Juggernaut Advisory

SMSF Property: How to Prepare for a Smooth Audit

Team Juggernaut — Mon, 14 Sep 2026 06:03:23 +0000

SMSF property can be one of the most significant assets in a fund, making accurate valuations and supporting evidence important for a smooth annual audit.

For many SMSF trustees, property is one of the most significant assets held by their SMSF. Unlike personally owned assets, there is a legal requirement that all SMSF assets are valued each 30 June. This can be a simple process for assets that have a ready market, like listed shares; however, the process for other assets like property can be more onerous.

Trustees are responsible for determining the market value of fund assets. After your annual financial statements are prepared, your fund auditor will need to see objective and supportable evidence that backs up how you have arrived at the market value.

Trustees have the option to use a qualified independent valuer for this and should consider this where an asset represents a significant part of the fund’s value or might be difficult to value.

Where trustees choose not to use an independent valuer, they will need to be able to support asset valuations with evidence from multiple sources. Typically, for property, this may include:

Recent comparable sales – Generally at least 3, and the properties should be genuinely comparable in terms of size and location.
A real estate agent appraisal that also includes comparable sales.
Net income yields for commercial property (generally not sufficient evidence on its own).

The ATO includes some helpful guidance on this in their Guide to valuing SMSF assets.

Where an SMSF holds property that meets the business real property (BRP) definition, it is possible that this property can be leased to a business that is operated by a member or a related party of the SMSF. However, the fact that an arrangement like this is permitted does not mean the fund trustees can charge a non-market rate of rent.

When a rental arrangement is entered into with a related party of the super fund, that arrangement should be on arm’s length (commercial) terms and this should be supported by a rental appraisal. An easy way to think about this is – do all the lease terms reflect an arrangement that would be agreed to if the tenant was an unrelated third party?

To evidence that a related party arrangement is on arm’s length (commercial) terms an auditor should be provided with;

A properly documented lease;
A rent appraisal when the lease was first entered into;
Evidence that the arrangement is operating based on the terms of the lease; and
Evidence that where a prior lease term has expired the terms have been reset to market value – backed up by a new rent appraisal.

Although your financial year 2026 SMSF audit might not be taking place for some months, the process can be much smoother where SMSF trustees are proactive and start to compile this evidence in advance, rather than waiting for the auditor’s request.

If you have any questions in relation to any of the above, please contact us to discuss further.

The post SMSF Property: How to Prepare for a Smooth Audit appeared first on Juggernaut Advisory.

Penalty Units Increase from 1 July 2026: What to Know

Team Juggernaut — Thu, 10 Sep 2026 00:49:00 +0000

Penalty units increased from $330 to $364 from 1 July 2026, increasing the cost of a range of ATO penalties for compliance failures.

From 1 July 2026, the value of a Commonwealth penalty unit increased from $330 to $364. While this may sound like a minor administrative change, it has a direct impact on many ATO penalties, increasing the cost of a range of compliance failures.

A penalty unit is simply the method used under Commonwealth law to calculate many fines and administrative penalties. Rather than specifying a fixed dollar amount, the legislation often refers to a certain number of penalty units. As the value of a penalty unit increases, so too do the penalties that rely on it.

The new value applies to breaches that occur on or after 1 July 2026. Earlier breaches continue to be assessed using the previous rate.

Where the increase is likely to be felt?

Many of the ATO’s administrative penalties are based on penalty units, meaning the increase flows directly through to the amount payable.

Failure to lodge on time

One of the most common penalties applies where tax returns, activity statements or other required documents are lodged late.

The base penalty is generally one penalty unit for every 28 days (or part of 28 days) that a document remains outstanding, up to a maximum of five penalty units.

For a small entity, this means the maximum base penalty has increased from $1,650 to $1,820. Higher penalties may apply to medium and large entities, while significant global entities are subject to much larger penalty amounts.

