Ward & Ilsley Partners

04/09/2026

🔑Work related deductions

Summary of recent cases:

The Hall case (2026) confirms that employees cannot claim home-office rent or car travel between home and work as deductions, while the Shaw case reframes the evidentiary order by requiring taxpayers to first establish that an expense is deductible in principle before substantiation rules apply. Together, they narrow the scope of work-related deductions and clarify the burden of proof.

🏠 Hall’s Case – Home Office Rent & Car Expenses

Case: Commissioner of Taxation v Hall [2026] FCAFC 43

Facts: Nathaniel Hall, an ABC sports presenter, worked partly from home (digital role) and partly at the studio (live role). He claimed:• Rent deduction: $5,878.87 (16.18% of apartment rent for a home office).
• Car expenses: 1,595 km of travel between home and studio.

Outcome: The Full Federal Court disallowed both deductions:• Home office rent: Occupancy expenses (like rent) are not deductible unless the home is a place of business. Hall’s apartment was not considered a business premise.
• Car travel: Travel between home and workplace is private in nature, even if part of the day’s duties are performed at home.

Implication: Employees working from home due to employer requirements or lockdowns cannot claim rent as a deduction unless their home is legally a business premise. Travel from home to work remains non-deductible.

📑 Shaw’s Case – Proof Before Substantiation

Case: Shaw v Commissioner of Taxation (recent Federal Court decision).
Key Principle: The Court clarified that substantiation rules (e.g., receipts, logbooks) only apply after a taxpayer has shown that an expense is deductible in principle under section 8‑1 ITAA 1997.
Effect:
• Taxpayers must first prove the nexus between expense and income production.
• Only then does the requirement to substantiate (provide records) arise.

Implication: This shifts the order of proof—taxpayers cannot rely on substantiation alone; they must establish deductibility before substantiation matters.

⚖️ Practical Takeaways for Taxpayers

• Home-office rent: Only deductible if the home is a place of business (e.g., doctor’s surgery, consulting office). A spare bedroom for employer-required remote work does not qualify.
• Car expenses: Travel between home and workplace is private, even if work duties are split between home and office.
• Burden of proof:
1. Show the expense is deductible in principle (work-related, not private).
2. Then substantiate with records.

🚨 Risks & Considerations

• Common misconception: Working from home ≠ automatic rent deduction.
• Audit risk: Claiming rent or commuting costs without meeting strict criteria may trigger ATO review.
• Best practice: Focus on allowable running expenses (electricity, internet, office supplies) rather than occupancy costs.

We can assist with any questions you may have regarding deductions and their validity ☎️ 9535 5900

03/09/2026

📑TPAR reporting

• Expanded ATO pre-fill service (Tax time 2026): Contractor payments reported through the Taxable Payments Annual Report (TPAR) are now used to pre-fill eligible recipients’ income tax returns.

• Industries affected: Building and construction, courier services, cleaning, road freight, IT, security, investigation, surveillance, and some gig economy platforms.

⛽️How pre-fill works:
• TPAR amounts will exclude GST.
• Allocated to the correct business income labels.
• Designed to reduce manual data entry and improve accuracy.
• Taxpayers must still review pre-filled data and ensure all income is reported, since not all business income is captured by TPAR.

📝Reporting obligations:
Businesses required to lodge a TPAR must do so by 28 August each year. After lodgement, the data feeds into the ATO’s pre-fill system. icb.org.au

In short: the ATO is making tax returns easier by automatically including contractor payment data from TPAR, but businesses still need to lodge on time, and taxpayers remain responsible for accuracy.

Here’s what the expanded TPAR pre-fill means in practice for contractors and businesses:

👷For Contractors

• Less manual entry: Income reported by businesses through TPAR will automatically appear in your tax return, reducing errors.

• Accuracy check still required: You must review pre-filled data carefully. Not all income sources are captured (e.g., private clients or non-reporting businesses).

• Audit trail: Since payments are cross-checked against TPAR, undeclared income is more likely to be flagged by the ATO.

📥For Businesses

• Timely lodgement critical: TPAR must be lodged by 28 August each year. Late lodgement delays pre-fill and may attract penalties.

• Compliance spotlight: The ATO uses TPAR data to identify contractors who under-report income. Inaccurate or missing reports can trigger audits.

• Industry coverage expanding: More sectors are now included (construction, cleaning, courier, IT, security, gig platforms), so businesses in these areas must ensure compliance.

🪄Practical Implications

• Contractors benefit from smoother tax preparation but face tighter compliance monitoring.
• Businesses must treat TPAR as a key compliance obligation, not just an administrative task.
• Both sides should expect greater transparency: the ATO is closing gaps where income might otherwise slip through.

