Are your related-party payments properly documented?

A recent Full Federal Court decision has highlighted an important issue for many family businesses and private groups.

If your business pays management fees, rent, administration fees or other charges to a related company or trust, those payments may not be tax deductible simply because they are commercially reasonable or recorded in your accounts. You must also be able to demonstrate a legally enforceable obligation to make the payment.

Why this matters

The decision is particularly relevant for:

• family groups
• private companies
• discretionary trusts
• corporate groups with shared services
• businesses charging management fees, service fees, licence fees or rent between related entities.

What happened?

In Commissioner of Taxation v S.N.A Group Pty Ltd [2026] FCAFC 10, several companies operating within a real estate group claimed almost $19 million in deductions for service fees paid to related trusts.

Although formal agreements had existed in earlier years, the arrangements during the relevant period were largely informal. The taxpayers argued that contracts could be implied from the way the businesses operated.

The Full Federal Court disagreed and ruled that the deductions were not allowable because there was insufficient objective evidence that legally binding agreements existed.

Importantly, accounting records, journal entries and the directors’ understanding of the arrangements were not enough to establish a legal obligation.

Key lessons from the decision

The Court confirmed several important principles:

• A tax deduction generally requires a legally enforceable obligation to incur the expense.
• Related-party transactions are subject to the same legal standards as transactions between unrelated businesses.
• Courts will rely on objective evidence of an agreement rather than what the parties believed they intended.
• Accounting entries and financial statements do not create legal obligations.
• Informal arrangements between related entities can expose businesses to significant tax risk.

What should you review?

This decision is a timely reminder to review any arrangements involving:

• management fees
• administration charges
• bookkeeping fees
• licence or intellectual property fees
• rent between related entities
• employee reimbursement arrangements
• shared staff costs
• trustee service fees.

If these arrangements are informal, outdated or poorly documented, there is a greater risk that the ATO could deny the deductions.

Practical steps to take

Businesses should ensure they have:

• current written agreements covering all significant related-party transactions
• board or trustee resolutions approving the arrangements where appropriate
• clear documentation showing how fees have been calculated
• evidence supporting the commercial basis for the charges
• invoicing and payment practices that reflect the written agreements
• regular reviews to ensure the documentation matches how the businesses actually operate.

Our view

This decision does not stop businesses from charging legitimate management or service fees between related entities.

It does, however, reinforce the importance of making sure those arrangements are properly documented and supported by the way the businesses actually operate.

Many family groups have historically relied on informal agreements or year-end accounting journals. Following this decision, now is an ideal time to review your related-party arrangements before your next year-end.

If you’re unsure whether your existing documentation is sufficient, speak with your Indigo Financial adviser. A review now could help avoid unnecessary tax issues in the future.

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding any of your accounting, taxation and business development needs.

The Government has announced a staged wind-back of the current Fringe Benefits Tax (FBT) exemption for electric vehicles (EVs), following recommendations from the Statutory Review of the Electric Car Discount released in May 2026. While the policy continues to support EV uptake, it also aims to make concessions more sustainable and better targeted. The changes are expected to save the Budget an estimated $1.7 billion over five years from 2025–26.

Importantly, nothing changes immediately—the existing full FBT exemption for qualifying EVs continues until 31 March 2027.

Three-phase transition…

Phase 1 — Now until 31 March 2027

The current rules remain fully in place.

Eligible EVs below the Luxury Car Tax (LCT) threshold (approximately $91,387 for fuel-efficient vehicles in 2025–26) continue to enjoy a complete FBT exemption.

For businesses and employees using novated leases or salary packaging, there is no change during this period.

Phase 2 — 1 April 2027 to 31 March 2029

The concession begins to narrow, with a focus on more affordable vehicles:

EVs costing $75,000 or less: Full FBT exemption continues if the eligibility conditions are met.

EVs priced above $75,000 and below the LCT threshold: A 25% FBT discount applies when calculating the FBT liability.

This phase is intended to encourage manufacturers to continue supplying competitively priced EVs into the Australian market, complementing the Government’s New Vehicle Efficiency Standards.

