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Nadine Connell, co-founder of Smart Business Plans, told SMSF Adviser that most common by a wide margin is that clients believe their SMSF will be under the $3 million threshold and believe they are safe from any tax impact.

She added the other two misconceptions are that the cost-base election will take care of it and that SMSF borrowing was almost banned.

“The ‘I’m under $3 million so I don’t need to do anything’ response is the most common,” she said.

“But the TSB calculation routinely misses industry super from earlier employment, or doesn’t account for what a planned commercial property purchase does to their position at the first assessment date.

“In regard to the cost base election response, clients assume it’s automatic when it’s not. It’s a decision the trustees have to actively make. What they’re often missing is the valuation behind it which has to reflect conditions at 30 June 2026, and commercial valuations are already running four to six weeks in some areas.

“Finally, with the belief that SMSF borrowing was almost banned a meaningful number of clients paused plans through 2025 on that belief. The Treasurer ruled it out, but the decision hasn’t been revisited.”

Connell said confusion is becoming more apparent as the deadline for the start of the new legislation gets closer.

“However, the clients you should worry most about aren’t the confused ones. They’re the quiet ones. They’ve read a headline, done a back-of-envelope calculation, and filed the issue away,” she said.

“Those are the clients making decisions now, or deliberately not making them, based on an incomplete picture. From an adviser perspective, those are the clients least likely to call you between now and 30 June.”

She continued that for clients approaching $3 million, the backwards calculation method can be used whereby you start with the target property price, work out likely market rent, calculate loan repayments, identify the gap.

“That gap is what needs to be closed with voluntary contributions, planned against the caps and documented. If the gap is too big for the caps, the property target comes down or the structure gets rethought,” she said.

“The discipline matters for Div 296 reasons, too. The bigger the contributions needed to make a property work, the faster the fund’s balance grows, and the sooner the $3 million threshold becomes their problem.

Connell said for clients already above the thresholds of $3 million and $10 million, the strategies shift.

“I see spouse balance splitting and re-contribution come up in conversations with their accountant. From our side, the question is liquidity. Does the fund have the cash flow to meet whatever assessment comes, without having to sell a property to fund it. That has to be planned in, not figured out when the bill arrives,” she said.

Although the decision whether to use the cost-base reset election sits with the accountant and the trustees, Connell said the timing of doing that is of importance.

“Whatever they decide, they need a 30 June 2026 valuation, and commercial valuation lead times can be up to six weeks in some areas of our network. The mistake we see is clients waiting for the accountant to tell them what to do, when by then the valuer’s booked out,” she said.

“Get the valuation commissioned now, then let the accountant run the numbers when they’re ready. The valuation is the ingredient, so don’t run out of it while you’re deciding on the recipe.”

Despite the threat of a large Div 296 bill, property owners aren’t getting rid of real estate from their SMSF portfolios, Connell said.

“If anything, it’s the opposite. Clients are directing their next investment toward commercial property in an SMSF rather than residential outside super. I think this trend will accelerate if the CGT and negative gearing changes expected in the upcoming May federal budget come to fruition,” she said.

“The structure still stacks up for balances comfortably under $3 million, and for business owners buying their own premises the fundamentals haven’t changed.”

In the lead up to the start of Div 296 legislation coming into force, Connell said advisers should be doing three things.

“Explain what’s actually in the final law, because a lot of client framing is still stuck on the 2023 version,” she said.

“Then flag the 2026-27 liquidity question: clients with property-heavy SMSFs need cash flow inside the fund to meet a possible Div 296 assessment, on top of normal expenses. That’s planning, not improvising on the day.

“And finally, reach out to the clients least likely to call you. The ones who’ve gone quiet since March because, from their perspective, they’ve already worked it out. Those are the ones who haven’t.”

by Keeli Cambourne
April 27, 2026
smsfadviser.com

The post SMSF commercial property owners and Div 296 ‘misconceptions’ appeared first on Professional Wealth Services.

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Bluestone head of specialised distribution Richard Chesworth said in dealing with mortgage brokers, accountants and financial advisers he has emphasised official numbers demonstrate the settled nature of SMSF borrowing.

“When you look at the ATO statistics, the size of the market, as in assets secured by LRBAs, has generally been between 6.5 and 7.5 per cent [of the total value of all SMSF assets] since about 2020, so it’s consistent,” Chesworth said.

