Picture this scenario. After years of deteriorating health, you are forced to exit the workforce and rely on a Total and Permanent Disability (TPD) pension from your superannuation fund. That pension becomes your only source of income. At the same time, your medical needs escalate, and you spend tens of thousands of dollars on treatment simply to manage the condition that ended your career in the first place. It seems reasonable to think that those medical expenses should be deductible, given the disability is the reason the pension is paid. A recent tribunal decision shows the tax law does not always follow that logic. In Wannberg v Commissioner of Taxation [2025] ARTA 1561, the Administrative Review Tribunal (ART) confirmed the ATO’s stance that almost $100,000 in medical expenditure was not deductible. The case is a sobering example of how the tax system separates the act of earning income from the realities of maintaining personal health.

A Closer Look at the Wannberg Case

The taxpayer, Mr Wannberg, had withdrawn from employment due to serious physical and psychological injuries arising from long-term abuse. His TPD pension was the sole income supporting him. In 2024, he approached the ATO for a private ruling on whether approximately $98,000 of medical fees could be deducted. These included psychotherapy, residential rehabilitation programs, and extensive dental treatment. His reasoning was straightforward: the treatments were vital for stabilising his condition and effectively allowed him to continue receiving the pension. He drew parallels to the High Court’s 2010 decision in Anstis, where a student successfully claimed self-education expenses because they were sufficiently related to her Youth Allowance. However, the ATO rejected the deduction, and the tribunal upheld that decision.

Why the Medical Expenses Were Not Deductible

The entire dispute centred on section 8-1 of the Income Tax Assessment Act 1997. For an expense to qualify as a deduction, it must be incurred in the course of “gaining or producing assessable income,” and it cannot be private or domestic in character. The tribunal determined there was no necessary link between the medical treatments and the pension income. The TPD pension was payable because of the taxpayer’s disability—its continuation did not depend on undergoing medical treatment. The treatments improved his ability to cope day to day, but they did not contribute to generating the pension. Because of this lack of nexus, the expenses were categorised as private, similar to general medical bills, therapy sessions, or dental work, which are usually nondeductible regardless of their personal importance.

Key Lessons for Taxpayers

This decision provides important guidance for individuals receiving disability pensions, superannuation income streams, or other forms of support:

• The “nexus” requirement is strict: A deductible expense must be directly connected to the income you are earning. Most medical or therapeutic costs will not satisfy this test.
• Private expenses remain private: Even if treatment helps you manage a condition that affects work capacity, it generally does not convert the expense into a deductible one.
• Treatment vs assessment obligations: Some people must obtain regular medical certificates to keep a licence or accreditation needed for their job. These assessment-related costs can often be deductible. However, once it crosses into treatment, it becomes private.
• Prepare for non-deductible medical spending: Those relying on pension or disability payments should factor medical outlays into their budgeting. Explore whether private health insurance, rebates, or other concessions might ease the burden.
• Seek guidance before you spend: When large costs are involved, ask for professional advice or apply for an ATO private ruling to avoid unexpected outcomes.

Final Thoughts

The Wannberg case underscores a tough reality: tax law focuses on the connection between expenditure and income production, not the necessity of the expense for day-to-day life. Even legitimate, essential healthcare costs may fall outside the boundaries of deductibility. If you’re uncertain about whether an expense is deductible, it’s always safer to clarify the position early. Speak with us so we can help you evaluate your options, avoid pitfalls, and structure your affairs in a way that works best within the tax rules.

Need Help?

By working with us as your professional tax accountant and mortgage broker, you can be confident that your loans are structured to protect your tax position, maximise deductions, and avoid costly mistakes, giving you greater peace of mind and more control over your financial future.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), membership certification of the Australian Society of Certified Practising Accountants (CPA), Registered Australia Tax Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Zoe Ma @ Pitt Martin Tax

A new Bill currently before Parliament — the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025 — outlines several changes that may affect small businesses, listed companies, and the not-for-profit sector. The most widely anticipated proposal is the extension of the $20,000 instant asset write-off for an additional year, through to 30 June 2026.

Instant Asset Write-Off: Extended Support for Small Businesses

If passed, the measure would allow small businesses with an aggregated annual turnover below $10 million to continue claiming an immediate deduction for eligible assets costing less than $20,000 (excluding GST). The threshold applies on a per-asset basis, meaning businesses can claim multiple deductions as long as each item falls under the limit.

