Happy New Financial Year! Here's What's Changed from 1 July 2026

2 July

A new financial year always brings a fresh round of changes, and 2026–27 is no exception. Below is a rundown of the key changes now in effect, and what they might mean for you, your business, and your super.

Personal Tax

$1,000 standard deduction for work-related expenses

From 1 July 2026, eligible taxpayers can choose to claim a standard $1,000 deduction for work-related expenses without needing receipts, instead of itemising actual costs. This first applies to the 2026–27 tax return (lodged from July 2027); it does not apply to the return you're lodging this year. If your actual work-related expenses are higher than $1,000, you're still better off claiming the real amount, so it's worth keeping your receipts either way. Certain deductions (like donations, tax agent fees, and union fees) can still be claimed on top of the standard deduction.

16% tax rate reduced to 15%

The tax rate on income between $18,201 and $45,000 drops from 16% to 15% from 1 July 2026, delivering a tax cut of up to $268 a year for anyone earning $45,000 or more (smaller savings apply below that threshold). A further cut to 14% is legislated to take effect from 1 July 2027. PAYG withholding tables have been updated accordingly, so the benefit should show up in pay packets automatically from the first full pay period on or after 1 July.

Business

$20,000 instant asset write-off made permanent

The $20,000 instant asset write-off is now a permanent feature of the tax law (rather than being renewed Budget by Budget). Small businesses with an aggregated turnover under $10 million can immediately deduct the cost of eligible depreciating assets costing less than $20,000, in the year they're first used or installed ready for use.

ASIC fees increase

ASIC's annual CPI indexation has pushed up a range of fees from 1 July 2026, including:

Company registration: $611 → $636
Annual review fee (standard proprietary company): $329 → $342
Annual review fee (special purpose company, e.g. SMSF trustee): $67 → $70
Business name registration (1 year): $45 → $47 / (3 years): $104 → $108

Employment

Minimum wage increase

The National Minimum Wage rises by 4.75% to $26.44 per hour ($1,004.90 for a 38-hour week), effective from the first full pay period on or after 1 July 2026. Modern Award minimum rates increase by the same amount. If you run payroll, now's the time to check your rates are updated.

Payday Super

From 1 July 2026, employers must pay employee superannuation guarantee contributions at the same time as wages, rather than quarterly, with funds needing to land in the employee's account within a set number of business days of each payday. This is a significant shift for payroll processes and cash flow planning, so if you haven't reviewed your systems yet, it's worth doing so now.

Parental Leave Pay increased to 130 days

For children born or adopted from 1 July 2026, Parental Leave Pay increases from 120 days (24 weeks) to 130 days (26 weeks). The portion reserved for a partner also increases from 15 to 20 days on a "use it or lose it" basis. Superannuation (at the standard rate) is also now paid by the ATO on Parental Leave Pay for children born or adopted from 1 July 2025, with payments starting from July 2026.

Superannuation

Concessional and non-concessional caps increase

From 1 July 2026:

Concessional contributions cap: $30,000 → $32,500
Non-concessional contributions cap: $120,000 → $130,000
Bring-forward cap (3 years, where eligible): $360,000 → $390,000

If you've been planning additional super contributions, the higher caps may open up extra opportunities, but the usual eligibility rules (age, total super balance, and bring-forward status) still apply, so it's worth checking your position before contributing.

Transfer balance cap increased

The general transfer balance cap rises from $2 million to $2.1 million from 1 July 2026. Anyone starting a retirement-phase pension for the first time from this date will have a personal transfer balance cap of $2.1 million; those already in retirement phase may receive a proportional increase depending on how much of their cap they've already used.

Division 296 tax commences

The new Division 296 tax on superannuation earnings starts from 1 July 2026. It applies an additional 15% tax on earnings attributable to the portion of an individual's total super balance above $3 million (with a higher rate above $10 million). Total super balance for the first year is measured at 30 June 2027. If your balance is approaching $3 million, this is worth a conversation with us about your contribution and investment strategy.

LRBA ban on residential property from 10 August 2026

Following a late-stage amendment to secure passage of the Government's tax reform legislation, SMSFs will no longer be able to enter new limited recourse borrowing arrangements (LRBAs) to purchase residential property from 10 August 2026. Key points:

Existing LRBAs are grandfathered and can still be refinanced.
Contracts exchanged before 10 August 2026 are protected, even if settlement happens later.
LRBAs for business real property remain unaffected.
SMSFs can still purchase residential property outright using cash; the ban only affects borrowing.

Rex Ting