14 October 2025

While certainly not a joy ride, the progression of the proposed Division 296 tax on superannuation balances above $3 million has taken a few sharp turns – now featuring a re-engineered structure, new thresholds and a delayed start.

What’s changed

Following industry feedback, the federal Treasurer has responded with several key changes:

1. A two-tier threshold approach;
2. Indexation of the thresholds;
3. Earnings to be calculated on a realised basis (not unrealised); and
4. Delayed commencement of the provisions for 12 months to 1 July 2026.

There will be a consultation period which will invite stakeholders to weigh in on:

1. The calculation of realised earnings;
2. The extension of exemptions for some judges – to improve consistency across jurisdictions; and
3. Any additional changes to ensure that treatment is fair and equitable for defined benefit members.

What’s not changed

Despite the above announcement, there are elements of the provisions that have not changed:

1. The ultimate objective of the Division 296 proposal remains the same – “maintain the concessional tax treatment of superannuation for all members but make these concessions more sustainable”;
2. The tax will still be levied on the individual, who can choose to pay the tax from their superannuation or personal sources;
3. The  member’s Total Superannuation Balance (TSB) remains the measure for determining the additional tax liability; and
4. The ability to carry forward any losses and offset against future year’s earnings to reduce the tax.

Changes in detail

Two-tier threshold

Where previously the proposal was focussed on individuals with a TSB of more than $3 million, the adjustments now alter this focus to two tiers. The provisions will now include:

Noting that the above 15% and 25% are in addition to the 15% income tax that superannuation funds already pay on taxable income (although this may be reduced by long-term capital gains discounts or as low as nil where the Fund is wholly in pension phase).  

Indexation of thresholds

The previously proposed legislation recorded a fixed $3 million threshold, with no option for indexation. Refreshingly,  thresholds will now be indexed using the Consumer Price Index (CPI). These changes will align the indexation approach with other measures such as the indexation of the Transfer Balance Cap (TBC). 

However, similar to the indexation of TBC, the indexation to the thresholds will only occur where the CPI increases by a certain amount, and the application of that amount results in the increase of the threshold reaching the stated increment. The indexation rules for the thresholds will be:

Importantly, this indexation ensures that the number of individuals captured by the new tax remains consistent with the original policy intent, rather than growing disproportionately over time.

Calculation of earnings

Due to the inclusion of unrealised capital gains, the previous calculation of earnings was the most contentious part of the original proposed legislation. The most significant feedback with regards to this was that the taxing of unrealised capital gains was unconstitutional, and that any passing of the law would lead to a constitutional challenge.

The original proposal suggested that the Earnings would be calculated as:

The adjustments indicate that while a member’s Total Superannuation Balance (TSB) will remain the key reporting measure, the ATO will obtain realised earnings information directly from the member’s superannuation fund where the TSB exceeds the relevant thresholds.

According to Treasury, these realised earnings will generally reflect the fund’s taxable income, adjusted for member contributions and exempt current pension income (with detailed rules still to be confirmed).

For SMSFs, this information is expected to be reported through the SMSF Annual Return, with each member attributed a fair and reasonable proportion of the fund’s realised earnings.

While this is a positive outcome where only realised income and gains are taxed, it may create practical challenges for large APRA-regulated funds, which will need systems capable of attributing realised gains, losses, and income to individual members. The intention, however, is for the calculation to align with existing tax concepts and use current reporting mechanisms wherever possible to minimise additional compliance burdens.

Practical application

The methodology for calculating an individual’s liability has not been finalised or confirmed. However, Treasury have provided five broad steps detailing how to arrive at the liability.

1. The ATO will determine whether an individual is “in scope” (has a TSB of $3 million or more) and will notify the applicable superannuation funds;
2. The applicable funds will calculate the realised earnings attributable to the individual and report the amount back to the ATO (as above, this is expected to be reported on the SMSF annual return, so this step would occur in conjunction with step 1, once the Fund’s relevant return has been lodged);
3. The ATO will calculate the proportion of TSB above the $3 million threshold, utilising the original proportion calculations:

4. ATO will calculate the proportion of the TSB exceeding the $10 million threshold

5. ATO will calculate the tax liability for the individual’s TSB interests:

Examples

The below examples are based on a SMSF having total earnings of 10% (including unrealised capital gains), on their TSB at 30 June 2026 (which are $8 million and $15 million respectively), where the realised earnings is 10% of the total earnings.  There are two examples – one within the upper threshold, and one above the upper threshold. 

