While some challenges are temporary, others can begin placing serious pressure on cash flow, profitability and the overall financial position of the business. For many business owners, one of the most significant drivers of that pressure is ATO debt unpaid GST, PAYG or income tax that has accumulated over time and become difficult to manage alongside the everyday costs of running a business.

Rising costs, changing market conditions, increasing debt and delayed customer payments can all compound that pressure further. When these challenges start occurring together, the focus often shifts from managing the next month to understanding what the future of the business could look like and what options may be available.

A Small Business Restructure is one pathway that may help eligible businesses address financial challenges including ATO debt while continuing to trade.

Understanding how the process works, when it may be relevant and what outcomes it is designed to achieve can help business owners make more informed decisions about what comes next.

What Is a Small Business Restructure?

A Small Business Restructure (SBR) is a formal process available to eligible companies experiencing financial difficulty.

Introduced to help viable small businesses manage financial pressure, the Small Business Restructuring process allows a company to continue trading while proposing a plan to creditors regarding how certain debts may be repaid.

Unlike some insolvency processes, the objective is not necessarily to bring the business to an end. Instead, it is designed to provide an opportunity to address financial challenges including ATO debt while preserving value within the business and allowing operations to continue.

Not every business experiencing pressure will be suitable for a Small Business Restructure, and eligibility requirements apply. While eligibility is ultimately a matter to confirm with a professional, there are some general criteria that typically apply. A company may be eligible if it:

• is an incorporated company the process is not available to sole traders or partnerships
• has total liabilities of less than $1 million at the time of appointment
• has all employee entitlements that are due including superannuation paid up to date
• has tax lodgements up to date with the ATO, even if there are outstanding amounts still owing

Meeting these criteria does not guarantee a particular outcome, and individual circumstances will vary. However, understanding whether a business broadly fits within these parameters may help business owners have a more informed conversation with an adviser early on.

For those businesses that do qualify, a Small Business Restructure may offer an alternative to liquidation and a structured pathway to address business debt while maintaining day-to-day operations.

When Financial Pressure Starts Affecting the Business

Every business experiences challenges. A key client pays late. Costs increase unexpectedly. Demand slows for a period of time.

Most businesses encounter situations that create short-term pressure. The challenge arises when those pressures stop being temporary and begin influencing everyday decision-making.

Business owners may find themselves delaying supplier payments, relying on payment arrangements, juggling competing financial obligations or spending more time managing cash flow than focusing on growth. At this stage, the issue is often no longer a single event. Instead, financial distress has started affecting the broader financial position of the business. Understanding what is driving that pressure is often an important first step before considering what business restructuring options may be available.

Common Signs a Restructure May Be Worth Exploring

Financial difficulties do not always present themselves in obvious ways. In many cases, pressure builds gradually over time.

Some signs that may indicate a business should take a closer look at its position include:

• Ongoing cash flow challenges
• Growing ATO debt or unpaid tax obligations
• Difficulty paying creditors on time
• Reliance on short-term funding to cover existing obligations
• Increasing pressure from lenders or suppliers
• Declining profitability despite consistent revenue
• Limited working capital available to support operations

Experiencing one of these challenges does not automatically mean a restructure is required. However, when multiple issues begin occurring together, it may be worth gaining a clearer understanding of the business’s financial position and the business debt solutions available moving forward.

Could This Apply to Your Business?

To make this more tangible, here’s a scenario that our the team has faced. A Queensland-based construction company with 8 employees had experienced strong growth over a few years but began to have cash flow pressure due to a combination of rising material costs, fixed price contracts, and delayed customer payments.

Over time, the business accrued approximately $450,000 in ATO debt, along with some trade creditor pressure. While the business remained operationally viable and continued to generate revenue, it was unable to meet its liabilities as and when they fell due. After seeking advice, the directors explored the Small Business Restructuring (SBR) process. With the assistance of a restructuring practitioner, a plan was developed that allowed the company to compromise its unsecured debts, including the ATO, while continuing to trade.

The proposal was put forward to creditors, offering a return funded from future trading profits over a defined period. The plan was accepted, allowing the business to reduce its overall debt burden, stabilise cash flow, and continue operating without entering liquidation. This type of outcome is particularly relevant for otherwise viable businesses that are facing pressure from ATO debt and working capital constraints but still have a core business worth preserving.

How a Small Business Restructure Works

While every situation is different, a Small Business Restructure generally involves working with a registered Small Business Restructuring Practitioner to assess the company’s position and develop a proposed restructuring plan. During the process, directors typically remain involved in the day-to-day operation of the business while the restructuring proposal is prepared and presented to creditors. Creditors then have an opportunity to consider and vote on the proposal. If the plan is accepted, the business moves forward under the agreed arrangement. The process is designed to provide a structured framework for dealing with financial obligations, including ATO debt restructuring while allowing the company to continue trading. Because every business has different circumstances, outcomes can vary depending on the nature of the debt, creditor support and the overall viability of the business.

How Restructuring Differs from Liquidation

One of the most common misconceptions is that restructuring and liquidation are essentially the same thing.

In reality, they are designed to achieve very different outcomes. Liquidation generally involves winding up the affairs of a company and bringing its operations to an end. A Small Business Restructure focuses on whether the business can continue operating while addressing financial difficulties. It is one of several alternatives to liquidation that may be available to eligible businesses facing financial pressure.

The distinction is significant. In some situations, a business may still have strong customer demand, experienced staff, valuable relationships and a viable future. The challenge may simply be that the current financial position has become difficult to manage.

A restructure is designed to assess whether there is a pathway forward for that business, not to bring it to a close.

Looking Beyond Debt and Understanding the Bigger Picture

Debt is often the issue that brings businesses to the restructuring conversation.

However, debt itself is not always the root cause.

Financial pressure can develop from a range of underlying factors, including:

• Rising operating costs
• Reduced margins
• Pricing that no longer reflects business costs
• Changes in market conditions
• Inefficient processes
• Slow debtor collections
• Poor visibility over financial performance

Addressing debt may help relieve immediate pressure, but understanding what created the pressure in the first place is often equally important. This is why restructuring conversations frequently extend beyond creditor balances and focus on the overall health of the business. Looking at profitability, cash flow, operations and financial reporting may help identify opportunities to strengthen the business moving forward.

Why Timing Can Make a Difference

When financial pressure first emerges, it is common to assume things will improve with time.

The next project may be more profitable. A major debtor may finally pay. Market conditions may improve. Sometimes they do.

Sometimes they don’t. One of the challenges with delaying difficult conversations is that options may become more limited as pressure continues to build. Seeking clarity early does not necessarily mean significant action is required immediately. In many cases, it simply provides a better understanding of the business’s position and the pathways that may be available. The earlier challenges are identified, the more opportunity there may be to assess potential solutions before pressure escalates further.

Final Thoughts

Financial pressure does not automatically mean a business has reached the end of the road. Many businesses experience periods where debt, cash flow challenges or changing market conditions create strain on operations. What often matters is understanding the underlying issues, assessing the available options and taking the time to understand what a sustainable path forward may look like. A Small Business Restructure is one option that may be available to eligible companies experiencing financial difficulty. While it is not appropriate for every situation, understanding how the process works can help business owners better evaluate their position and the opportunities that may exist moving forward.