“In regards to the debt, there are about 11 per cent of SMSFs with exposure to LRBAs, and at June 2024 there were $67 billion of assets under LRBAs with about $27 billion worth of debt against them.

“So the real message I like to drive home is this market is established. It’s been around for 19 years, which means we have SMSF loans that have been repaid. We have SMSF loans where the property has been sold.

“I don’t see it as a new safe haven that everyone is looking into, which is where some commentators with a vested interest in the lending for property are going down the path.”

He added these statistics countered criticism of the SMSF sector using LRBAs, noting they were relatively safer, in terms of failure rates, than other forms of lending.

“The LRBA market is mature, is operating well and is low risk because we’re looking at about a 33 per cent gearing of the overall portfolio,” he said.

“I was in a S&P presentation last year and figures they put forward showed that residential mortgage-backed securities had a 30-plus-day default rate of just over 1 per cent, but the SMSF residential mortgage-backed securities had a default rate of over 30 days of 0.1 per cent.

“That default can often be as simple as someone has set up their loan, but haven’t got their direct debit set up properly, so they miss their first payment and it’s reported on that basis.”

April 23, 2026
Jason Spits
smsmagazine.com.au

The post LRBA stability has been understated appeared first on Professional Wealth Services.

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• Shares – by buying shares, investors become part owners in companies and can benefit if the company increases in value or pays dividends. 
• Bonds – when governments or corporations want to borrow money, they can issue bonds, which are securities that usually pay investors a fixed interest rate.
• Cash – a low-risk, short-term financial instrument that typically provides stable and regular income through interest payments.
• Managed funds – an investment where your money is pooled together with other investors and managed by a professional.
• ETFs – an ETF is a pooled investment vehicle that you can buy or sell on an exchange, like the Australian Securities Exchange. In Australia, most ETFs — including many of Vanguard’s — are low-cost, index-tracking investments.

The post 7 simple steps to get on the investment ladder appeared first on Professional Wealth Services.

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The PBR (1052509195315) highlighted the stringent conditions that are placed on the definition of a close personal relationship.

The ruling involved the beneficiary who was a parent of the deceased. Upon their death, the trustee of the deceased estate received a death benefit payment from the deceased’s superannuation fund, and no tax was withheld from this payment.

The beneficiary applied for a private ruling on whether they were a death benefits dependant of the deceased, due to being in an interdependency relationship with him prior to his death.

The facts presented to the hearing showed that the deceased was in receipt of Centrelink Carer Payment and/or Carer Allowance Medical Report (SA332a), after the deceased was diagnosed with an illness which immobilised him and made him dependent on daily physical care for all personal needs before he died.

The beneficiary had moved into the deceased’s home to care for him and lived at the deceased’s home until his passing and continued to live there until it was sold.

Prior to his passing the deceased had received an income protection insurance payout and a TPD insurance payout. The beneficiary paid for food and some household bills prior to the deceased’s insurance payments and continued to pay for all food while the deceased paid all household bills.

The deceased provided free accommodation to the beneficiary who did all of the housework, provided most of the daily physical care required by the deceased as well as the two providing emotional support to each other.

The ruling stated that the definition of death benefits dependant does not stipulate the nature or degree of dependency required to be a dependant of the deceased person in paragraph 302-195(1)(d) of the ITAA 1997.

It stated that the beneficiary was not financially dependent on the deceased person and therefore, paragraph 302-195(1)(d) of the ITAA 1997 is not applicable and to meet the definition of a death benefits dependant, the beneficiary must have been in an interdependency relationship with the deceased, in accordance with paragraph 302-195(1)(c) of the ITAA 1997.

The first test of interdependency to be met is a close personal relationship and the ruling stated that where unusual and exceptional circumstances exist, a relationship between a parent and an adult child may be treated as an interdependency relationship for the purposes of subsection 302-200(1) of the ITAA 1997.

However, it continued that while it is accepted that the beneficiary had a close relationship with the deceased, the relationship was not over and above a normal family relationship between a parent and an adult child.

“The fact the beneficiary and the deceased lived together for a period of time and were living together at the time of the deceased’s passing, and that the beneficiary provided daily personal care to the deceased does not mean that they had a mutual commitment to a shared life,” the ruling stated.

“In this case, the beneficiary moved into the deceased’s home in order to provide personal care for him. The evidence does not show that the beneficiary and the deceased shared a ‘close personal relationship’.

