As part of the May Budget tax legislation that became law on 26 June 2026, the Government has banned new limited recourse borrowing arrangements (LRBAs) used by self-managed super funds (SMSFs) to purchase residential property.

What is an LRBA

Super funds are generally not allowed to borrow to invest. The one exception is the LRBA, which allows an SMSF to borrow money to purchase a single asset (typically property) held inside a separate bare trust. If the loan defaults, the lender can only claim that one asset and the rest of the fund’s assets are protected.

LRBAs have been used since 2007 and have become a common strategy for SMSF members to acquire residential and commercial property inside super.

What is changing

From the date the legislation takes effect, SMSFs will no longer be able to enter new LRBAs to purchase residential property. With Royal Assent received on 26 June 2026, the ban commences 45 days later, on 10 August 2026.

What is not changing

Existing LRBAs for residential property are not affected. If your SMSF already has one in place, nothing changes.

Contracts signed before the commencement date are protected. If you have already exchanged contracts to purchase a residential property in your SMSF (even if settlement is yet to happen), the arrangement is grandfathered.

LRBAs for commercial property remain available. This includes business real property, which is the strategy commonly used by business owners who buy their business premises through their SMSF and lease it back to their operating company. This remains one of the most powerful structures available to small business owners and is not affected by the change.

Key takeaway

If you already have an LRBA in your SMSF, nothing changes. If you have been planning to buy residential property through your SMSF, talk to your accountant and financial adviser as soon as possible to understand your options and the timing. Business owners considering acquiring their business premises through their SMSF can continue to use an LRBA, as commercial property is not affected by the ban.

What has become law from the May Budget

The first round of legislation from the May Budget became law on 26 June 2026. Here is what is in it and what it could mean for you.

Capital gains tax is changing from 1 July 2027

If you sell an asset such as an investment property, shares or your business, the way your capital gain is taxed is changing.

Right now, if you have held the asset for more than 12 months, you only pay tax on half of the gain. This is the 50% CGT discount that most investors and business owners are familiar with.

From 1 July 2027, that discount is being scrapped and replaced with two new rules:

Indexation: Instead of getting a 50% discount, your cost base will be adjusted for inflation. You will only pay tax on the gain above inflation.

A minimum tax rate of 30%: Any capital gain will be taxed at a minimum rate of 30%, even if your marginal tax rate is lower (with some exceptions).

The combined effect is that some taxpayers will end up paying more tax on capital gains than they do today, while others may pay less depending on how long they hold the asset and how much it grows above inflation.

An option for new residential properties

If you invest in an eligible new residential dwelling, you will have a choice. You can either stick with the existing 50% CGT discount or use the new indexation and 30% minimum tax arrangements, whichever gives you the better outcome. Investors in affordable housing will have a similar choice, with the existing CGT discount of up to 60% being fully retained.

What this means for assets you already own

If you already own assets, the changes apply prospectively from 1 July 2027. Any capital gain that accrued up to 30 June 2027 will still be eligible for the 50% CGT discount when you eventually sell. Only the gain that accrues from 1 July 2027 onwards will be subject to the new indexation and 30% minimum tax rules.

This split treatment means establishing a market value as at 30 June 2027 will be critical to working out how much of your gain is taxed under the old rules versus the new ones. This applies to all CGT assets, not just property. Shares, business assets, units in trusts and other investments are all caught.

The Government has indicated there will be two methods available to work out this value:

Obtaining a formal valuation of the asset as at 30 June 2027

Using a prescribed apportionment formula that estimates the value based on the holding period and growth rate of the asset (the ATO will release tools to help with this)

You will not need to decide which method to use until you actually sell the asset.

However, for many taxpayers the ATO apportionment tool may not produce a fair or appropriate result. It is likely to work reasonably well for assets with observable market prices, such as listed shares, but for property, businesses and other complex assets, a formula based on a growth rate is unlikely to reflect the real value of the asset at 30 June 2027.

This is where planning ahead matters. The Commissioner generally accepts valuations from a registered or qualified valuer. Real estate agent appraisals and rough estimates are not viewed as reliable evidence and are likely to be challenged.

For business owners, a proper business valuation will be far more useful down the track than back of the envelope figures or a formula that does not reflect what your business is actually worth. We offer business valuation services and can prepare one for you leading up to 30 June 2027.