The sooner financial challenges are understood, the greater the opportunity may be to create clarity, preserve flexibility and make informed decisions about the future of the business.

How Carbon Restructuring & Insolvency Can Help

Financial pressure can be difficult to navigate, particularly when uncertainty begins affecting day-to-day decision-making.

At Carbon, our Restructuring & Insolvency team works with business owners, directors and advisers to help them better understand their financial position and the options available to them. This may involve reviewing cash flow challenges, creditor obligations, ATO debt, business performance and broader operational concerns to provide a clearer picture of what is driving the pressure.

Carbon’s Restructuring & Insolvency team can help assess your position, explain whether a Small Business Restructure may be available and discuss any alternative options that may be appropriate for your circumstances.

Contact our team for a confidential discussion about your options.

As part of the Federal Government’s recent tax reforms, new Limited Recourse Borrowing Arrangements (LRBAs) for residential property through SMSFs will no longer be permitted. The change forms part of a broader package of housing and tax reforms and is aimed at limiting the use of superannuation borrowing for residential property investment. Existing borrowing arrangements will be grandfathered, meaning they can continue under the current rules, while borrowing to acquire eligible commercial property through an SMSF remains available. 

While the announcement has generated plenty of discussion, what should current and prospective SMSF investors take note of? 

What has changed? 

Previously, SMSFs could borrow to purchase residential investment property using a Limited Recourse Borrowing Arrangement (LRBA). This structure allowed SMSF to borrow funds while limiting the lender’s security to the asset being purchased. 

Under the new rules: 

• SMSFs will no longer be able to establish new LRBAs to purchase residential property. 

• Existing residential LRBAs are expected to continue under grandfathering provisions. 

• Borrowing to acquire eligible commercial property through an SMSF is not affected by these changes. 

It’s important to note that this change relates to borrowing, not SMSF property ownership itself. An SMSF can still invest in residential property if it has sufficient funds to purchase the assets outright and all existing superannuation rules are met. 

Why has the Government introduced this change? 

The Government has described the reform as a way to strengthen Australia’s superannuation system while supporting broader housing affordability objectives. 

Although SMSF borrowing represents only a small proportion of Australia’s residential property market, concerns have existed for several years that allowing leverage within superannuation increased investment risk and created an unintended advantage for some investors. 

Who is affected? 

Investors planning to buy residential property through an SMSF 

If your strategy relied on borrowing through your SMSF, you’ll need to reassess your options once the new rules commence. 

This doesn’t necessarily mean your investment plans need to stop, but it may mean considering alternative ownership structures or funding strategies. 

Existing SMSF property owners 

If your SMSF already has a residential property purchased under an LRBA, the current arrangements are expected to remain in place. 

In most cases, you won’t be required to sell the property or unwind your existing loan simply because of the legislative change. 

Business owners 

Importantly, these changes do not prevent SMSFs from borrowing to purchase eligible commercial property.

For many business owners, purchasing their business premises through an SMSF can still form part of an effective long-term retirement and asset protection strategy, depending on their individual circumstances. 

Should you still consider an SMSF? 

An SMSF can still be a valuable wealth creation and retirement planning vehicle. 

However, property should never be the sole reason for establishing an SMSF. 

Before deciding whether an SMSF remains the right structure for you, it’s important to consider : 

• your retirement objectives 

• your investment timeframe 

• diversification across different asset classes 

• cash flow requirements 

• ongoing compliance obligations 

• administration and audit costs 

• your ability to fund investments without relying on residential borrowing. 

Every investor’s circumstances are different, and the most appropriate strategy will depend on your broader financial goals rather than one investment opportunity. 

What should you do next? 

If you were planning to purchase residential property through your SMSF, now is the time to review your strategy. 

While the recent changes may affect how you invest, they don’t necessarily change why you’re investing. There may still be alternative structures available that better suit your circumstances, whether that’s investing outside of super, reviewing your financing options or exploring different asset classes. 

Seeking professional advice before making any changes can help ensure your investment strategy remains tax-effective, compliant and aligned with your long-term objectives. 

How Carbon can help 

Changes to tax and superannuation legislation can have significant implications for your financial plans. 

Our Carbon Wealth team can work with you to understand your circumstances, explain how legislative changes may affect them and develop strategies that help support both your immediate needs and long-term goals. 

Before deciding whether an SMSF remains the right structure for you, it may be worth consulting with a financial advisor who will consider reviewing your existing investment strategy or exploring alternative ownership structures.

From working from home deductions and rental property claims to payroll reporting and side hustle income, the ATO is paying closer attention to areas where errors and incorrect reporting commonly occur.

Understanding what the ATO is focusing on this year can help you avoid unnecessary issues, ensure your records are accurate and put you in a stronger position come lodgement time.

1. Working From Home Deductions

Working from home deductions continue to be one of the ATO’s biggest focus areas this tax season.

While many Australians still work remotely or in hybrid arrangements, the ATO is paying close attention to how deductions are calculated and whether taxpayers have appropriate records to support their claims.

This includes:

• Hours worked from home
• Electricity and internet expenses
• Mobile and phone usage
• Depreciation on office equipment

The ATO has repeatedly flagged concerns around inflated claims and insufficient documentation, making accurate record keeping more important than ever.

2. Rental Property Claims

Rental properties remain a significant compliance focus due to the high number of mistakes made each year.

Common issues the ATO continues to monitor include:

• Incorrect interest deductions
• Claiming improvements as immediate repairs
• Overclaiming depreciation
• Incorrectly reporting short-term rental income

Many property owners are unaware that certain expenses must be claimed over time rather than immediately, which can lead to unintentional errors. If you own an investment property, it’s always a good idea to review your deductions carefully before lodging your return.

3. Side Hustles and Additional Income

The rise of side hustles, freelancing and online selling has increased the ATO’s focus on undeclared income.

Additional income can come through:

• Ride-sharing platforms
• Freelance work
• Marketplace sales
• Content creation
• Consulting services

It’s important to understand that many platforms now share data directly with the ATO. A common misconception is that smaller or casual income streams do not need to be declared. However, if income has been earned, it may still need to be reported depending on the nature of the activity.

4. Crypto and Investment Activity

Cryptocurrency and investment reporting continue to create confusion for many taxpayers. The ATO is increasing its use of data matching to monitor crypto transactions, investment income and capital gains events. Tax obligations can arise even if assets have not been converted back into cash.

Areas commonly misunderstood include:

• Crypto-to-crypto transactions
• Capital gains tax events
• Dividend and ETF reporting
• Investment losses

With investment activity becoming more common, ensuring your transactions are properly recorded and reported is increasingly important.

5. Instant Asset Write-Offs and Business Purchases

For business owners, the instant asset write-off remains one of the most discussed EOFY measures. For the 2025–26 financial year, eligible small businesses (those with an aggregated turnover under $10 million) can immediately deduct the full cost of qualifying assets costing less than $20,000 each rather than depreciating them over several years. The $20,000 threshold applies per asset, so multiple assets can potentially be written off and the limit is GST-exclusive if you’re registered for GST.