Below is a checklist for both contractors and businesses:

✅ Contractors

• Review pre-filled income carefully — confirm all sources are included.
• Add any missing income (e.g., private clients, non-reporting businesses).
• Keep records of GST amounts separately (TPAR excludes GST).
• Be aware that undeclared income is more easily detected by the ATO.

✅ Businesses

• Lodge TPAR by 28 August each year — late lodgement risks penalties.
• Ensure contractor payments are reported accurately (excluding GST).
• Double-check industry obligations — construction, cleaning, courier, IT, security, gig platforms are covered.
• Maintain clear records to support reported amounts in case of audit.

🔑Key Takeaway

Contractors get smoother tax returns but must still verify accuracy. Businesses face stricter compliance obligations, with TPAR now a central tool for ATO oversight.

02/09/2026

Discretionary trusts in Australia - what you need to know

Australia’s 2026–27 Federal Budget introduced sweeping reforms to discretionary trusts: from 1 July 2028, trustees will face a minimum 30% tax on trust taxable income, ending the long‑standing practice of income splitting to low‑rate beneficiaries.

Corporate beneficiaries are excluded from relief, meaning effective tax rates could exceed 50%.

🔑 Key Changes to Discretionary Trusts

• 30% minimum tax, effective 1 July 2028.
• Applies at the trustee level, regardless of beneficiary tax rates.
• Non‑corporate beneficiaries can claim a non‑refundable tax credit for tax paid by the trustee.
• Corporate beneficiaries are excluded
• No credits for trustee tax.
• Distributions to companies could face effective tax rates of 51–62.9% once passed to shareholders.
• Restructure rollover relief available 1 July 2027 – 30 June 2030. Allows migration of assets into companies or fixed trusts without immediate tax consequences.
• CGT reforms (impacting trusts generally)
• From 1 July 2027, the 50% CGT discount is replaced with indexation.
• Minimum 30% CGT on net capital gains for individuals.
• Pre‑CGT assets accrue taxable gains from 2027 onwards.

• Testamentary trusts - New discretionary testamentary trusts created after 12 May 2026 will also be subject to the minimum tax.
• Minors receiving distributions will be affected.

⚠️ Risks & Implications

• Reduced flexibility: Income splitting to low‑income family members no longer yields tax savings.
• Corporate beneficiary penalty: Using “bucket companies” becomes unattractive due to punitive effective rates.
• Restructuring pressure: Many SMEs and family groups may need to shift to company or fixed trust structures.
• Uncertainty: Draft legislation is pending; details on exclusions (e.g., certain trust types or income classes) remain unclear.

📌 Bottom Line

Discretionary trusts in Australia are losing their traditional tax advantages. From 2028, trustees face a flat 30% tax, with limited relief for individuals and none for companies. Families and SMEs relying on trusts for tax planning should review structures now and consider rollover relief options before 2030.

01/09/2026

Family Trusts in Australia – What You Need to Know 🧑‍🧑‍🧒

• Purpose: Family trusts are used to protect assets, manage wealth, and distribute income among family members.

• Tax changes: From 1 July 2028, discretionary trusts face a 30% minimum tax on income, reducing the benefits of income splitting.

• Capital gains: The 50% CGT discount will be replaced with indexation from 1 July 2027, meaning higher tax on property and investment sales.

• Impact: Low‑income beneficiaries and “bucket companies” lose tax advantages, while high‑income earners see less change.

• Restructuring options: Temporary rollover relief (2027–2030) allows moving assets into companies or fixed trusts without immediate tax costs.

⚠️ Risks & Considerations:

• Reduced flexibility: Income splitting strategies lose effectiveness.

• Restructuring pressure: Many SMEs may shift to company or fixed trust structures.

• Uncertainty: Draft legislation not yet released; consultation expected.

• Punitive corporate outcomes: Bucket companies may become obsolete.

📌 Bottom line:

Family trusts are still useful for asset protection and succession planning, but their tax advantages are shrinking. It may be time to review your structure before 2027 to avoid unexpected costs.

28/08/2026

What self-managed super funds (SMSFs) must do to receive super contributions under Payday Super.

📌 What SMSFs must do under Payday Super
• SMSFs must comply with all Payday Super and SuperStream changes when receiving employer contributions .
• If receiving contributions from unrelated employers, the SMSF must:
o Have a bank account reachable via the New Payments Platform (NPP) .
o Maintain an active electronic service address (ESA) .
• If the SMSF’s administration or reporting is not up to date, it may not be able to receive contributions .
• Employers can check SMSF eligibility via Super Fund Lookup .

