The start of the 2025/2026 financial year has brought significant updates to superannuation rates and thresholds that employers, employees, and self-managed super fund (SMSF) members need to be aware of. These changes affect payroll obligations, contribution strategies, and retirement planning, making it essential to review your arrangements now to ensure compliance and maximise opportunities.

From 1 July 2025, the superannuation guarantee (SG) rate has increased to 12%, marking the final stage in the legislated gradual rise. At the same time, there are adjustments to contribution caps, total superannuation balance (TSB) limits, and several key super and tax thresholds.

Super Guarantee Rate Now 12%

Old rate: 11.5% (up to 30 June 2025)
New rate: 12% (from 1 July 2025)

The SG increase means employers must now contribute 12% of an employee’s ordinary time earnings (OTE) to their super fund. While the rise helps employees build stronger retirement savings, it may also impact employers’ cash flow, payroll accruals, and employment contracts—especially where remuneration packages are expressed as “inclusive of superannuation.”

Employer Checklist:

• Update payroll systems so SG is calculated correctly from the first pay run after 1 July 2025.
• Review employment agreements— if contracts are expressed as “inclusive of super,” an SG increase could reduce take-home pay unless contracts are renegotiated or the employer absorbs the cost.
• Plan for higher contributions in budgets and cash flow forecasts.
• Avoid penalties—late or incorrect SG payments can result in loss of tax deductions, interest charges, and administration fees.

Personal Superannuation Contributions

The annual concessional contribution cap remains at $30,000 for 2025/2026. The annual non-concessional contribution (NCC) cap stays at $120,000, which is four times the concessional cap.

While the NCC cap itself has not changed, individuals with a total super balance (TSB) of less than $2 million on 30 June 2025 can now make NCCs—provided they have not reached the age 75 deadline and any previous bring-forward periods are taken into account. This change is due to the upper TSB limit being linked to the general transfer balance cap (TBC), which has increased to $2 million.

NCC Cap and Bring-Forward Rules for 2025/2026:

Total Super Balance at 30 June 2025	NCC Cap	Bring-Forward Period
Less than $1.76m	$360,000	3 years
$1.76m to $1.88m	$240,000	2 years
$1.88m to $2.0m	$120,000	No bring-forward
$2.0m and above	Nil	Nil

Personal Deductible Contributions

Individuals may claim a tax deduction for personal super contributions made with after-tax funds if they meet eligibility criteria. Generally, a deduction is available if the member:

1. Contributes to their fund in the relevant financial year;
2. Is aged under 67, or aged 67–74 and meets the work test or exemption;
3. Provides the fund with a valid Notice of Intent to Claim; and
4. Receives an acknowledgment from the fund.

The official form for this notice is NAT 71121 – Notice of Intent to Claim or Vary a Deduction for Personal Super Contributions.

A notice will only be valid if:

• The person is still a member of the fund;
• The fund still holds the contribution;
• It has not been included in a previous notice;
• It is not part of a super income stream or released under the First Home Super Saver Scheme (FHSS); and
• It does not include recontributed FHSS amounts.

Key deadlines: The notice must be given by the earlier of:

• The date the individual lodges their income tax return for the relevant financial year; or
• 30 June of the following financial year.

If the member rolls over or withdraws their entire balance, or starts a pension before lodging the notice, the deduction claim will be invalid.

Updated Superannuation & Tax Thresholds for 2025/2026

Unchanged Thresholds for 2025/2026

• Concessional contribution cap: $30,000
• Non-concessional contribution cap (standard): $120,000
• Maximum bring-forward NCC cap (over 3 years): $360,000
• Division 293 annual income threshold: $250,000

What This Means for You

These changes represent an important opportunity to review your superannuation strategy:

• For employers: Ensure payroll systems are updated and contracts reviewed to comply with the SG increase.
• For employees and SMSF members: Consider contribution timing and whether you are eligible for bring-forward arrangements before your TSB reaches $2 million.
• For individuals making personal deductible contributions: Meet the strict notice deadlines to secure tax deductions.

The 2025/2026 updates are more than just compliance changes—they can directly influence retirement outcomes, tax planning, and cash flow.

If you’d like tailored advice on how these superannuation changes could affect you or your business, contact our team today. Our superannuation and tax specialists can help you maximise opportunities and remain compliant.