Note, we have not considered contributions in the realised earnings figure, as there is currently no drafted formula for this figure.  We note that taxable income of a Fund would include assessable contributions, so the below examples assume no such contributions for any adjustment required to be made. 

$8 million TSB at 30 June 2026

$15 million TSB at 30 June 2026

Challenges

While the latest changes are broadly welcomed (short of the tax being abolished altogether), several practical and policy issues remain to be resolved through consultation and the legislative process:

• Reporting complexity
  SMSFs will be able to calculate and report realised earnings through their annual return with relatively minor adjustments, even though member level reporting isn’t currently required. However, large industry and retail (APRA-regulated) funds may face significant challenges in adapting systems to attribute realised gains, losses and income to individual members.
• Higher-tier tax impact
  The introduction of the additional 10% tax for balances above $10 million is unlikely to be well received by those with substantial superannuation holdings.
• Legislative consultation required
  These updates represent a major redesign of the original Division 296 proposal. As the changes were announced without prior stakeholder consultation, the next phase will involve detailed consultation and Parliamentary debate before any legislation is finalised.

Key takeaways

1. Commencement has been delayed until 1 July 2026.  This means the first assessments for the 2026/2027 year will be issued in the 2027/2028 financial year, so effectively two years from now.
2. Changes have made the earnings calculation fairer, by ensuring only realised earnings will be taxed (not unrealised capital gains).
3. There will be a two-tiered threshold system, being:
   1. $3 million – where up to an additional 15% tax will be payable on earnings
   2. $10 million – where up to an additional 10% tax will be payable on earnings (in addition to the amount payable as a result of the $3 million threshold)
4. The two thresholds will be indexed by CPI in different increments:
   1. $3 million threshold – at $150,000 increments
   2. $10 million threshold – at $500,000 increments
5. Superannuation will remain a tax efficient structure for the accumulation of wealth for retirement and over the longer term, despite these changes.  It will be important to seek specialist advice prior to making any investment or withdrawal decisions to ensure that all qualitative and quantitative elements are considered. 

Next Steps

For now, keep your hands inside the ride and hold on tight. We suggest not taking any impulsive actions and to wait for the new legislation to be put forward. We will keep you abreast of when the updated draft legislation is released, at which point it may be appropriate to review your own situation to understand how this will affect you.

For more information, please refer to our previous newsletters.

• Newsletter dated 10 September 2025 
• Newsletter dated 05 May 2025 
• Newsletter dated 04 April 2025 
• Newsletter dated 10 October 2024 

If you have any questions about this new potential tax and how it might impact you, or superannuation more widely, please reach out to our superannuation team.

Authors:
Jemma Sanderson, Director
Lindzee-Kate Tagliaferri, Senior Manager

This newsletter is current as of 14 October 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

Cooper Partners Financial Services Pty Ltd AFSL 000 327 033

The information and opinions in this presentation were prepared by Cooper Partners Financial Services (“CPFS”) for general information purposes only. Case studies and examples are included for illustrative purposes only.

In preparing this newsletter CPFS has not taken into account the investment objectives, financial situation and particular needs of any particular investor. The information contained herein does not constitute advice nor the promotion of any particular course of action or strategy and you should not rely on any material in this presentation to make (or refrain from making) any decision or take (or refrain from making) any action. The financial instruments, services or strategies discussed in this publication may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
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10 September 2025

The fate of the Division 296 tax (Taxation Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023), which aims to tax earnings on superannuation balances of members greater than $3 million up to an additional 15% remains uncertain. The federal Government did not introduce the Bill, nor a modified version, during the recent sitting weeks of Parliament. The next scheduled sitting dates are 8 to 10 October 2025 for the House of Representatives and 27 to 30 October 2025 for the Senate. We will be watching closely to see if any progress is made at that time.

Growing negative media coverage and signs of internal Labor dissent are placing pressure on the government to reconsider the tax. Concerns have mounted that the measure risks political backlash and could impact Australia’s already fragile economy.