False or misleading statements

Providing incorrect information to the ATO can also result in penalties.

Where there is no tax shortfall, the law provides for base penalties of 20, 40 or 60 penalty units, depending on the circumstances and the taxpayer’s level of care.

At the new penalty unit value, these base penalties have increased to $7,280, $14,560 and $21,840 respectively, before taking into account any reductions or increases that may apply.

Self-managed super funds

Trustees of self-managed superannuation funds (SMSFs) should also be aware of the higher penalty amounts.

A range of SMSF administrative penalties are calculated using penalty units. For example, some breaches that previously attracted a penalty of $19,800 (60 penalty units) now carry a penalty of $21,840.

Importantly, these penalties are generally imposed on each individual trustee rather than the fund itself. This means the total cost can increase significantly where a fund has multiple individual trustees, and the penalties cannot usually be paid from the assets of the superannuation fund.

Other obligations, such as certain record-keeping requirements, tax invoice obligations and some superannuation guarantee penalties, may also be affected by the higher penalty unit value.

Why this matters?

For most taxpayers, these penalties are entirely avoidable.

Late lodgements, poor record-keeping and incorrect information remain some of the most common reasons businesses and individuals incur ATO penalties. While the increase in penalty units may not seem substantial on its own, the cost can add up quickly where there are multiple outstanding obligations or repeated compliance issues.

It is also worth remembering that ATO penalties are generally not tax deductible, meaning they must be paid from after-tax income.

The good news is that the ATO will often consider remitting penalties (in part or full) where there are genuine mitigating circumstances, reasonable care has been taken, or a voluntary disclosure is made before the issue is identified by the ATO. Addressing problems early typically results in a better outcome than waiting until formal compliance action begins.

Practical steps to reduce your risk.

There are several simple steps that can help minimise the risk of penalties:

Lodge on time. Providing information to us well before due dates gives enough time to prepare accurate returns and meet lodgement deadlines.
Keep good records. Accurate and up-to-date records make it easier to prepare returns correctly and support your tax positions if questions arise.
Review your compliance regularly. If you operate a business or manage an SMSF, periodic reviews can identify issues before they become costly.
Seek advice early. If you think you’ve made a mistake or have fallen behind with your tax obligations, speaking with us as soon as possible will generally provide more options than waiting for the ATO to contact you.

A timely reminder.

The increase in penalty units is a timely reminder that the cost of tax non-compliance continues to rise. While the higher penalties are intended to encourage timely and accurate compliance, they also reinforce the value of good record keeping and proactive tax management.

If you have any concerns about outstanding lodgements, record-keeping obligations or any other tax compliance matter, please contact us. We can help you address issues early and minimise the risk of unnecessary penalties.

If you have any questions in relation to any of the above, please contact us to discuss further.

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Travel Allowance Rates 2026–27: What Employees Need to Know

Team Juggernaut — Tue, 08 Sep 2026 23:36:00 +0000

Travel allowance rates for the 2026–27 income year have been updated by the ATO, with new reasonable amounts applying to travel and overtime meal expenses.

The ATO has released its updated reasonable travel and overtime meal allowance rates for the 2026–27 income year in Taxation Determination TD 2026/4.

The overtime meal allowance has increased to $40.00, while the reasonable amounts for domestic and overseas travel have also been updated based on salary levels and travel destinations.

Although these figures are widely publicised each year, they are often misunderstood. A common misconception is that employees can automatically claim a tax deduction up to the ATO’s published rates. In reality, the rules are much narrower, and applying them incorrectly could lead to deductions being denied as well as interest and penalties.

A travel allowance is the starting point.

The ATO’s reasonable amounts only become relevant if an employee receives a genuine travel or overtime meal allowance from their employer.

Generally, an allowance should:

Be paid specifically to cover work-related travel or overtime meal expenses;
Relate to particular work trips or overtime worked, rather than being a general additional payment;
Be shown separately from normal salary or wages; and
Be intended to help cover expenses the employee is expected to incur.