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

Financial influencers – or “finfluencers” – are everywhere on platforms like Instagram and TikTok. With polished content and confident advice, they’ve built large audiences, but it’s important to be cautious. Following financial or tax advice from unqualified sources can lead to costly mistakes. We’re increasingly seeing examples of misleading tips, inflated claims, and outright misinformation. Acting on these could result in unexpected tax bills, penalties, or even legal action from the ATO.

Why It’s a Problem

Many finfluencers generate income by promoting financial products or services, meaning their content may be driven by commercial interests rather than what’s best for you. Most aren’t licensed or qualified to give tax advice, and their tips often lack the accuracy and nuance required for individual circumstances. We have seen so-called “tax hacks” circulating that are not only incorrect but often apply only in very limited situations, if they apply at all.

Some recent examples flagged by the ATO and professional accounting bodies include:

• Claiming your pet as a work-related guard dog
• Writing off designer handbags as work-related laptop bags
• Deducting fuel expenses without any records
• Claiming swimwear as a work uniform

While these might sound clever, they don’t meet the ATO’s strict criteria for deductions and can easily trigger an audit. The ATO uses advanced data matching tools to flag suspicious claims, and incorrect deductions can lead to:

• Increased tax payable
• Interest charge
• Penalties
• In severe cases, criminal prosecution

How to Stay Tax-Safe

• Be skeptical of anything that sounds too good to be true — especially on social media.
• Refer to credible sources like ato.gov.au for accurate, up-to-date guidance.
• Don’t jeopardise your financial integrity for a quick deduction — it’s not worth the risk.

If you’re unsure about what you can and can’t claim, speak to a registered tax professional. We’re here to help — no gimmicks, no filters, just solid advice.

Need Help?

We can assist you in reviewing your tax position before year-end to ensure you’re making the most of the opportunities available while reducing your exposure to compliance risks. Contact us today for a tailored review.

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

If you’ve got an outstanding tax bill with the ATO, now’s the time to take a closer look. Because from 1 July 2025, it might cost you more than you expect.

The government has officially scrapped the tax deductibility of interest charges applied to ATO debts. That means two common interest charges, General Interest Charge (GIC) and Shortfall Interest Charge (SIC), will no longer be deductible for tax purposes if they’re incurred on or after that date. Even if the original debt arose earlier, any new interest charges from 1 July 2025 won’t reduce your taxable income.

What are they?

When you pay your tax late, the ATO applies General Interest Charge (GIC), essentially a penalty to encourage timely payment and maintain fairness among taxpayers. GIC is calculated daily and compounds, meaning the longer it takes to pay, the more you’ll owe. As of the July–September 2025 quarter, the GIC annual rate is a hefty 10.78%.

Then there’s Shortfall Interest Charge (SIC), which applies when your tax return is amended and reveals that you underpaid your taxes. SIC also compounds daily and applies to the shortfall for the period between when the tax should have been paid and when the shortfall is corrected. The SIC rate for the same quarter sits at 6.78%.

What’s in change?

Until now, businesses and individuals could claim these interest charges as deductions, softening the blow by lowering the effective after-tax cost. That benefit is about to disappear.

From 1 July 2025 onwards, GIC and SIC will no longer be deductible, regardless of when the underlying tax debt was incurred. This means that many taxpayers, especially those in higher tax brackets, will feel the full impact of these interest charges.

In practical terms, the end of deductibility translates to higher real costs. You’ll still be hit with the interest, but without the tax deduction that used to ease the sting.

What can you do about it?

The best move is simple: pay down your tax debt as soon as you can. With interest rates this high and compounding daily, the cost of delay adds up fast.

If that’s not financially feasible in the short term, there are other options worth exploring. For example, you might consider refinancing the tax debt through a loan with a lower interest rate. In some cases, the interest on such a loan could still be deductible—particularly if the tax debt relates to business income. That said, interest on loans used to pay personal or investment-related tax debts generally won’t be deductible, so it’s important to get proper advice before taking that route.

Another path is to negotiate a payment plan with the ATO. While this spreads out repayments, it doesn’t stop GIC from accruing. So even if a plan offers breathing room, it’s still better to pay the debt off faster if you can.

Plan ahead

More importantly, this is a good reminder to think ahead when it comes to managing your tax obligations. Setting aside funds regularly for GST, PAYG, and other liabilities can make a world of difference. Keeping these amounts separate, almost like a mini tax savings account, helps avoid nasty surprises when the ATO bill arrives.