Without proper valuation evidence, it will be difficult to substantiate how much of the gain accrued before 1 July 2027 and you could end up paying more tax than necessary.

What is not affected

Some important things remain unchanged:

The main residence exemption on your home is not affected

The four small business CGT concessions remain in place, with the 50% active asset reduction becoming more accessible (see below)

Super funds, including SMSFs, are not affected and keep their existing CGT treatment

Companies are not affected since they never had access to the 50% discount in the first place

Recipients of government income support payments such as (but not limited to) Age Pension, JobSeeker, Disability Support Pension, Parenting Payment and Youth Allowance in the same financial year they realise a capital gain will be exempt from the 30% minimum tax

Where you have made a deductible charitable donation, the gain subject to the 30% minimum tax can be reduced

Good news for small business owners selling their business

If you sell your business or a business asset, the small business CGT concessions can significantly reduce or even eliminate the tax on your capital gain. The most commonly used of these is the 50% active asset reduction, which reduces your taxable gain by half on top of other CGT relief.

Currently, you can only access this concession if your business has aggregated turnover of less than $2 million or if you meet the $6 million maximum net asset value test. However, many businesses miss out as they aren’t able to satisfy either test.

From 1 July 2027, the turnover threshold for the 50% active asset reduction is being lifted from $2 million to $10 million. According to the Government, this will mean around 2.7 million small businesses (around 98% of active businesses) will be eligible. The $6 million maximum net asset value test stays the same. Importantly, this change only applies to the 50% active asset reduction. The other small business CGT concessions (the 15-year exemption, retirement exemption and small business rollover) continue to use the existing $2 million turnover threshold or $6 million maximum net asset value test.

Personal tax relief for workers

From 1 July 2026, a $1,000 standard deduction for work-related expenses is being introduced. You can claim this without needing to keep receipts or itemise your expenses. If you have genuine work-related expenses above $1,000, you can still claim the higher amount in the usual way and provide the substantiation. This is intended to simplify tax time for most workers.

From 1 July 2027, a new Working Australians Tax Offset of $250 per year will apply. This is a permanent non-refundable offset for all Australian workers earning above the tax-free threshold.

Negative gearing changes for property investors

If you are considering a residential investment property, please note the proposed changes to negative gearing. These changes apply to residential properties where the contract was entered into after 7:30 PM (AEST) on 12 May 2026.

Grandfathering: Properties held before this time are fully grandfathered and continue under existing rules.

New Builds: Eligible ‘new build’ properties (those genuinely adding to housing supply) remain exempt from these restrictions and retain full negative gearing benefits.

Affected Properties: For ‘established’ (non-new-build) residential properties purchased after the cutoff, any rental losses incurred from the 2027–28 income year onwards can no longer be offset against your salary or other non-property income. Instead, these losses will be ‘quarantined’ and can only be deducted against your residential rental income or capital gains derived from the sale of residential property. Please note that these quarantined losses can be carried forward to offset future residential property income.

Key takeaway

These changes are now law. If you are considering selling a business, an investment property, or shares, the timing of that sale could materially change your tax outcome. The same applies if you are looking at buying a residential investment property. Speak to your accountant before you commit so you understand where you stand.

Scam calls pretending to be from the ATO ramp up every year around tax time. The ATO received almost 7,500 impersonation scam reports in July 2025 alone. They have now released a feature that lets you confirm in real time whether a caller is the ATO.

How verify call works

The verify call feature was launched on 2 April 2026 and sits inside the free ATO app. If you get a call from someone claiming to be the ATO:

Open the ATO app and log in.

Tap “Verify call”.

Within 30 seconds you should get a notification confirming the call is genuine. If you don’t, hang up.

You need to have downloaded the ATO app and registered your device on it for this to work.

Strengthen your myID at the same time

While you are in the app, check that your myID is set to the highest identity strength (called “Strong”). This makes it harder for anyone else to access your tax or super information online and is the most secure way to log into ATO services.

If you have a tax agent

If you have a tax agent and the ATO calls you directly, ask the representative to call your agent instead, unless the matter is one that can only be discussed with you. Most ATO matters can be handled through your agent, which adds another layer of verification and saves you sorting it out yourself.

Key takeaway

Set up the ATO app and the verify call feature before tax time. If you ever get a call, SMS or email claiming to be from the ATO and you are not sure, contact your dedicated team at Inspire first and we will check it through official channels for you.