“As a close personal relationship did not exist between the beneficiary and the deceased, the first requirement specified in paragraph 302-200(1)(a) of the ITAA 1997 has not been satisfied in this case.”

In regard to the condition of financial support, the ruling stated that bank statements provided for the deceased show he made mortgage payments, and paid household expenses such as rates, power, internet and utilities (water) as well as several cash transfers to the beneficiary.

However, it stated that it is not considered that the deceased or the beneficiary were financially dependent on the other as they both had sufficient income from pensions to support themselves.

“However, the test here is one of financial support, not dependency. It is considered that the beneficiary and the deceased provided each other with a level of financial support during the period in which they lived together: the deceased paid for the majority of household expenses, and the beneficiary contributed towards expenses by paying for groceries. Consequently, paragraph 302-200(1)(c) of the ITAA 1997 has been satisfied,” it added.

“As all of the requirements in section 302-200 of the ITAA 1997 have not been satisfied, the deceased and beneficiary were not in an interdependency relationship in the period just before the deceased’s death. As the beneficiary was not in an interdependency relationship with the deceased, the beneficiary is not a death benefits dependant as defined under section 302-195 of the ITAA 1997.”

Keeli Cambourne
April 23, 2026
smsfadviser.com

The post Carer responsibilities don’t meet interdependency criteria: PBR appeared first on Professional Wealth Services.

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For many Australians, superannuation will be their most significant source of long‑term savings.

Yet, despite being a crucial part of the nation’s retirement income system since the introduction of compulsory super payments in the early 1990s, confusion still reigns for many people over when they can access super, or if they can get it early.

Broadly speaking, anyone can access their super when they turn 65, regardless of whether they are still working or not. From age 60, if you are retired or leave a job, you can also get full access to your super. For more information about release conditions, visit the ATO’s website.

Transition to retirement

One option is to open a Transition to Retirement (TTR) account, which allows you to access part of your super while you are still working. This can help supplement your income if you choose to reduce your working hours. You can start a TTR once you reach your preservation age, which is the minimum age at which you can generally access your super and is currently 60. Preservation age is different from the Age Pension age, which is 67.

Under TTR rules, your super must be paid as a regular income stream rather than as a lump sum. Withdrawals are capped at 10% of your account balance each year. Once you turn 65, this cap is removed and your TTR automatically becomes a Retirement Income account, giving you full access to your super. To decide what is best for you, it’s important to speak with your super fund or a financial adviser before making any decisions.

Beware of false promises

If you have been on social media platforms recently, you may have been targeted with reels about accessing your super early. The sales pitch is that you can withdraw funds early from super to pay for expensive medical and dental treatments, or even to invest in property. But if it sounds too good to be true, it probably is.

There are limited circumstances allowing you to get your super before retirement under a compassionate grounds scheme. If approved, you can use the retirement funds to meet certain medical, palliative care, disability, death and home foreclosure expenses. However, be conscious that the Australian Taxation Office (ATO) manages such applications, imposing strict eligibility conditions and requiring a raft of relevant documents to support claims. 

Some other rare approvals may be granted that allow early access to super. For example, under the First Home Super Saver Scheme, investors may be eligible to withdraw voluntary contributions they have made to super to help save for their first home. 

Don’t waste your super

The primary reason the government and the ATO are reluctant to endorse the early release of super is that they want you to have sufficient finances for a healthy and happy post-work life.

Early withdrawals can minimise the magic of compound interest, and potentially leave Australian retirees short of money at a vulnerable point of their life.

Vanguard
08/04/26

The post Can I access my super early? appeared first on Professional Wealth Services.

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Liam Shorte, director of SONAS Wealth, said while an SMSF is “right for the right person”, the approach, advice and cost disclosure must all check out first.

“Too often, what looks like helpful advice is really a cleverly disguised sales pitch designed to get you to move your super so the promoter can sell you their product, charge high fees, or worse, put your retirement savings at risk,” Shorte said.

“The ATO is watching this space more closely than ever, and the consequences for getting it wrong as a trustee are serious and personal.”

Shorte said that legitimate SMSF advice starts with a person’s situation not the adviser’s product and a proper adviser asks about retirement goals, risk tolerance, existing super balance, insurance needs, available time, and whether an SMSF even makes sense for your circumstances.

“Only then do they make a recommendation. The product-led approach works the other way around,” Shorte said.