To qualify, the asset must be first used or installed ready for use by 30 June 2026. This write-off remains one of the most practical tax incentives available, as it allows the full deduction in the year of purchase rather than spreading depreciation over several years. For many businesses, this helps manage cash flow and supports investment in tools, equipment, or technology upgrades. A tradesperson replacing tools or a café acquiring kitchen equipment, for example, can claim the deduction upfront and redeploy cash into other parts of their operations.

Although the measure is still before Parliament, now is a good time to plan ahead. Businesses considering upgrades or new acquisitions should ensure that lead times, delivery schedules, and installation timing align with the proposed deadline should the Bill be enacted.

Stronger Disclosure Obligations for Listed Companies

The Bill also introduces reforms to the Corporations Act 2001 by requiring the disclosure of equity derivative interests — including options, swaps, and short positions — under the substantial holding regime. The intention is to enhance market transparency and reduce the likelihood of control interests being obscured through complex derivative arrangements.

For listed entities, these reforms will likely increase compliance requirements and may necessitate updates to internal monitoring and reporting systems. Investors with substantial positions should also review their existing arrangements to ensure they remain compliant under the proposed rules.

Greater Transparency in the Charity Sector

For not-for-profits, the Bill proposes granting the ACNC Commissioner the authority to publicly disclose certain “protected information” where a public harm test is met. This shift aims to strengthen public confidence by demonstrating that regulatory action is being taken where misconduct is identified.

For compliant and well-run charities, increased transparency can reinforce community trust. However, it also highlights the importance of robust governance, accurate record-keeping, and a clear understanding of regulatory obligations.

Changes to Oversight of Financial Regulators

The Bill would also reduce the frequency of reviews of ASIC and APRA conducted by the Financial Regulator Assessment Authority, shifting from a two-year to a five-year cycle. While largely administrative, this change reflects a move toward streamlined oversight, giving regulators more room to focus on core responsibilities rather than frequent review processes.

Planning Ahead

Although these measures are not yet law, it may be helpful to prepare early:

• Small businesses should evaluate upcoming capital expenditure and consider whether planned purchases would benefit from the instant asset write-off if the extension is enacted.
• Listed companies may want to assess whether their reporting systems can accommodate expanded disclosure requirements.
• Charities and not-for-profits should review their governance procedures to ensure they are equipped for an environment with greater transparency and potential public disclosures.

We will continue to monitor the progress of the Bill. If you would like tailored guidance on how these changes may affect your organisation or investment plans, feel free to reach out.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), membership certification of the Australian Society of Certified Practising Accountants (CPA), Registered Australia Tax Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Yvonne Shao @ Pitt Martin Tax

If your superannuation balance is below $3 million, you can relax for now. But if your balance is nearing that amount, or already exceeds it, the Government’s proposed changes could affect how your super is taxed in the coming years.

For some time, the Government has been developing new measures to limit the generous tax concessions available to people with very large super balances. This initiative, often referred to as the Division 296 tax, aims to ensure the system remains fair and sustainable.

Recently, the proposal was updated under the Better Targeted Superannuation Concessions (BTSC) policy. The revised version keeps the same goal — reducing tax advantages for high-balance accounts — but simplifies the approach and removes some of the earlier complications that raised industry concerns.

Here’s a breakdown of what’s changing and what it could mean for you.

What’s Changing and Why

The 2023 proposal planned an additional 15% tax on earning for super balances above $3 million, including unrealised gains — meaning members could be taxed on asset growth they hadn’t cashed in.

The revised model fixes this by taxing only realised earnings, such as income and capital gains from sold assets. This change makes the system simpler, fairer, and more in line with standard tax principles.

A Tiered System for Big Balances

The new model introduces a two-tier system for people with higher balances:

• Tier 1: $3 million to $10 million – Earnings on this portion of the balance will face an extra 15% tax, bringing the total tax rate to 30%.
• Tier 2: Over $10 million – Earnings on this portion will attract an extra 25% tax, giving a total rate of 40%.

Both thresholds will increase each year in line with inflation — by $150,000 for the first tier and $500,000 for the second. This prevents “bracket creep” as balances grow over time.