📌 Timeframe to allocate or reject contributions
• SMSFs have 28 calendar days after the end of the month in which a contribution is received to allocate or reject it.
• This timeframe has not changed under Payday Super .

📌 Maintaining an active electronic service address (ESA)
• The ESA is how SMSFs receive SuperStream contribution messages .
• Usually managed through an administrator or messaging provider .
• Employers can send a member verification request to confirm the ESA is active before contributing .
• If the ESA is not active:
o Contributions may be delayed or rejected .
o Employers may become liable for the super guarantee charge if contributions don’t reach the SMSF on time .
• To avoid this, employers can:
o Request the employee’s stapled fund details and pay that fund, or
o Pay the employer’s default fund if no stapled fund exists .

📌 Closely held SMSFs and related parties
• Super guarantee contributions must be made each payday for closely held SMSFs .
• These contributions are excepted from SuperStream requirements .
• They must still be reported through Single Touch Payroll (STP).
• STP concessions remain unchanged .

27/08/2026

Which payments count as qualifying earnings for super guarantee from 1 July 2026.

⭐ Core Concept: What Are Qualifying Earnings?
• Qualifying earnings are the payments employers must include when calculating super guarantee (SG) from 1 July 2026 .
• SG remains 12% of qualifying earnings for each pay period .

⭐ What’s Changing?
• New inclusion: commissions paid solely for work done outside ordinary hours must now be included in qualifying earnings .
• Employee eligibility rules remain unchanged; most employees and labour based contractors are still eligible for SG .

⭐ What Counts as Qualifying Earnings?
1. Ordinary Time Earnings (OTE)
Includes payments for ordinary hours of work such as:
• Paid leave (annual, sick, carers, RDOs, etc.)
• Certain allowances (skill-based, adverse conditions, partial expense allowances)
• Bonuses linked to ordinary hours (performance, Christmas, sign on, referral)
• Lump sum payments relating to ordinary hours (e.g., back pay for ordinary hours)
2. All Commissions
• All commissions are qualifying earnings, including those solely for work outside ordinary hours (new rule) .
3. Salary Sacrifice to Super
• Salary sacrificed amounts count if they would have been qualifying earnings had they been paid as wages .
4. Payments to Contractors
• Payments to contractors mainly for their labour are included under the expanded definition of employee .

⭐ What Does Not Count as Qualifying Earnings?
• Overtime (when ordinary hours are clearly defined)
• Annual leave loading linked to lost overtime opportunities
• Expense reimbursements (actual costs repaid)
• Fringe benefits and other non salary benefits (e.g., shares under employee share schemes)
• Overpayments that employees must repay (treated as loans)
• Certain leave types:
o Government parental leave
o Jury duty, defence reserve leave, community service leave
• Termination payments, except payment in lieu of notice (which is qualifying earnings)
• Payments to employees under 18 or domestic/private workers unless they work >30 hours/week .

⭐ Key Examples (ATO)
• Example: Ordinary hours not stated All hours worked count as ordinary time earnings → all wages are qualifying earnings .
• Example: Piece rates Piece-rate payments count as OTE and therefore qualifying earnings when ordinary hours aren’t defined .
• Example: Overtime clearly identified Overtime payments are excluded from qualifying earnings .
• Example: Bonus for overtime work Bonus paid solely for work outside ordinary hours is excluded .
• Example: Salary sacrifice to super Sacrificed amounts still count if they would have been qualifying earnings .
• Example: Reimbursement Reimbursement for actual expenses is not qualifying earnings .
• Example: Genuine redundancy Only payment in lieu of notice is qualifying earnings; other redundancy components are excluded .

⭐ Additional Rules
• Maximum contribution base applies: SG not required above the cap .
• Annual leave loading is included unless clearly linked to lost overtime .
• Long-distance drivers have specific guidance for calculating qualifying earnings

25/08/2026

Deductions for digital product expenses

As a business owner, you can claim a tax deduction for the cost of digital products used in running your business.

The timing and method of claiming depend on whether the expense is operating or capital.

Key Principles
• The type of expense (operating vs capital) determines when you claim the deduction.
• You can only claim the business-use portion of any expense.
• You must keep records showing the expense and how you calculated the claim.

Operating Expenses
These are everyday running costs and are generally deductible in the year incurred.
Examples include:
• Cloud storage
• Website running costs (maintenance)
• File sharing services
• Internet service provider fees
• Lease payments
• Software subscription fees (accounting, cybersecurity, POS, learning, job, client or inventory management software)

Example: Leasing a scanner/photocopier is an operating expense because ownership stays with the leasing entity.

