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

In Australia, employers must pay superannuation (super) to their workers. This is called the Superannuation Guarantee (SG). It helps workers save for retirement. While most people know that super is paid to regular employees, the rules are actually much broader. In fact, even some people who don’t seem like employees—such as contractors, gym instructors, or performers—might still be owed super by the people who hire them.

This article will break down the SG rules in simple terms, so you can understand who needs to be paid super, when you need to pay it, and what happens if you don’t.

What Is Superannuation Guarantee (SG)?

Superannuation Guarantee is a legal requirement in Australia. Employers must pay a percentage of an eligible worker’s ordinary time earnings into a super fund. This helps that worker build a retirement savings balance over time.

As of 01 July 2024, the SG rate is 11.5%, and it is set to increase to 12% by 01 July 2025.

Who Is Exempt From SG?

Before diving into who is captured by SG obligations, it’s useful to clarify who is not. Employers are not required to pay SG contributions in the following scenarios:

• Workers under 18 who work fewer than 30 hours per week.
• Private and domestic workers (e.g., nannies, gardeners) who work less than 30 hours per week.
• Non-resident employees working outside Australia.
• Employees temporarily working in Australia under a bilateral agreement.
• Certain foreign executives with specific visa types or entry permits.
• Contractors hired via a company, trust, or partnership.

Even in these cases, caution is advised. For example, Australian employees temporarily working overseas may still be eligible for SG, especially if their host country, such as United States, has a bilateral social security agreement with Australia. In such cases, a certificate of coverage from the ATO can exempt the employer from having to pay super in the foreign jurisdiction.

The Broader Definition of “Employee” Under SG Laws

Section 12 of the Superannuation Guarantee (Administration) Act 1992 outlines an expanded definition of “employee” for SG purposes. This section brings into the fold several categories of workers who may not traditionally be seen as employees:

• Company directors who are paid for their work.
• Contractors whose contract is mainly for their labour (time and skills).
• Certain workers hired by the government.
• People paid to perform or present music, plays, dances, entertainment, sport, or promotional activities. It also includes people who help with these activities or are involved in recordings or broadcasts (like film or TV).

Are Contractors Entitled to SG?

One of the biggest mistake among business owners is that hiring someone with an ABN automatically exempts them from SG contributions. Unfortunately, that’s not the case.

If the contract with the individual is “wholly or principally for their labour and is an employee of the other party to the contract” then that individual is likely to be deemed an employee for SG purposes. The ATO provides clear criteria to help determine this:

• The contractor is paid under a contract primarily for their labour (i.e., more than half the value of the contract is for their time and effort).
• The individual is paid for their personal labour and skills, not for delivering a specific result.
• The work cannot be delegated to another person.

Even more frustrating for business owners is the fact that the language of the contract is not enough to protect you. It doesn’t matter if the agreement explicitly says the contractor is responsible for their own super. If they meet the ATO’s criteria for a deemed employee, you’re legally required to pay SG.

In a recent clarification, the ATO noted that where a contractor uses significant capital assets (like a truck), this may indicate that the contract is not primarily for their labour. However, every case depends on the specific facts.

Do Company Directors Receive Super?

Under SG legislation, company directors who are remunerated for performing duties for the business must also be paid SG contributions. This applies regardless of whether they are employees in the conventional sense. Director remuneration—if paid in return for services—is sufficient to trigger the obligation.

What About Performers, Entertainers, and Sportspeople?

If a performer works through a company, trust or partnership, you normally don’t have to pay super for them. But if they are working as individuals (like a sole trader), then SG usually applies.

Under the SG rules (section 12(8)), you must pay super for someone who is paid to:

• Perform in music, theatre, dance, sports, or similar events.
• Provide services in connection with the activities above (e.g., production staff, technical crew).
• Help with the creation of films, recordings, or broadcasts (TV, radio, etc.).

Here’s how it works in real life:

If a music festival hires a solo performer who operates as a sole trader, the festival may need to pay super for that performer. If that performer hires backup singers or band members, and pays them, then they also need to pay SG for those workers.

If an agency is involved—meaning the agency gets paid and then pays the performers—then the agency is likely responsible for paying the super. But if the festival pays the performers directly, then the festival takes on the responsibility.

This is why it’s so important to be clear on who is legally responsible for super payments.

Fitness Industry: Are Gym Instructors Employees?

Let’s take a common example from the fitness world—a gym instructor who operates as a sole trader. The instructor has an ABN and a contract with the gym stating they are an independent contractor responsible for their own taxes and super. They are paid per class or session and use the gym’s facilities, scheduling system, and branding.

In this scenario, several red flags are raised:

• The instructor is paid for their time and skills (labour-based payment).
• They cannot delegate the task to another instructor.
• They wear the gym’s uniform and follow the gym’s methods of training.

Despite the contractual wording, the instructor likely meets the definition of an employee under the SG Act. If the gym has not been making SG contributions, they could be liable for payments backdated to the beginning of the instructor’s engagement.

Why This Matters: ATO Enforcement and No Time Limits

One of the most critical aspects of SG compliance is that there is no statutory time limit for the ATO to enforce unpaid super. In theory, the ATO can pursue unpaid SG obligations from the inception of the employment relationship—whether that was last year or a decade ago.

Moreover, company directors can be held personally liable under the Director Penalty Notice (DPN) regime for unpaid SG obligations. This creates a significant risk for businesses, particularly in industries where non-traditional work arrangements are common.

What Should Employers Do?

