A new financial year typically brings with it a few tax changes for workers and super fund members, but this year the action has been dialled up to 11.
On July 1 Australians will face a big batch of changes across income tax, superannuation and thresholds for savers, seniors and families.
Chartered accountant and Mr Taxman founder Adrian Raftery said “the only constant about tax is change”.
With that in mind, here’s what you need to know.
1. A tax cut for everyone
Don’t get too excited, but from July 1 every Aussie taxpayer will get a tweak to their take-home pay via a tax cut worth up to $268 annually, or $5.15 a week.
Announced a few years ago, the Australian government is implementing further personal tax cuts for the 2026-27 financial year.
“The 16 per cent tax rate which applies to incomes between $18,201 and $45,000 will be reduced to 15 per cent,” Dr Raftery said.
2. Instant work tax deduction
The May federal budget announced an instant tax deduction of $1000 for work-related expenses, starting on July 1 this year.
Dr Raftery said while it might appear to be a great incentive on paper, a majority of taxpayers already claimed more than $1000 of work-related expenses in their tax return each year with receipts and logbooks.
The changes are not yet law, but the government is hopeful it will usher in its changes before the end of the financial year.
3. Tax-deductible super cap up
Superannuation fund members seeking to make personal contributions to their fund, and claim a tax deduction for it, will have a larger cap to play with.
The annual cap for these concessional contributions rises from $30,000 to $32,500 from July 1, but people should remember that compulsory employer contributions and salary sacrifice are also concessional contributions that count towards the cap.
4. Non-concessional cap climbing too
Super fund members can also pump a large amount of non-deductible money, called non-concessional contributions, into their fund each year, and are allowed to bring forward two future years of contributions.
Dr Raftery said the non-concessional contribution limit was set at four times the concessional cap, so would climb from $120,000 to $130,000 per year from July 1.
“The three-year bring forward rule also increases to $390,000 from $360,000,” he said.
5. Division 296 begins
Labor’s new tax on people with more than $3m in their superannuation starts in July after a turbulent passage through parliament last year in which the worst of its impacts – and lack of indexation and taxing unrealised gains – were removed.
Accounting and advice group William Buck says while the change, known as Division 296, is aimed at high-balance super fund members, the rules are complex and can have wider implications for cashflow, investment structures, estate planning and retirement strategies.
William Buck executive chair Jamie McKeough said the changes would “require careful navigation over the coming weeks and months”.
6. Payday super starts
Super has another huge change coming on July 1, with employers being forced to pay their workers their super in line with wages, rather than the current system of quarterly payments.
UniSuper state manager advice Tristan Barnes said this shift to payday super meant employer contributions would start working for Australians earlier.
“When super is paid sooner, it starts compounding sooner,” he said.
However, there was a potential tax catch for some, he said. “With contributions landing more frequently, workers who salary sacrifice should check their arrangements still sit comfortably within concessional caps,” Mr Barnes said.
7. Bigger business write-offs
Small and medium business owners – those with turnover below $10m – are set to benefit from the $20,000 instant asset write-off for business purchases being made permanent from July 1.
Dr Raftery said this was announced in the recent budget and had not yet passed through parliament. However, it is one of the few budget tax changes likely to receive bipartisan support.
8. Claiming back tax paid
Similarly, another business boost from July 1 is likely from the reintroduction of a loss carry back tax offset that allows companies to claim back company tax paid in the preceding two years.
“Currently businesses must carry forward tax losses to offset profits made in future tax years,” Dr Raftery said.
Again, this measure is part of the budget changes so are not law yet.
9. Transfer balance cap climbs
Seniors will be able to start bigger tax-free retirement pensions from July, as the transfer balance cap limiting their size rises from $2m to $2.1m, in line with its inflation indexation.
This is good news for new retirees, but no solace for existing seniors who started their account-based pensions in 2017-2019 using the maximum transfer balance cap at the time of $1.6m. People who maxed out their cap back then are ineligible for future increases.
10. Parental leave boost
At the other end of the life stage scale, new parents will get an extra 10 days of parental leave pay, which is paid at the national minimum wage that rises to $1004.90 per week in July.
The amount will increase by 10 days to 130 days – 26 weeks – for children born or adopted after July 1.