Since 1 November 2021, if you hire a new employee and they don’t pick a super fund, you cannot just default them into your usual employer fund. You need to ask the ATO whether the employee already has a “stapled” super fund and pay their super into that one.

What a stapled super fund is

A stapled super fund is an existing super account linked to the employee. It follows them from job to job, so they do not end up with a new account (and a new set of fees) every time they change employers.

When you need to request stapled details

You need to request stapled super fund details from the ATO when:

You are about to pay super for a new employee, and

They have not given you a choice of fund.

This applies to employees, and to independent contractors who are treated as employees for super purposes.

How to request it

The request is made through ATO Online Services for Business. You need to have an employment relationship established first, which usually means either a TFN declaration or an STP pay event has been lodged. The result comes back within minutes in most cases.

Your registered tax or BAS agent can also make the request on your behalf through Online Services for Agents.

Full steps from the ATO are here: Stapled super funds for employers

If the employee chooses a fund of their own after you have already requested stapled details, you have 2 months to switch contributions over to their chosen fund.

What happens if you get it wrong

If you pay super into a fund the employee did not choose, without requesting their stapled fund first, you are exposed to the choice shortfall penalty.

For super relating to quarters up until 30 June 2026

The choice shortfall penalty is 25% of the SG shortfall, capped at $500 per employee per notice period.

For super relating to periods from 1 July 2026 (under payday super)

The choice shortfall penalty is 25% of the non-compliant contributions, capped at $1,200 per employee per notice period.

Key takeaway

If you are onboarding new staff, build the stapled super fund check into your process before the first super payment is due.

The Federal Budget was handed down on 12 May 2026. Some of the proposals are the biggest rework of personal and small business tax in nearly 30 years. None of it is law yet.

Here’s what’s on the table and how the Coalition has responded.

Property investors and trusts

Labor:

50% CGT discount replaced with cost base indexation plus 30% minimum tax on real gains, from 1 July 2027. Gains accrued before that date grandfathered.

Negative gearing losses on established residential property bought after 12 May 2026 can only be deducted against rental or residential capital gains income. Existing properties grandfathered.

30% minimum tax on discretionary trusts from 1 July 2028. Three-year rollover relief from 1 July 2027 for restructures.

Coalition: Fight to block these in Parliament. Repeal them if elected at the next election.

Small business

Labor: $20,000 instant asset write-off made permanent for businesses with turnover up to $10m, from 1 July 2026. Loss carry-back reinstated for companies with turnover up to $1bn.

Coalition: $50,000 instant asset write-off, permanent, for businesses with turnover under $10m.

Individuals

Labor: $1,000 flat work-related deduction without itemising, from 2026-27. $250 Working Australians Tax Offset, from 2027-28.

Coalition: Index the bottom two income tax thresholds to inflation from 2028-29. Index all four thresholds from 2031-32.

Other Coalition proposals

End tax breaks for electric vehicles.

Rewrite and simplify key laws (Corporations Act, Tax Act, Competition Act).

Key takeaway

These are proposals, not law. They will go through consultation with professional bodies and changes are likely before anything is legislated. No need to panic or rush to restructure yet. Once we see the legislation, we will be in touch about what it means for you.

For a deeper walk-through of the Budget and what it could mean, watch our Budget debrief webinar here: Annual Federal Budget Debrief 2026

If you have customers who are not going to pay, writing off those debts before 30 June brings the deduction into the 2026 year.

What you need to have in place

The debt must be genuinely bad, not just overdue or in dispute. You need to have taken reasonable steps to recover it and reached the view it won’t be paid.

The write-off entry must be made in your accounts before 30 June.

The amount must have been included in your assessable income in a prior year. Cash basis businesses generally cannot use this.

Key takeaway

Go through your debtors list before 30 June.

Let your accountant or bookkeeper know so they can reflect it in your books.

Making a personal super contribution before 30 June can be one of the most tax-effective moves available to individuals before year end.

Concessional contributions

The concessional contributions cap for 2025-26 is $30,000, including any employer contributions made during the year. If you are self-employed or your employer doesn’t contribute at a rate that uses your full cap, you can make a personal contribution and claim a tax deduction.

To claim the deduction you must lodge a notice of intent to claim with your super fund before you lodge your tax return. This step is not automatic. Missing it means losing the deduction.