Phase 3 — From 1 April 2029

All eligible EVs under the LCT threshold will receive a flat 25% FBT discount, regardless of price.

The import tariff exemption for qualifying EVs remains permanently in place.

Grandfathering of existing leases

The Government has indicated that existing arrangements will be protected: current leases will not be affected by the new rules.

Draft legislation will clarify the precise scope of this grandfathering, but businesses and employees can take some comfort that current packages will continue to qualify for existing FBT concessions.

What this means for your business and your employees

The FBT exemption has been one of the most effective incentives driving EV adoption, particularly via novated leasing, allowing employees to access EVs using pre-tax income.

The Review found that the exemption:

• Led to around 64,000 additional battery EVs in its first three years
• Reduced emissions and improved fuel savings
• Increased EV uptake across metropolitan, regional and outer-suburban areas

However, it also highlighted equity concerns (higher-income employees benefited disproportionately) and noted that costs to the Budget were growing quickly. The new phased approach aims to balance continued access to lower-cost EVs with long-term fiscal sustainability from the Government’s perspective.

Practical considerations for businesses and individuals

• Consider acting before 31 March 2027: Anyone thinking about packaging an EV may benefit from entering arrangements while the full exemption still applies. Timing of orders and leases will be particularly important.
• Review fleet and salary packaging models: From 2027 onwards, the value proposition will shift. EVs at or below $75,000 will remain highly attractive under the full exemption in Phase 2.
• Commercial fleets: Businesses with high work-use vehicles may see limited impact, but reviewing total cost of ownership (including FBT, running costs and charging infrastructure) remains essential.
• Second-hand EVs: A growing used-EV market may provide cost-effective alternatives, particularly where new-vehicle thresholds become restrictive.

EV momentum remains strong. EV/PHEV sales reached 22.9% of new vehicles in March 2026, up from just 1.8% in May 2022, with an increasing number of models now available in the $30,000–$40,000 range.

Next steps

These reforms maintain support for cleaner transport while tightening the focus of concessions. As always, the fine print in the amending legislation will matter, especially when it comes to transitional rules.

If you are considering acquiring an EV—personally or for your business—or want to understand the impact on salary packaging and fleet costs, our team can model the outcomes and advise on the optimal timing. Please let us know if you would like some assistance with working through your options.

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding any of your accounting, taxation and business development needs.

The Reserve Bank of Australia (RBA) has confirmed that all surcharges on credit and debit card payments — across eftpos, Mastercard and Visa — will be banned from 1 October 2026.

This represents one of the most significant updates to Australia’s payments landscape in years and will have a direct impact on businesses and consumers.

Why this matters

Australians pay an estimated $1.6 billion in card surcharges every year. At the same time, businesses collectively bear even higher card-acceptance costs behind the scenes. Under the new rules, total merchant payment costs are expected to fall by around $910 million per year, with small businesses likely to see the largest percentage savings.

For many businesses this will mean simpler pricing, fewer compliance headaches and potentially better margins — but it also means some preparation is needed.

What’s changing?

The RBA’s reform package has three key components:

1. Surcharges banned

From 1 October 2026, businesses cannot add any surcharge — percentage or flat fee — for payments made using eftpos, Mastercard, Visa or related networks. Customers must see and pay one final price, whether they purchase online, at the counter, or via mobile payment.

2. Lower interchange fees

Interchange fees (the wholesale fees charged between banks when a customer pays by card) will be reduced, with new caps for foreign-issued cards. This should directly lower the cost that a business needs to pay to accept card payments.

3. Greater transparency

Banks, card schemes and payment providers must publish clearer information about fees and margins.

They must also demonstrate how reductions in wholesale fees are being passed through to retailers. This gives businesses more power to compare providers and negotiate.

These changes are supported by oversight from the Australian Competition and Consumer Commission (ACCC) and guidance from the Australian Small Business and Family Enterprise Ombudsman.