The changes are planned to start on 1 July 2026, with the first tax assessments expected in 2027–28. According to Treasury, fewer than 0.5% of Australians will be affected at the $3 million level, and fewer than 0.1% will fall into the $10 million tier.

How It Works in Practice

To understand how this tax might work, here are two examples.

Example 1:
Megan has a total super balance of $4.5 million across her SMSF and an APRA-regulated fund. Her fund earns $300,000 in realised income for the year. The portion of her balance above $3 million represents one-third of her total balance, so she will pay extra tax on one-third of her earnings. Her additional Division 296 tax will be:
15% × 33.33% × $300,000 = $15,000.

Example 2:
Emma has a $12.9 million super balance in her SMSF and earns $840,000 in realised income for the year. She pays 15% on the Tier 1 portion and an additional 10% on the Tier 2 portion, bringing her total additional tax to around $115,000.

These examples show the tax increases are proportionate — only the earnings related to the amounts above the thresholds are affected.

Why It’s Better News for Most

This update will come as a welcome relief for many SMSF members, as excluding unrealised gains reduces both valuation complexities and liquidity concerns — especially for those with property or unlisted assets. On the other hand, individuals with super balances exceeding $10 million could face total tax rates of up to 40%, which may encourage a review of long-term planning. It’s important to keep in mind, however, that the legislation for this measure has not yet been introduced to Parliament, so the rules could still change before they are finalised.

Low Income Superannuation Tax Offset (LISTO)

Alongside this change, the Government has announced an increase to the LISTO.

From 1 July 2027, the LISTO income threshold will rise from $37,000 to $45,000, and the maximum payment will increase to $810. Treasury expects that affected workers will receive an average increase of around $410.

What You Should Do Now

1. Understand your total super balance (TSB)
Start by reviewing your current balance and projecting where it’s likely to sit by 2026.

2. Get professional advice early
Thoughtful planning can make a real difference. Strategies such as managing liquidity, reviewing asset allocations, and timing asset sales can help you stay flexible and tax-efficient under the new rules.

3. Stay informed
We expect draft legislation in 2026 and will keep you informed via our newsletters or online article.

Overall, the revised rules aim to simplify super for the majority, though those with larger balances may see less advantage. If your super sits near or above $3 million, taking action now will put you in the best position for what’s ahead. With the right planning, you can safeguard your wealth and move forward with confidence.

Pitt Martin Group is a CPA accounting firm, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Australian Society of Certified Practising Accountants (CPA), Australian Taxation Registered Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Angela Abejo @ Pitt Martin Tax

Unpaid ATO debts are about to become a far pricier problem for many taxpayers.

From 1 July 2025, interest charges imposed by the Australian Taxation Office — including the general interest charge (GIC) and shortfall interest charge (SIC) — will no longer be deductible for tax purposes. The rule applies to all tax debts, whether they arise from previous or future income years.

With the GIC currently at 11.17%, ATO interest ranks among the highest-cost forms of borrowing. Now that the tax deduction is off the table, those relying on ATO payment arrangements could find themselves paying a steep premium for the privilege of deferring their tax liabilities, such as arrangement of payment plan.

Refinancing ATO Debt

One way businesses can reduce the impact of these changes is by refinancing their ATO debts through a bank or other lender. Unlike the ATO’s GIC or SIC, interest on commercial loans may be deductible, provided the borrowed funds are used in connection with business activities.

For example, if the borrowing is used to pay tax liabilities directly linked to your business operations, the interest may be deductible. This could include payments for:

• Income Tax
• Goods and Services Tax (GST)
• PAYG instalments
• PAYG withholding for employees
• Fringe Benefits Tax (FBT)

However, deductibility will depend on the nature of the underlying debt and how the borrowed funds are applied. It’s important to seek advice before proceeding, as not all refinanced tax debts will result in deductible interest expenses.

Individuals

For individuals, the tax treatment of interest on loans used to pay ATO debts depends primarily on how the tax debt arose.

• Sole traders: If you are carrying on a genuine business, and the tax debt arose from that business, the interest on money borrowed to pay that tax debt is generally tax deductible.
  
• Employees or investors: If your tax debt stems from salary and wages, rental income, dividends, or other investment income, the interest on money borrowed to pay that debt is not deductible. Refinancing may still make sense to reduce your total interest cost, but it won’t provide any tax benefit.

