This month, the Government has released draft legislation for the proposed minimum tax on discretionary trusts, changes to fringe benefits tax (FBT) are on the horizon, and the ATO is preparing to stop accepting credit card payments.
Here’s a breakdown of the key updates, what they could mean for you, and what to consider before the end of October.
Trust Tax: Draft Legislation Released
Following last month’s update, the Government has released draft legislation for the proposed minimum tax on discretionary trusts, currently scheduled to commence on 1 July 2028.
The draft legislation provides further detail on how the proposed rules may operate, including several important considerations for trust beneficiaries and business owners.
Key points to understand:
- A proposed fixed-distribution option: Trusts may be able to elect to distribute income to pre-nominated beneficiaries in fixed proportions each year to avoid the minimum tax.
- Exclusions for certain income: Some income, including primary production income, is proposed to be excluded from the rules. This may be particularly relevant for farming families. If you operate a farm through a family trust, our Farm Advisory team can help you understand how the proposed changes could affect your circumstances and what options may be available to you.
- Proposed restructure relief: Roll-over relief is proposed to be available for three years from 1 July 2027 for eligible restructures out of discretionary trusts.
The legislation remains in draft form, and concerns have been raised about the potential impact on beneficiaries with lower incomes and company beneficiaries.
What should you do now?
There is no need to rush into restructuring your trust. However, if you operate a business, hold investments or manage a farming enterprise through a family trust, this is a good opportunity to review your current structure and understand the options available to you.
The right approach will depend on your circumstances, the purpose of your trust and how you intend to distribute income in the future.
If you’d like to understand what these proposed changes could mean for you, get in touch with our team to discuss your circumstances and plan your next steps with confidence.
Fringe Benefits Tax: Changes to Electric Vehicles
The Government has released draft legislation proposing changes to the Fringe Benefits Tax (FBT) exemption for eligible electric cars.
The proposed changes would gradually reduce the tax concessions available, making the timing of an electric vehicle purchase or lease an important consideration for employers and employees.
Under the proposed arrangements:
- Before 1 April 2027: Eligible arrangements that meet the existing commitment requirements would retain the current exemption.
- From 1 April 2027 to 31 March 2029: A 100% FBT discount is proposed for eligible cars valued at $75,000 or less, with a 25% discount for eligible cars above that value, subject to the applicable fuel-efficient car limit.
- From 1 April 2029: The proposed discount would reduce to 25%.
The eligibility requirements and transitional provisions will be important when determining which arrangements qualify.
What should you consider?
If you or your employees are considering an electric vehicle through a novated lease or another employer-provided arrangement, it’s worth reviewing the timing and tax implications before committing.
The proposed changes could affect the overall cost of an arrangement, so understanding the rules before making a decision can help you plan with greater confidence.
Salary Sacrifice: Proposed Changes from April 2027
Changes to the FBT treatment of certain salary-sacrificed work-related items are proposed to commence on 1 April 2027.
Items potentially affected include laptops, mobile phones, software, protective clothing, briefcases and tools of trade. The proposals also cover certain work-related expenses, including home office costs, phone and internet expenses, and self-education costs.
These items are generally expected to retain their existing exemption when provided outside a salary sacrifice arrangement, subject to the applicable rules.
There is also a positive change proposed: the current limit of one eligible work-related item per year would be removed.
The changes are intended to align with the proposed $1,000 standard deduction for work-related expenses, which individuals would be able to claim from the 2027 income year without providing receipts, subject to the final legislation and eligibility requirements.
What does this mean for employers?
If you offer salary packaging or salary sacrifice arrangements to your team, now is a good time to review how these benefits are structured.
Understanding the proposed changes early can help you identify potential cost implications, assess existing arrangements and prepare for the transition.
ATO Credit Card Payments to End
From 30 June 2027, the ATO is scheduled to stop accepting credit cards as a payment method, following changes associated with the Reserve Bank’s ban on card surcharges.
If you currently use a credit card to pay your activity statements or tax liabilities, you’ll need to consider an alternative payment method before the change takes effect.