What your business should do now

1. Review your merchant fees

Look at your recent statements and determine:

• How much you currently pay in card-acceptance fees; and
• Whether you have been relying on surcharges to offset part of those costs.

If surcharges are part of your pricing strategy, you may need to adjust prices to maintain margins, where commercially appropriate.

2. Speak to your payment provider

With lower interchange fees coming and more transparency required, it’s a good time to negotiate:

• Better merchant service fees
• Updated pricing plans
• POS or terminal upgrades

Small businesses often pay closer to the current fee caps, so they stand to gain the most.

3. Update your pricing and POS systems

You’ll need to remove:

• Surcharge signage
• Online checkout surcharges
• Automatic percentage add-ons

All displayed prices must become all-inclusive.

4. Build changes into your cash flow

Lower merchant fees won’t appear immediately, but most businesses should see reduced costs flow through during the 2026–27 financial year. This is a good time to revisit budgets, especially for cafés, retailers, trades and service-based operators that have a high proportion of small card transactions.

5. Watch customer behaviour

Businesses might find that the removal of surcharges encourages more customers to pay by card. Higher card usage is often positive for convenience and transaction speed, but keep an eye on total acceptance costs as patterns shift.

The broader commercial picture

This reform levels the playing field to some extent.

Businesses that never applied surcharges will simply benefit from lower underlying fees. Those that did add a surcharge will enjoy simpler operations, less admin and fewer compliance risks. Over time, the changes should encourage more competition among payment providers, potentially leading to better products and lower fees across the market.

There may be secondary adjustments (for example, banks reviewing rewards programs), but the combined effort of the RBA and ACCC aims to ensure that cost savings are passed through fairly and transparently.

Final thoughts

This is ultimately a practical reform: fewer add-ons at the checkout, simpler pricing for customers, and lower complexity for businesses. Some businesses will see this as an opportunity to improve margins, streamline processes and enhance the customer experience.

We recommend reviewing your payment arrangements in the coming months. Our team can help analyse your current merchant fees, model the likely impact of the changes, and support negotiations with providers.

If you’d like tailored advice on how the end of card surcharges affects your business, please reach out — now is the ideal time to prepare.

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding any of your accounting, taxation and business development needs.

With the start of the 2026–27 financial year, SMSF trustees should take a proactive approach to ensure funds remain compliant and well positioned. Below is a concise checklist of the key legislative changes, compliance deadlines and practical steps trustees should prioritise.

Review Transfer Balance Cap and Pension Planning

• Indexation of the general TBC: From 1 July 2026 the general transfer balance cap (TBC) increases from $2.0 million to $2.1 million. Members should check whether their personal transfer balance cap is eligible for indexation, particularly if they started a pension before the latest indexation dates.The ATO will calculate a member’s entitlement to indexation of their personal TBC, however, this will be based on reported transfer balance account (TBA) events (eg, commencement or commutation of a pension). It’s important that all TBA events up to 30 June 2026 have been reported to the ATO to ensure an accurate calculation of TBC indexation entitlement.
• Legacy pensions: The five-year legacy pension exit measure (7 Dec 2024 – 6 Dec 2029) remains available. Where clients hold legacy lifetime, life expectancy or market-linked pensions, confirm deed powers and consider the interaction with Division 296 and commutation rules before acting.

Update Contribution Strategies and Caps

• Higher caps for 2026–27: The concessional contributions cap rises to $32,500 and the standard non-concessional cap becomes $130,000. However, the non-concessional cap is subject the member’s 30 June 2026 total superannuation balance (TSB) being less than $2.1 million. Review your planned contributions to avoid cap breaches.
• Bring-forward and TSB thresholds: Check each member’s TSB at 30 June 2026 prior to applying bring-forward rules in 2026-27. Thresholds and allowable bring-forward periods changed for 2026–27.

The increase to the standard non-concessional cap means the maximum bring forward cap has increased from $360,000 to $390,000. However, if the bring-forward rule was triggered in 2024-25 or 2025-26, the member does not get the benefit of the increase.