If you’re carrying tax debt or unsure about how these changes might affect you, now is the time to act. The rules are shifting, but with some smart planning and the right support, you can stay ahead of the curve and avoid unnecessary interest costs.

Let’s talk if you need help navigating the changes or putting a plan in place—we’re here to make sure you stay compliant and in control.

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 Federal Government has proposed a new measure that could impact individuals with large superannuation balances. Known as the Division 296 super tax, this proposal would introduce an additional 15% tax on a portion of super earnings for individuals whose total superannuation balance (TSB) exceeds $3 million as at 30 June of the relevant income year.

While not yet law, the Government aims for the measure to apply from 1 July 2025, with the first Division 296 tax assessments expected to be issued after 30 June 2026. The proposal must still pass through both Houses of Parliament, and the final legislation could include amendments.

How Will Division 296 Work?

Assuming the legislation is passed in its current form, here’s how the Division 296 tax would operate:

• If your TSB exceeds $3 million at the end of a financial year (30 June), a proportion of your annual superannuation earnings will be subject to an additional 15% tax.
• This tax is assessed personally, not at the fund level, and can be paid either from your super fund or your personal funds.
• Superannuation earnings for this purpose are calculated based on the net increase in your total super balance across the year, with adjustments made for certain contributions and withdrawals.

Some exclusions apply. Division 296 will not apply to:

• Children receiving super income streams,
• Structured settlements (such as personal injury payouts), and
• Deceased members.

It’s important to understand that your TSB includes all superannuation interests—including balances in APRA-regulated funds, self-managed super funds (SMSFs), and defined benefit schemes assessed at 30 June each year.

If the proposed start date of 1 July 2025 goes ahead, then the first test date will be 30 June 2026. Your TSB on that date—and each following 30 June—will determine whether Division 296 applies to you. Only those with a TSB exceeding $3 million at financial year-end will incur this additional tax.

Real-World Examples

Tom has a super balance of $5 million at 30 June, and his fund earned $150,000 for the year. The portion of his balance above the $3 million threshold is 40%:

• Taxable earnings: $150,000 × 40% = $60,000
• Division 296 tax: $60,000 × 15% = $9,000

Darren withdraws $100,000 just before 30 June, reducing his balance to under $3 million. He avoids any Division 296 liability for that year.

Natalie inherits a death benefit pension, pushing her balance from $2.5 million to $3.5 million. While the inherited amount isn’t taxed, investment earnings on the excess balance may still trigger a Division 296 tax.

Practical Considerations

Now is a good time to start preparing in case the measure becomes law. We recommend:

• Reviewing your super fund’s liquidity and cash flow to plan for future tax obligations.
• Keeping your asset valuations accurate and current, especially within SMSFs.
• Monitoring your combined superannuation balances across all funds.
• Planning ahead for large contributions or withdrawals that could affect your TSB at year-end.
• Documenting asset values for transparency and audit support.

Need Help?

While the Division 296 super tax is still subject to legislative approval, it’s important to begin assessing the potential impact. If you have questions or would like to discuss your superannuation strategy in light of this proposed measure, contact our team today. We’re here to help you navigate this change with clarity and confidence.

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 Angela Abejo @ Pitt Martin Tax

From tax cuts to energy rebates, here’s what to watch after the new term begins

With Labor returning to government and holding a majority in the House of Representatives, attention is turning to the promises they made during the campaign—and what they still want to achieve. While some measures are already in motion, others may rely on support in the Senate or further development. Here’s a detailed summary of the key initiatives that could affect individuals, small businesses, and high-energy industries in the new term.

---

For Individuals

1. Personal income tax cuts (confirmed)

Starting from 1 July 2026, income tax rates for individuals will begin to drop:

• The tax rate for the $18,201–$45,000 bracket will reduce from 16% to 15% in 2026–27, and further to 14% from 2027–28.
• The maximum tax saving is estimated at $268 for the first year, and $536 in the second year. This change has been legislated and is set to take effect as planned.

2. $1,000 shortcut work-related deduction

A new simplified tax deduction has been introduced, allowing taxpayers who earn employment income to claim a flat $1,000 deduction without needing detailed substantiation.

• Taxpayers with higher actual expenses can still opt for itemised deductions.
• This shortcut deduction is not available for those earning only business or investment income.
• Additional non-work deductions (such as donations or tax agent fees) can still be claimed.