Example:
 Sam operates a café as a sole trader and owes $30,000 in tax, entirely arising from his business profits. He borrows $30,000 to pay this debt. The interest on that loan should be fully deductible because the debt is connected with his business activity.

However, if part of Sam’s tax debt relates to his employment income from a part-time job — say $10,000 out of the $30,000 total — then only two-thirds of the interest would be deductible (reflecting the portion of the debt linked to his business).

Companies and Trusts

For companies and trusts, the rules are similar.

If a company or trust borrows to pay its own tax debts (for example, income tax, GST, PAYG withholding, or FBT liabilities), then the interest will usually be deductible, provided the debts are connected with the business.

However, if a director or beneficiary personally borrows money to pay the company’s or trust’s tax liabilities, the interest on that personal loan would not normally be deductible to them. This is because the borrowing is not incurred in producing their own assessable income.

Partnerships

The situation becomes more complex with partnerships.

If the borrowing occurs at the partnership level and is used to pay a tax debt arising from a business carried on by the partnership, then the interest should generally be deductible. This includes borrowings used to pay GST, PAYG withholding, or other business-related tax obligations.

However, the ATO has a stricter view when individual partners borrow personally to pay tax debts that relate to their share of partnership income. In such cases, the interest is typically not deductible, as it’s considered a personal expense rather than a business one — even if the partnership itself carries on a business activity.

Practical Takeaway

Leaving debts outstanding with the ATO is now more expensive than ever. With GIC and SIC no longer deductible from 1 July 2025, taxpayers can no longer rely on these interest charges being partly offset through tax savings.

If you are currently on an ATO payment plan or expect a future tax liability, it’s worth reviewing your position. Refinancing tax debts through a commercial lender could potentially offer two advantages:

1. Lower interest rates compared to ATO GIC, and
   
2. Possible tax deductibility of interest if the borrowing relates to business activities.

That said, not every refinancing arrangement will qualify for a deduction. For mixed-purpose debts (for example, partly business and partly personal), interest deductions must be apportioned.

If you’re unsure whether refinancing makes sense in your situation, it’s best to seek advice before arranging any finance. With the right structure and strategy, you can manage your tax debts more efficiently and avoid unnecessary costs.

Need Help?

By working with us as your professional tax accountant and mortgage broker, you can be confident that your loans are structured to protect your tax position, maximise deductions, and avoid costly mistakes, giving you greater peace of mind and more control over your financial future.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), membership certification of the Australian Society of Certified Practising Accountants (CPA), Registered Australia Tax Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Zoe Ma @ Pitt Martin Tax

The Federal Government has completed its review of supermarket unit pricing — a topic that might seem purely consumer-focused but could carry real implications for businesses in the grocery supply chain.

What’s Happening

Unit pricing lets shoppers compare the cost of products using a standard measure — such as dollars per 100 grams or per litre. Since 2009, large supermarkets have been required to display these figures to help customers identify better value.

This system has operated with relatively low compliance costs and limited penalties. But that could soon change. Treasury recently consulted on strengthening the Retail Grocery Industry (Unit Pricing) Code of Conduct, with submissions open only from 1–19 September 2025 — a short window for feedback.

Why the Review

The move follows the ACCC’s supermarket inquiry, which found that while unit pricing is useful, there are still gaps. One major concern is shrinkflation — when pack sizes shrink but prices stay the same or rise.

With cost-of-living pressures still high, the Government wants pricing to be clearer and fairer, helping rebuild trust between retailers and consumers.

Possible Changes

The consultation paper proposed several reforms:

• Shrinkflation alerts – supermarkets may need to flag when a product’s size decreases without a price drop.
• Clearer displays – larger, more visible unit prices in-store and online.
• Wider coverage – applying rules to smaller retailers and online platforms.
• Standardised measures – ensuring consistent “per 100g” or “per litre” comparisons.
• Civil penalties – introducing fines for non-compliance.

Business Implications

For suppliers, packaging and labelling decisions could face greater scrutiny — especially when changing pack sizes or formats.

For retailers, new systems may be needed for shelf labels, software, or e-commerce updates. These could add costs, but they also offer an opportunity to show transparency and build consumer loyalty.

In the longer term, clearer pricing may affect how products are positioned, marketed, and priced across the sector. Businesses that prepare early can avoid disruption once the new rules are introduced.