A few points that regularly trip people up:

• The asset must be first used or installed ready for use by 30 June 2026, not simply ordered or paid for. A late delivery can push the deduction into the following financial year.
• Assets costing $20,000 or more aren’t lost, they go into the small business depreciation pool instead and are written off over time.
• Business-use percentage matters, only the business portion of the cost is deductible.
• Thresholds and eligibility rules change frequently, so it’s worth confirming the current position before committing to a purchase.

Rushed EOFY purchases without proper planning can sometimes create cash flow pressure or unexpected tax outcomes. Before making significant business purchases, it’s worth reviewing whether the investment aligns with both your operational needs and broader tax strategy.

6. Payroll and Contractor Compliance

The ATO continues to strengthen payroll reporting requirements through Single Touch Payroll (STP) and increased employer compliance reviews.

This tax season, businesses should pay close attention to:

• Accurate payroll reporting
• Superannuation obligations
• Employee versus contractor classifications
• Allowance reporting

It’s also worth noting that Payday Super commences from 1 July 2026, requiring employers to pay super on or before each payday. This is one of the ATO’s active monitoring areas this year, and many small businesses are still adjusting to the change. Getting this right early will save you from unnecessary penalties down the track.

Misclassifying workers or failing to meet super obligations can expose businesses to penalties, back payments and additional compliance reviews. With payroll data now reported in real time, errors are far easier for the ATO to identify.

7. Outstanding Tax Debts and ATO Collections

The ATO has significantly increased its debt recovery activity over the past 12 months, particularly for small businesses with overdue tax obligations.

Businesses with outstanding BAS, PAYG or superannuation liabilities may face:

• Director penalty notices
• Garnishee notices
• Payment plan reviews
• Increased compliance activity

In addition, effective 1 July 2025 the General Interest Charges and Shortfall Interest Charge are no longer tax deductible. For many businesses, proactive communication and early planning are critical to managing tax obligations effectively. Ignoring tax debt rarely improves the situation and can limit future lending and growth opportunities.

Preparing for Tax Season

While the ATO’s compliance activity continues to increase, the best approach is preparation rather than panic.

Keeping accurate records, reviewing deductions carefully and seeking advice early can help reduce risk and improve your overall tax position. Tax season is also a valuable opportunity to review your broader financial position, business structure and future tax planning strategies.

If you’d like support preparing for tax season or understanding how these focus areas may affect you or your business, our team at Carbon Accounting & Tax is here to help.

More often, the pressure builds gradually. Cash flow becomes harder to manage. Creditor conversations become more frequent. Tax obligations start falling behind. What initially feels like a temporary challenge can slowly become part of everyday business operations.

The difficulty is that these warning signs rarely arrive all at once. They often develop quietly in the background while business owners remain focused on serving customers, managing staff and keeping operations moving.

Recognising potential indicators of financial distress doesn’t necessarily mean a business is insolvent. However, identifying them early may provide an opportunity to better understand what is driving the pressure, assess potential risks and explore options before the situation becomes more difficult to manage.

1. When Cash Flow Pressure Becomes the Norm

Every business experiences periods where cash flow feels tight. Seasonal fluctuations, delayed customer payments or unexpected expenses can all create short-term pressure. The concern arises when cash flow challenges stop being occasional and start becoming part of everyday operations.

If payroll, supplier payments or tax obligations are regularly causing stress, it may indicate that the business is operating with limited financial flexibility. Over time, this can make it harder to respond to opportunities, absorb unexpected costs or invest in future growth.

Understanding why cash flow pressure is occurring is often more important than simply finding ways to manage it week by week. Ongoing cash flow challenges may sometimes point to broader issues such as declining profitability, rising operating costs, excessive debt commitments or a mismatch between when money is received and when obligations fall due.

Reviewing cash flow patterns, upcoming commitments and where funds are being allocated may help provide greater visibility into what is driving the pressure and whether it is likely to be temporary or ongoing.

2. Struggling to Keep Up with Creditors

One of the more common signs of financial distress is when businesses begin falling behind on payments to suppliers, lenders or service providers.

This can start subtly. Payment terms are stretched, calls from creditors become more frequent or arrangements are made to delay payments until more funds become available.

While these actions may provide temporary relief, they can also signal that the business is under increasing financial pressure. If obligations continue to grow while available cash remains limited, the gap can become increasingly difficult to close.

Maintaining strong relationships with creditors is important, but if your business is regularly relying on extensions or payment plans, it may be worth taking a closer look at what is driving the pressure. Understanding what you owe, when those payments fall due and whether cash flow can comfortably support them may help highlight areas that need attention.

3. Growing ATO Debt and Compliance Concerns

Tax obligations are often one of the first areas where financial pressure becomes visible.

Businesses facing cash flow challenges may find themselves delaying BAS payments, PAYG obligations or other tax liabilities to prioritise more immediate expenses. While this may feel necessary in the short term, unpaid tax debts can continue to grow and attract increased attention from the ATO. For many business owners, the arrival of reminder notices, payment demands or discussions around Director Penalty Notices can significantly increase stress and uncertainty.

Reviewing tax obligations early may help businesses gain a clearer understanding of their position and the implications of any outstanding liabilities. Having visibility over these obligations can often support more informed decision-making moving forward.

4. Relying on Short-Term Fixes to Stay Afloat

When financial pressure builds, it’s common for businesses to look for quick solutions. This might include increasing debt facilities, using personal funds to cover business expenses, delaying payments or moving money between accounts to meet immediate obligations. While these measures may provide temporary breathing room, they don’t always address the underlying issue.

If short-term fixes are being used repeatedly, it may be a sign that the business is dealing with a broader structural challenge rather than a temporary cash flow shortfall. In some cases, the underlying issue may relate to profitability, pricing, debt levels, operating costs or the way cash moves through the business.

While short-term solutions may help relieve immediate pressure, understanding what is causing the need for those solutions in the first place is often critical to improving long-term financial stability.

5. Losing Visibility Over the Financial Position

Financial pressure often creates a cycle where business owners become so focused on immediate challenges that they lose visibility over the bigger picture. Reports may not be reviewed regularly. Forecasting may stop. Important financial information can become outdated or difficult to interpret.

Without clear visibility, decision-making becomes increasingly difficult. It can be harder to understand what is driving profitability, where risks are emerging and what options may be available. Greater visibility may help business owners identify emerging issues earlier, assess potential risks and make more informed decisions about the future of the business.

6. The Personal Impact of Business Stress

Financial pressure rarely stays within the business. Many owners carry the burden quietly, managing staff, clients, creditors and personal responsibilities while attempting to keep everything moving forward.

Over time, this pressure can affect confidence, relationships, sleep and overall wellbeing. The constant weight of uncertainty can make it difficult to focus on strategic decisions and long-term planning.

Recognising the personal impact of financial stress is just as important as recognising the financial indicators themselves. For some business owners, gaining a clearer understanding of their financial position may help reduce uncertainty and create a stronger foundation for future decision-making.

Final Thoughts

Insolvency is often viewed as a single event, but for many businesses, financial distress develops gradually over time.