What should you do?
Review how your business currently pays its tax obligations and make sure you have an alternative arrangement in place before the end of November.
You can find the ATO’s available payment options at ato.gov.au/howtopay. Or contact our team, we’re happy to help.
Planning ahead will help you avoid unnecessary disruption when your next payment falls due.
PAYG Instalments: Getting Your Estimates Right
The ATO is contacting businesses that have varied their PAYG instalments significantly below their eventual tax liabilities.
If your varied instalments are less than 85% of the tax ultimately payable, interest may apply to the shortfall, and penalties may also be relevant.
While varying your instalments can help manage cash flow, it’s important that your estimates reflect your current circumstances and are supported by reasonable calculations.
What should you consider?
If your business income, profitability or financial position has changed, review your PAYG instalments to determine whether your current payments remain appropriate.
An estimate that was reasonable earlier in the year may no longer reflect your position. Reviewing it before lodging your next activity statement can help you make an informed decision and reduce the risk of an unexpected liability.
Separately, draft legislation proposes a monthly PAYG instalment option from the 2028 income year. For eligible taxpayers, more frequent payments could provide an alternative way to manage tax cash flow. The proposal remains subject to the legislative process.
Car and Travel Claims: Common Areas of Risk
The ATO has highlighted several common errors in car and travel expense claims. Reviewing your records and understanding the rules can help you avoid unnecessary adjustments at tax time.
Areas to watch include:
- Travel between home and work: These trips are generally considered private, with limited exceptions.
- Cents per kilometre claims: Claiming the maximum 5,000 kilometres without being able to substantiate your work-related travel can create problems.
- Novated lease vehicles: Claiming car expenses personally for a vehicle covered by a novated lease may be inappropriate, depending on the arrangement.
- Private travel expenses: Adding holiday costs, family travel or other private expenses to a business travel claim can lead to incorrect deductions.
Keeping accurate records throughout the year makes it easier to support your claims and identify which expenses are genuinely work-related.
The ATO app’s myDeductions tool can help you record eligible expenses and work-related trips, with records that may be shared with your tax agent.
If you’re unsure which expenses you can claim, seek advice before lodging your return.
October Compliance Checklist: Key Dates
October includes several important tax and compliance deadlines. Make sure the following dates are on your calendar.
28 October 2026
- September quarter Business Activity Statement (BAS) due for taxpayers lodging directly, unless a different arrangement or concession applies.
- SMSF transfer balance account reports (TBARs) due where a reportable event has occurred and reporting is required.
31 October 2026
- Individual tax returns for the previous financial year are generally due for taxpayers required to lodge by this date.
- Eligible clients who want to access a tax agent’s extended lodgement program generally need to be on the agent’s client list by this date, subject to the applicable ATO requirements.
The standard BAS lodgement and payment deadline may be extended for eligible taxpayers lodging through a registered BAS or tax agent. Confirm your applicable due date with your adviser.
It’s also worth noting that the ATO continues to target non-compliance, including outstanding tax returns and activity statements. Its enforcement activity is a reminder that keeping your lodgements up to date is an important part of managing your business obligations.
If you’re behind on your lodgements, don’t put off addressing them. Contact your adviser to discuss the best way to get back on track and understand your next steps.
Stay Informed. Make Decisions with Confidence.
Tax changes can create uncertainty, particularly when they affect your business structure, employee benefits or cash flow.
At Advisory Partner, we help you understand what these developments mean for your circumstances, identify the issues that need attention and make informed decisions about what comes next.
Whether you need to review your trust structure, assess salary packaging arrangements, revisit your PAYG instalments or bring outstanding lodgements up to date, our team can help you work through your options.
Get in touch with Advisory Partner to gain clarity on your obligations and confidence in your next decision.
Contact our team to discuss your circumstances.
This article contains general information only and does not take into account your individual objectives, financial situation or needs. The legislative changes discussed may be proposed or subject to further amendments. Please seek professional advice before making decisions based on this information.