The Key Sources of Dissent

Feedback and opposition appear to be developing around several key issues:

• The unprecedented taxing of unrealised capital gains.
• The absence of indexation of the $3 million threshold.
• The timing of the first payment date in 2027, which coincides with an election campaign.

Beyond the politics, industry voices highlight deeper risks:

• A chilling effect on innovation, productivity, and aspiration.
• Discouragement of SMSF-led venture capital and start-up funding.
• The practical and technical challenges of effectively “backdating” this tax, as the first valuation date for superannuation balances is 1 July 2025 under the current proposal and previously introduced draft legislation.

New Developments in the Debate

Adding fuel to the conversation, Liberal Victorian Senator Jane Hume introduced a Private Member’s Bill on 4 September 2025. The proposal allows splitting of superannuation balances between spouses, targeting the gender super gap. Framed as a matter of fairness, equity, and recognition of unpaid work and broken career patterns – particularly affecting women – it has received attention, with consideration that it may thwart some of the intentions of the Division 296 tax where it was to pass.  Accordingly, how this proposal would co-exist with a Division 296 framework remains contentious.

Next Steps

For now, no action is required. Please refrain from making any impulsive actions, particularly withdrawing of benefits from superannuation (where you may be eligible), or making substantial changes to your investment strategy solely in response to this legislation.

• The wisest course is patience. We must await reintroduction of the legislation and see whether amendments address the clear inequities raised by multiple industry bodies and commentators.
• We continue to recommend accurate market valuations of unlisted assets (such as property and unlisted shares and trusts) held within superannuation funds at 30 June 2025, as this remains the most likely start date if introduced.

We remain on top of developments and will keep you updated.

Author:
Jemma Sanderson, Director

This newsletter is current as of 10 September 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

Cooper Partners Financial Services Pty Ltd AFSL 000 327 033

The information and opinions in this presentation were prepared by Cooper Partners Financial Services (“CPFS”) for general information purposes only. Case studies and examples are included for illustrative purposes only.

In preparing this newsletter CPFS has not taken into account the investment objectives, financial situation and particular needs of any particular investor. The information contained herein does not constitute advice nor the promotion of any particular course of action or strategy and you should not rely on any material in this presentation to make (or refrain from making) any decision or take (or refrain from making) any action. The financial instruments, services or strategies discussed in this publication may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
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For further information please refer to our privacy policy 

15 August 2025

From 1 July 2025, new corporate climate reporting laws have come into effect, which have been described as ‘the biggest change to corporate reporting in a generation’ by ASIC’s Chair.

World-leading changes

The world-leading legislative amendments to the Corporations Act 2001 (the Act) requires certain organisations to make detailed disclosures about climate-related risks and opportunities. This is to be carried out through a phased approach, beginning with ‘Group 1’ being the largest emitters and corporations who are equivalent in scale to the ASX 200, from the first reporting period that commenced from 1 January 2025.

Subsequently, the scope of the requirements will extend to a broader range of smaller organisations, ‘Group 2’ and Group 3’ from the first reporting period commencing on or after 1 July 2026 and 1 July 2027, respectively.

These changes require qualifying organisations to prepare detailed reporting on their climate-related risks and opportunities in a mandated ‘Sustainability Report,’ in accordance with the AASB S2.

AASB S2 is the mandatory standard for climate-related disclosures.

Who do the changes apply to?

Exempted Entities

Entities that are exempt from preparing sustainability reports include:

• Small to medium sized businesses; and
• Charities registered with the Australian Charities and Not-for-profits Commission and public authorities.

Small to medium sized businesses experiencing strong growth should be aware of whether they are approaching the Group 3 thresholds and be ready to seek the appropriate advice on their obligations.

What is required?

Qualifying Entities

Qualifying entities will be required to lodge their annual Sustainability Report with ASIC alongside their Annual Report. The Sustainability Report will be required to contain the Entity’s climate statements for the year as well as supporting notes and the directors’ declaration about the statements and notes.

The climate statements are required to address:

• Material climate related financial risks or opportunities faced by the entity;
• Climate related metrics and targets required to be disclosed under AASB S2, including the entity’s scope 1, 2 and 3 greenhouse gas emissions;
• Information about the governance of, the strategy of, or any risk management by the entity in relation to, the risks, opportunities, metrics and targets referred to above; and
• Climate-related scenario analysis assessing the Entity’s climate resilience under at least two possible future states. The two current mandated scenarios are:
  • increase in global average temperature of 1.5°C above pre-industrial levels, and
  • increase in global average temperature well exceeding 2°C above pre-industrial levels.