If an amount has simply been built into an employee’s normal salary package or is not identified as a separate allowance, the ATO’s reasonable rates generally do not apply. Instead, the normal substantiation rules will usually apply to any deduction claimed.

The reasonable rates are not an automatic deduction.

One of the most common misunderstandings is that receiving a travel allowance allows an employee to automatically claim the ATO’s published rate as a tax deduction.

This is not how the rules operate.

Employees can generally only claim the amount they actually spend on deductible work-related travel or overtime meal expenses. The ATO’s reasonable amounts simply mean that, in certain circumstances, employees may not need to keep a receipt for every specific expense.

Importantly, the expenses must still have been incurred, and they must relate to work-related activities.

Good records are still essential.

Even where a genuine travel allowance has been paid, employees should still keep sufficient records to demonstrate that they incurred the expenses and that their claim is reasonable.

Useful records may include:

A diary recording work trips and overnight travel;
Details of meals and incidental expenses incurred while travelling;
Bank or credit card statements showing the expenses were personally paid;
A representative sample of receipts; and
Where travel involves six or more consecutive nights away from home, a travel diary recording the dates, locations and purpose of the travel.

While receipts may not always be required, relying solely on the ATO’s published rates without any supporting evidence could expose you to unnecessary scrutiny if your return is reviewed.

Practical tips for employees and employers.

If you receive a travel or overtime meal allowance, it is worth checking that the arrangement satisfies the ATO’s requirements before claiming a deduction.

Some practical steps include:

Review your payslip. Check that the allowance is separately identified rather than being included in ordinary salary or wages.
Keep records throughout the year. Maintaining a simple travel diary and retaining some supporting documents is much easier than trying to recreate the information months later.
Only claim what you actually spend. The ATO’s reasonable amounts are not a target or standard deduction. They simply provide a benchmark for when the normal receipt requirements may be relaxed.
Take extra care on longer trips. If you are away from home for six or more consecutive nights, additional travel diary requirements will generally apply.

A little preparation can avoid problems later.

The updated reasonable amounts provide a useful guide for employers and employees during the 2026–27 income year, but they should not be viewed as an automatic entitlement to a tax deduction.

Understanding how the rules operate, keeping appropriate records and claiming only genuine work-related expenses can significantly reduce the risk of problems if the ATO reviews your tax return.

If you or your employees receive travel or overtime meal allowances, now is a good opportunity to review your current arrangements. We can help you confirm whether the allowances meet the ATO’s requirements and what records should be kept to support any future claims.

If you have any questions in relation to any of the above, please contact us to discuss further.

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Discretionary Trusts: Proposed 30% Minimum Tax Explained

Team Juggernaut — Tue, 08 Sep 2026 01:24:00 +0000

Discretionary trusts have long been a popular structure for Australian families and businesses, but proposed tax changes could significantly affect their future use.

Discretionary trusts, often referred to as family trusts, have been a popular structure for Australian families and businesses for many decades. They are commonly used to operate family businesses, hold investments and assist with succession planning. Their flexibility, together with asset protection and estate planning benefits, has made them an attractive option for many groups.

In the 2026–27 Federal Budget, the Government announced a significant proposed change. From 1 July 2028, trustees of discretionary trusts would generally be required to pay a minimum tax of 30% on the trust’s taxable income.

According to the Government, the proposal is intended to better align the tax paid on trust income with that paid by salary and wage earners, while reducing opportunities to split income between family members. However, the announcement has generated considerable debate. Professional bodies, business groups and tax advisers have expressed concerns that the changes could increase complexity and compliance costs for many genuine family businesses and investment structures.

How the proposal is expected to work?

Under the proposal, the trustee would generally pay the minimum 30% tax on the trust’s taxable income.

