10 Random Finance & Investing Tips

For many Australians, a holiday home offers the best of both worlds — personal enjoyment and short‑term rental income through platforms like Airbnb or Stayz. However, recent draft guidance from the Australian Taxation Office (ATO) suggests that owners need to take a closer look at how these properties are treated for tax purposes. The ATO’s latest guidance makes it clear that earning some rental income does not automatically mean a property qualifies for full tax deductions . Instead, the focus is on whether the property is genuinely operated as an income‑producing investment or whether it is primarily a lifestyle asset. Investment Property or Lifestyle Asset? While all rental income must be declared, the ATO may restrict expense deductions where a property is mainly used for private purposes and only rented when convenient. If a property is classified as a holiday home rather than a genuine rental property, deductions for expenses such as interest, council rates, land tax, insurance and general maintenance may be denied. In many cases, owners may only be able to claim limited, direct costs associated with specific guest stays, such as cleaning or advertising. What Will Attract ATO Attention? The ATO is particularly focused on properties that: Are unavailable for rent during peak periods such as school holidays Are advertised inconsistently or priced above market rates Generate ongoing tax losses year after year Are clearly prioritised for personal use over rental income While no single factor is decisive, these patterns can indicate that the property is not being run on a commercial basis. Apportionment and Records Matter Where a property qualifies as income‑producing but is used partly for private purposes, expenses must be apportioned fairly and reasonably. Good records are critical, including booking calendars, listings, rental enquiries and notes of private use. The ATO can access booking platform data and readily cross‑check claims.  What Should Owners Do Now? Although the draft guidance is proposed to apply from 1 July 2026, now is the time to review your position. Owners should consider whether their property is genuinely operated to maximise rental income, whether pricing reflects market conditions and whether their record‑keeping would stand up to scrutiny. Final Takeaway The ATO isn’t banning deductions for holiday homes, but it is taking a firmer approach to distinguishing investment properties from lifestyle assets. A proactive review now can help avoid unexpected tax outcomes later. If you own a holiday property and are unsure where you stand, a proactive review could help protect your position and improve your tax outcome. Please contact us if you would like assistance assessing your current arrangements.

Capital Gains Tax (CGT) – What You Need to Know (and What’s Changing) If you own investments like property, shares, or a business, understanding Capital Gains Tax (CGT) is critical—especially with major changes on the horizon. What is Capital Gains Tax? Capital Gains Tax (CGT) is the tax you pay on profits when you sell an asset. It applies to assets acquired after 19 September 1985 Your capital gain is simply: Sale price (what you sell it for) minus Cost base (what you paid + associated costs) If the result is positive → you have a taxable capital gain If negative → you have a capital loss Do you always pay tax on the full gain? Not always. There have historically been concessions to reduce your tax bill, depending on when you bought the asset and how long you held it. The Two Main CGT Methods (Historically) 1. Indexation (Pre-1999 assets) This older method adjusted your cost base for inflation so you were only taxed on the real gain. Only applies to assets acquired on or before 21 September 1999 Adjusts the purchase cost using CPI This method is no longer available for newer assets. 2. The CGT Discount (Current system) This is the most common method used today. If you: hold an asset for more than 12 months, and are an eligible taxpayer (individual, trust, or super fund) You may reduce your capital gain: 50% discount for individuals and trusts 33.33% discount for super funds Example: If you make a $100,000 gain, you may only pay tax on $50,000 How CGT is Taxed Your net capital gain is added to your income It’s taxed at your marginal tax rate Capital losses can’t reduce other income—but can be carried forward Major CGT Changes Coming (From 1 July 2027) The government has proposed significant reforms that will change how CGT works. 1. The 50% Discount is Being Replaced From 1 July 2027: The current 50% CGT discount will be removed Instead, we return to a form of indexation Meaning: You’ll only be taxed on gains above inflation This is designed to tax the “real” gain only 2. A New Minimum 30% Tax Rate A key change: A minimum tax rate of 30% will apply to capital gains What this means: If your tax rate is below 30% → you still pay 30% If your rate is above 30% → you pay your normal rate The 30% is a floor, not a cap 3. Existing Assets – How Will They Be Treated? If you already own assets, the rules will split your gain into two periods: Before 1 July 2027 Existing rules apply (including the 50% discount) After 1 July 2027 New rules apply (indexation + 30% minimum tax) In practice: You may need a valuation at 1 July 2027 to determine the split 4. What About Pre-1985 Assets? Historically: Assets bought before 20 September 1985 were completely CGT-free From 1 July 2027: Any future growth in those assets will become taxable Past gains remain tax-free 5. Special Rule for New Housing To support housing supply: Investors in new residential property may choose between: The old 50% discount, or The new indexation method + minimum tax What This Means for You These changes could significantly impact: Investment property owners Share investors Business owners Family groups and trusts Key implications: The timing of asset sales will become more important Valuations at 1 July 2027 may be critical Tax outcomes could increase for lower-income taxpayers Long-term investment strategies may need review Final Thoughts Capital Gains Tax has always been complex—but the upcoming changes make planning even more important. If you own, or are thinking about selling: Property Shares A business Or any investment asset it’s worth reviewing your position well before 1 July 2027.