Consolidated Groups

Consolidated groups enjoy streamlined reporting requirements. Under the Act, where a parent entity is required to prepare consolidated financial statements it may elect to prepare a sustainability report for the consolidated group.

Directors’ Obligations and Entity Liability

Directors are obliged to oversee the preparation of the Annual Report in compliance with the Act. They must ensure that the entity’s financial statements disclose any information that will materially impact the financial position, performance and prospects of the entity, including climate-change and sustainability-related information.

Directors must make a declaration that that the Sustainability Report complies with the Climate Reporting legislation, including the AASB S2. As with their other obligations, directors must exercise due care and diligence in overseeing the reporting and assessing the materiality of climate related risks and opportunities to their organisation. Part of this may involve undertaking assessments and gap analysis on the company’s current climate risks  and what actions need to be taken to achieve compliance.

The existing liability framework under the Act will continue to apply to entity disclosures, including the director duties and misleading and deceptive conduct provisions.

However, under a modified liability regime, entities will be provided with relief for a fixed period between 1 July 2025 and 30 June 2028 for disclosures relating to specific types of emissions and certain climate related forward-looking statements. Only ASIC will be able to bring action relating to breaches of relevant provisions in relation to these disclosures and the regulator’s remedies will be limited to injunctions and declarations.

A such, reporting entities will have immunity from civil claims brought by private litigants regarding disclosures made in sustainability reports and relevant auditors’ reports as they relate to sustainability. This is designed to incentivise full disclosure from entities.

Next Steps

The team at Cooper Partners have extensive experience in advising and assisting corporate entities and their groups attend to their statutory requirements, beyond merely tax compliance. For any questions or tailored advice, contact the Cooper Partners engagement team to see how this decision might affect you.

If you would like further information about the contents of this newsletter, please contact your Cooper Partners engagement team on 08 6311 6900.

Author:
Andrew Tuckey, Principal

This newsletter is current as of  15 August 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy 

13 June 2025

Today, Friday 13 June, the Australian Taxation Office (ATO) issued a statement announcing that the High Court has granted the ATO special leave to appeal the Full Federal Court (FFC) decision in the Bendel case. The High Court’s decision to grant the ATO special leave likely stems from the fact the case holds significant implications for such a large segment of taxpayers, and the need for definitive legal clarity on the treatment of UPEs under the Division 7A law.

As a reminder, our previous newsletters on the Bendel case discussed the court decisions in detail:

• Newsletter dated 13 October 2023 on the Administrative Appeal Tribunal (AAT) decision.
• Newsletter dated 21 March 2025 on the FFC decision.

In today’s ATO statement, deputy commissioner Louise Clarke acknowledged the broad impact of the Bendel case on taxpayers:

“The Bendel case is the first time that the ATO’s longstanding view has been considered by the Courts. In February, the Full Federal Court reached a decision that’s contrary to the ATO’s published position. We’re now appealing this decision in the High Court because the decision is of wide interest and will affect many private company taxpayers”.

Consistent with the ATO’s Interim Decision Impact Statement published in March subsequent to the FFC decision, the new ATO statement indicated that:

• Until the High Court rules on Bendel, the ATO will continue to administer their views on UPEs and Division 7A as expressed in Taxation Determination TD 2022/11 Income tax: Division 7A: when will an unpaid present entitlement or amount held on sub-trust become the provision of ‘financial accommodation’? No blanket exercise of discretion will be provided by the Commissioner for taxpayers who rely on the FFC decision that UPEs are not Division 7A loans.
• Regardless of the High Court decision, section 100A has the potential to apply to corporate beneficiary UPEs particularly where the UPEs are not put on complying Division 7A loan terms. The ATO’s views on this matter are detailed in Practical Compliance Guideline PCG 2022/2 Section 100A reimbursement agreements – ATO compliance approach.

So, while we await the outcome of the appeal process, which the ATO previously indicated could take many months, the Division 7A landscape remains clouded in uncertainty.