3. Energy rebate continues

From 1 July 2025, eligible households and small businesses will receive a further $150 energy rebate. The rebate will be automatically applied to electricity bills in quarterly instalments through the end of the 2025 calendar year.

4. Discount on home battery systems

In a move to support household energy storage, the government is introducing a 30% discount on the installed cost of home batteries, starting 1 July 2025.

• The average savings per battery system are estimated around $4,000.
• This expands on the existing Small-scale Renewable Energy Scheme.

5. First home buyer scheme expansion

The existing 5% deposit Home Guarantee Scheme will be expanded:

• Income caps and place limits will be removed.
• Eligible Australians, including permanent residents, who have never owned property (or haven’t owned one in the last 10 years) can purchase with a 5% deposit without paying Lenders Mortgage Insurance (LMI).
• The scheme remains available only to owner-occupiers.

---

Superannuation – Will the 30% tax return?

A proposal from the previous term—Division 296—would apply a 30% tax on earnings of superannuation balances over $3 million. The measure lapsed when Parliament dissolved before the election, but could return in this term.

• The Greens may support the bill if changes are made, including lowering the threshold to $2 million and banning borrowing by super funds.
• The proposed tax would apply to both realised and unrealised gains, allowing for losses to be carried forward.

---

For Small Businesses

1. $20,000 instant asset write-off extended

The Government confirmed that the instant asset write-off threshold of $20,000 for small businesses will be extended until 30 June 2026.

• This applies to businesses with turnover under $10 million.
• Eligible assets must be first used or installed ready for use by this date.

2. National small business strategy under consultation

The government has launched a national consultation on how federal, state, and territory governments can better support small businesses.

• Key focus areas include simplifying compliance, streamlining digital services, and improving communication.

---

For Industry: Focus on Clean Energy Transition

Green Aluminium Production Credit

The government has committed $2 billion for a new Green Aluminium Production Credit aimed at encouraging aluminium smelters to transition to renewable electricity.

• Why aluminium? It is the second most-used metal globally and accounts for about 10% of Australia’s total electricity consumption.
• Tomago Aluminium, the country’s largest electricity user, uses approximately 40% of its operating costs on energy.
• Under the scheme, eligible smelters can enter into 10-year contracts to receive emissions-linked credits based on reduced Scope 2 emissions (indirect emissions from electricity use).

This initiative is both an environmental and economic strategy—intended to support industry competitiveness while driving decarbonisation.

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 Yvonne Shao @ Pitt Martin Tax

As the 2025 tax season approaches, the Australian Taxation Office (ATO) has issued a timely reminder for taxpayers to tread carefully when claiming work-related expenses. This comes after a number of questionable claims were recently flagged — many of which failed to meet the basic requirement of being clearly tied to income-producing activities.

What Not to Claim: Recent ATO Crackdowns

Recent reviews by the ATO have revealed several inappropriate deductions, which the average person wouldn’t think they’re fair or reasonable. Here are real examples from recent ATO reviews:

• Mechanic: Tried to deduct air fryer, microwave, vacuum cleaner, TV, and gaming equipment as work-related tools.
  
• Truck Driver: Claimed swimwear as a necessity for driving in hot weather.
  
• Fashion Retail Manager: Lodged over $10,000 in luxury clothing and accessories for work related events.

In each case, these claims were disallowed. The ATO ruled the expenses to be private in nature and not directly related to earning assessable income.

Key takeaway: Just because you use an item at work doesn’t make it deductible. The expense must have a clear and direct connection to your income-earning activities.

When in Doubt: Leave It Out

If you’re ever uncertain whether something is deductible, it’s safer to either:

• Leave it out of your tax return, or
• Speak to a registered tax agent for tailored advice.

ATO’s 2025 Focus Areas: What You Need to Know

To help taxpayers stay compliant, the ATO has outlined its priority areas for the 2025 tax year:

1. Work-Related Expenses

Claims must be directly related to earning income and supported by evidence such as receipts or invoices. Just because an expense is incurred while working doesn’t automatically make it deductible — personal and private costs are generally not allowed.

Example: If you use your personal internet 30% of the time for work, you can only claim 30% of the costs.