Cash flow challenges, creditor pressure, growing tax debts and declining visibility can all be indicators that the business is operating under increasing strain. On their own, these signs do not necessarily mean a business is insolvent. However, they may highlight areas that warrant closer attention.

The earlier potential issues are identified, the greater the opportunity may be to understand what is contributing to the pressure and assess the options available. Waiting until challenges become overwhelming can often reduce flexibility and make decision-making more difficult.

For many business owners, recognising the signs is not about assuming the worst. It’s about gaining clarity, understanding the situation and creating an opportunity to respond before the pressure escalates further.

How Carbon Restructuring & Insolvency Can Help

If your business is experiencing any of the warning signs discussed above, having a conversation sooner rather than later may help provide greater clarity around your position and the options available. Early action doesn’t necessarily mean significant changes are required, but it may provide more flexibility, more visibility and more opportunities to address issues before pressure escalates further.

Then suddenly, the questions begin.

Do we need to lodge one?
Have we tracked every subcontractor payment properly?
Are the ABNs and invoice details correct?
Why does this feel harder than it should?

The Taxable Payments Annual Report, commonly known as TPAR, is an annual report that certain businesses need to lodge with the ATO. For many businesses in the building and construction industry, it is used to report payments made to contractors for services during the financial year.

While TPAR may seem like another compliance task, it often highlights something bigger. The quality of your contractor records, the accuracy of your bookkeeping and how well your systems have kept up with the way your business actually operates.

For trade businesses using subcontractors across jobs, sites and projects, preparing early may help reduce pressure and make lodgement feel far more manageable.

1. Do I Actually Need to Lodge a TPAR?

One of the first pain points for trade business owners is understanding whether TPAR applies to them.

If your business provides building and construction services and pays contractors or subcontractors for services, you may be required to lodge a TPAR. This can include payments made to sole traders, companies, partnerships or trusts that have provided services to your business.

Where confusion often happens is when businesses assume TPAR only applies to large builders or major construction companies. In reality, many smaller trade businesses may also be captured if they engage contractors as part of their operations.

This is why it can be useful to review how your business operates, what services you provide and whether contractor payments form part of your yearly activity.

Understanding whether TPAR applies early may help avoid a last-minute scramble and give you more time to review contractor records properly before lodgement is due.

It’s also worth noting that if, after reviewing your circumstances, you determine that a TPAR is not required for the financial year, there may still be value in notifying the ATO. Lodging a non-lodgement advice can help avoid unnecessary follow-up enquiries relating to a report the ATO may otherwise expect to receive.

2. I’ve Paid Contractors All Year. How Do I Pull This Together Now?

For many trade businesses, subcontractors are part of everyday operations.

You may have engaged electricians, plumbers, carpenters, tilers, painters, labourers or other specialists across different jobs throughout the year. Some may have worked with you regularly, while others may have only been involved for one project.

The issue is that contractor payments can become difficult to track if records have not been kept consistently throughout the year.

Payments may have been made from different bank accounts, invoices may be saved in different places and some contractor details may be incomplete. If bookkeeping has fallen behind, the process of preparing a TPAR can quickly become more time-consuming than expected.

What may help is having a clear process for recording contractor payments as they happen, rather than trying to rebuild the information later. Keeping invoices, ABNs, business names and payment records organised throughout the year may make TPAR preparation more accurate and less stressful.

3. What Information Needs to Be Included?

Another common challenge is realising that the business does not have all the required contractor information on hand.

A TPAR generally requires details about contractors paid during the financial year, including information such as their name or business name, ABN, address and the total payments made for services. It is important to note that the amount reported is generally the total amount paid to the contractor, including any GST that may apply. Businesses should therefore ensure their payment records accurately reflect the amounts being reported. This is where trade businesses can get caught out.

A subcontractor may have been paid months ago, but their invoice is missing an ABN. Another may have changed business names. Some records may only show a nickname, mobile number or job reference rather than formal supplier details.

These gaps can slow everything down.

Building a habit of collecting complete contractor details before work begins may help reduce issues later. It can also make supplier records cleaner, improve bookkeeping accuracy and reduce the time spent chasing information after the financial year has ended.

4. When Bookkeeping Issues Make TPAR Harder Than It Needs To Be

TPAR often exposes bookkeeping issues that may have been sitting unnoticed throughout the year.

For example, contractor payments may have been coded inconsistently. Some may be recorded as materials, others as subcontractor costs and others as general expenses. Invoices may be missing, duplicate supplier records may exist or payments may not clearly match the contractor who performed the work.

For a busy trade business, this can happen easily.

When you are managing jobs, staff, quotes, client expectations and cash flow, admin often happens quickly or gets pushed aside. The problem is that when TPAR time arrives, messy records can make it harder to confirm what was paid, who was paid and whether the information is complete.

Improving bookkeeping processes may help reduce this pressure. Regular reconciliations, consistent supplier coding and up-to-date contractor records can make reporting easier and also provide a clearer picture of labour costs across the business.

This may also help business owners better understand where money is going, how much is being spent on subcontractors and whether project costs are being tracked properly.

5. Why the 28 August Deadline Can Come Around Quickly

The TPAR is generally due by 28 August each year.

That may sound like there is plenty of time after EOFY, but for many trade businesses, July and August are already busy. EOFY wrap-up, BAS, payroll finalisation, superannuation and general business operations are all competing for attention.

By the time TPAR moves up the priority list, there may be limited time left to check records properly.

The pressure often comes from discovering issues too late. Missing contractor details, unreconciled transactions or unclear payment records can take longer to resolve than expected.

Starting earlier may help ease that pressure. Reviewing contractor records shortly after 30 June can give you more time to identify gaps, follow up missing information and ensure your bookkeeping is in a better position before the deadline arrives.

6. What TPAR May Reveal About Your Business

Although TPAR is a reporting obligation, the process can also reveal useful insights about the way your business is operating.

It may show that subcontractor costs are increasing. It may highlight gaps in supplier onboarding. It may reveal that records are being managed inconsistently across jobs or that your bookkeeping system is not giving you the visibility you need.

For trade businesses, contractor costs can represent a significant part of project delivery. If those costs are not being tracked clearly, it can become harder to understand job profitability, quote accurately or manage cash flow.

Reviewing contractor payment data may help business owners see patterns that are not always obvious day to day.

This could include:

• which contractors are used most often
• how subcontractor costs are changing over time
• whether payments are being recorded consistently
• where project margins may be under pressure
• whether admin processes need to be improved

TPAR may start as a compliance task, but the information behind it can often support better visibility across the business.

Final Thoughts

For many trade businesses, TPAR can feel like another EOFY task to get through.

But when the process feels difficult, it is often a sign that the issue is not the report itself. It may be the way contractor information, payments and bookkeeping records have been managed throughout the year.

Incomplete supplier details, inconsistent coding and missing invoices can all make TPAR more stressful than it needs to be. On the other hand, clean records and clearer processes may help make lodgement more straightforward and provide better visibility across the business.

With the 28 August deadline approaching each year, reviewing contractor records early may help reduce last-minute pressure and support a smoother reporting process.

How Carbon Bookkeeping & Accounting Can Help

At Carbon, our Bookkeeping and Accounting teams work with trade businesses to help keep records accurate, organised and easier to manage throughout the year.