In line with the discussions our impacted clients have had to date with their Cooper Partners engagement teams, the ATO statement ended as follows:

“If a taxpayer has been following the ATO guidance and if they continue to do so, then they will have certainty regardless of the outcome of the High Court proceedings. That is, they will not be facing the prospects of a deemed dividend or potential application of other integrity provisions. Of course, it’s up to individual taxpayers to decide their approach post the Full Court’s decision, and pending the outcome of the High Court appeal. However, any decision needs to be made with knowledge of the relevant risks and their individual circumstances. I strongly encourage affected taxpayers to seek advice appropriate to their particular circumstances.”

Stay tuned.

This newsletter is current as of  13 June 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy 

05 May 2025

With the federal Election being a resounding win for the Australian Labour Party, including their ability to pass legislation through the Senate with their alliance with the Greens, this legislation is likely to be back on the table. 

Until Parliament officially sits, and this legislation is then read again, we wait to see if any changes from the original drafts are made, including the effective start date.  The original start date was 1 July 2025, which is mere months away, and with no systems up and running for any funds or the ATO, then this may be pushed out to 1 July 2026. 

Once the legislation is passed by both Houses of Parliament and the content of it is then known, we will be in touch for any action items prior to 30 June 2025 (or beyond). 

Please refer to our previous newsletter here for information regarding the content of the draft legislation as passed through the House in October 2024 (although will now need to be reintroduced due to the Election).

If you have any questions, please feel free to contact your superannuation team.

This newsletter is current as of 05 May 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

Cooper Partners Financial Services Pty Ltd AFSL 000 327 033

The information and opinions in this presentation were prepared by Cooper Partners Financial Services (“CPFS”) for general information purposes only. Case studies and examples are included for illustrative purposes only.

In preparing this newsletter CPFS has not taken into account the investment objectives, financial situation and particular needs of any particular investor. The information contained herein does not constitute advice nor the promotion of any particular course of action or strategy and you should not rely on any material in this presentation to make (or refrain from making) any decision or take (or refrain from making) any action. The financial instruments, services or strategies discussed in this publication may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy 

11 April 2025

The Government’s controversial plan to deny tax deductions for ATO interest charges is now law, taking effect from 1 July 2025. It has sharp implications for you personally and your business.

From 1 July 2025, you will no longer be able to claim a tax deduction for interest paid to the ATO, specifically:

• General Interest Charge (GIC) – for late payment of tax;
• Shortfall Interest Charge (SIC) – where a tax shortfall has been identified after self-assessment.

It’s a significant shift— these amounts must now be paid from after-tax income, making the cost of late or unpaid tax significantly higher—in many cases more expensive than commercial borrowing.

What’s Changing?

Up until now, the interest you have paid to the ATO could be claimed as a deduction, which helped to soften the blow.

From 1 July 2025:

• GIC and SIC will be non-deductible;
• You will be paying that interest out of after-tax dollars.

So, while the ATO is still charging interest on late or underpaid tax, the tax system will no longer share in the cost.

What Does That Mean for You?

Many businesses occasionally defer tax payments as a form of short-term working capital. It’s not uncommon, but that practice will need a rethink.

With deductibility removed, the effective cost of funding via unpaid tax will almost certainly exceed commercial borrowing rates.

• The GIC rate is currently above 11% p.a;
• Without a deduction, the effective after-tax cost can exceed 16%, depending on your tax rate.

That’s likely much higher than the cost of a loan from a bank or other commercial lender.

In other words, using the ATO as a fallback funding source is about to become a very expensive option.

ATO vs Bank: What’s the Real Cost of Paying Late?

The below demonstrates the after-tax effective cost comparing between funding methods pre and post legislative changes for a base rate corporate business taxpayer.

No Exceptions, No Carve-Outs

We know some businesses choose to delay tax payments during tight periods. If you’ve ever thought- “It’s easier than going to the bank” that may no longer hold true.

There are no exclusions in the Bill—not for inadvertent errors, not for small business, and not for those experiencing genuine cash flow pressure.

It’s a blunt instrument, and while it may drive behavioural change, it could hit smaller operators harder than intended.

This is a one-size-fits-all measure.

Overall Theme by The ATO

The Commissioner will retain the discretion to remit GIC and SIC, but this is rarely granted unless:

• The delay is due to exceptional circumstances, and
• The taxpayer has an otherwise strong compliance history.

Given how strict GIC remission already is, it’s unlikely this discretion will offer much relief under the new regime.