Pension Minimums, TRIS and ECPI Risks

• Minimum pension percentages: Check minimum pension percentages for age groups and ensure pensions meet the standards to avoid breaches and potential loss of fund tax exempt income.

For a transition to retirement (TTR) pension, in addition to making at least the minimum pension payment, make sure you don’t exceed the 10% maximum. Also, if turning 65 in 2026-27, a TTR pension automatically moves into retirement phase and has TBC consequences. Speak to your adviser about implications and options well before your 65th birthday.

• Commutations and starting pensions: Follow correct commencement and commutation procedures; incorrect handling can trigger multiple events and adverse tax outcomes. Report all TBA events to the ATO by the due date.

Review Related Party Loans and Update Interest Rate

• The ATO document PCG 2016/5 sets out many of the terms and conditions a related party loan should have, including the interest rate. These are commonly referred to as the ‘safe harbour provisions’.Each year, the interest rate of the loan should be reviewed and updated in line with the relevant rate determined in May immediately before the commence of the financial year. The rate for the 2025-26 year was 8.95% for property and 10.95% for listed securities.

As a result of increases in the RBA’s cash rate over the last 12 months there has been an increase to the safe harbour interest rates to 9.35% and 11.35% for property and listed securities respectively. The repayments of any related party loans that are complying with the safe harbour provisions will need to be adjusted to reflect these new rates.

Check Compliance for Payroll and Contributions (SuperStream 3.0 / Payday Super)

• NPP readiness: From 1 July 2026 funds and employers must be capable of receiving contributions via the New Payments Platform (NPP). Ensure the SMSF bank account can accept Osko/PayID and other NPP payments.
• Member Verification Requests (MVRs): Employers will use MVRs to confirm whether a fund can accept a contribution. SMSFs receiving employer contributions should be prepared to respond to MVRs promptly (within required timeframes). Generally, SuperStream messages will be received in the SMSF administration platform that is used by the SMSF’s accountant or administrator. Members should inform their SMSF accountant or administrator if their employer will be sending a message via the MVR to confirm whether their SMSF can accept the contribution.
• Closely held employees: If your SMSF has related employees, confirm whether SuperStream exemptions apply and ensure payroll systems are updated as late lodgements may result in penalties. Remember the ATO can remove fund details from the SMSF lookup database if tax returns are overdue. This could impact on a fund’s ability to receive employer contributions.

Consider the Division 296 Transitional Rules and Tax Traps

• 2026–27 transitional year treatment: The 2026–27 year has specific transitional rules for Division 296 where the relevant TSB is measured at 30 June 2027. Trustees should assess whether electing to set a Div 296 cost base to 30 June 2026 market values is appropriate. This election does not need to be made until the lodgement of the 2027 SMSF Annual Return (tax return), and if made, applies to all assets and has consequences for capital losses and later adjustments. Seek tailored advice before electing.

Practical Housekeeping

• Deed powers and trustee structure: For SMSFs with individual trustees, consider whether a corporate trustee is a potentially better option. Talk to you adviser about these potential benefits and the process to change. Ensure that any changes to the trustee structure is reported to the relevant authority within the required timeframe (eg, the ATO, ASIC).
• Document everything: Keep clear records of trustee decisions, valuations used for elections, contribution timing evidence and communications with employers — documentation is key for the annual audit and if the ATO queries an event.

Preparing now will reduce 2026-27 year-end stress and help avoid costly compliance issues. Speak to us if you have any questions or wish to discuss any of the issues raised above.

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding any of your accounting, taxation and business development needs.

The Tax Ombudsman has reported a dramatic 127% increase in complaints about the ATO this financial year (to 30 April 2026), with nearly 3,000 complaints received in the first ten months. Debt collection, penalties, and tax debt interest charges have dominated the issues raised.

Tax Ombudsman Ruth Owen has linked the sharp rise directly to the ATO’s intensified focus on recovering outstanding debts amid tighter economic conditions. Many SME owners and individuals are feeling the pressure from cash flow challenges, rising costs, and stricter ATO enforcement.