Where trust income is distributed to individual beneficiaries or certain other non-corporate beneficiaries, those beneficiaries would generally receive a non-refundable tax offset recognising the tax already paid by the trustee. This is intended to reduce the risk of the same income being taxed twice, but while maintaining the impact of the 30% minimum tax rate.

Importantly, the minimum tax would not apply to every trust. The Government has indicated that a number of trusts would be excluded, including fixed trusts, widely held trusts, complying superannuation funds, charitable trusts, deceased estates, special disability trusts and genuine testamentary trusts. Primary production income and certain income relating to vulnerable minors would also be excluded.

The Government has also stated that more than 90% of small businesses are not expected to be affected. While that may be reassuring for some taxpayers, there are still some important issues that could affect family groups using discretionary trusts.

What could this mean in practice?

One area likely to receive close attention is the use of companies as beneficiaries of family trusts.

Many family groups have historically distributed some trust income to a company. This can provide flexibility in managing cash flow, retaining profits within the business and funding future growth. Under the proposed rules, however, the corporate beneficiary would not receive a tax offset for the tax already paid by the trustee. In many cases, this will mean that income distributed from a discretionary trust to a company would be subject to double taxation.

Another practical impact of the proposed change is that some family groups may find it more difficult to fully utilise existing tax losses.

While the impact will depend on each group’s circumstances, the proposed minimum tax is likely to reduce some of the flexibility that currently exists when managing taxable income across a family structure within many groups.

The Government has also proposed a temporary three-year rollover period, commencing from 1 July 2027, to help restructure into alternative business structures, such as companies or fixed trusts, without triggering immediate income tax or capital gains tax consequences.

While this may assist some groups, restructuring is rarely straightforward. Depending on the circumstances, it might be necessary to consider things like stamp duty, loan approvals, financing arrangements, contract changes, licensing requirements and professional advice. Even relatively simple restructures can involve significant time and cost, so careful planning will be important.

The rules are not yet final.

At this stage, the proposal remains subject to consultation. Treasury released a consultation paper in July 2026 seeking feedback on a range of design issues, including how the new rules would operate in different situations. Final legislation has not yet been introduced, meaning aspects of the proposal could still change before the rules become law.

For this reason, most groups utilising discretionary trust structures should avoid making major structural decisions based solely on the announcement. Instead, it is sensible to monitor developments while considering whether existing structures are likely to remain appropriate if the proposal proceeds.

What should you do now?

For many families, discretionary trusts are about much more than tax. They can continue to provide valuable asset protection, succession planning and business flexibility. The proposed changes do not remove those benefits, nor do they prevent discretionary trusts from continuing to be used.

However, the proposal does have the potential to change the tax outcomes for some family groups, particularly those with more complex structures or those that regularly distribute income to companies.

With the proposed start date still some time away, there is an opportunity to pause and carefully understand how the changes may affect your circumstances and consider whether any planning or restructuring might be appropriate. As the legislation develops, we can help you assess the impact on your business or investment structure and determine whether any action is warranted.

If you have any questions in relation to any of the above, please contact us to discuss further.

The post Discretionary Trusts: Proposed 30% Minimum Tax Explained appeared first on Juggernaut Advisory.

SMSF Borrowing Rules: What the New Changes Mean for Trustees

Team Juggernaut — Thu, 13 Aug 2026 03:20:55 +0000

SMSF borrowing rules have changed, affecting how trustees can use limited recourse borrowing arrangements to purchase property.

To ensure passage of the negative gearing and CGT discount changes that were announced in the May 2026 Federal Budget, the Government agreed to make amendments to the SMSF borrowing rules.

SMSFs are able to borrow in restricted circumstances, which include borrowing under a limited recourse borrowing arrangement (LRBA) to purchase a single acquirable asset. While there have previously been no specific legislative restrictions on the type of asset an SMSF can borrow to purchase, most commonly we see LRBAs being used to purchase property. Up until this point, this could have been any type of real property.

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.