Capital Expenses
These relate to acquiring or improving business assets and are usually claimed over time through depreciation.
Examples include:
• Cameras
• Computers and accessories
• Connectivity boosters
• Website acquisition or development
• In house software
• Mobile phones and tablets
• POS machines

Businesses may be eligible for immediate deductions under simplified depreciation rules (e.g., instant asset write off).

Example: Laptops purchased under hire purchase can be fully deducted if criteria such as turnover < $10M and cost < $20,000 are met.

Software Expenses
Some software costs are operating expenses if:
• They are subscription fees, or
• They are commercial off the shelf software with an effective life ≤ 1 year.
If the effective life is > 1 year, consider whether it is in house software.

Example: SaaS subscription fees for booking software are deductible as operating expenses.

In House Software
Software developed or acquired specifically for business use (not for sale).
Deductions may be claimed via:
• Depreciation incentives, or
• Software development pool rules if the software is still being developed.
Once you choose to allocate expenses to a pool, all future in house software expenses must also go into the pool.

Example: Custom booking software costing $1,500 must be allocated to a development pool and deducted over 5 years.

Calculating Your Claim
• Apportion expenses between business and private use.
• If registered for GST and entitled to full credits, exclude GST from the asset cost.

Records You Must Keep
• Tax invoices
• Loan or lease documents
• Details of how you calculated your claim

https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/income-and-deductions-for-business/deductions/deductions-for-digital-product-expenses

24/08/2026

✨ Running a home-based business? Make tax time easier with these smart deduction tips!

Tax time is the perfect moment to make sure you’re claiming everything you’re entitled to — and avoiding the things you can’t.

💡 What you can claim:
• Depreciating business assets like laptops, desks and office furniture
• Running expenses such as electricity, heating/cooling, lighting, phone and internet, and office cleaning

🧮 Choose the right method Many home-based business owners use the fixed rate method — a simple way to claim a set rate per hour worked from home. Just remember: some expenses are already included in the fixed rate and can’t be claimed separately.

🏠 Have a dedicated business area? You may also be able to claim occupancy expenses like rent, mortgage interest, council rates, land tax or home insurance — depending on your circumstances.

📁 Keep strong records Good record keeping makes tax time smoother. Keep most records for 5 years, stored safely and in English (or easily converted).

🏡 Don’t forget CGT If you run your business from home, CGT may apply when you sell your home — but small business CGT concessions may help reduce it.

📚 Want to learn more? Check out the ATO’s free toolkits, guides and courses to help you stay confident and compliant this tax time.

Information to help small businesses at tax time and all year round.

21/08/2026

Paying super for independent contractors under Payday Super

Running a business and working with independent contractors? Here’s an important super update.

Under Payday Super, you now need to pay super on payday — and make sure it reaches the contractor’s fund within 7 business days.

Remember: Even if a worker has an ABN or calls themselves a contractor, you may still need to pay super if they’re mainly providing their labour, skills, or time.

Key Points
• Payday Super changes when super must be paid, not who is eligible independent contractors remain eligible for super under the same rules.
• Independent contractors may still be entitled to super Businesses should review their arrangements to ensure compliance.
• Super is generally required when contractors are paid mainly for their labour, personal effort, skills, or time This applies even if they have an ABN, invoice you, or are labelled as contractors in a contract.
• Super payment timing under Payday Super Contributions must:
o be paid each payday, and
o reach the contractor’s super fund within 7 business days after payday.
• STP reporting is optional for contractor payments If you choose to report, you must meet all STP requirements, including reporting qualifying earnings and super liability.
• Further guidance is available The ATO provides examples and detailed information on super obligations for contractors.

20/08/2026

TPAR: Final Reminder

Deadline
TPAR Due 28 August If you pay contractors in certain industries, your Taxable Payments Annual Report must be lodged by 28 August each year. Electronic lodgment only — paper forms are no longer accepted.

Who Must Lodge
Do You Need to Lodge? Businesses that pay contractors in specific industries must report these payments annually. If you don’t need to lodge, you must still submit a Non Lodgment Advice (NLA).

How to Lodge
Lodge Online in Minutes You can lodge through Online services for business, Online services for individuals and sole traders, SBR enabled software, or a registered tax practitioner.

Why It Matters
Stay Compliant & Avoid Penalties Lodging your TPAR ensures accurate reporting across industries and keeps your business compliant with ATO requirements.

Need Help?
Support for Small Business We can help you stay informed about obligations and changes.

https://www.ato.gov.au/businesses-and-organisations/small-business-newsroom/final-reminder-tpar-due-28-august