“The SMSF is not the goal, it is the vehicle. Someone wants to sell you a property, a managed fund, an unlisted investment, or a crypto platform. The SMSF is simply how they access your superannuation balance.”

Shorte continued that there are warning signs that should alert SMSF trustees about unscrupulous operators and it starts from the way in which trustees are approached.

Care should be taken, he said, if it is unsolicited contact such cold calls, emails, social media ads, or “free seminars” promising to “unlock the power of your super”.

Additionally, the pressure to act fast with phrases like “limited time offer”, “EOFY special”, or “get your money out before the rules change” should also raise an alert.

So should promises that sound too good to be true such as guaranteed returns, easy access to your super before retirement, or “we’ll handle everything so you don’t have to lift a finger”.

“There should not be a focus on a single product like a specific property deal, crypto scheme, or investment the promoter (or their related parties) controls,” he said.

“Nor should there be a referral chain where the adviser, accountant, mortgage broker and property manager all recommend each other and all earn from the same transaction. If the conversation quickly moves to rolling your super into a new SMSF so they can ‘invest it for you’ or ‘help you buy that investment property’ — stop. That is usually the gateway to selling their product, not acting in your best interest.”

Shorte said there are some precautions SMSF trustees can take to ensure they do not become victims to dodgy schemes, and a quick licence check is a must before doing anything.

“Anyone who recommends you set up an SMSF must hold an Australian Financial Services LIcence, or be an authorised representative of a licensee. This is not optional — it is the law,” he said.

“You can check for licences on the ASIC Financial Advisers Register (moneysmart.gov.au) or on the Tax Practitioners Board register (if they are advising on tax matters). If there is no licence, walk away immediately and consider reporting them to ASIC.”

The next thing to consider is whether the operator provides genuine education or just “hype”, said Shorte, adding that real SMSF education explains the responsibilities, not just the glamour.

“Any adviser worth trusting will make sure you understand what you are signing up for before you commit to anything,” he said.

“Proper education must cover the sole purpose test, arm’s length rules, annual audit obligations, investment strategy requirements, record keeping and valuation duties and your personal liability as an SMSF trustee.”

Furthermore, Shorte said, it is best to demand a written fee disclosure before proceeding with any decisions.

“Total fees should be expressed in dollars and as a percentage of your fund balance. A side-by-side comparison between the SMSF and your current super fund, after all fees and tax should be given,” he said.

“Also, a full disclosure of any referral fees, commissions or benefits the adviser or their network receives and confirmation that ATO administrative penalties are your personal liability — not payable from fund assets.”

He said if a trustee is approached unsolicited and the conversation starts with a product, the starting position is one of conflict of interest. 

“Understand the full annual cost (typically $3,500–$6,000+) and compare it to your current fund before deciding. The most common contraventions are member loans, in-house asset breaches and non-lodgement — all carry personal penalties,” Shorte said. 

“Always verify licences, demand a written SOA, and get an independent second opinion. The ATO will find non-compliance. Trustees cannot hide behind their accountant or adviser.”

Keeli Cambourne
April 28, 2026
smsfadviser.com

The post Look for the red flags that signal unscrupulous advice appeared first on Professional Wealth Services.

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The “Magnificent Seven.” It’s an understandable, memorable, and concise term, but its simplicity masks important distinctions. With the backdrop of strong U.S. stock market performance attributed to a handful of technology companies, the group’s run has fuelled questions about market concentration. When we look more closely, we see a clutch of U.S. stock market leaders that are more diversified than some may think.

The Magnificent Seven goes well beyond AI

Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla offer a wide range of products and services, with some areas of overlap. Certainly, their activities extend well beyond AI. The companies have a diverse footprint across industries, variously functioning as global marketplaces, cloud computing providers, and even automobile manufacturers and physical grocery store operators.

The Magnificent Seven business models span how we work, play, and consume

Sources of the companies' combined 2025 revenues of $2.2 trillion

^{Notes: Weighted revenue breakdown is the proportion of combined revenues attributed to a given source. It is determined by aggregating the revenue from each source across companies and then dividing this figure by the total revenue from all companies combined. Revenues are based on the company’s reported annual fiscal year total revenue for 2025. Sum may not total 100% due to rounding.} 

^{Sources: Vanguard calculations, based on data from FactSet, as of January 2026.} 

Consider a few examples: 

• Amazon: Nearly two-thirds of its revenue comes from digital mall operations, approximately one-quarter from cloud services, and the remainder from online marketing and advertising services. 
• Apple: Half its revenue comes from smartphone sales, one-quarter from media downloads and content streaming, and one-quarter from a mix of computer hardware, cloud storage, and wearable consumer electronics.
• Microsoft: Forty percent of its revenue comes from end-user home and office software, approximately one-third from back-end office infrastructure software, and the remainder from a mix of internet and data services, electronic gaming, and enterprise technology consulting.