What’s Next

Now that submissions have closed, Treasury will review feedback and the Government is expected to announce its response later this year.

Companies involved in food, grocery, or household goods should monitor the outcome closely. The upcoming reforms could shape packaging, pricing, and compliance obligations across the industry.

At Pitt Martin Tax Pty Ltd, we can help you assess potential compliance costs, evaluate financial impacts, and prepare for these regulatory changes. If your business sells or supplies to supermarkets, now is a good time to review your pricing systems and get ready for what’s next.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), membership certification of the Australian Society of Certified Practising Accountants (CPA), Registered Australia Tax Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Yvonne Shao @ Pitt Martin Tax

The Australian Taxation Office (ATO) has released new guidance outlining its key areas of focus for privately owned and wealthy groups. Each financial year, the ATO highlights the issues it will be monitoring more closely. For business owners, families, and wealthy groups, this serves as an important reminder to review tax positions, ensure compliance, and identify potential planning opportunities before year-end.

There are many areas that the ATO will be focusing on this year. Please click this link for full details. We pull out three key areas as below:

I. Family Trust Distributions

The ATO is continuing to closely review family trust distributions. When a family trust makes a family trust election, it gains access to several tax benefits. However, problems arise when the trust distributes income to someone outside the “family group.”

If this happens, it can trigger Family Trust Distribution Tax (FTDT), which is charged at a hefty 47% of the amount distributed, plus interest on any unpaid amounts. What makes this even more serious is that there is no time limit for the ATO to collect unpaid FTDT.

If you operate a family trust, it’s essential to make sure your distributions stay within the defined family group. Reviewing trust deeds and resolutions each year before finalising distributions can help avoid this costly mistake.

II. Business Restructures

The ATO has also flagged its concern about business restructures designed mainly to access tax concessions that wouldn’t otherwise apply.

For example, this may include changing how a business or group is structured to take advantage of the small business CGT concessions. The ATO has previously used the general anti-avoidance rules (Part IVA) to challenge restructures that appear to be primarily tax-driven.

If you’re considering a restructure, make sure it has a commercial purpose beyond tax benefits and that all steps are properly documented.

III. Trusts and Franked Dividends

Another area attracting attention is trusts distributing franked dividends to newly created companies. The ATO believes that if a corporate beneficiary didn’t exist when the original dividend was paid, it might not qualify to use the franking credits.

This is because the company may not meet the 45-day holding period rule, even if the trust held the shares for long enough.

Stay Proactive

These ATO focus areas highlight the need for proper planning and documentation. If you operate through a family trust, hold business investments, or are considering a restructure, now is the time to review your tax position.

Our team can help you ensure your structures are compliant and that your strategies remain effective under current ATO scrutiny.

Pitt Martin Group is a CPA accounting firm, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Australian Society of Certified Practising Accountants (CPA), Australian Taxation Registered Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Angela Abejo @ Pitt Martin Tax

The Federal Government has recently introduced significant reforms to student loans aimed at easing the financial pressure on Australians, particularly younger generations grappling with both higher education costs and the broader rise in living expenses. The measures include a 20% reduction in student debt and a more generous repayment threshold, providing meaningful relief to millions of Australians.

These changes go beyond symbolic gestures and will deliver tangible savings to those carrying student debt, an outcome that is expected to be far more effective than lifestyle adjustments often suggested outside of Parliament, such as forgoing café breakfasts.

20% Reduction in Student Debt

From 1 June 2025, a one-off 20% reduction will be applied to the balances of eligible student loans. This policy is expected to benefit over three million Australians, collectively reducing outstanding student debt by more than $16 billion.

The reduction will apply to a wide range of government-supported education loans, including:

• HELP loans (HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP, OS-HELP)
• VET Student Loans
• Australian Apprenticeship Support Loans
• Student Start-up Loans
• Student Financial Supplement Scheme

How it works:

• The reduction will be calculated based on the loan balance as at 1 June 2025, before indexation is applied.
• Indexation will only apply to the reduced balance.
• The ATO will automatically process the reduction and adjust the indexation. No action is required from borrowers.
• Individuals will be notified once the adjustment has been made.

