys preferential tax treatment, but this comes with limits. If you exceed the annual limits that apply to you, higher tax rates apply to those contributions above your limit. All contributions across multiple funds count towards your caps, so careful tracking is essential. High-income earners earning over $250,000 (including concessional super contributions) may also face an extra 15% tax on some of their concessional contributions.

Key takeaways

Understanding contribution types helps you: maximise tax benefits through strategic contribution timing; avoid excess contribution penalties; plan effectively for retirement; and take advantage of available exemptions and exclusions. Remember that your age, work status and total super balance can also affect contribution eligibility and fund acceptance rules. Strategic planning becomes increasingly important as your circumstances change throughout your working life and as you approach retirement.

Need personalised advice?

Super contribution rules are complex and your circumstances are unique. For detailed guidance on optimising your contribution strategy and understanding how these rules apply to your situation, visit the ATO website and speak with your professional tax adviser.

2026 – 27 Federal Budget Update

Admin 15th May, 2026

The 2026 – 27 Federal Budget introduces a range of significant tax and policy measures impacting individuals, property investors, and private groups. The reforms are set against a backdrop of persistent cost of living pressures, elevated interest rates, global uncertainty, and a continued focus on fiscal sustainability.

Many measures are proposed to apply from 1 July 2027 or later and remain subject to consultation and legislative refinement. As such, further detail will be critical in assessing their full impact.

Key Tax Measures

Capital Gains Tax (CGT) Reform

From 1 July 2027, the Government proposes to:

Replace the existing 50% CGT discount with an inflation-based indexation method
Introduce a 30% minimum tax on net capital gains

Practical implications:

Taxpayers may need to obtain market valuations of assets as at 1 July 2027
Existing accrued gains up to that date are expected to retain current CGT treatment under transitional rules
Investment strategies and asset allocation decisions may require reassessment
The application of the minimum tax to superannuation funds and managed investment vehicles remains unclear

Overall, these changes represent a fundamental shift in the taxation of capital and may reduce the attractiveness of long-term passive investment strategies relative to other asset classes.

Negative Gearing – Residential Property

From 1 July 2027, negative gearing concessions for residential property will be limited.

Losses on established residential properties will be ring-fenced
These losses can only be offset against:
- Rental income, or
- Future capital gains from residential property
Losses will no longer offset salary or business income
Grandfathering applies to existing holdings (including contracts entered prior to Budget night)
Exclusions include:

- New residential developments
- Superannuation funds (including SMSFs)
- Widely held trusts and build-to-rent projects
- Certain government-supported housing investments

This measure is expected to influence investor behaviour, gearing strategies, and ownership structures, particularly in the residential property market.

Minimum Tax on Discretionary Trusts

From 1 July 2028, a 30% minimum tax is proposed on discretionary trust income.

Tax will apply at the trustee level, with beneficiaries generally receiving tax credits
Aimed at limiting income splitting and the use of bucket company structures
Exclusions include:
Fixed and widely held trusts
Complying superannuation funds
Deceased estates and charitable trusts
Special disability trusts

These changes are expected to significantly impact family groups and may necessitate review or restructuring of existing trust arrangements, subject to the availability of anticipated transitional relief.

Business Tax Measures

Several measures are aimed at supporting business cashflow and investment:

Loss carry-back
Companies (turnover under $1 billion) can offset current losses against profits from the previous two years (from 1 July 2026), subject to franking constraints
Instant asset write-off
The $20,000 threshold will become permanent from 1 July 2026 for businesses with turnover up to $10 million
Start-up support
Early-stage businesses may access refundable tax offsets for losses in initial years (from 1 July 2028, subject to limits)

These measures provide targeted relief, particularly for SMEs and growing businesses.

Research & Development (R&D) Tax Incentive

From 1 July 2028, the R&D incentive will be re-focused:

Increased support for core R&D activities
Reduced benefits for supporting (non-core) expenditure
Introduction of tighter thresholds and limitations on refundability

Businesses undertaking R&D should review project eligibility, expenditure categorisation, and expected cashflow impacts.

Venture Capital and Investment Incentives

Increased thresholds under VCLP and ESVCLP regimes to support larger investments
Measures aimed at encouraging innovation and growth-stage funding

These changes may enhance access to capital for emerging businesses.