If you have any questions in relation to any of the above, please contact us to discuss further.

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Car Thresholds 2026–27: What Businesses Need to Know

Team Juggernaut — Wed, 05 Aug 2026 23:05:00 +0000

Understanding car thresholds is important if you’re purchasing or leasing a vehicle for your business in the new financial year.

If you’re thinking about purchasing or leasing a vehicle for your business in the new financial year, it’s worth understanding the updated car thresholds that apply from 1 July 2026. While these limits may seem technical, they can have a practical impact on the amount you can claim for tax depreciation deductions, the GST credits that are available, and whether luxury car tax (LCT) could apply.

Knowing how these rules work before signing a contract can help you make a more informed decision and potentially improve your overall tax and cash flow position.

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.

If you have any questions in relation to any of the above, please contact us to discuss further.

The post Car Thresholds 2026–27: What Businesses Need to Know appeared first on Juggernaut Advisory.

Sharing Economy Income: What to Know at Tax Time

Team Juggernaut — Wed, 05 Aug 2026 02:44:47 +0000

Sharing economy income has created new opportunities for Australians to earn additional income, but it can also create unexpected tax obligations.

The sharing economy has created new opportunities for Australians to earn additional income. Whether it’s driving for a ride-sharing service, renting out a holiday property, completing freelance work, hiring out equipment, or creating digital content, many people are supplementing their regular income through online platforms.

However, one aspect that can sometimes come as a surprise at tax time is that this income generally needs to be declared in your tax return. Unlike salary and wages, sharing economy income isn’t always fully pre-filled in your tax return, so it’s important to maintain your own records and check that your tax return is completely accurate.

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.

If you have any questions in relation to any of the above, please contact us to discuss further.

The post Sharing Economy Income: What to Know at Tax Time appeared first on Juggernaut Advisory.

Bendel Decision Division 7A: What the High Court Ruling Means for Trust Distributions

Team Juggernaut — Tue, 04 Aug 2026 02:38:16 +0000

Bendel decision Division 7A changes provide greater clarity for private business groups using discretionary trusts and corporate beneficiaries, particularly in relation to unpaid trust distributions.

The High Court has recently handed down an important decision that will impact many private business groups using discretionary trusts and corporate beneficiaries.

In Commissioner of Taxation v Bendel [2026] HCA 18 (10 June 2026), the Court rejected the ATO’s long-standing view that an unpaid distribution (also known as an unpaid present entitlement or UPE) owed by a trust to a corporate beneficiary will automatically constitute a loan for the purpose of the integrity rules in Division 7A.

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 your group.

If you have any questions in relation to any of the above, please contact us to discuss further.

The post Bendel Decision Division 7A: What the High Court Ruling Means for Trust Distributions appeared first on Juggernaut Advisory.

8 Business Growth Strategies to Improve Profitability and Manage Costs

Team Juggernaut — Mon, 27 Jul 2026 04:48:00 +0000

Business Growth Strategies can help businesses improve profitability, manage rising costs and build a stronger foundation for sustainable long-term success.

Running a small or medium-sized business is challenging. Investing in hiring, marketing and raising prices may drive growth… but also impact the bottom line. Making prudent investments while managing cash is extremely important.

Here are some practical strategies to help leaders achieve long-term profit growth, without putting the business at risk.

1. Stay Informed: Monitor Key Metrics

Keep an eye on gross margin, net profit margin, and other key metrics which make sense in your business. For example, a financial services firm implemented a real-time dashboard to monitor key performance indicators (KPIs), and this analysis helped make informed decisions about their pricing and cost-control strategies.

2. Price Right: Regularly Review Your Pricing Strategy

Research the market to ensure prices are competitive. Your pricing should capture the true worth of products or services in the minds of your customers. For example, a Theater owner learned to modify ticket prices based on customer demand, resulting in increased revenue per performance even in slow periods.