Special circumstances:

If you had a HELP debt recorded with the ATO on 1 April 2025 but subsequently repaid the loan in full after 1 June 2025, the reduction will generally create a credit in your HELP account. Where no other tax or Commonwealth debts exist, this credit will typically be refunded to you.

To estimate the impact of this measure, the Government’s HELP debt estimator is available online. If you require assistance in checking your eligibility or understanding your reduction amount, professional guidance can ensure you make the most of these changes.

Changes to Repayment Thresholds

In addition to reducing debt balances, the Government has also altered the repayment system to make it fairer and more affordable.

From the 2025–26 income year, the minimum repayment threshold will increase from $56,156 to $67,000. By comparison, the threshold was $54,435 in the 2024–25 year. This means compulsory repayments will now only apply to income above $67,000. Importantly, repayments will be calculated only on the portion of income above this threshold.

Repayments will continue to be administered through the tax system and assessed once individuals lodge their annual tax returns with the ATO.

What This Means for You

For many Australians, these reforms will provide greater disposable income in the short term, allowing households to better manage everyday expenses. However, this also means that student loans may take longer to clear unless voluntary repayments are made.

Those in a position to make extra contributions may still wish to consider voluntary repayments as a strategy to reduce long-term interest through indexation. For others, the breathing space provided by the higher threshold will be a welcome relief.

Final Thoughts

The combination of a 20% debt reduction and more flexible repayment arrangements represents one of the most significant reforms to student loans in recent years. This policy recognises the challenges faced by graduates and current students while also addressing the economic reality of rising living costs.

If you are unsure how these changes affect your situation, or whether voluntary repayments may still be beneficial in your case, it is advisable to seek tailored advice.

Need Help?

By working with us as your professional tax accountant and mortgage broker, you can be confident that your loans are structured to protect your tax position, maximise deductions, and avoid costly mistakes, giving you greater peace of mind and more control over your financial future.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), membership certification of the Australian Society of Certified Practising Accountants (CPA), Registered Australia Tax Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Zoe Ma @ Pitt Martin Tax

A recent decision of the Administrative Appeals Tribunal (AAT) has served as a timely reminder of the importance of correctly preparing and finalising trust resolutions. The case involved the Goldenville Family Trust (GFT), where the Tribunal found that certain trust distributions were not valid. As a result, the trust’s default beneficiaries—rather than the intended recipients—were taxed on the trust’s net income for the years in question.

What Happened?

In the 2015, 2016, and 2017 income years, the trustees of the GFT made written resolutions to distribute interest income to two beneficiaries. One of these beneficiaries was a foreign resident. The arrangement appeared to be designed to achieve a more favourable tax outcome, since distributions of interest to non-residents are normally subject to a flat 10% withholding tax.

However, the Commissioner challenged the treatment of the distributions, arguing that the trust resolutions were not valid and that the income itself should not be classified as interest.

The Tribunal’s Findings

The Tribunal identified two key issues:

1. Validity of the Resolutions
   For trust resolutions to be effective for tax purposes, trustees must make their decisions before 30 June of the relevant income year. While the formal documentation can be prepared later, it must reflect a decision that was genuinely made by year-end. In this case, the Tribunal was not satisfied that the resolutions had been made by 30 June. Evidence suggested the decisions were likely made after year-end, rendering the resolutions invalid.

Because the resolutions were invalid, the trust’s default beneficiaries—who were Australian residents—became entitled to the income, and they were taxed accordingly.

2. Characterisation of the Income
   Even if the resolutions had been valid, the Tribunal was not convinced that the amounts distributed could be properly classified as interest income. While it accepted that the amounts were income and assessable, there was insufficient evidence to prove they were specifically “interest.” Without adequate supporting material, the Tribunal rejected the trustee’s characterisation.

Key Lessons for Trustees and Advisers

This case provides two important reminders:

• Trust resolutions must be finalised by 30 June. Trustees should ensure decisions are properly documented before year-end, and contemporaneous records should be maintained. Backdating or relying on incomplete resolutions poses a serious risk of challenge.
• Labels are not decisive. Simply calling an amount “interest” or another category of income will not determine its tax treatment. The ATO and courts will look to the substance of the income and how it was derived.

If you would like assistance reviewing your trust arrangements or preparing valid year-end resolutions, you may contact our team to help ensure you remain compliant and protected.