While all three companies serve both consumers and commercial clients, their revenue exposures vary meaningfully across and within each company. 

“The diverse revenue sources matter because they show that the Magnificent Seven’s business models span different end-users and markets,” said Erich Pingel, an analyst in Vanguard Investment Strategy Group. “Differences in business models also mean differences in risk-factor exposures, which helps explain why their stock prices do not move entirely in lockstep.”

The Magnificent Seven stocks have not moved in lockstep

Quarterly total returns of common stocks, Q4 2020-Q4 2025

^{Sources: Vanguard calculations, based on data from FactSet, as of December 31, 2025.}

Seven stocks: Neither narrow nor self-contained

“The Magnificent Seven currently represents around 30% of the U.S. stock market. The companies are often portrayed as a monolith, but their business models tell a different story,” said Rodney Comegys, chief investment officer, Vanguard Capital Management, and head of Global Equity. “Their commercial and equity market success coexists with meaningful differentiation at the company level—making it unlikely that all of them will disappear or experience significant drawdowns at the same time. They share a label, not a business model.”  

For investors with long time horizons, it’s worth considering how creative destruction—the process by which innovation disrupts products, technologies, and companies—recasts market leadership. 

Comegys said that those inclined to consider the market’s evolution over short periods should recognize that market leadership often changes—and that the human tendency to expect trends to persist is just one factor that makes it hard to predict who the new winners or laggards will be or when the transition happens.

The world is more interconnected and interdependent than ever, due in no small part to technological progress. Although the Magnificent Seven share common elements, the companies and their stocks are not interchangeable. Their business models, strategies, and consumer bases vary—and so has the performance of their stock prices. 

Vanguard
15/04/2026
vanguard.com.au

The post Magnificent Seven: More diverse than they may appear appeared first on Professional Wealth Services.

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The government has handed down one of the most significant budgets for tax in recent years, with the budget containing fundamental changes to the taxation of capital gains and trusts, incentives for small businesses and an overhaul of the R&D tax incentive.

Chartered Accountants ANZ (CA ANZ) chief executive Ainslie van Onselen said the budget contained ‘genuine positives’ and acknowledged the government's willingness to address “long-standing balances”.

Colonial First State head of technical services Craig Day said the Federal Budget was significant from a tax perspective, and in many ways went “further than expected”.

“This budget is particularly significant for individual investors who hold assets that are subject to capital gains tax or who are using negative gearing. For those individuals, there are transitional provisions in place which will help those investors manage the impact,” said Day.

Treasurer Jim Chalmers said the government was hopeful that the tax reforms and productivity measures announced in the 2026-27 budget would back business innovation and investment.

“New tax incentives will encourage more entrepreneurship and back hundreds of millions of dollars in new research and development for young firms and start‑ups,” said Chalmers.

“The government’s productivity package will reduce regulatory costs by $10.2 billion a year, boost long‑run GDP by around $13 billion a year through work underway with states and territories, and promote $400 million in additional R&D among young firms.”

The Treasurer also said the government would consult with stakeholders on key details of the Government’s capital gains tax reforms, including the treatment of early‑stage and start‑up businesses given the unique features of the tech and start‑up sector.

Measures to boost small business

The budget contained a number of measures designed to support business investment including a permanent instant asset write-off and the return of the two‑year loss carry back

The accounting industry and business advocacy groups have welcomed the extension of the $20,000 instant asset write-off for business with turnover under $10 million and the re-introduction of carry loss provisions which allow companies to offset current-year losses against tax paid in the prior two years.

H&R Block Australia’s director of tax communications Mark Chapman said for small businesses navigating today's difficult trading environment, “the ability to recover previously paid tax “provides genuine breathing room”.

Business Council Chief Executive Bran Black also welcomed the changes, stating that they would “help businesses invest, grow and create jobs”.