Why Complaints are Rising

Debt collection accounted for around 23% of complaints, followed by payment-related issues (16%) and penalties plus interest (15%). Common concerns include:

• Refund offsets against debts
• Director Penalty Notices
• Challenges in setting up or maintaining payment plans
• The rapid accumulation of General Interest Charge (GIC) on overdue amounts

This surge reflects real-world pressures: businesses navigating post-pandemic recovery, higher interest rates, and increased ATO activity to close the tax gap. For many clients, these issues create significant stress and can distract from core operations.

Practical wins: Relief is Possible

The good news? The Ombudsman’s office is proving effective as an independent escalation point. Around 31% of complaints relating to penalties and interest resulted in some form of debt reduction or remission.

This highlights that persistence and proper representation can sometimes deliver favourable outcomes when initial ATO decisions feel overly harsh or inconsistent.

Important Developments on GIC Remission

A key theme in the complaints data is the GIC – the daily interest applied to unpaid tax debts. In March 2026, the Tax Ombudsman released a major review titled In the Interest of Fairness, which examined the ATO’s handling of GIC remission requests.

The review identified inconsistent decision-making, unclear guidance, and communication gaps that left many taxpayers confused about their options. It made several recommendations, including clearer upfront interest-free payment plans for compliant taxpayers.

The ATO’s response has been positive. It accepted all recommendations and has already begun implementing improvements, such as:

• Enhanced website guidance with practical examples
• New, more user-friendly remission application forms
• A $2,500 cap on phone approvals with a dedicated review team for larger requests to improve consistency
• Better support frameworks for vulnerable taxpayers

These changes should hopefully make the process fairer and more predictable going forward, but sometimes best intentions don’t translate into practical reality so we will have to wait and see how this plays out.

What this Means for You

1. Act early on tax debts: Don’t wait for the ATO to contact you. If you’re facing cash flow pressure, engage proactively before penalties and GIC escalate. Early action often leads to better terms.
2. Keep detailed records: Strong supporting documentation is crucial when seeking remission of penalties or interest. Demonstrate why the delay occurred (eg, unexpected revenue drop, illness, or system issues) and what steps you’ve taken to rectify it.
3. Use professional representation: Tax agents can liaise directly with the ATO on your behalf, prepare strong submissions, and escalate to the Tax Ombudsman where appropriate. This often leads to faster and more commercially practical outcomes than dealing with the matter alone.

While the ATO must collect revenue fairly, the Ombudsman plays a vital role in ensuring processes remain reasonable and transparent. With economic headwinds continuing, understanding your rights and options has never been more important.

If you’re concerned about a tax debt, penalty notice, or GIC charge, contact our team promptly. Early intervention can significantly reduce costs and protect your business or personal finances.

For more information, visit the Tax Ombudsman’s complaints snapshots and reports: Complaints snapshots – Tax Ombudsman

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding any of your accounting, taxation and business development needs.

The ATO is sharpening its focus on how taxpayers generating income from personal services deal with that income for tax purposes. In a recent Spotlight bulletin, Small Business Assistant Commissioner Tony Poulakis highlighted the release of Practical Compliance Guideline PCG 2025/5.

This guideline clarifies the ATO’s compliance approach to the “alienation” of personal services income (PSI) — essentially, arrangements which involve routing income earned through your personal skills and efforts via a company or trust, rather than receiving it directly.

Why the ATO Is Interested

Many business owners operate through a company or trust rather than earning income personally. In many cases this is entirely legitimate and provides commercial benefits such as asset protection, flexibility and succession planning.

However, where income is generated primarily from the efforts, skills or reputation of one individual, the ATO is concerned about arrangements that divert income away from that individual in order to reduce tax.

Even where a business is able to pass certain tests to be classified as a Personal Services Business (PSB) under the tax rules and falls outside the strict PSI attribution rules, the ATO has made it clear that general anti-avoidance provisions in Part IVA can apply if the arrangement is primarily tax-driven. If Part IVA applies then this can lead to higher tax liabilities as well as significant penalties and interest charges.