Pitt Martin Group is a CPA accounting firm, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Australian Society of Certified Practising Accountants (CPA), Australian Taxation Registered Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Angela Abejo @ Pitt Martin Tax

From 1 July 2025, the superannuation guarantee (SG) rate increased to 12%. This is the final step in a series of planned rises that have been legislated for several years. While the new rate has received attention, the more pressing issue for both employers and employees is how contributions are handled and when they must be paid.

Quarterly Deadlines

Employers are currently required to pay SG contributions within 28 days after the end of each quarter. The due dates are:

• 28 October – July to September quarter
• 28 January – October to December quarter
• 28 April – January to March quarter
• 28 July – April to June quarter

If the deadline falls on a public holiday, an extra day is granted. Importantly, contributions must be in the employee’s superannuation fund by these dates. The only exception is where the ATO Small Business Superannuation Clearing House (SBSCH) is used. In that case, a payment is considered made once the SBSCH receives it.

Employer Considerations

Claiming Deductions

To claim a tax deduction, contributions must be in the super fund (or SBSCH) by the due date. Employers who use commercial clearing houses need to plan carefully. These intermediaries process contributions and forward them to super funds, but turnaround times can be lengthy—sometimes up to two weeks. Employers should therefore allow plenty of lead time before the quarterly deadline.

Late Payments and Penalties

Missing a deadline, even by a single day, triggers the Superannuation Guarantee Charge (SGC). This results in:

• Loss of the tax deduction
• Additional penalties
• Interest charges

The ATO requires employers to lodge an SGC statement if a deadline is missed, which increases compliance costs.

Looking Ahead: Payday Super

Employers should also prepare for potential changes. The government has proposed “payday superannuation” reforms starting 1 July 2026. Under this system, SG would be paid at the same time as wages, not quarterly. If introduced, the SBSCH will close, and employers using it will need to transition to a commercial clearing house. Businesses may wish to start reviewing their options early.

Employee Considerations

Employees also have responsibilities. It is recommended that workers:

• Regularly check superannuation fund statements
• Match contributions with payslips
• Raise issues directly with employers if contributions are missing or late

If concerns are not resolved, employees can escalate matters to the ATO.

The increase to 12% completes a long-running policy change, but the real challenge lies in timely and accurate contributions. Employers must ensure processes are in place to meet deadlines, especially if using a clearing house. Employees should remain proactive in monitoring their super accounts. With stronger ATO enforcement and the possibility of payday super on the horizon, both sides have good reason to stay alert.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), membership certification of the Australian Society of Certified Practising Accountants (CPA), Registered Australia Tax Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Yvonne Shao @ Pitt Martin Tax

As at tax time, one of the most common questions ATO receives is whether interest on a loan is tax deductible. It’s an important question as the way interest expenses are treated can make a significant difference to your overall tax outcome. But the rules can be complex, and it’s easy to fall into traps without the right guidance. Here is a breakdown of the key points to keep in mind.

1. Purpose of the Loan

The tax treatment of interest always comes back to a simple principle: what was the borrowed money used for?

• If the funds are applied to an income-producing or business activity, the interest is usually deductible.
• If the funds are used for private purposes (such as buying a new home, car, or holiday), the interest is not deductible.

Importantly, the security for the loan does not matter. Many people assume that because a loan is secured against an income-producing asset, the interest should automatically be deductible — this is not correct.

Example – Using rental property as security:
Harry borrows against his rental property to fund the purchase of a private home. Even though the loan is secured against an income-producing asset, the funds are used privately. The result? No interest deduction is available.

2. Redraw Facilities vs Offset Accounts

While redraws and offsets may appear similar from a financial perspective, their tax outcomes are very different.

• Redraw facility – Extra repayments reduce the loan balance. When those funds are redrawn, it’s treated as taking out a new loan. Deductibility is determined by how the redrawn funds are applied.
• Offset account – Funds in an offset account are treated as savings. Withdrawing them doesn’t create a new loan, even though interest on the linked loan increases. Deductibility depends only on the original loan purpose.
  

Example 1 – Lara’s redraw facility:
Lara borrowed to buy her home. She later made extra repayments, then redrew some of those funds to invest in shares. Her loan now has mixed purposes:

• The home loan portion remains private, with non-deductible interest.
• The investment portion may generate deductible interest, as it funds an income-producing asset.
  

