Election results are in, what’s next for tax?
Clarke McEwan Accountants
The Australian Labor Party (ALP) has won the 2022 Australian federal election and has been elected to form government in the House of Representatives. It is unclear at the time of writing whether the ALP will have a majority in the lower house.
In the Senate, the ALP will not have a straight majority and will likely have to work with the Crossbench in order to pass legislation.This article discusses tax changes that we may expect to see in the near future. It also considers the future of key tax changes previously proposed by the Coalition.
Election promises
In the leadup to the election, Labor had proposed the following tax measures if elected:
- providing an FBT exemption for electric cars provided by an employer below the luxury car threshold from 1 July 2022
- limiting debt deductions by multinationals to 30% of profits from 1 July 2023
- limiting the ability of large multinationals to abuse Australia’s tax treaties while holding intellectual property in tax havens from 1 July 2023
- implementing the OECD’s Two-Pillar solution for a global 15% minimum tax
- reforming the Pacific Australia Labour Mobility Schemes, including changes that would see the government meeting upfront travel costs over $300 from January 2023.
These measures will not be effective until enacted by the incoming government.
Bills lapsed when the election was called
Measures contained in Bills that lapsed upon the proroguing of parliament will now be subject to consideration of the incoming government.
Key tax changes proposed in lapsed Bills related to:
- Work-related self-education expenses: removing the $250 non-deductible threshold from the 2022–23 income year.
- Electronic platform operators: requiring operators to provide transactions information to the ATO. In a Senate Committee report on the Bill, Labor had supported the amendments but highlighted that the proposed changes burdened workers rather than multinational technology companies.
- Effective life of intangible assets: allowing taxpayers the choice to self-assess the effective life of certain intangible assets that start to be held on or after 1 July 2023. When introduced in 2022, Labor stated it would not oppose the measure. However, Labor had previously opposed similar amendments proposed by the Coalition government in 2017 from the Treasury Laws Amendment (2017 Enterprise Incentives No 1) Bill 2017. The amendments in that Bill were ultimately removed.
- Recovery grants for Cyclone Seroja: making eligible grants non-assessable and non-exempt income.
- Labour mobility schemes: changes to effective tax rate on certain income earned by workers participating in the Australian Agriculture Worker Program or the Pacific Australia Labour Mobility scheme.
- Patent box regime: providing concessional tax treatment for eligible income from exploiting a medical or biotechnology patent, to apply to patents issued after 11 May 2021 in respect of income years starting on or after 1 July 2022.
Tax changes proposed in the Federal Budget
Labor has previously indicated that it would seek to issue its own budget by the time of the usual mid-year fiscal and economy update in December. These measures were not introduced into parliament, and it is unknown at this stage whether the Labor government will proceed or make significant modifications. Key tax measures in the Coalition government’s 2022–23 Budget included:
- temporary increased 20% deduction for small business external training expenditure from 7:30pm 29 March 2022 (Budget night) until 30 June 2024
- temporary increased 20% deduction for small business expenditure supporting digital adoption from 7:30pm 29 March 2022 (Budget night) until 30 June 2023
- concessional tax treatment for primary producers selling Australian Carbon Credit Units from 1 July 2022
- expansion of patent box concession to include agricultural and low emissions innovation from 1 July 2023.
Other pending measures
The jury is still out on the future of tax changes announced by the previous government, particularly the following measures with a rapidly approaching start date:
- Digital games tax offset: 30% refundable tax offset for qualifying Australian development expenditure on eligible games, due to commence from 1 July 2022.
- Car parking fringe benefits: modifications to the definition of “commercial parking station” to better reflect the policy intention for car parking fringe benefits, for benefits provided from 1 April 2022.
- Downsizer superannuation contributions: expanding eligibility to make downsizer contributions to individuals aged over 55 from 1 July 2022. As currently legislated, the eligibility age will reduce from 65 to 60 years of age from 1 July 2022.
Other longstanding tax proposals that we may see the incoming government address include:
- Reforms to tax residency. The previous government had announced changes relevant to individuals, SMSFs and foreign incorporated companies.
- Debt and equity rules. Amendments to clarify the scope of an integrity provision was first announced in a 2011–12 Labor Budget announcement. Draft legislation based on the Board of Taxation’s recommendations from their review of the debt-equity provisions were released for consultation in 2016 by the previous government.
- Division 7A. Targeted amendments to improve the operation and administration of Div 7A were first announced in the 2016–17 Budget. Further proposed changes for unpaid present entitlements to come within the scope of Div 7A were announced in the 2018–19 Budget.
- Not-for-profits. The Labor government had previously introduced amendments to standardise the term “not-for-profit” by replacing defined and undefined uses of “non-profit” throughout tax legislation in a lapsed 2012 Bill. The previous government had also proposed changes to the administration of deductible gift recipients and the introduction of a deductible gift recipient category for pastoral care in schools.
Over the next few months, we will follow the progress on these measures once they have been considered by the incoming government.
However, if you wish to speak with us specifically about one or more of the items listed above, please do not hesitate to contact us so that we can keep you fully informed as soon as we become aware of any new information.
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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 includes 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 a 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. For any further information please contact our office.
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.
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 tax returns are completely accurately. 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.
