These amendments will mean that when SMSF trustees wish to borrow to purchase a property, it must meet the business real property (BRP) definition. This BRP definition relates to usage of the property rather than zoning or what the property was originally built for.

This change became law on 26 June 2026, but the Bill includes a 45 day transitional period which will finish on 10 August 2026. This transitional period may allow for arrangements that are currently being implemented on non-BRP assets to be allowable under the new rules where settlement occurs after 10 August 2026, provided the arrangement to purchase the property was entered into on or before 10 August 2026. We recommend that SMSF trustees who are currently implementing LRBA arrangements on non-BRP assets seek specialist SMSF legal advice to ensure their arrangements meet these transitional rules.

While this change has been referred to in the media as a ban on super funds borrowing to purchase residential property, the use of the BRP definition makes the change slightly more complex than this. As this definition relates to usage of the property, it is possible that some residentially designed properties could meet the BRP definition (for example, a medical practice that operates from a residentially designed terrace dwelling).

The BRP definition also requires that the property is wholly and exclusively used for business purposes. This could mean that some properties that may initially appear to be commercial in nature may not meet the BRP definition (for example, a mixed use residential and retail property on a single title).

We recommend that SMSF trustees entering into new LRBAs seek advice from specialist legal and financial advisers to ensure the new requirements are met.

Existing arrangements

The updated rules allow for existing LRBAs over non-BRP assets to continue. They also allow for existing arrangements to be refinanced, subject to lender availability and approval.

The car limit – understanding the depreciation cap

For vehicles first used or leased in the 2026–27 income year, the car limit is $69,883.

This limit generally represents the maximum value that can be used when calculating tax depreciation deductions for a passenger vehicle, regardless of how much was actually paid for the car.

From a commercial perspective, this is an important consideration if you're looking at a higher-value vehicle. While purchasing a more expensive car may still make sense for operational or business reasons, the portion of the purchase price above the car limit will generally not attract depreciation deductions.

If the vehicle is used for both business and private purposes - which is common for many business owners - you would typically only be able to claim deductions for the business-use portion. Maintaining appropriate records, such as a valid logbook and odometer readings, remains an important part of supporting those claims should the ATO undertake a review or audit.

Rather than focusing solely on the purchase price, it is often worthwhile considering the overall after-tax cost of the vehicle. In many cases, a vehicle priced around the car limit may provide similar practical benefits while maximising the available tax deductions.

It's also worth confirming which depreciation rules apply to your circumstances, including whether any simplified depreciation concessions are available so that deductions can be claimed at a faster rate.

GST credits – also subject to a cap

Businesses that are registered for GST may also be entitled to claim GST credits when purchasing a business vehicle. However, where the purchase price exceeds the car limit, the GST credit is also capped.

For the 2026–27 financial year, the maximum GST credit available is $6,353 (being one-eleventh of the $69,883 car limit) for passenger vehicles.

Even if the vehicle costs considerably more, the GST credit will generally not increase beyond this amount. However, when the vehicle is sold you will normally need to pay GST on the full sale price.

For many businesses, GST credits can provide an important short-term cash flow benefit, so it is important to ensure they are claimed correctly and within the relevant time limits through your Business Activity Statement (BAS).

Luxury Car Tax thresholds increase

The Luxury Car Tax (LCT) thresholds have also increased from 1 July 2026 and are now:

• $91,661 for fuel-efficient vehicles.
• $80,809 for all other vehicles.

Where applicable, LCT is generally imposed at 33% of the value above the relevant threshold, increasing the overall purchase cost of eligible vehicles.

If you're considering a premium vehicle, these thresholds may become an important part of the purchasing decision. In particular, many fuel-efficient vehicles, including a range of hybrid and electric models, benefit from the higher threshold. Depending on the vehicle selected, this could potentially reduce the amount of LCT payable while also delivering lower running costs over the life of the vehicle.

Planning ahead can pay off

These updated thresholds apply to vehicles first used or leased from 1 July 2026, making now an ideal time to review any planned vehicle purchases.

Before making a decision, it may be worthwhile considering:

• The total after-tax cost of ownership, including depreciation deductions, GST credits and any LCT;
• Whether purchasing or leasing is likely to be more suitable for your circumstances;
• The expected business use of the vehicle and the records you'll need to maintain; and
• How the purchase fits within your broader cash flow and business plans.

Whether you're replacing a work vehicle, expanding your fleet or purchasing a new car for client-facing activities, taking these factors into account can help ensure the vehicle meets both your operational requirements and your tax objectives.

Key takeaways

A business vehicle is often a significant investment, and while tax considerations shouldn't drive the decision, they can influence the overall cost of ownership.

Before committing to a purchase, it's worth speaking with your accountant to model the likely tax outcomes based on your individual circumstances. A little planning upfront may help you maximise available tax concessions, avoid unexpected costs and ensure the purchase aligns with your broader business strategy.