2. Working from Home (WFH) Deductions

To qualify, taxpayers must demonstrate that they incurred additional expenses as a result of working from home. The ATO offers two calculation methods for WFH deductions:

a) Fixed Rate Method (70 cents/hour)

• Covers electricity, gas, internet, mobile and home phone use, and stationery. You are allowed to claim these even without a dedicated home office.
• You must keep a detailed log of your actual work hours — estimates are not sufficient.
• You can separately claim the decline in value of assets like office chairs or monitors.

b) Actual Cost Method

• Allows you to claim the exact amount spent on eligible WFH expense.
• Requires comprehensive documentation, including receipts and records of usage.
• This method allows for potentially larger claims, but has stricter substantiation requirements.
  

Important: You can’t  claim expenses twice — if you use the fixed rate method, you can’t also claim those same expenses separately under the actual cost method.

3. Multiple Income Streams

Whether you’re juggling a side hustle, freelance work, or gig economy jobs (like Uber, Airtasker, or OnlyFans), all income must be fully declared.

Each income stream may have its own set of allowable deductions, but again, records are key.

Example: A freelance graphic designer may claim software subscriptions and design tools, but not gym memberships or fashion items “for client impressions.”

Final Thoughts: Get it Right the First Time

Tax laws can be complex, and even well-meaning taxpayers can get it wrong. A disallowed deduction could not only reduce your refund — it may also flag your return for audit, leading to penalties or interest.

Tip: If you’re unsure whether an expense qualifies or need assistance preparing your tax return, don’t hesitate to get in touch. It’s always better to check first than risk a deduction being denied.

Need Help?

We can assist you in reviewing your tax position before year-end to ensure you’re making the most of the opportunities available while reducing your exposure to compliance risks. Contact us today for a tailored review.

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

For those involved in the administration and governance of not-for-profit (NFP) organisations, it is essential to remain informed about legislative changes and compliance obligations. Of particular importance are the conditions that apply to NFPs that self-assess as income tax-exempt. Recent changes introduced by the Australian Taxation Office (ATO) impose new annual reporting requirements that must be adhered to in order to retain this tax-exempt status.

Introduction of the Annual NFP Self-Review Return

Commencing with the 2023–24 income year, non-charitable NFPs possessing an active Australian Business Number (ABN) are now required to lodge an annual NFP self-review return with the ATO. This return serves to confirm the organisation’s ongoing eligibility to self-assess as exempt from income tax.

The self-review return comprises three core components:

1. Organisation Details – This section captures standard information relating to the NFP, including its ABN, name, and contact details.
2. Income Tax Self-Assessment – Here, the organisation provides confirmation that it meets all relevant criteria to remain income tax-exempt.
3. Summary and Declaration – A formal declaration acknowledging the accuracy and completeness of the information submitted.

A critical aspect of this process is the requirement for organisations to answer a specific compliance question: Does the organisation have and follow clauses in its governing documents that prohibit the distribution of income or assets to members while it is operating and on winding up? A positive response to this question is mandatory to maintain income tax-exempt status through self-assessment.

Transitional Arrangements and Deadlines

Should an organisation’s governing documents currently lack these required non-distribution clauses, it may still self-assess as income tax-exempt for the 2024 income year, provided it has not in practice distributed any income or assets to members. However, as part of a transitional concession, the ATO has set a compliance deadline: governing documents must be amended to include the required clauses by 30 June 2025. Failure to meet this deadline will render the organisation ineligible to self-assess as tax-exempt from the 2025 income year, and it may consequently be required to lodge a tax return and potentially pay income tax.

Mandatory Clauses in Governing Documents

Governing documents are the legal instruments that define an organisation’s purpose, character, decision-making procedures, operational rules, and dissolution process. In order to self-assess as income tax-exempt, these documents must include:

• A clause that prohibits the distribution of income or assets to members, both during the organisation’s operations and in the event of winding up.
• A clause that stipulates that any surplus assets on winding up must be transferred to another NFP with similar objectives.

In addition to incorporating these clauses, NFPs should implement appropriate governance controls to ensure that members do not receive any financial benefits or property that belongs to the organisation, except where such payments constitute reasonable remuneration for services rendered or reimbursement of legitimate organisational expenses.

It is recommended that governing documents be reviewed annually, or when there is a significant change in the organisation’s structure or operations. Conducting this review during the annual general meeting can be an efficient and practical approach.

Taking proactive steps to comply with these new ATO requirements will safeguard your organisation’s tax-exempt status and reinforce its commitment to sound governance and transparency.