Example 2 – Peter’s offset account:
Peter borrowed to buy his home and placed extra funds into an offset account. Later, he withdrew money from the offset to buy shares. Even though his loan interest rises, it remains entirely non-deductible because the loan was for private purposes. The shares were purchased using Peter’s own savings, not borrowed funds.

3. Parking Borrowed Funds in an Offset Account

A common strategy we see is clients taking out a loan for future investment and temporarily placing the funds in an offset account. This approach is risky.

• While the money sits in the offset account, it isn’t being used to produce income, so the interest is not deductible.
• Mixing borrowed funds with existing personal money can make it impossible to trace where the funds ultimately went, creating a risk that deductions will be denied even after the money is invested.
  

Example – Duncan’s loan:
 Duncan takes out a loan intending to buy shares but first deposits the funds into an offset linked to his rental property loan. During this time, interest on the new loan is not deductible. If he later withdraws the funds to purchase shares, the ATO may still deny deductions, especially if the offset already contained other money.

This is an area where the mixing of funds can have lasting consequences, as once the deductibility of interest is affected it can be extremely difficult, and sometimes impossible, to restore.

4. Mixed-Purpose Loans and Record-Keeping

When a single loan funds both private and investment activities, it becomes a mixed-purpose loan. This situation complicates interest calculations, as repayments must be apportioned between the private and deductible components.

Over time, these loans can become extremely difficult to manage, especially if additional redraws or repayments are made. The risk of error is high, and taxpayers often end up either over-claiming (risking penalties) or under-claiming (missing out on deductions).

Practical tip: Keep investment borrowings completely separate from private loans wherever possible. This makes tracing and substantiating deductions straightforward.

5. ATO Audit Risk

Interest deductions are a common area of focus for the Australian Taxation Office (ATO). Because loan arrangements can be complex and easily misunderstood, the ATO pays close attention to:

• Claims where loans are secured against rental properties but used for private purposes.
• Deduction claims involving redraw facilities and offset accounts.
• Mixed-purpose loans where taxpayers struggle to apportion interest correctly.
• Situations where borrowed funds are temporarily parked in offset accounts.
  

If the ATO determines that deductions have been incorrectly claimed, taxpayers may face not only amended assessments but also penalties and interest charges. This makes it especially important to maintain clear records and seek advice before structuring or using loan facilities.

Need Help?

By working with us as your professional tax accountant and mortgage broker, you can be confident that your loans are structured to protect your tax position, maximise deductions, and avoid costly mistakes, giving you greater peace of mind and more control over your financial future.

Pitt Martin Group is a firm of Chartered Accountants, providing services including taxation, accounting, business consulting, self-managed superannuation funds, auditing and mortgage & finance. We spend hundreds of hours each year on training and researching new tax laws to ensure our clients can maximize legitimate tax benefit. Our contact information are phone +61292213345 or email info@pittmartingroup.com.au. Pitt Martin Group is located in the convenient transportation hub of Sydney’s central business district. Our honours include the 2018 CPA NSW President’s Award for Excellence, the 2020 Australian Small Business Champion Award Finalist, the 2021 Australia’s well-known media ‘Accountants Daily’ the Accounting Firm of the Year Award Finalist and the 2022 Start-up Firm of the Year Award Finalist, and the 2023 Hong Kong-Australia Business Association Business Award Finalist.

Pitt Martin Group qualifications include over fifteen years of professional experience in accounting industry, membership certification of the Chartered Accountants Australia and New Zealand (CA ANZ), membership certification of the Australian Society of Certified Practising Accountants (CPA), Registered Australia Tax Agents, certified External Examiner of the Law Societies of New South Wales, Victoria, and Western Australia Law Trust Accounts, membership certification of the Finance Brokers Association of Australia Limited (FBAA), Registered Agents of the Australian Securities and Investments Commission (ASIC), certified Advisor of accounting software such as XERO, QUICKBOOKS, MYOB, etc.

This content is for reference only and does not constitute advice on any individual or group’s specific situation. Any individual or group should take action only after consulting with professionals. Due to the timeliness of tax laws, we have endeavoured to provide timely and accurate information at the time of publication, but cannot guarantee that the content stated will remain applicable in the future. Please indicate the source when forwarding this content.

By Zoe Ma @ Pitt Martin Tax