For more information, refer to the ATO’s Small Business Newsroom: Car thresholds from 1 July | Australian Taxation Office, or contact our team to discuss how these changes may apply to your business.

The ATO continues to focus on income earned through the sharing economy and has expanded its data-matching capabilities in recent years. As a result, it is becoming increasingly likely that income reported by online platforms will be compared against returns that are lodged by taxpayers.

What counts as sharing economy income?

Sharing economy income can arise from a wide range of activities, including:

• Ride-sourcing services such as Uber or DiDi
• Short-term accommodation through platforms like Airbnb or Stayz
• Hiring out assets such as vehicles, caravans, tools, parking spaces or storage areas
• Freelance or task-based work, including deliveries, cleaning, handyman services or graphic design
• Creating digital content, streaming, selling digital products or receiving tips through online platforms.

Even if these activities are only occasional or generate relatively modest amounts of income, they may still have tax consequences. In many cases, the income will be assessable for tax purposes, regardless of whether the activity is carried on as a business, as a contractor, or simply as a way of earning extra money.

Increased reporting to the ATO

Under the Sharing Economy Reporting Regime (SERR), many electronic platform operators are required to provide transaction information directly to the ATO. This regime applies across a growing range of sharing economy activities, including ride-sharing, short-term accommodation and certain personal services.

This information may be used by the ATO to compare against the income reported in tax returns. Where discrepancies arise, the ATO may contact taxpayers to seek clarification and, in some cases, adjustments, interest or penalties could apply.

Practical tips to help stay on top of your tax

If you earn income through the sharing economy, a few simple habits can make tax time much easier.

Keep good records

While many platforms provide annual income summaries, it is generally worthwhile maintaining your own records as well. Keeping receipts and tracking expenses such as platform fees, vehicle costs, repairs, cleaning expenses or equipment purchases can help support any deductions you may be entitled to claim.

Understand what expenses may be deductible

You may be able to claim deductions for expenses that are directly related to earning your sharing economy income. This will always depend on your particular circumstances and the nature of the expenses you are incurring, so it's worth discussing your situation with us to ensure claims are appropriate and adequately supported.

Plan ahead for your tax bill

Unlike employment income, tax is often not withheld from sharing economy earnings. This can result in an unexpected tax liability when you lodge your return.

Depending on your circumstances, it may be worthwhile considering strategies such as making voluntary tax payments during the year, setting aside part of your earnings in a separate account, or, where appropriate, entering the PAYG instalment system.

Don't overlook other obligations

In some situations, GST registration may be required if your activities reach the relevant turnover thresholds. If you are involved in ride-sourcing activities then you will normally need to register for GST regardless of the income you generate.

Depending on the nature of your income, there may also be opportunities to make additional superannuation contributions, which could provide longer-term financial benefits.

Looking beyond tax time

Treating your sharing economy activities in a business-like manner can provide benefits beyond simply meeting your tax obligations. Good record-keeping and proactive tax planning may help you better understand the profitability of your activities, improve cash flow management and make it easier to access finance if the activity continues to grow.

If you've earned income through an online platform during the year, now is a good time to review your records and ensure you're well prepared before lodging your tax return. A conversation with your accountant may help identify deductions you are entitled to claim, confirm that your reporting is accurate and avoid unnecessary surprises at tax time.

The sharing economy can provide valuable opportunities to earn additional income. With some forward planning and good record-keeping, managing the tax implications should become a straightforward part of making the most of those opportunities.

For more information, visit the ATO's guidance on sharing economy income and tax or speak with us about your individual circumstances.

The rules in Division 7A are aimed at situations where private companies provide benefits to shareholders or their associates in the form of payments, loans or forgiven debts. When these rules are triggered the tax rules apply as if the company had paid an unfranked dividend to the recipient of the benefit.

Why this matters

Many private business groups use discretionary trusts as part of their structure. It is common for a trust to distribute at least some income to a corporate beneficiary so that this income can be taxed at the corporate tax rate (currently 25% or 30%), while the cash remains within the trust to fund working capital, future investment or business growth.

Until now, the ATO's view was that these unpaid distributions would typically be treated as loans under Division 7A. This often meant businesses needed to put complying loan agreements in place, charge benchmark rates of interest and make annual repayments to avoid the risk of deemed unfranked dividends being recognised for tax purposes. For many groups, this created an additional administration burden, reduced cash flow flexibility and increased compliance costs.

The High Court has now clarified that an unpaid distribution will not necessarily amount to a Division 7A loan simply because the corporate beneficiary has not demanded payment.

While every arrangement will depend on its particular facts, the decision is likely to provide greater certainty for many business groups that have historically retained funds within their trusts.