What Does the ATO Consider Low Risk?

The ATO’s guidance focuses heavily on whether the individual generating the income receives an appropriate share of the profits.

Generally, an arrangement is more likely to be considered low risk where:

• The individual who performs the work receives most of the economic benefit through salary, wages, bonuses, director fees or trust distributions.
• Profits retained in a company are kept for genuine and short-term business reasons.
• Family members or associates are only paid reasonable amounts for genuine work performed.

For example, retaining profits in a company to fund the purchase of new equipment in the short-term could be viewed favourably if there is evidence supporting those plans and the company actually follows through with these plans.

What Will Attract ATO Attention?

The ATO has specifically identified a number of higher-risk behaviours, including:

• Splitting income with family members who have made little or no contribution to earning that income.
• Retaining substantial profits in a company without a genuine short-term commercial purpose.
• Directing profits generating from someone’s personal services to entities or beneficiaries primarily because they are taxed at lower rates or because they have tax losses.

The ATO’s expectations in this area are very strict. The greater the mismatch between who performed the work and who is ultimately taxed on the profits from that work, the greater the likelihood of ATO scrutiny.

A Limited Opportunity to Review Existing Arrangements

The ATO has provided a transition period for taxpayers who genuinely review and adjust their arrangements.

Businesses that take genuine steps to move from higher-risk arrangements to lower-risk arrangements by 30 June 2027 are unlikely to face Part IVA action in relation to those arrangements if reviewed by the ATO.

This is not an amnesty, but it is an opportunity for business owners to proactively assess their position and make changes where necessary.

What Should Business Owners Do?

Now is an ideal time to review how profits are being distributed within your structure.

Questions worth considering include:

• Are retained profits supported by documented short-term commercial reasons?
• Are payments to family members commercially justifiable?
• Would your arrangements withstand ATO scrutiny if reviewed?

If you operate through a company or trust and derive income largely from your personal skills or efforts, it is important to review existing arrangements in light of the ATO’s updated guidance. A proactive review today may prevent costly issues tomorrow.

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding any of your accounting, taxation and business development needs.

Since the Federal Treasurer handed down the 2026-27 Federal Budget on 12 May 2026 there has been a significant amount of commentary on some of the more controversial proposals, including the decision to replace the CGT discount with an indexation system and impose a 30% minimum tax rate on discretionary trusts.

Since our latest update in this area, the Government has announced some changes to these proposals, as well as some other areas of the tax system that weren’t initially impacted by the Budget.

CGT Changes

On Budget night the Treasurer announced that the existing 50% CGT discount for individuals and trusts would be replaced with an indexation system and a 30% minimum tax rate on capital gains accruing from 1 July 2027 (with limited exceptions).

However, the Government has announced that it plans to introduce a new Innovative Business CGT Concession that would provide a 50% CGT discount to early-stage investors, including founders and employee share scheme participants in innovative start-up businesses. A consultation paper has been released on the design of this concession.

In addition, the Government is taking steps to increase the annual turnover threshold that applies in determining whether a small business or its owner can access the existing 50% “active asset reduction” under the small business CGT concessions, from $2m to $10m. This change would apply from 1 July 2027.

The existing $2m turnover threshold would remain in place for the other three small business CGT concessions, being the 15 year exemption, retirement exemption and small business rollover relief. Taxpayers who can’t pass the turnover test can still access the concessions if they can pass a $6m net asset value test.

Testamentary Trusts

In the Budget the Government announced that a 30% minimum rate of tax would apply to the net taxable income of discretionary trusts from 1 July 2028. The Government had indicated that this would apply to testamentary trusts, unless they already existed at 12 May 2026.

However, the Government has announced that it will now exempt income from all testamentary trusts from the new minimum tax rate rules, as long as they are established for “genuine testamentary purposes”.

The exclusion from the rules will be limited to income from assets of the relevant deceased estate. For discretionary testamentary trusts established on or after 1 July 2028, the exclusion will only apply to trusts that can only benefit individuals and income tax exempt entities.