We are noticing a much stricter enforcement of the ATO’s penalty regime that could impact your business.

1. Director Penalty Notices (DPNs):
   • The ATO is intensifying its use of DPNs, making directors personally liable for certain company tax debts, including Pay As You Go (PAYG) withholding, Goods and Services Tax (GST), and Superannuation Guarantee Charge (SGC) obligations.
   • As a director, you could be held personally responsible for your company’s unpaid tax debts if they remain unreported and unpaid within specified timeframes.​
      
2. Increased Penalty Units:
   • The value of a penalty unit has risen from $313 to $330. This increase applies to infringements occurring on or after 7 November 2024. ​
   • Many administrative penalties imposed by the ATO are calculated based on the penalty unit value.
   • Penalty units apply broadly but are scaled based on taxpayer size and nature.
   • SGEs and larger entities face significantly higher penalties due to multipliers.
   • Penalties apply for late lodgements, record-keeping failures, and incorrect disclosures.
   • Due to ATO systems now being more automated, they detect trends in late lodgements which allows a noticeable change in ATO’s approach.
      
3. Expanded Penalty Provisions:
   • From 1 July 2026, penalties will apply to large taxpayers that mischaracterise or undervalue interest or dividend payments to avoid withholding tax. Additionally, tax scheme penalties will extend to taxpayers in a loss position.

Summary

With the new law now passed, the removal of deductions for ATO interest (GIC and SIC) has been met with strong concern across the profession and wider business community.

The change will increase the cost of doing business, disproportionately affect small businesses, and potentially shift viable debts into unrecoverable territory.

While the ATO retains discretion to remit interest, this is already applied strictly—and there’s no indication the approach will soften under the new rules.

We believe there is a compelling case for the Government to consider a one-off GIC remission amnesty prior to 1 July 2025. This would support willing taxpayers in regularising historical debts while interest remains deductible, reduce the administrative burden of recovering legacy liabilities, and help transition businesses into the new regime fairly.

Next Steps

• Settle balances while interest is still deductible.
• Review your cash flow practices and any reliance on delayed tax payments.
• Reach out to your banking relationship manager or lender to explore funding alternatives.
• If you would like us to help model the potential cost impact for you, let us know so we can assist you in your preparations ahead of time.

This new rule is part of a broader push by the Government and ATO to tighten compliance and encourage timely tax payments.

We are here to help you prepare—before 1 July 2025 arrives and beyond.

Author:
Michelle Saunders, Managing Director

This newsletter is current as of  11 April 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
Liability limited by a scheme approved under Professional Standards Legislation.
For further information please refer to our privacy policy 

04 April 2025

With the calling of the election for May 3, the  proposed Division 296 legislation (additional taxation on superannuation accounts greater than $3 million) has lapsed. As Parliament is in caretaker mode due to the election, all proposed bills and other business before the House of Representatives (HOR) and Senate expire.

What does this mean?

Although the Bill has lapsed due to the election, the Australian Labour Party (ALP) has indicated that where they are returned to Government, they will be re-introducing the Bill.  This is particularly given that in their recent federal Budget they accounted for the revenue that would be generated from this measure in their forward estimates.

In the lead up to the election announcement, the Bill had stalled in the Senate, where it was considered that the Government lacked the support for it to be passed, and was the reason that it hadn’t been read a second time.  In order to pass in the Senate, a certain number of cross-bench Members would be required to vote in favour of the Bill, whereby that support hadn’t been secured. 

One of the biggest criticisms of this proposed legislation is that unrealised capital gains are subject to taxation. Therefore, if the proposed policy remains as per the current draft Bill, the ALP will need to justify that approach through the course of their election pitch, which may or may not resonate positively with voters.  If the ALP is successful, as the Bill has lapsed, they would need to reintroduce the Bill and effectively commence the entire process again.  This involves having the Bill read and passed in the HOR again, and where that is successful, the Bill would then proceed to be read, debated and require passage in the Senate.  Where there is a minority Government, or cross-bench Members are required to vote positively, that may remain a challenge to overcome for an ALP Government.

Next Steps

For now, it remains a “Watch this Space” concept.  Depending on the outcome of the election, and in fact the progress of the election and any polling that may indicate that the policy is a barrier to a win and may therefore be entirely shelved, there is no action to take.  