Personal Tax Measures

Working Australians Tax Offset (WATO)
$250 annual offset from 1 July 2027
Standard deduction for work-related expenses
$1,000 deduction from the 2026–27 income year without substantiation
Personal income tax cuts (previously legislated)
The 16% rate reduces to:
- 15% from 1 July 2026
- 14% from 1 July 2027
Medicare levy thresholds to increase from 1 July 2025

These measures aim to provide modest cost-of-living relief and reduce compliance burden.

Other Measures

Electric vehicle FBT concessions to be phased down, moving to a 25% concession from 1 April 2029
PAYG instalments expected to become more dynamic and software-driven from 1 July 2027
Foreign resident CGT changes expanding the definition of taxable Australian property (including retrospective elements)
Pillar Two global minimum tax alignment from 1 January 2026

Economic Context and Policy Direction

The Budget reflects a broader policy shift focused on:

Productivity and investment in innovation
Housing supply and generational equity
Energy security and economic resilience
Fiscal sustainability and revenue integrity

Key structural themes include:

Reduced reliance on tax concessions for asset-based wealth (property and trusts)
Increased focus on labour income support and business investment
Measures aimed at encouraging capital into productive economic activity

DLK Advisory Commentary

The 2026 – 27 Budget represents a material shift in Australia’s tax landscape, particularly in relation to capital taxation and private wealth structures.

While the measures are significant, they are largely targeted rather than forming part of a comprehensive tax reform framework. This raises the potential for increased complexity and unintended interactions between rules.

Importantly:

Many measures are not yet legislated
Transitional rules and detailed design will be critical
A backlog of announced but unenacted measures continues to create uncertainty

What This Means

Clients should consider:

Reviewing long-held investment positions, particularly in light of CGT reform
Assessing property investment strategies and gearing approaches
Re-evaluating trust structures and distribution strategies
Modelling the cashflow and tax impact of proposed changes ahead of implementation

Next Steps

DLK Advisory recommends:

Early engagement to model the impact of proposed reforms
Identifying opportunities for restructuring or repositioning ahead of commencement dates
Monitoring ongoing consultation and legislative developments closely

DLK Advisory will continue to provide updates as further detail becomes available.

Will the proposed $1,000 instant tax deduction benefit you?

Admin 13th May, 2026

You may have heard about the Federal Government’s proposed $1,000 “instant” tax deduction for work-related expenses. Before you get excited about potential savings, it’s worth understanding who may benefit, when it could apply, and whether it would be better than claiming your actual expenses.

What’s being proposed?

The Government has released draft legislation for a new standard deduction of up to $1,000 for eligible taxpayers. The aim is to simplify tax returns by allowing people with smaller work-related expenses to claim a set amount without the need to substantiate actual expenses. If introduced, this would replace the current $300 no-receipt threshold and the separate $150 laundry concession. However, this is still just a proposal and is not yet before Parliament. If passed, it would apply from the 2026–2027 financial year, meaning it won’t help with 2025–2026 returns.

The deduction would be available to Australian tax residents earning assessable labour income, including salary and wages and certain PAYG-withheld payments such as director fees, termination payments, and parental leave pay. The deduction is capped at the lesser of $1,000 or total assessable labour income.

How much could you actually save?

A deduction reduces taxable income, not a direct cash refund, so the benefit depends on your tax rate. For example, someone on a 30% tax rate could save up to $300, while higher income earners could save up to $450 (or $470 including Medicare levy). The Government estimates 6.2 million taxpayers may benefit, with average savings of $205. However, if you already claim more than $1,000, you may be better off keeping receipts and claiming actual expenses. ATO data shows the average claim was $2,739 and the median $1,338, suggesting many taxpayers may not benefit financially, though those near $1,000 may value reduced record-keeping.

What expenses would count?

The deduction would cover home office costs, work clothing and uniforms, tools and equipment, work-related car expenses, and stationery and supplies. You could still claim certain items on top of the $1,000, including charitable donations, union fees, income protection insurance, and investment-related expenses.

Low-value pool changes:

From 2026–2027, you would no longer be able to allocate assets to a low-value pool where they are mainly used to produce assessable labour income. This applies only to new allocations and won’t affect existing assets, but it may slow down deductions for items like computers or tools.

What should you do?

Remember this is still a proposed change. Consider whether you typically claim more or less than $1,000—if more, the standard deduction may not benefit you. Tax changes can have unexpected consequences, so if you want to optimise your deduction strategy, contact our office to discuss your circumstances and ensure you’re maximising your legitimate tax benefits.