What happens with existing loan arrangements?

The ATO has since released a Decision Impact Statement (26 June 2026), confirming that it will generally administer the law in accordance with the Court's decision, while also highlighting that other integrity provisions may still need to be considered.

One of the key things that the ATO has clarified is that where formal written loan agreements have been put in place in response to the ATO’s previous views in this area, these can’t simply be unwound just because of the High Court decision.

That is, the trust still needs to make minimum loan repayments each year until the loan period ends or the loan is completely repaid to prevent a deemed unfranked dividend from being recognised under the tax rules.

 Other tax rules still matter

Although the decision represents a significant development, it should not be viewed as removing all Division 7A or tax related concerns. 

The ATO has made it clear that other provisions within Division 7A can still apply in certain situations. For example, if a trustee appoints income to a corporate beneficiary and this is left unpaid, but the trustee subsequently lends money to a shareholder of the company (or an associate of a shareholder), then this can potentially still trigger a deemed unfranked dividend for tax purposes unless appropriate steps are taken.

Other integrity rules also need to be considered when trust distributions are left unpaid. For example, the rules in section 100A can potentially trigger adverse tax outcomes in situations where a trustee appoints income to a beneficiary but the real benefit of the funds is enjoyed by another party.

These provisions remain highly fact-dependent, making it important to review arrangements carefully rather than assuming the Bendel decision resolves every issue.

Looking ahead

The decision provides a timely opportunity for private groups to review their trust structures, distribution resolutions and patterns, accounting records and the way unpaid entitlements have been managed over time.

However, we also need to keep an eye on the Government's proposed trust tax reforms. The Government announced in the recent Federal Budget that it will be introducing a 30% minimum tax rate for discretionary trusts from 1 July 2028. The Government has also indicated that income distributed by discretionary trusts to corporate beneficiaries will generally be subject to double taxation because companies won’t receive a credit for the tax that is paid at the trust level on its income. This is likely to significantly reshape tax planning strategies over the coming years.

A recent consultation paper released by Treasury in connection with the proposed 30% minimum tax rate also suggests that the Government might modify the tax rules to ensure that Division 7A can apply to unpaid distributions. This isn’t law yet, so we will need to monitor developments because this could mean that tax planning strategies need to be revisited before we reach 1 July 2028.

Please let us know if you would like to discuss how the Bendel decision and proposed 30% minimum tax on discretionary trust income will impact on your group.

Under the draft instrument, where an employer has an  established payroll schedule and makes a payment  outside the normal pay cycle, the following payments 
may qualify as out-of-cycle earnings:

• Allowances
• Bonuses
• Commissions
• Loadings
• Advance payments, and
• Back payments.

Rather than the standard 7 business day contribution deadline, employers would have until 7 business days after the employee’s next regular payday to make an on-time SG contribution for these payments. The measure is intended to reduce compliance costs by avoiding ad hoc contribution requirements for irregular payments made outside the usual payroll cycle.

However, termination payments will generally not qualify for the extended timeframe where there is no 
later qualifying earnings day for that employee. In those cases, the standard 7 business day deadline 
continues to apply.

More information

• LI 2026/D3

If a determination is made, it allows additional time for affected employers to make eligible SG contributions. If the determination is made before the relevant qualifying earnings (QE) day, the employer has 20 business days after the QE day. If the determination is made on or after the QE day, the employer has 20 business days starting the day after the determination is made.

The Practice Statement outlines the types of events that constitute exceptional circumstances, being natural disasters and widespread system outages, and the considerations relevant to determining whether affected employers should have a longer period of time to make eligible contributions.

More information

• PS LA 2026/D3

• ​TR 2026/1 Income tax: rental property income and deductions for individuals who are not in business
• PCG 2026/2 Apportionment of rental property deductions – ATO compliance approach
• PCG 2026/3 Application of section 26-50 of the Income Tax Assessment Act 1997 to holiday homes that you also rent out – ATO compliance approach.

​TR 2026/1 
The ruling provides guidance for individuals who earn income from their rental property, and applies to both short-term rental arrangements, such as holiday accommodation or room sharing through online platforms, and long-term residential leasing.

The ruling explains when rental receipts will be assessable income, when expenses relating to rental 
properties can be claimed as deductions, and how deductions should be apportioned where a property is 
used partly for income-producing and private purposes. It also outlines the ATO’s view on the 
operation of the “leisure facility” rules in section 26-50 ITAA 1997, under which certain holding costs for 
holiday homes may be denied completely unless an exception applies. The key thing to note is that if a 
property is classified as a leisure facility then certain expenses won’t be deductible at all, even if the 
property is used to derive some assessable rental income during the income year. 

A transitional compliance approach applies to expenses incurred before 1 July 2026, with the Commissioner indicating compliance resources will generally not be devoted to reviewing the application of section 26-50 to holiday homes during this period, except in cases involving avoidance, fraud, evasion, or inappropriate use of the concession. 