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 Angela Abejo @ Pitt Martin Tax

As urban expansion continues across Australia’s major cities, more property owners are considering subdivision projects. While these ventures can be financially rewarding, it’s crucial to understand the potential tax consequences before committing. Misunderstanding the tax treatment of subdivisions can lead to costly surprises and significantly impact the profitability of a project.

A common misconception is that tax liabilities on subdivision profits will be minimal. However, the reality is more complex, as there are several important tax considerations that can significantly affect the overall profitability of your project.

For instance, if you purchase a property with the intention of subdividing and selling the lots for a short-term profit, the Australian Taxation Office (ATO) is likely to treat this as a profit-making activity. In this case, your profit is taxed as ordinary income rather than under the Capital Gains Tax (CGT) rules. This means the 50% CGT discount—available for assets held longer than 12 months—won’t apply. You also won’t be able to use any capital losses to reduce the tax payable.

In addition to income tax, GST may also apply to the sale of the subdivided lots. Both taxes can significantly reduce any after-tax profits.

Many individuals underestimate their income tax and GST obligations. By the time they realise the true financial implications, it may be too late to reverse course, and the viability of the project could be jeopardised.

To assist taxpayers, the ATO has updated its guidance on the tax treatment of property transactions. The revised guidance includes a series of real-world examples that demonstrate how income tax and GST rules may apply to different property scenarios, including subdivisions, property flipping, and development.

One example involves a taxpayer who repeatedly buys, renovates, and sells properties. This person conducts thorough market research, seeks professional advice, secures business loans, and undertakes renovations in a structured, business-like manner. The ATO views this activity as the operation of a business, with the primary goal being profit from the resale of properties. Consequently, profits are taxed as ordinary income. The CGT rules, including the discount, do not apply because the properties are treated as trading stock rather than capital assets.

However, GST may not apply unless the properties undergo “substantial renovations”. This is a technical definition and must be carefully assessed in each case.

Another ATO example highlights a different situation. In this case, a taxpayer subdivides their land due to personal hardship—ill health and mounting debts. The subdivision involves minimal activity beyond securing council approval, and there is no clear intention to develop or profit beyond selling a portion of their land. The ATO considers this transaction a “mere realisation” of a capital asset. The proceeds are taxed under CGT rules, and the 50% CGT discount is available if the land has been held for more than 12 months.

However, despite being part of the land where the taxpayer’s main residence is located, the subdivided lot does not qualify for the main residence exemption because it is sold separately from the home itself.

These examples underline the importance of correctly identifying the purpose and scale of a subdivision project from the outset. Small changes in intention, structure, or execution can lead to vastly different tax treatments.

Before starting any subdivision, seek professional tax advice to understand your obligations. A well-informed approach can help avoid unexpected tax bills and ensure your project remains financially viable.

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 Angela Abejo @ Pitt Martin Tax

As the end of the financial year approaches, it’s the perfect time to review your business tax position. Below, we highlight practical tax-saving opportunities as well as areas where the ATO is paying closer attention. A little planning now can make a big difference.

Opportunities to consider

• Write off bad debts
  If a customer is clearly not going to pay and all recovery options have been exhausted, consider writing off the debt before 30 June. Just make sure it’s properly documented—whether in your debtor’s ledger or via a board resolution—so you can claim a deduction this year.

• Scrap obsolete assets
  Still depreciating old equipment that’s no longer in use? If it’s on your depreciation schedule but no longer serving the business, you can scrap and write it off in full before year-end to free up tax savings.

• For companies: bring forward deductions
  Where appropriate, you can bring forward deductions by resolving to pay director fees and employee bonuses (even if paid later), and ensuring June quarter superannuation is paid before 30 June.

• $20,000 instant asset write-off now confirmed
  After some delays, the Government has finally passed legislation keeping the instant asset write-off threshold to $20,000 for the 2025 financial year. This applies to small businesses with turnover under $10 million. Eligible assets (like plant or equipment) purchased before 30 June 2025 may be immediately deducted—so long as the asset cost (excluding GST credits) is under the threshold.
  However, the rules can be tricky, so check with us before you buy. Also note: unless further changes are made, the threshold is set to drop back to $1,000 from 1 July 2025.

 Risks to keep on your radar

• Lodgment delays and tax debt
  Failing to lodge tax returns is a major warning sign for the ATO. In some cases, they may issue their own estimate of your debt—whether you agree or not. If your business is struggling with reporting or payments, don’t wait—talk to us early. We can help you engage with the ATO proactively.