Catch-up contributions

If your total super balance was below $500,000 on 30 June 2025, you may be able to use unused cap space carried forward from earlier years going back to 2019-20. This can allow a larger deductible contribution in a year where your income is higher than usual.

Key takeaway

Check where your concessional contributions are sitting for the year and talk to your accountant about whether topping up before 30 June makes sense for your situation.

Many business owners run their business from home. What most do not realise is that if you have been claiming occupancy expenses, selling your home may not be fully tax-free.

How the main residence exemption is affected

If you have been claiming a portion of mortgage interest and rates as a business expense, the main residence exemption only applies partially when you sell. The business-use portion of any capital gain is not exempt.

The calculation is based on floor area. The same percentage you used for occupancy expense claims is the percentage that falls outside the exemption.

What does this mean for you?

If you have a home office or a room set aside for the business and have been claiming occupancy expenses, a portion of the gain on sale will be taxable. The larger the business use percentage and the bigger the gain, the more significant the tax impact.

There may be CGT concessions that can be applied to minimise the tax but these can be complex and need to be preplanned with your accountant.

Key takeaway

If you run a business from home and are thinking about selling, speak to your accountant to understand your exposure to capital gains and whether any CGT concessions are worth applying. Every situation is different. Sometimes the taxable portion of the gain is small enough that the cost of applying concessions outweighs the benefit. Other times it can make a significant difference.

The ATO has published a new guideline (titled PCG 2025/5), targeting Personal Services Business (PSB) structures that lack genuine commercial substance.

PSI and PSB: The Basics

Personal Services Income (PSI) = income mainly from your personal skills and effort (e.g. financial professionals, engineers, consultants, IT professionals, medical practitioners, lawyers etc).

The PSI rules restrict income splitting and deductions UNLESS you meet one of four PSB tests.

Personal Services Business (PSB) = if you pass one of four tests, the PSI rules don’t apply.

Most people pass the “unrelated clients test” (2+ clients) and no more than 80% percent generated by one client OR “results test” (paid for outcomes, not time).

What’s changed?

The ATO published a guideline that highlights their approach to applying Part IVA (general anti-avoidance rules) to PSB arrangements that are artificial even if the PSI rules do not apply.

Follow this guideline in good faith and the Commissioner will administer the law accordingly. Structure your arrangements as low-risk and the ATO won’t review them.

How the ATO will assess your risk

Examples of low-risk arrangements (ATO review likelihood is low):

Net PSI distributed to the individual who earned it, taxed at their rate

Associates paid market rates for genuine work

Intention to temporary profit retention for genuine commercial purposes (e.g. to buy a business asset, hire new employees, working capital). Ensuring that intention is carried out.

Examples of higher-risk arrangements (ATO likely to review and consider Part IVA):

Individual receives less than commensurate remuneration

Income split to family members not performing equivalent work

Profits retained without clear commercial purpose

Retained profits used for personal purposes such loans made to related parties.

The fringe benefits tax (FBT) year ends on 31 March 2026. If your business provides non-cash benefits to employees or their associates, you may have an FBT obligation for the year.

What counts as a fringe benefit?

Common examples include:

Cars made available for private use

Car parking

Entertainment (meals, events, recreational activities)

Expense payments (gym memberships, school fees, private health insurance)

Low-interest or interest-free loans

What you need to do now

To prepare your FBT return, gather the following before we get started:

Logbooks and odometer records for any cars provided to employees

Details of any entertainment expenses paid during the year (including who attended and the occasion)

Records of any other benefits provided to employees or their family members

Declarations from employees where required

Key dates

The FBT return for the year ending 31 March 2026 is due 21 May 2026 if you lodge yourself, or 25 June 2026 if we lodge on your behalf.

Tip: Not everything attracts FBT. Common exempt benefits include:

Cars with no or extremely limited private use (e.g. Ute or Van)

Minor and infrequent benefits valued under $300 per employee per occasion

Gift cards valued under $300 per employee (including GST and transaction fees)

Light meals and refreshments consumed on business premises during work hours (e.g. pizza to celebrate a promotion, birthday cake, pastries for staff)

Meals and drinks consumed by employees while travelling for work (e.g. a Brisbane-based employee dining in Sydney while attending a conference)

If you think FBT may apply to your business, reach out to your Inspire accountant now so we have enough time to gather what we need before the lodgement deadline.

Share This