This may include reviewing contractor payment records, keeping supplier details up to date, ensuring transactions are coded consistently and helping prepare the information needed for TPAR lodgement. Our team can also help businesses strengthen the processes behind the reporting, including bookkeeping systems, contractor onboarding and regular reconciliations. For trade businesses, this can help create greater confidence not only at TPAR time, but across day-to-day financial management.

If your contractor records feel unclear or TPAR has become a time-consuming task each year, it may be worth reviewing how your bookkeeping processes are supporting your business.

What’s New for EOFY 2026

Before diving into the checklist, here are the key changes specific to this financial year that every business owner needs to be across.

Payday Super starts 1 July 2026:  From 1 July, employers must pay superannuation contributions at the same time as wages not quarterly. Contributions must reach the employee’s super fund within 7 business days of each payday. The quarterly payment model ends with the Q4 2025–26 payment due 28 July 2026. This is the last quarterly super payment you will make.

SBSCH closes 1 July 2026: The ATO’s Small Business Superannuation Clearing House used by many small businesses to batch and submit super payments  is being decommissioned. If you currently use the SBSCH, you must transition to a Super Stream-compliant alternative clearing house before 1 July. Speak to your payroll software provider or super fund about your options now.

Instant asset write-off last chance at $20,000: The $20,000 instant asset write-off for businesses with turnover under $10 million from 1 July becomes permanent so the $20,000 threshold is secured going forward. However, any asset you want to claim this financial year must be purchased, installed, and ready for use before 30 June.

New PAYG withholding tax tables from 1 July 2026: The 16% marginal tax rate for income between $18,201 and $45,000 drops to 15% from 1 July 2026. Updated PAYG withholding tax tables will apply from your first pay run in the new financial year. Your payroll software should update automatically but verify before processing your first July payroll.

STP reporting changes From 1 July 2026, employers must report both Ordinary Time Earnings (OTE) and total super liability in Single Touch Payroll (STP) to support the ATO’s real-time Payday Super monitoring. Check with your payroll software provider that this reporting is set up correctly.

Part 1: Bookkeeping Checklist

Bookkeeping is the foundation everything else sits on. Your accountant cannot prepare an accurate tax return from incomplete or unreconciled records, and problems found in August cost more to fix than problems found in May. Work through this list before 30 June.

Reconcile everything

• Bank accounts: Reconcile all business bank accounts and credit cards to 30 June. Every transaction should have a coded record in your accounting software. Unreconciled items are the most common source of errors in EOFY reports.
• GST coding: Review your GST coding across the year. Incorrectly coded transactions affect both your BAS and your tax return. Pay particular attention to mixed-use expenses, international purchases, and any large one-off transactions.
• Accounts receivable: Review outstanding invoices. If any debts are genuinely unrecoverable, writing them off before 30 June allows you to claim a bad debt deduction in the current year. You cannot claim the deduction after the year ends.
• Accounts payable: Ensure all supplier invoices received before 30 June are entered, even if payment is due in July. Accrual-basis businesses need to capture expenses in the period they were incurred.
• Petty cash and loan accounts: Reconcile any director or shareholder loan accounts, petty cash floats, and intercompany accounts. Director loan accounts need particular attention for Division 7A compliance.

Asset register

• Review your fixed asset register and confirm depreciation has been calculated correctly for the year.
• Remove any assets that have been disposed of, written off, or scrapped during the year.
• For assets purchased this year, confirm they meet the instant asset write-off eligibility criteria (cost under $20,000, purchased and in use before 30 June, business turnover under $10 million).

Inventory

• If your business holds stock, conduct a physical stock take as close to 30 June as possible.
• Identify any obsolete, damaged, or unsellable stock and write it down to net realisable value before year end to bring forward the deduction.

Finalise your software

• Ensure Xero, MYOB, or your accounting platform is up to date and all transactions are coded to 30 June.
• Lock prior periods to prevent accidental changes to reconciled data.

Export and save year-end reports: profit and loss, balance sheet, aged receivables, aged payables, and general ledger.

Part 2: Tax Checklist

Once your books are clean and reconciled, your accountant can work efficiently to prepare your tax return and identify any year-end planning opportunities. The items below are worth reviewing before 30 June, not after.

Tax planning before 30 June

• Prepay deductible expenses: If your business is on a cash basis, prepaying expenses like insurance, subscriptions, rent, or professional memberships before 30 June can bring forward deductions into the current year. Most prepayments for a period of 12 months or less are immediately deductible.
• Review your income timing: If you can legitimately defer invoicing to July without affecting your commercial relationships, doing so pushes income into next year’s return. Accrual-basis businesses have less flexibility here, but it is worth discussing with your accountant.
• Trust distributions: If your business operates through a discretionary trust, the trustee resolution to distribute income must be made and documented before midnight on 30 June. Missing this deadline has significant tax consequences. Do not leave it until the last day.
• Superannuation contributions: If you are a business owner who wants to make additional concessional super contributions for yourself before the cap ($30,000 for 2025–26), the payment must be received by the fund before 30 June. Allow at least a week for processing.
• Division 7A: Ensure any loans from a company to shareholders or associates are either repaid or formalised under a complying loan agreement before lodgment. Your accountant can advise on the minimum annual repayment required.

Instant asset write-off final check

• Assets must be costing less than $20,000 each, purchased, first used, or installed ready for use before 30 June 2026.
• Your business must have aggregated turnover under $10 million.
• The write-off applies on a per-asset basis there is no cap on the number of assets you can claim.
• From 1 July 2026, the $20,000 threshold is permanent but assets purchased in the new year will be claimed in next year’s return, not this one.

Business structure review

This time of year is also a good moment to take stock of whether your current structure still makes sense. The 2026–27 Federal Budget introduced a 30% minimum tax on discretionary trusts from 1 July 2028, and three-year rollover relief from 1 July 2027 for businesses that want to restructure without triggering CGT. If you operate through family trust and haven’t yet mapped out your options, now is the time to start that conversation.

BAS and GST

• Your June quarter BAS (or June monthly BAS) will be due in late July. Make sure your GST-coded transactions are accurate before lodgment.
• If your business has been making PAYG instalment variations during the year, ensure those variations are reconciled against actual income.

Record keeping

• The ATO requires business records to be kept for a minimum of five years. Ensure your digital records, receipts, and contracts from the 2025–26 year are stored securely.
• Cloud accounting software like Xero retains your data automatically but physical receipts for significant purchases should be scanned and saved.

Part 3: Payroll Checklist

Payroll has its own set of EOFY obligations, and this year the stakes are higher than usual given the Payday Super transition on 1 July.

Before 30 June

• Pay superannuation early: For super contributions to count toward this financial year, the payment must be received by the super fund before 30 June not just sent. Allow at least two weeks for clearing times, particularly if using a commercial clearing house. The Q4 super deadline under the old quarterly system is technically 28 July, but paying early means contributions are deductible in the current year.
• Process bonuses and commissions: Any bonus or commission you want included in this year’s payroll records and income statements must be processed through your payroll system before 30 June. Last-minute bonus runs on 29 June create errors.
• Review payroll accuracy for the full year: Check that every pay run from 1 July 2025 to 30 June 2026 has been processed correctly. Look for missed pays, incorrect leave accruals, and any manual adjustments that weren’t properly reconciled.
• Confirm the SG rate is set to 12%: The superannuation guarantee rate has been 12% since 1 July 2025. Check your payroll software is calculating super correctly on ordinary time earnings for every employee.
• Review leave balances: Check that annual leave, personal leave, and long service leave balances in your payroll system match your records and employee expectations. Discrepancies are easier to resolve before year end.