• Professional services income under review
  The ATO is closely reviewing how profits are distributed in professional firms—lawyers, accountants, engineers, and so on. If a structure appears to unfairly divert income to lower-taxed entities, or if professionals are underpaid for the value of their work, the ATO may take action. It’s important to ensure your arrangements reflect commercial reality.

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 Yvonne Shao @ Pitt Martin Tax

As the end of the financial year approaches, now is the ideal time to review your personal tax position. Below we highlight strategies to maximise your deductions and outline areas under increased scrutiny from the Australian Taxation Office (ATO).

Key Strategies to maximise deduction

1. Superannuation Contributions

If you’re focused on growing your superannuation and your balance allows, consider making a personal concessional contribution before 30 June. The concessional contributions cap for 2024–25 is $30,000 and includes employer super guarantee payments, salary sacrifice amounts, and personal contributions for which you intend to claim a tax deduction.

If your total super balance was below $500,000 on 30 June 2024, you may be eligible to use unused concessional cap amounts from the previous five financial years in 2024-25 as a personal contribution.. For example, if you have $8,000 of unused cap each year, you may be able to contribute an extra $40,000 this year and claim the full amount as a deduction.

To claim a tax deduction:

• You must be under 75.
  
• Submit a ‘Notice of Intent to Claim’ form to your super fund.
  
• Receive confirmation from the fund before lodging your tax return.

If you’re aged 67–74, the work test applies (40 hours worked over 30 consecutive days in the financial year), though exemptions may apply in some cases.

Additionally, if your spouse earns less than $37,000 and eligibility criteria are met, you could claim a tax offset of up to $540 by contributing to their super.

Super contributions can also help reduce tax on capital gains realised from the sale of shares or property.

2. Charitable Giving

Donations of $2 or more to registered deductible gift recipients (DGRs) are tax-deductible. The higher your marginal tax rate, the greater your tax saving—for instance, a $10,000 donation could save $3,250 for someone earning $120,000, or $4,500 for someone on $180,000+ (excluding Medicare levy).

Donations must be voluntary and not linked to goods or services received in return. Special rules apply for charity auctions and events.

Consider structured giving through a public or private ancillary fund, which can allow for immediate deductions and ongoing philanthropic impact.

3. Investment Property Deductions

If you own a rental property, a depreciation schedule can help maximise deductions by quantifying the decline in value of eligible assets over time. This is particularly relevant for newer properties or those with significant fixtures.

ATO Watchlist: Common Risk Areas

1. Working from Home Claims

Work-from-home expenses continue to attract ATO attention. You can claim using:

• Fixed-rate method: 70 cents per hour worked from home, covering energy, phone, internet, and consumables. You must maintain detailed records of actual hours worked—estimates are not acceptable.
  
• Actual cost method: Claim the work-related portion of specific expenses. Requires receipts and at least 4 weeks of diary records to establish a typical work pattern.

Items like coffee, snacks, and household goods remain non-deductible—even if used during work hours.

2. Rental Property Expenses

To claim deductions on rental property expenses, the property must be genuinely available for rent. Claims made while the property is occupied by friends/family, off the market, or overpriced may be denied.

Key ATO focus areas include:

• Loan interest apportionment: Only interest on the portion of a loan used for income-producing purposes (e.g., property purchase or improvement) is deductible. Funds redrawn for private expenses (e.g., holidays, school fees) must be excluded.
  
• Repairs vs. capital improvements: Immediate deductions are allowed for repairs that restore the property due to wear and tear from rental use. Capital improvements (e.g., replacing an entire roof) must be depreciated over time. Initial repairs when purchasing a property are not deductible.
  
• Co-ownership: Expenses and income must be reported in line with legal ownership. For joint tenants, this is typically 50/50. Who paid the expenses is irrelevant.

3. Gig Economy Income

Earnings from platforms like Airbnb, Uber, YouTube, or OnlyFans must be declared—even if held in a platform wallet and not yet withdrawn.

Since 1 July 2023, ride-sharing and short-stay accommodation platforms have been reporting income data directly to the ATO. From 1 July 2024, this extends to other digital platforms. If you’ve received income that hasn’t yet been reported, disclose it now to avoid penalties and interest.

Need Help?

We can assist you in reviewing your tax position before year-end to ensure you’re making the most of the opportunities available while reducing your exposure to compliance risks. Contact us today for a tailored review.

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 Zoe Ma @ Pitt Martin Tax