Current polling is indicating that a minority Government may be the outcome, however until polling day, we will not know the result. 

Where the Bill is ultimately passed, it is also highly likely that the introduction will be deferred until 1 July 2026, as none of the requisite systems are in place for the administration of the provisions. This is particularly where any legislation is unlikely to be introduced, let alone pass until the first sitting week of the new Parliament after 3 May. 

We will keep you updated, including whether any action is required to be taken. 

If you would like some more information on these proposed (now lapsed) provisions, please refer to our previous newsletters here or feel free to contact one of our team.

This newsletter is current as of 04 April 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

Cooper Partners Financial Services Pty Ltd AFSL 000 327 033

28 March 2025

This year’s federal Budget walks a tightrope between cost-of-living relief and cautious election-year politics.

With major tax reforms notably absent, the Government has opted for modest, targeted measures over structural change — a clear signal that it’s budgeting with the ballot box in mind.

While households may welcome the immediate support, those waiting for bold tax system updates will need to keep waiting — tax reform, it seems, has been politely excused from the table… for now.

Individuals

I get a tax cut… You get a tax cut… Everyone gets a tax cut!

As mentioned in Dr Chalmers’s speech to Parliament, “the additional tax cuts are modest but will make a difference.”

The change to individual tax will occur in the first marginal tax bracket after the tax-free threshold. The tax rate will be lowered from its current rate of 16% to 15% in 2026/27 and 14% in 2027/28. The changes in tax rates are as follows:

The tax saving will be $268 for the 2026/27 income year and $536 for the 2027/28 income year, both compared to the current 2024/25 tax rates.

The changes have passed Parliament and are expected to receive royal assent prior to the May 3 election.

 🛑The Coalition has pledged to repeal these cuts if elected.

No changes were made to the low-income tax offset.

Additional cost-of-living measures

1. $150 in electricity bill credits for very household and around one million small businesses.
2. Ban on non-compete clauses for earners under $175,000.
3. 20% reduction in all HELP debts owed by Australian students and former students.
4. HELP repayment threshold lifted from $54,435 in 2024/25 to $67,000 in 2025/26.

Superannuation

The Budget itself was quite silent on any measures relating specifically to superannuation, which was expected coming into a federal election. By not announcing any specific new measures, the current Labor Government will not have to spend their campaign defending policies which are yet to see any legislative light of day.

However, where was the $3 million tax?

Conspicuously absent from the Budget papers themselves was any mention of the Government’s current Bill intending to levy a tax on superannuation accounts greater than $3 million.

Currently, this Bill is sitting in the Parliament and not likely to be legislated with the election now only weeks away. By not removing or postponing this proposed revenue item from the Budget, the Government is taking this measure into the election, signalling its intention to re-introduce the Division 296 tax if re-elected this May.

Funding for Pay Day Super

Under ‘Pay Day Super’, all employers will be required to pay superannuation at the same time as salary and wages. Treasury released for consultation an exposure draft on the proposed Pay Day Super measures on 14 March 2025.

The ATO’s Tax Integrity Program has been allocated an additional $50 million over 3 years beginning on 1 July 2026. These additional resources are in line with the proposed measure to introduce ‘Pay Day Super’ from the same date. These reforms and supporting compliance programs reflect broader policy efforts to address the non-payment and late payment of superannuation and taxes by some employers and improving transparency for employees.

Family Trusts / Private Companies / Small Business

Coming into the election cycle, the Labor Government has decided not to put major tax reform on the table for debate. This includes no mention on previously announced reforms former leaders have flagged, such as capital gains tax, negative gearing and franking credits.

Speaking of things missing from the Budget, one main item that will affect small businesses going forward is the silence on the ongoing instant asset write off.

The instant asset write off has been a staple of small business allowable deductions since 1 July 2012 and has had many different levels throughout its time including an unlimited amount under the COVID Temporary Full Expensing regime.  The law as it currently stands provides that the instant asset write off is permitted for expenditure incurred up to $20,000 on assets installed ready for use by 30 June 2025, with the threshold reverting to $1,000 at 1 July 2025.

However, there was no mention of further extending the instant asset write off this time, whether temporarily or permanently as has been lobbied by industry. Therefore, unless there is a change announced in the mid-year economic and fiscal outlook later in the year, the $20,000 instant asset write off for small businesses will end on 30 June 2025.