Single Touch Payroll (STP) finalisation

• Ensure your payroll is fully reconciled at the EOFY against the STP records with the ATO.  Any discrepancies will be picked up and may incur an ATO payroll audit.  Speak to your payroll provider if needed or ask our team for assistance.
• Submit your STP finalisation event for all employees by 14 July 2026. This confirms your employees’ year-to-date income, tax withheld, and super figures and allows them to pre-fill their individual tax returns.
• If an employee has left during the year, ensure their records are finalised correctly.
• From 1 July 2026, STP must also report Ordinary Time Earnings and total super liability. Confirm your payroll software is updated before the first July pay run.

Transition away from the SBSCH

• If your business currently uses the ATO’s Small Business Superannuation Clearing House, you must transition to an alternative before 1 July 2026 with enough time to set up the new systems before your first payroll of the 2027 financial year.
• Contact your payroll provider to assist you to integrate to your software provider (Xero, MYOB, KeyPay) most have integrated clearing house solutions that are SuperStream compliant.
• Do not leave this until July. Transitions take time to set up and test.

Update for Payday Super from 1 July 2026

• From 1 July, every pay run must include a super contribution that reaches the employee’s fund within 7 business days of the pay date.
• Review your cash flow the shift from quarterly lump-sum payments to per-payroll super will change your outgoing cash rhythm significantly.
• Update your payroll software settings and clearing house configuration before processing your first July pay run.

Annual Wage Review

• The Fair Work Commission announces the outcome of the Annual Wage Review each year in early June, with new minimum wage rates taking effect from the first full pay period on or after 1 July.
• The 2026–27 decision is expected in early June 2026. Once announced, update your payroll so it is ready for that first full July period before the first July pay run. Employees paid under modern awards must receive the updated rate from the effective date.

Review relevant award rates for each employee’s classification if you have award-covered staff.

Key Dates at a Glance:

How Carbon Can Help

EOFY is one of the busiest periods for our teams across Australia, and the earlier you start, the smoother it goes. Whether you need help with bookkeeping reconciliation, tax planning before 30 June, payroll finalisation, or getting ready for Payday Super our accountants, bookkeepers, and payroll specialists are here to work through it with you.

Disclaimer: This checklist is general in nature and does not constitute personal tax or financial advice. Tax laws change frequently and individual circumstances vary. Please speak with your Carbon accountant or bookkeeper for advice specific to your business.

Main Highlights:

• A new $250 Working Australians Tax Offset (WATO) for over 13 million workers for the 27-28 financial year. 
• A $1,000 instant tax deduction for work-related expenses from the 27-28 financial year, no receipts required. 
• The 16% marginal tax rate drops to 15% on 1 July 2026, then 14% on 1 July 2027. 
• Fuel excise more than halved (52.6c to 20.6c per litre) and heavy vehicle road user charge cut to zero for three months from 1 April 2026. 
• $20,000 instant asset write-off made permanent from 1 July 2026 for small businesses (turnover under $10 million). 
• Loss carry back permanently reintroduced for companies with turnover up to $1 billion. 
• Loss refundability introduced for new start-ups (from 2028–29). 
• Negative gearing limited to new builds, and the 50% CGT discount replaced with cost base indexation plus a 30% minimum tax on capital gains, both from 1 July 2027. 
• A 30% minimum tax on discretionary trusts from 1 July 2028. 
• $10.2 billion per year reduction in regulatory burden, including the abolition of 497 nuisance tariffs. 

2026–27 Federal Budget: For Individuals

This section covers the measures aimed at individuals and families, income tax, fuel relief, healthcare and household support. 

Income Tax Cuts (Five Rounds, Combined Benefit Up To $2,816) 

The Government is cutting taxes five times when combined with previously legislated changes. The new and confirmed measures include: 

• Working Australians Tax Offset (WATO): A new, permanent $250 tax offset from the 2027–28 income year, available to over 13 million workers, including around 1.5 million sole traders. 97% of eligible workers are expected to receive the full $250. 
• $1,000 Instant Tax Deduction: From 2027–28 financial year, employees can claim a flat $1,000 deduction for workrelated expenses without keeping receipts. Around 6.2 million workers (42% of taxpayers) will benefit, with
  an average tax saving of $205. You can still itemise instead if your actual expenses are higher.
• Marginal rate cuts: The 16% rate on income between $18,201 and $45,000 drops to 15% from 1 July 2026, then to 14% from 1 July 2027, worth up to $268 in 2026–27 and $536 every year from the 2027–28 financial year.

Currently legislated marginal tax rates (the bracket and rate path from the 2025–26 Budget — unchanged in this Budget):

What’s NEW in this Budget, combined annual tax benefit by income level (FY28 vs FY24):

Figures are derived from the Budget Overview worked examples (Dean the mechanic at $70,000 and the average worker at $81,245). The instant tax deduction benefit depends on your marginal rate; itemising actual deductions may produce a better result if your work-related expenses exceed $1,000.

Combined with the WATO and the $1,000 instant tax deduction, an Australian worker on average earnings ($81,245) could be up to $2,816 better off in 2027–28 compared to 2023–24 settings. 

Fuel Excise Relief

To soften the impact of the global oil shock: 

• Fuel excise on petrol and diesel has been more than halved from 52.6 to 20.6 cents per litre  for three months from 1 April 2026. 
• The heavy vehicle road user charge has been cut to zero for the same three-month period. 
• A typical driver filling a 40-litre tank weekly is expected to save around $14 per tank and roughly $170 over the three months. 
• The ACCC has been directed to publish weekly retail fuel price reports, and maximum penalties for major breaches of competition and consumer law have been doubled to $100 million. 

Cost-of-Living and Family Support

• Government-funded Paid Parental Leave increases to a full six months from July 2026. 
• The 3 Day Guarantee for the Child Care Subsidy makes 87,500+ additional families eligible for at least 72 hours of subsidised care. 
• $182.6 million to make the Child Support Scheme safer and more effective, including measures targeting financial abuse and non-compliance. 
• $59.4 million to help Community Housing Providers support over 4,000 young people aged 16–24 at risk of or experiencing homelessness. 
• The Government has backed wage growth at every recent Annual Wage Review — the National Minimum Wage has increased by over $9,120 per year across the last four reviews. 

2026–27 Federal Budget: Housing & Rental Support

Housing affordability remains a major focus, and this Budget introduces some of the most significant tax changes to investment housing in decades. 