CA ANZ tax and superannuation lead Susan Franks said that for years the short-term, year-to-year thresholds for these incentives had created confusion for businesses and advisers, undermining investment planning and adding unnecessary complexity.

“Locking in a stable, long-term setting is exactly the kind of practical reform we’ve been advocating for, as it cuts red tape, supports confidence and lets businesses focus on running and growing their operations, not second-guessing the next Budget,” said Franks.

CA ANZ said the reform demonstrates the “value of stable, durable tax settings that provide clarity rather than uncertainty, and noted that it aligns with the organisation’s long-standing call for predictable frameworks that support productivity and long-term economic resilience”.

A ‘fundamental rewrite’ of the capital gains rules

Franks said this year's budget “fundamentally rewrites the rules on capital gains”.

“For the first time in 40 years, pre-1985 assets are being brought into the tax net. The 50 per cent discount is replaced by indexation, and a new 30 per cent minimum tax applies to all capital gains,” Franks explained.

“Bringing pre-1985 assets into the tax net for the first time in 40 years is a significant step. Australians who have held assets their entire investment life need clarity and urgent advice on what this means for them.”

Franks warned that the transitional arrangements will be costly as taxpayers will need to document the market value.

“Existing investors made long-term decisions based on the old rules and deserve stronger protection,” she said.

“These changes reshape the incentives for every investor in Australia. Property, shares, crypto, collectibles – if you have an investment portfolio, this budget matters to you.”

CFS head of technical services Craig Day explained that under the proposed measures, for assets purchased before 1 July 2027 and then sold after that date, both the current 50 per cent discount method and the new CPI-based method will apply.

“The existing rules will apply to June 30, and then the CPI indexation method will apply to gains after 1 July,” said Day. “That means asset values are going to need to be determined as at 1 July 2027, which will involve some additional work, including seeking a valuation as at 1 July.

Day also noted that the government has indicated that the ATO will be releasing tools to support the changes.

BDO chief economist Anders Magnusson said that with most of the current CGT discount flowing to owners of existing residential property, reducing it may shift incentives toward other assets.

“[This] should, over time, support more business investment and innovation,” said Magnusson.

The government also confirmed that it would limit negative gearing to new builds from 1 July 2027.

H&R Block Australia’s director of tax communications Mark Chapman said this was structural change that would require careful planning from property investors.

“Those holding established properties as of Tuesday night retain full existing entitlements, but anyone looking to purchase in future will need professional advice to understand their options,” said Chapman.

“The ability to carry forward losses — even if they can no longer be offset against wages — preserves some flexibility.”

Trust distribution tax

The budget also confirmed that the government plans to introduce a 30 per cent minimum tax on discretionary trust distributions.

Treasury outlined that the minimum tax would not apply to other types of trusts such as fixed and widely held trusts, including fixed testamentary trusts, complying superannuation funds, special disability trusts, deceased estates and charitable trusts. Some types of income such as primary production income, certain income relating to vulnerable minors, amounts to which non-resident withholding tax applies, and income from assets of discretionary testamentary trusts existing at announcement would also be excluded.

Under the changes, the government said it will also provide expanded rollover relief for three years from 1 July 2027 to support small businesses and others that wish to restructure out of discretionary trusts into another entity type, such as a company or a fixed trust.

The Council of Small Business Organisations Australia (COSBOA) warned that the proposed changes to the taxation of trusts, along with changes to capital gains tax have the potential to “significantly disrupt the retirement plans of many small businesses”.

“For many Australians, their business is their retirement asset. Changes that reduce the value of business sale proceeds or associated property holdings could have major long-term consequences for owners who have spent decades building their businesses,” said COSBOA chief executive Skye Cappuccio.

Cappuccio said the government must undertake extensive consultation with the small business sector before implementing the proposed reforms.

“Small business needs fairness in the tax system, but it also needs stability, certainty and simplicity,” she said.

BDO tax partner Mark Molesworth said this year's budget fundamentally shifts how income from investment assets is taxed, with 30 per cent “emerging as the new floor”.

“Over time, that will reshape investment structures with more new investments and businesses likely to be held through companies rather than trusts or personal structures. As always, the devil will be in the detail particularly around transitional measures,” said Molesworth.

Reforms to the R&D tax incentive and venture capital tax incentives

The government also provided details on its plans to reform the research and development tax incentive which include increasing the offset for core R&D expenditure by around 25 to 50 per cent through a 4.5 percentage point increase in core R&D offset rates.