PCG 2026/2 
PCG 2026/2 outlines the ATO’s compliance approach to apportioning rental property deductions where an 
individual uses a property partly to derive assessable income and partly for private purposes, such as renting out part of a home while living in the remainder. In these situations, expenses must be apportioned on a “fair and reasonable” basis to determine the deductible amount.

The guideline sets out apportionment methods the Commissioner will accept in common scenarios. While 
taxpayers can potentially adopt a different methodology, they will need to demonstrate why it is 
fair and reasonable in their circumstances and will not have the protection of the guideline.

PCG 2026/2 applies to individuals only and does not cover rental properties used in carrying on a business 
or held by non-individual entities. It also generally excludes holiday homes, although an exception may 
apply where the property is mainly held to produce rental income. In those cases, the guideline can assist 
in apportioning deductions for any private use.

PCG 2026/3
PCG 2026/3 sets out how the ATO differentiates and manages risk for a range of rental property 
arrangements which could potentially be subject to the leisure facility rules in section 26-50.

SMSFs should confirm with their financial institution  whether their bank account supports NPP payments 
and understand any conditions or payment processing limitations that may apply. Trustees should also 
consider how incoming and outgoing payments will appear in bank records to ensure contributions can be accurately identified and reconciled.

While NPP payments may include additional transaction information, SMSFs remain responsible for 
maintaining adequate records and ensuring contributions are correctly identified, allocated and 
reported. The ATO notes that contribution allocation rules are unchanged under Payday Super, with SMSFs 
still having up to 28 calendar days after the end of the month in which a contribution is received to allocate or return the contribution.

The ATO also encourages SMSFs to engage with banks, administrators and gateways to understand how NPP payments will operate within existing fund processes and to test payment workflows early to minimise future processing issues

You are classified as a foreign person if you intend to buy Australian residential or commercial property and 
you are not one of the following:

• A citizen of Australia,
• A permanent resident of Australia, or
• A New Zealand citizen with a special category visa.

A permanent resident who is not ordinarily a resident in Australia may also be treated as a foreign person in some circumstances.

A ‘foreign person’ includes temporary residents and NZ citizens who are non-residents. A temporary resident is an individual who:

• Holds a temporary visa that allows them to stay in Australia for a continuous period of 12 months or more (regardless of the time remaining on the visa), or
• Resides in Australia, has submitted an application for a permanent visa and holds a bridging visa that allows them to stay in Australia until their application is finalised.

The Government also announced that it would strengthen and streamline Australia's foreign investment framework, including reforms to foreign investment laws and the Register of Foreign Ownership of Australian Assets. Existing obligations remain in place until these reforms have been implemented.

Additional resources:

• Reforms to the Register of Foreign Ownership of Australian Assets
• Are you a foreign person buying property in Australia?
  

The ATO continues to focus on higher-risk arrangements, particularly where significant amounts of PSI are diverted away from the individual who generated the income. The ATO is encouraging personal services businesses (PSBs) to review their arrangements and address any PSI alienation risks as soon as possible. 

Where a genuine effort is made to move an arrangement to a low-risk position by 30 June 2027, the ATO has indicated it will generally not seek to apply Part IVA if the arrangement is reviewed during the transition period. 

The ATO has clarified that its compliance approach under PCG 2025/5 is not an amnesty or safe harbour, but a targeted initiative encouraging PSBs to review and address higher-risk PSI alienation arrangements. The ATO has indicated it will continue to scrutinise high-risk cases, but voluntary corrective action taken by taxpayers will be considered when determining whether to pursue Part IVA compliance action.

Where a PSI review commences between 28 November 2025 and 30 June 2027, the ATO has stated it will generally not seek to apply Part IVA if a PSB can demonstrate a genuine attempt to move an alienation arrangement to a low-risk position. This includes selfassessing whether PSI has been inappropriately diverted, taking meaningful steps to address higher-risk behaviours, and ensuring current year tax returns are compliant. In cases involving significant PSI diversion, prior year returns may also need to be amended.

For reviews or audits already underway, the ATO has indicated it will work with taxpayers to identify any further action required to address historical noncompliance. However, where a review or audit has 
been finalised and an assessment or Part IVA determination issued, the decision will generally stand, subject to normal objection rights.

The ATO has also clarified how PCG 2025/5 interacts with PCG 2021/4 on professional firm profit allocation. PCG 2025/5 applies where income is primarily generated from an individual’s personal services and there is a risk of PSI alienation, while PCG 2021/4 applies to broader professional practices supported by systems, staff and capital, where the income is generated from a business structure. TheATO emphasises that as businesses evolve, alienation risk is not removed entirely but assessed under a different compliance framework.