Negative Gearing — Limited to New Builds from 1 July 2027

• From 1 July 2027, negative gearing for residential property investments will be limited to new builds. 
• Transitional rules for established residential properties: Properties purchased between the announcement (12 May 2026) and 30th June 2027 may be negatively geared but not from 1 July 2027. 
• Properties held at announcement date (12 May 2026) will be exempt from the changes until disposed of. 
• Properties purchased from 1 July 2027 will not be able to be negatively geared for established properties. 
• Properties purchased after 1 July 2027 will be treated wholly under the new arrangements except for new properties.  
• Important to note: Commercial property, shares and other asset classes are unaffected and can continue to be negatively geared. 

Capital Gains Tax — Cost Base Indexation + 30% Minimum

From 1 July 2027, the 50% CGT discount will be replaced for individuals, trusts and partnerships with: 

• Cost base indexation (similar to the pre-1999 regime, using CPI) meaning tax is only paid on the real gain above inflation. 
• A 30% minimum tax rate on real capital gains. 
• Buyers of new builds can choose between the old 50% CGT discount or the new indexation arrangements. 
• The main residence exemption is preserved and unchanged. 
• The four small business CGT concessions are unchanged. 
• The 60% CGT discount for qualifying affordable housing is fully retained. 

Important: The transitional rules require TWO separate calculations for any asset owned before 1 July 2027 and sold after that date. The taxable gain is the sum of: 

• Gain accrued BEFORE 1 July 2027 — calculated using the asset’s original cost base and its market value at 1 July 2027. The existing 50% CGT discount continues to apply to this portion. 
• Gain accrued FROM 1 July 2027 — calculated using the market value at 1 July 2027 as the new cost base, and the eventual sale price. CPI indexation and the 30% minimum tax apply to this portion. 

Taxpayers will need to determine the asset’s value at 1 July 2027 when they realise the asset, either by formal valuation (or quoted price for listed shares), or via an ATO apportionment formula based on the asset’s growth rate over its holding period. The ATO will publish tools to support this. 

Pre-CGT assets (acquired before 20 September 1985)  important change. 

Pre-CGT assets have historically been fully exempt from CGT. Under the new rules: 

• Gains accrued BEFORE 1 July 2027 on pre-1985 assets remain exempt (consistent with the original regime). 

• Gains accrued FROM 1 July 2027 on pre-1985 assets may be taxable under the new indexation and 30% minimum tax arrangements. 

In practical terms, an asset bought before 20 September 1985 and sold after 1 July 2027 will move from fully exempt to partially taxable. If you hold legacy assets in this category, we’d recommend talking to your adviser about whether sale timing or any small business CGT concession opportunities apply before 1 July 2027. 

Treasury estimates these reforms will support around 75,000 additional owner-occupiers over the next decade. 

Worked example (drawn from the Budget tax explainer): 

Jane buys an asset on 1 July 2022 for $800,000 and sells on 1 July 2032 for $1,600,000 (a 7.2% annual return). Using ATO tools, she determines the asset was worth $1,131,371 on 1 July 2027. Her taxable capital gain is the sum of: 

• Pre-commencement gain: $331,371 gross, halved by the 50% CGT discount = $165,685 taxable. 
• Post-commencement gain: $468,629 gross, less cost base indexation = $319,958 taxable. 
• Total taxable capital gain: $485,643 (vs $400,000 if the old 50% discount applied to the whole gain). At a 47% marginal rate, that’s $228,252 in CGT (vs $188,000 under the old rules) — about $40,000 more. 

2026–27 Federal Budget: For Small Businesses & SMEs

Permanent $20,000 Instant Asset Write-Off 

After years of one-year extensions, the $20,000 instant asset write-off becomes permanent from 1 July 2026 for small businesses with aggregated turnover under $10 million. Eligible assets costing less than $20,000 each can be immediately deducted in the year they’re first used or installed ready for use. 

• Estimated to save small businesses around $32 million per year in compliance costs and improve cash flow by around $890 million over five years. 
• Removes the annual uncertainty around whether the threshold will be extended meaning you can plan capital purchases with confidence. 

Loss Carry Back — Permanently Reintroduced 

From 2026–27, companies with turnover up to $1 billion that make a tax loss in the current year can carry that loss back to claim a refund against tax paid in the prior two income years. 

• This will benefit up to 85,000 companies, most of them small businesses. 
• Particularly valuable for SMEs investing to grow, those impacted by fuel and supply chain disruption, or those navigating temporary downturns. 

Loss Refundability for Start-ups 

From 2028–29, small start-ups in their first two years of operation will be able to receive a refund for tax losses, capped at the value of FBT and PAYG withholding tax paid on employee wages. Around 25,000 young companies a year are expected to benefit. 

Venture Capital & R&D Incentives 

To better support innovative, high-growth businesses: 

• Venture capital incentives expanded from 1 July 2027. The VCLP cap on eligible investee business assets rises from $250M to $480M; the ESVCLP cap rises from $50M to $80M; the ESVCLP tax-exempt cap rises from $250M to $420M; and the ESVCLP maximum fund size rises from $200M to $270M. 
• R&D Tax Incentive reform — the regime is being meaningfully overhauled. From 1 July 2028: 
• 4.5 percentage point increase to R&D offset rates across each category — meaningfully positive news for Australian innovators. 
• Premium offset rates rise from 8.5% to 13% (low intensity) and from 18.5% to 23% (high intensity). 
• Supporting activity R&D expenditure will be excluded from the regime — only core R&D activities will qualify going forward. 
• Turnover threshold for the refundable offset increases to $50 million. 
• Refundable offset eligibility now limited to companies less than 10 years old. 
• Minimum R&D spend increased from $20,000 to $50,000 (below this, R&D must be done with a Research Service Provider or Cooperative Research Centre). 
• Maximum R&D spend threshold increased to $200 million. 
• Intensity threshold reduced to 1.5%. 
• The Government estimates these changes will unlock around $400 million more in R&D by young firms each year. 

Cash Flow, Compliance & Tax Simplification 

• From 1 July 2027, small businesses will be able to opt in to monthly PAYG instalment reporting and payment. 
• Expanded access to the ATO’s dynamic PAYG instalments pilot, using business software to calculate instalments more accurately in real time. 
• The ATO will remove interest charges where businesses accidentally get an instalment variation wrong using ATO-approved calculators. 
• A White Tape Review (led by ASBFEO) and a Board of Taxation Red Tape Reduction Review are underway. 
• Sole traders are eligible for the $250 WATO and the $1,000 instant tax deduction alongside the other personal income tax cuts. 

Fuel and Supply Chain Relief 

For SMEs hit hardest by the global oil shock: 

• $1 billion in interest-free loans through the National Reconstruction Fund’s Economic Resilience Program for affected manufacturing and logistics businesses. 
• The ATO is streamlining temporary relief until 30 June 2026 — more generous payment plans, remission of interest and penalties, support for varying PAYG instalments and a dedicated channel for businesses to access help. 
• Some compliance and debt collection actions will be paused for the worst-affected industries. 
• $8.2 million in cost recovery relief for agricultural exporters. 

Trade, Tariffs & Regulatory Reform 

• 497 more nuisance tariffs abolished from 1 July 2026, bringing the total abolished to around 1,000 and saving businesses ~$157 million a year in compliance costs. 
• Free access to all standards referenced in Australian legislation — saving small businesses and tradies up to $1,600 a year. 
• The Australian Trusted Trader program is being expanded with $7.6 million to make exporting faster and easier. 
• The Australia–EU Free Trade Agreement is being implemented to lower trade barriers. 
• The ‘tell-us-once’ approach across government and $654.3 million to expand Digital ID will reduce duplicated reporting. 