While most of the media focus around the 2026 Federal Budget has been on things like negative gearing and housing, one of the biggest changes has barely been mentioned at all — the taxation of discretionary trusts. And if you’re a small business owner or part of a family that uses a trust, this change could materially affect how your income is taxed in the future. Introduction One of the most significant outcomes of the 2026 Federal Budget isn’t aimed at the so‑called ‘top end of town’. It is aimed squarely at structures that everyday mum‑and‑dad businesses rely on. From 1 July 2028, discretionary trusts will be subject to a minimum 30% tax on taxable income, fundamentally changing how trust distributions are taxed. What Was Announced Under the measures announced in the 2026 Federal Budget:  • Discretionary trusts will pay a minimum of 30% tax on their taxable income • That tax will be withheld by the trustee • Beneficiaries will receive a non‑refundable tax credit for the tax already paid by the trust Why This Is a Big Deal for Individual Beneficiaries Under the current system, a trust distribution to an individual is taxed at the individual’s marginal tax rates, allowing access to the $18,200 tax‑free threshold and currently a 16% tax rate on income up to $45,000. Under the proposed rules, this benefit effectively disappears. Even beneficiaries with total taxable income below $45,000 will still bear an effective 30% tax on trust distributions. Why Small Businesses Are Most Affected Discretionary trusts are widely used by small businesses including trades, farming operations, professional practices, and family‑run enterprises. While paying wages instead of trust distributions may address the tax outcome, if your business does not already have employees it introduces real additional costs such as payroll software, payday superannuation compliance, Single Touch Payroll obligations, and WorkCover premiums. The Investment Company Issue A major concern with the proposed measures is how they apply where a company is a beneficiary of a trust, commonly referred to as ‘Bucket’ companies. Based on information released to date, companies do not appear to receive access to the non‑refundable tax credit. This creates the risk of double taxation and significantly undermines bucket company strategies commonly used to smooth income over multiple years and manage long‑term family tax outcomes. Another Common Structure Being Impacted Many small businesses operate through a company, but where all shares are owned by a discretionary trust. This has historically been prudent tax and succession planning, allowing flexibility, family involvement, and long‑term planning. While companies may continue to declare franked dividends to the trust, distributions from the trust to family members appear to be subject to the same minimum 30% tax outcome — even where that income represents the operating profit of the business. Practical Example Consider a modest family business earning $120,000 through a Trust. Under current rules, the Trust could be distributed across family members on low marginal tax rates, or at the least between Mum and Dad, therefore they would each have taxable incomes of $60,000. Currently Tax on that before Medicare and other offsets would be $17,576 combined. Under the new measure that same profit would result in tax of $36,000, an increase of $18,424 in tax paid! For a business operation we would strongly suggest wages be paid of at least $45,000 to each of Mum and Dad. If the same profit is from Trust where all income is from investments there may not be the justification of wages. Final Thoughts Although these measures are not scheduled to commence until 1 July 2028 and further legislative details are still to be released, the implications for small business owners and families using trusts are significant. This article is general information only and does not constitute tax advice.

We’re seeing an increase in company clients receiving correspondence that closely resemble ASIC annual company renewal notices . While these notices can look official, they’re often sent by private businesses that are not associated with ASIC. They typically offer optional services at a cost well above the actual ASIC renewal fee. Before paying anything, we recommend taking a moment to check the following:  Who it’s from – Genuine ASIC renewal notices come directly from ASIC, or from our office if we act as your registered agent. The details – Official ASIC correspondence will include your Corporate Key and clear ASIC branding. The tone – These notices often use urgent or threatening language to encourage quick payment. If you receive an invoice or notice and aren’t sure whether it’s legitimate, please contact our office before making payment. We’re happy to review it with you and help ensure you don’t pay for unnecessary services.