If you’re uncertain about whether SG applies in a particular work arrangement, here are some proactive steps to take:

1. Seek professional advice – An accountant or employment lawyer can help you assess worker classifications.
2. Request a private ruling from the ATO – This provides legal clarity for your unique arrangement.
3. Review contracts – Ensure your agreements reflect the actual working relationship, not just the desired label.
4. Keep detailed records – Documentation can support your position in the event of an audit.
5. Audit historical arrangements – Identify any existing risks related to past or present engagements.

Final Thoughts

The Superannuation Guarantee rules have never been more important for business owners to understand—especially those in industries like entertainment, fitness, and contract-based services. With the ATO sharpening its focus on compliance, failing to understand and correctly apply SG obligations can have serious financial and legal consequences.

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 government is moving ahead with the Payday Super reforms, and employers should start preparing. Treasury has released draft legislation proposing that employers pay superannuation at the same time as they pay salaries and wages to their employees. These changes are scheduled to take effect from 1 July 2026.

Currently, employers have up to 28 days after the end of each quarter to make their super contributions. Under the new rules, this window will be significantly shortened — employers will need to pay super within seven calendar days of paying their employees.

The draft legislation also introduces the concept of “qualifying earnings” (QE), which is generally based on ordinary time earnings. The “QE day” refers to the day an employer pays their employee’s wages.

If an employer does not ensure that contributions reach the employee’s fund within seven days of the QE day, they will become liable for the Superannuation Guarantee Charge (SGC). There are some exceptions, such as a two-week grace period for new employees.

The reforms also bring changes to how interest and administrative costs are calculated. The current flat 10% nominal interest rate will be replaced with the ATO’s General Interest Charge (GIC). Additionally, the current fixed $20 administrative fee per employee per quarter will be replaced by a variable amount — calculated at 60% of the total shortfall plus interest. In practice, this means the costs of late payments could increase.

While it’s proposed that SG statements will no longer be mandatory, employers may still need to make voluntary disclosures if they wish to access potential reductions in administrative penalties.

One positive aspect for employers is that both on-time and late contributions, as well as SGC payments, will remain tax-deductible. However, any penalties will continue to be non-deductible.

The draft also outlines a revised penalty regime for late or missed SGC payments. If the SGC remains unpaid after 28 days, the ATO will issue a notice to pay. Employers will face an initial 25% penalty, which could rise to 50% for repeat non-compliance within a 24-month period. Unlike the current system — where penalties can reach 200% but may be remitted — these new penalties will not be subject to remission.

To simplify the process of correcting late payments, any overdue contributions will automatically be applied to the earliest QE day with an outstanding shortfall.

Finally, from 1 July 2026, the Small Business Superannuation Clearing House will be phased out. Small businesses will then need to make super contributions directly to employees’ super funds, rather than using the clearing house service.

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

The Administrative Review Tribunal (ART) has upheld the ATO’s position, confirming that the taxpayer, Mr Quy, maintained a domicile in Australia and was therefore a resident of Australia for tax purposes under section 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936). (Quy and Commissioner of Taxation (Taxation and business) [2025] ARTA 174 (28 February 2025))

Background

Mr Quy first arrived in Australia in 1978 and later became an Australian citizen. From around 1986, he worked as an engineer. In 1998, he relocated to Dubai for work, accompanied by his wife and three children. Around 2009, the family returned to Perth. Then, in 2015, Mr Quy moved back to Dubai for employment, while his wife joined him intermittently and their children remained in Australia.

During the income years 2016 to 2020, Mr Quy spent between 29 and 119 days each year in Australia, whereas his wife spent significantly more time in the country—between 183 and 343 days annually. Notably, Mr Quy maintained a residence in Perth and held two investment properties in Sydney. He also kept active bank accounts in Australia, private health insurance, and vehicle registrations.

The ATO issued tax assessments for those years on the basis that Mr Quy was a resident for Australian tax purposes. Mr Quy objected, primarily seeking a refund of PAYG amounts withheld.

Key Issues

The central issue was whether Mr Quy qualified as a resident under either the ordinary concepts test or the domicile test.

Mr Quy argued that he was not a resident under either test. He claimed that he did not reside in Australia and that, if he retained an Australian domicile, then his permanent place of abode had shifted to Dubai.

Initially, the Administrative Appeals Tribunal (AAT) sided with the Commissioner, concluding that despite his physical presence in Dubai, Mr Quy was still a resident under the ordinary concepts test. The AAT highlighted his strong ongoing ties to Australia—his wife’s residence in Perth, the maintained family home, his regular returns, and his apparent long-term connection to the country.

Mr Quy appealed this decision to the Federal Court. The Court found the AAT had incorrectly applied the test by focusing on whether he intended to reside in Australia “permanently or indefinitely,” rather than whether he treated Australia as his home “for the time being.” The matter was referred back to the ART.

Tribunal Decision on Remittal

Upon review, the ART found that Mr Quy was not a resident under the ordinary concepts test. The Tribunal pointed to objective indicators—such as the nature of his overseas employment and the length and consistency of his absences from Australia—as evidence that he did not regard Australia as his home during the relevant period.

However, under the domicile test, the Tribunal concluded that Mr Quy was still a tax resident. Despite his physical absence, his ongoing ties to Australia—including property ownership, financial interests, and family connections—demonstrated he had not severed his residential ties or established a permanent home abroad.

In contrast to the taxpayer in Harding v Commissioner of Taxation, who had shown a clear and sustained intent to live overseas indefinitely, Mr Quy’s relocations were primarily driven by short- to medium-term work assignments and lacked the permanence required to displace his Australian domicile.

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