For Businesses to Keep in Mind

30% Minimum Tax on Discretionary Trusts (From 1 July 2028) 

This is one of the most significant structural changes for SMEs that operate through a trust. From 1 July 2028, the trustee of a discretionary trust will pay a 30% minimum tax on the trust’s taxable income. 

• Beneficiaries (other than corporate beneficiaries) will receive non-refundable credits for the tax paid by the trustee. 
• Corporate beneficiaries will not receive credits (closing the ‘bucket company’ pathway). 
• Around half of all discretionary trusts are not expected to be affected in any given year; if a trust is already distributing to non-corporate beneficiaries on the 30% rate or higher, there will be no additional tax. 
• The Government estimates more than 90% of small businesses won’t be affected in any given year. 
• Exclusions include fixed and widely held trusts, complying super funds, special disability trusts, deceased estates, charitable trusts, primary production income (e.g. agriculture), certain income relating to vulnerable minors and amounts subject to non-resident withholding tax. 
• Three-year rollover relief from 1 July 2027 will be available to support small businesses that wish to restructure (e.g. into a company or fixed trust) without triggering income tax or CGT consequences. 
• The ASBFEO will be available from 1 January 2027 to help small businesses understand their options. 

For many family businesses currently distributing significant profits to adult beneficiaries on lower marginal rates, this is a fundamental change. If you operate through a discretionary trust, now is the time to start mapping out your structure options — there is time before the 2028 commencement, but restructuring decisions are not trivial. 

What The Budget Didn’t Address 

While the Budget is wide-ranging, several areas remain unresolved: 

• No clarity on the Bendel case and its broader implications for Division 7A. 
• No further reform of payroll tax beyond a commitment to work with the states on administration, harmonisation remains elusive. 
• No reduction to the 30% non-arm’s length income (NALI) penalty rate for SMSFs. 
• No new specific measures for franchisees beyond existing protections. 
• No deferral or reconsideration of the upcoming Division 296 super tax on balances above $3 million. 
• Limited new support for retail and hospitality outside the general business measures, despite continued cost pressures in those sectors. 

What Does The Budget Mean For Me? 

Whether you’re a small business owner, family with a discretionary trust, sole trader, employee, first-home buyer or property investor, this Budget will reshape some part of your financial picture between now and 2028–29. 

A few priority planning conversations to have soon: 

• If you run a small business, review your capital expenditure plans against the permanent $20,000 instant asset write-off, and revisit how loss carry back could support investment decisions. 
• If you operate through a discretionary trust, start scoping the impact of the 30% minimum tax and whether restructuring (using the three-year rollover relief) makes sense. 
• If you’re a property investor, understand the grandfathering rules — properties held before 7:30pm on 12 May 2026 are protected, but post-announcement decisions need careful thought. 
• If you’re a first-home buyer, the combination of CGT and negative gearing reform, the Help to Buy scheme, and the new Local Infrastructure Fund are designed to shift the balance in your favour. 
• If you’re an employee or sole trader, the WATO and the $1,000 instant tax deduction are automatic — but worth modelling against your usual deductions to see which approach delivers the better outcome each year. 

Want to know how the 2026–27 Budget affects your specific industry or business? Our accountants, bookkeepers, including financial advisers can help you assess how the changes may affect you and work through some possible strategies on how to accumalte wealth. 

Get in touch with Carbon to discuss your next steps. 

What The Budget Didn’t Address

While the Budget is wide-ranging, several areas remain unresolved:

• No clarity on the Bendel case and its broader implications for Division 7A.
• No further reform of payroll tax beyond a commitment to work with the states on administration — harmonisation remains elusive.
• No reduction to the 30% non-arm’s length income (NALI) penalty rate for SMSFs.
• No new specific measures for franchisees beyond existing protections.
• No deferral or reconsideration of the upcoming Division 296 super tax on balances above $3 million.
• Limited new support for retail and hospitality outside the general business measures, despite continued cost pressures in those sectors.

What Does The Budget Mean For Me?

Whether you’re a small business owner, family with a discretionary trust, sole trader, employee, first-home buyer or property investor, this Budget will reshape some part of your financial picture between now and 2028–29.

A few priority planning conversations to have soon:

• If you run a small business, review your capital expenditure plans against the permanent $20,000 instant asset write-off, and revisit how loss carry back could support investment decisions.
• If you operate through a discretionary trust, start scoping the impact of the 30% minimum tax and whether restructuring (using the three-year rollover relief) makes sense.
• If you’re a property investor, understand the grandfathering rules — properties held before 7:30pm on 12 May 2026 are protected, but post-announcement decisions need careful thought.
• If you’re a first-home buyer, the combination of CGT and negative gearing reform, the Help to Buy scheme, and the new Local Infrastructure Fund are designed to shift the balance in your favour.
• If you’re an employee or sole trader, the WATO and the $1,000 instant tax deduction are automatic — but worth modelling against your usual deductions to see which approach delivers the better outcome each year.

Want to know how the 2026–27 Budget affects your specific industry or business? Our accountants, bookkeepers, including financial advisers can help you assess how the changes may affect you and work through some possible strategies on how to accumalte wealth.

Get in touch with Carbon to discuss your next steps.

Author’s Note

The longer-tail reforms particularly the 30% minimum tax on discretionary trusts, the negative gearing and CGT changes, and the R&D Tax Incentive overhaul (with offset rates rising 4.5 percentage points and the exclusion of supporting activity expenditure) deserve careful thought. None of them take effect immediately, but each of them changes the calculus on structuring, investing, and long-term planning. We’d rather our clients have the conversation now, with time to plan, than be caught short in 2027 or 2028.

There is also a range of changes that may affect individuals and businesses with trusts or capital gains exposure, meaning forward‑looking tax planning will be increasingly important. For many of our small business clients, these measures are expected to deliver tangible cash‑flow benefits from 1 July 2026, and we encourage discussing appropriate strategies with your accountant to ensure the right structures and planning are in place.

The Budget also leaves some open questions. Division 296, the Bendel case, NALI and payroll tax harmonisation are all still unresolved. Implementation detail on the trust minimum tax, the CGT indexation arrangements, and the new venture capital settings will be released through consultation in the coming months and the practical impact will depend heavily on how the legislation lands.

As always, our role at Carbon is to translate the policy noise into practical, balanced advice. If you have questions, get in touch.

SOURCES: 2026-27 Federal Budget

DISCLAIMER: Information in this wrap-up blog was sourced directly from the Government’s Federal Budget website here.

Past Budgets:

2025–26 Federal Budget Summary Australia – Carbon Group
2024-25 Federal Budget: What It Means for Your Business and Personal Finances
2023 Federal Budget Wrap-Up
2022-23 October Federal Budget Wrap-Up
Federal Budget 2022 wrap up
How The Federal Budget Is Affecting Women’s Superannuation?
Federal Budget 2021 Wrap Up