SMSF Borrowing Arrangements

As a result of negotiations with the Greens in connection with the changes to the CGT discount and negative gearing, the Government has agreed to remove the ability for SMSFs to borrow to purchase residential property (SMSF borrowing is commonly known as a limited recourse borrowing arrangement).

It seems that existing arrangements will be grandfathered.

We will keep you updated as more developments occur. However, please don’t hesitate to contact us if you want to discuss how these changes impact on your position.

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding how the 2026-27 Federal Budget impacts you or any of your accounting, taxation and business development needs.

Tax time can come around quickly when you’re busy running a growing business, but a little preparation now can make a big difference later.

There are things you can do now to get ready and avoid last-minute mistakes.

Declare all business income

Missed income is a common issue at tax time. Make sure you declare all your business income, including cash payments and non-monetary benefits like goods or services you receive for your work.

Know your losses

Knowing whether your losses are business losses or non-commercial losses can change how you report and carry them forward at tax time.

Separate business from personal expenses

If you’ve used business money for personal expenses, keep good records. Separating business and personal spending now can help prevent issues later.

Nominate your tax professional

If you’re using a tax professional, nominate them in Online services for business so they can access your information and act on your behalf without delays.

Claiming deductions

When claiming deductions, remember these 3 golden rules:

1. The expense must relate to your business, and not private use.

2. If the expense is for a mix of business and private use, you can only claim the business portion.

3. You need records or receipts to prove it.

Remember, if you’ve incurred general interest charge (GIC) or shortfall interest charge (SIC) on or after 1 July 2025, you can’t claim these amounts as an income tax deduction in your 2025–26 or later tax returns.

Cash or accruals: choose the right method

All income you earn from running your small business will be assessable for tax purposes. The method you use to account for income affects what you report. For:

• cash basis, report income when you receive the payment, even if the work was done earlier
• accruals basis, report income when you earn it, even if you haven’t been paid yet.

Generally, you should only report on a cash basis if your business income is principally a result of your own labour.

Don’t miss out on deductions and concessions

Check if you’re eligible for any deductions or concessions such as:

• simplified depreciation rules
• immediate deductions for pre-paid expenses
• depreciation for instant asset write-off.

Tools and support for tax time

The ATO has a range of tools and resources, including their 2026 Tax Time toolkit for small business to help you get it right this tax time.

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding your Income Tax obligations or any of your accounting, taxation and business development needs.

If you don’t pay the right amount, on time and to the correct fund, you may need to pay the super guarantee charge (SGC).

The redesigned SGC will apply when super contributions are not received by the super fund within 7 business days after payday (unless longer applies, for example for new employees).

Make sure you check your employees’ super funds will receive your payments on time.

Under Payday Super, the SGC is calculated based on qualifying earnings. The SGC is a charge on the employer for failing to pay super guarantee contributions for their employees in full, on time and to the right fund. It includes the total of any unpaid super, notional earnings, the administrative uplift amount, and the choice loading (if any). The ATO calculates the charge and sends an assessment to the employer.

The SGC is tax deductible.

The ATO has a video and factsheet available on their payday super resources webpage which explain the key changes.

They’ve also released a practical compliance guideline to outline their approach to compliance during the first year of Payday Super. Under this compliance guideline, you won’t be the focus of ATO compliance action as long as you:

• make your payments for each payday on time
• fix any errors as soon as possible.

Keep up to date

The ATO have tailored communication channels for small, medium, large and multinational businesses to keep you up to date with updates and changes you need to know.

• Read more articles in their online Business bulletins newsroom.

Subscribe to the ATO’s free:

• fortnightly Business bulletins email newsletter
• email notifications about new and updated information on our website – you can choose to receive updates relevant to your situation. Choose the ‘Business and organisations’ category to ensure your subscription includes notifications for more Business bulletins newsroom articles like this one.

Contact Indigo Financial on (08) 8212 8585 if you need help with understanding your PayDay Super obligations or any of your accounting, taxation and business development needs.