3. Bundle Up: Offer Product Bundles

Create bundles of products or services to encourage customers to buy more. This can increase the business’s average sale value and boost profits. For example, an e-commerce platform introduced personalised product bundles based on customer purchase history, leading to a significant increase in average order value.

4. Discount with Purpose: Offer Strategic Discounts

Use discounts strategically to move slow-moving inventory or to attract new customers. For example, a seller of furniture offered targeted discounts for high-end products during off-peak seasons, which had a long-term positive impact on the bottom line.

5. Start Smart: Streamline Your Operations

Review processes and identify inefficiencies. Find ways to automate or simplify them. This reduces costs AND frees up time for the team to focus on what matters. For example, a manufacturing business implemented an automated inventory system, saving 100 man-hours per month. In addition to reducing costs, the time saved was partly allocated to innovation, with good results.

6. Stay Sharp: Negotiate with Suppliers

Regularly review supplier contracts and don’t be afraid to negotiate better terms. Consider forming partnerships or buying in bulk to get discounts that boost the bottom line. A retail chain that renegotiated supplier contracts achieved a 15% cost reduction, which directly increased profit margins.

7. Be Agile: Implement Just-in-Time Inventory

Keeping a lean inventory helps reduce storage costs and avoids tying up cash in excess stock. For example, a food distributor uses sales forecasts to order inventory only when needed. This has reduced warehouse costs and food waste, leading to higher profitability.

8. Work Wisely: Outsource Non-Core Activities

Consider outsourcing tasks like Accounting or IT support to specialised firms. This lowers overhead costs and gives access to expertise to help the business grow. For example, a software developer outsources some projects to an offshore team, which accelerates time-to-market and improves customer satisfaction.

Each business is different, but consider these practical strategies to improve your business’s profitability and set the stage for long-term success.

If you have any questions in relation to any of the above, please contact us to discuss further.

The post 8 Business Growth Strategies to Improve Profitability and Manage Costs appeared first on Juggernaut Advisory.

2026–27 SMSF Checklist: Practical Steps SMSF Trustees Must Take Now

Team Juggernaut — Mon, 06 Jul 2026 03:50:06 +0000

SMSF Trustees should review contribution strategies, pension arrangements, compliance obligations and upcoming legislative changes to ensure their fund remains compliant and well positioned for the 2026–27 financial year.

With the start of the 2026–27 financial year, SMSF trustees should take a proactive approach to ensure funds remain compliant and well positioned. Below is a concise checklist of the key legislative changes, compliance deadlines and practical steps trustees should prioritise.

1. Review Transfer Balance Cap and Pension Planning

Indexation of the general TBC: From 1 July 2026 the general transfer balance cap (TBC) increases from $2.0 million to $2.1 million. Members should check whether their personal transfer balance cap is eligible for indexation, particularly if they started a pension before the latest indexation dates.

The ATO will calculate a member’s entitlement to indexation of their personal TBC, however, this will be based on reported transfer balance account (TBA) events (eg, commencement or commutation of a pension). It’s important that all TBA events up to 30 June 2026 have been reported to the ATO to ensure an accurate calculation of TBC indexation entitlement.
Legacy pensions: The five-year legacy pension exit measure (7 Dec 2024 – 6 Dec 2029) remains available. Where clients hold legacy lifetime, life expectancy or market-linked pensions, confirm deed powers and consider the interaction with Division 296 and commutation rules before acting.

2. Update Contribution Strategies and Caps

Higher caps for 2026–27: The concessional contributions cap rises to $32,500 and the standard non-concessional cap becomes $130,000. However, the non-concessional cap is subject the member’s 30 June 2026 total superannuation balance (TSB) being less than $2.1 million. Review your planned contributions to avoid cap breaches.
Bring-forward and TSB thresholds: Check each member’s TSB at 30 June 2026 prior to applying bring-forward rules in 2026-27. Thresholds and allowable bring-forward periods changed for 2026–27.