It also intends to reduce the intensity threshold from 2 per cent to 1.5 per cent, which it said wold enable more firms that engage in substantial core R&D to qualify for higher offset rates.

Other proposed changes include removing eligibility of supporting R&D expenditure for the R&DTI and enabling growing firms to retain access to the refundable tax offset for longer by increasing the turnover threshold for the highest offset rate from $20 million to $50 million.

For firms below the $50 million turnover threshold, Treasury said the government would maintain older firms’ eligibility for the higher offset rate while limiting refundability to firms under 10 years of age.

The government will also lift the maximum R&DTI expenditure threshold from $150 million to $200 million; and lift the minimum expenditure threshold from $20,000 to $50,000, with research activities valued below this amount required to be undertaken with a registered Research Service Provider or Cooperative Research Centre to be eligible for the R&DTI.

BDO tax partner Mark Molesworth warned that changes to the R&D tax incentive make it less supportive of early‑stage innovation.

“By narrowing eligibility and time-limiting refundable offsets, the Budget shifts the benefit toward mature, profitable firms,” said Molesworth.

“Even though the headline benefit has been increased, the changes risk reducing Australia’s already low R&D investment over time.”

The government also plans to expand venture capital tax incentives in order to better facilitate venture capital investment and support early stage and growth businesses.

Treasury said that from 1 July 2027 the venture capital limited partnership (VCLP) cap on the asset size of the investee business at the time of investment will be increased to $480 million, from $250 million.

The early stage venture capital limited partnership (ESVCLP) cap on the asset size of the investee business at the time of investment will be increased to $80 million, from $50 million, it added.

The ESVCLP tax incentive cap on the asset size of the investee business, at which investment returns can be fully tax exempt, will also be increased to $420 million, from $250 million and the maximum fund size of ESVCLPs will be increased to $270 million, from $200 million.

The government said the increases will apply to new and existing funds and to new investments they make, including where funds make further investments in businesses already held.

“ESVCLPs must remain in compliance with their existing investment plans or seek approval for a replacement plan. The eligible venture capital investor program will be closed to new applications from 7.30PM (AEST) 12 May 2026,” the budget papers said.

Working Australians tax offset

The budget also contained a measure which introduces a $250 Working Australians Tax Offset from the 2027–28 income tax year.

Treasury outlined that the Working Australians Tax Offset will provide a permanent annual tax offset for Australians for their income derived from work, such as wages and salaries and the business income of sole traders, from 1 July 2027.

“The Working Australians Tax Offset gives workers some immediate relief, but it doesn't fix the underlying problem,” said Franks.

“With inflation still elevated, bracket creep continues to push Australians into higher tax bands without any increase in real income.

“Indexing personal tax thresholds is the only lasting fix. It restores fairness and stops quiet tax increases from eating into people's pay.”

12 May 2026
By Miranda Brownlee
accountantsdaily.com.au

The post Key tax changes and measures from the 2026 Federal Budget appeared first on Professional Wealth Services.

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Global conflict has severely disrupted global oil supplies and is contributing to higher inflation, slower growth, and extreme economic uncertainty at home and abroad. At the same time, there are big structural changes unfolding in areas like energy and technology, and longstanding challenges when it comes to productivity, intergenerational equity and access to home ownership that demand our attention. The 2026-27 Federal Budget seeks to help get us through global and local pressures.

Budget themes

Fuel supply and security

• Boosting Australia’s fuel security
• Strengthening supply chains
• Building resilience

Cost of living

• New tax cuts to help with the cost of living
• Helping with the cost of fuel
• More homes and a fair go for first home buyers
• More affordable and accessible healthcare
• Growing wages

Productivity

• Delivering on our productivity agenda
• Reducing the regulatory burden

Tax reform

• A better tax system for workers, first home buyers and future generations
• A better tax system for businesses
• A simpler and more sustainable tax system

Care and opportunity

• Securing the NDIS for future generations
• Better care for older Australians
• Strengthening Medicare
• Broadening opportunity and increasing equality

Security and investment

• Future Made in Australia
• A record funding boost for defence
• Building infrastructure for the future
• Responding to the Bondi attack

Budget papers

Budget Strategy and Outlook

Budget Measures

Federal Financial Relations

Agency Resourcing

Women's Budget Statement

Portfolio Budget Statements

Budget 2026

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