The increase to the standard non-concessional cap means the maximum bring forward cap has increased from $360,000 to $390,000. However, if the bring-forward rule was triggered in 2024-25 or 2025-26, the member does not get the benefit of the increase.

3. Pension Minimums, TRIS and ECPI Risks

Minimum pension percentages: Check minimum pension percentages for age groups and ensure pensions meet the standards to avoid breaches and potential loss of fund tax exempt income.

For a transition to retirement (TTR) pension, in addition to making at least the minimum pension payment, make sure you don’t exceed the 10% maximum. Also, if turning 65 in 2026-27, a TTR pension automatically moves into retirement phase and has TBC consequences. Speak to your adviser about implications and options well before your 65th birthday.
Commutations and starting pensions: Follow correct commencement and commutation procedures; incorrect handling can trigger multiple events and adverse tax outcomes. Report all TBA events to the ATO by the due date.

4. Review Related Party Loans and Update Interest Rate

The ATO document PCG 2016/5 sets out many of the terms and conditions a related party loan should have, including the interest rate. These are commonly referred to as the ‘safe harbour provisions’.
Each year, the interest rate of the loan should be reviewed and updated in line with the relevant rate determined in May immediately before the commence of the financial year. The rate for the 2025-26 year was 8.95% for property and 10.95% for listed securities.

As a result of increases in the RBA’s cash rate over the last 12 months there has been an increase to the safe harbour interest rates to 9.35% and 11.35% for property and listed securities respectively. The repayments of any related party loans that are complying with the safe harbour provisions will need to be adjusted to reflect these new rates.

5. Check Compliance for Payroll and Contributions (SuperStream 3.0 / Payday Super)

NPP readiness: From 1 July 2026 funds and employers must be capable of receiving contributions via the New Payments Platform (NPP). Ensure the SMSF bank account can accept Osko/PayID and other NPP payments.
Member Verification Requests (MVRs): Employers will use MVRs to confirm whether a fund can accept a contribution. SMSFs receiving employer contributions should be prepared to respond to MVRs promptly (within required timeframes). Generally, SuperStream messages will be received in the SMSF administration platform that is used by the SMSF’s accountant or administrator. Members should inform their SMSF accountant or administrator if their employer will be sending a message via the MVR to confirm whether their SMSF can accept the contribution.
Closely held employees: If your SMSF has related employees, confirm whether SuperStream exemptions apply and ensure payroll systems are updated as late lodgements may result in penalties. Remember the ATO can remove fund details from the SMSF lookup database if tax returns are overdue. This could impact on a fund’s ability to receive employer contributions.

6. Consider the Division 296 Transitional Rules and Tax Traps

2026–27 transitional year treatment: The 2026–27 year has specific transitional rules for Division 296 where the relevant TSB is measured at 30 June 2027. Trustees should assess whether electing to set a Div 296 cost base to 30 June 2026 market values is appropriate. This election does not need to be made until the lodgement of the 2027 SMSF Annual Return (tax return), and if made, applies to all assets and has consequences for capital losses and later adjustments. Seek tailored advice before electing.

7. Practical Housekeeping

Deed powers and trustee structure: For SMSFs with individual trustees, consider whether a corporate trustee is a potentially better option. Talk to you adviser about these potential benefits and the process to change. Ensure that any changes to the trustee structure is reported to the relevant authority within the required timeframe (eg, the ATO, ASIC).
Document everything: Keep clear records of trustee decisions, valuations used for elections, contribution timing evidence and communications with employers — documentation is key for the annual audit and if the ATO queries an event.

Preparing now will reduce 2026-27 year-end stress and help avoid costly compliance issues. Speak to us if you have any questions or wish to discuss any of the issues raised above.

If you have any questions in relation to any of the above, please contact us to discuss further.

The post 2026–27 SMSF Checklist: Practical Steps SMSF Trustees Must Take Now appeared first on Juggernaut Advisory.