Continuing energy efficiency incentives

In the 2023/24 Budget, the Labor Government announced and enacted the Small Business Energy Incentive, allowing small businesses an additional 20% deduction for expenditure that supported electrification and more efficient use of energy.

Riding on those coattails, this year’s Budget announced the Energy Efficiency Grants for Small and Medium Sized Enterprises program. Grants of up to $25,000 will be available to over 2,400 businesses, funding a range of energy upgrades, such as replacing inefficient appliances and improving heating systems, with the program extended to 30 June 2026. More details on this will be announced most likely after the election.

Division 7A – ghosted again

Despite a landmark Full Federal Court decision and years of consultation, Division 7A has once again been left off the Budget agenda.

Following the Bendel decision — which concerns family trusts allocating income to corporate beneficiaries who then leave that entitlement unpaid — there had been anticipation of legislative response or clarification. This case may significantly impact how the ATO administers Division 7A and trust distributions.

Yet the Government has remained silent, choosing neither to reverse the court’s position nor codify it in legislation.

We explored the implications of the Bendel decision in detail in our previous newsletter here.

More broadly, while Division 7A reforms have appeared in Budgets dating back to 2016/17 and featured in 2018 Treasury consultation papers, this year’s Budget continues the trend of silence — with no movement on proposed changes to the treatment of loans to shareholders and associates.

General Interest Charge

Along with recently enacted legislation surrounding the instant asset write off to 30 June 2025, taxpayers who have an ATO debt will no longer be able to claim a tax deduction for the general interest charge.

This previously announced measure will deny deductions incurred after 1 July 2025.

Winemakers and beer manufacturers get relief

Producers of wine will get an additional rebate of $50,000 on Wine Equalisation Tax Producer rebate from 1 July 2026. Currently, the WET rebate sits at $350,000 pa.

To be eligible for this rebate, you must produce the wine, you are liable for WET on the sale to the wholesaler and your source product makes up at least 85% of the total volume of wine throughout the wine making process.

Brewers of beer will benefit from a 2 year pause in indexation on draught beer excise and excise equivalent customs duty. The proposed increases in August 2025, February 2026, August 2026 and February 2027 will not occur.

Multinational / Large Business / Industry

Thin capitalisation

While no further changes were announced in the Budget, the Government has flagged that additional clarification is expected around the new interest limitation rules — particularly the operation of the fixed ratio (EBITDA) test and third-party debt conditions. This will help businesses and advisers navigate the complex new regime, which took effect from 1 July 2023.

Housing and the construction industry

The Budget is using both the carrot and stick to attempt to address the housing shortage across the country. The measures announced as are follows:

Ban on Foreign Buyers

From 1 April 2025, foreign investors will be banned from purchasing existing residential dwellings for two years. The ATO will receive $5.7 million to enforce the restriction.

Help to Buy program

The shared equity Help to Buy scheme will expand, allowing eligible individuals to access lower deposits and smaller mortgages.
The Government may contribute up to 40% of a home’s purchase price. For example, a couple buying an $800,000 property with a $50,000 deposit and $510,000 loan could receive a $240,000 equity contribution from the scheme.
The Government share is repaid upon sale or when the owner is in a position to refinance.

Housing Supply & Skills Boost

The National Housing Accord continues as a cornerstone of the Government’s housing strategy. Key measures include:

• $1.5 billion for the Housing Support Program to improve planning capability and infrastructure delivery.
• $174 million to accelerate modern construction methods, with incentives for states and territories to reduce red tape.
• Ongoing funding for the Housing Australia Future Fund and Social Housing Accelerator.

To support workforce capacity, as from 1 July 2025, a new Housing Construction Apprenticeship stream will offer:

• Up to $10,000 in financial incentives for eligible apprentices.
• Up to $5,000 for employers under the Priority Hiring Incentive.

These incentives are now extended to 31 December 2025.

More information is available for you here.

Managed Investment Trusts

The extension of the cleaning building management investment trust (MIT) withholding tax concession was due to commence from 1 July 2025. This has now been delayed until after any legislation receives Royal Assent.

The Government will also amend the tax laws to clarify arrangements for MITs to ensure that legitimate investors can continue to access concessional withholding rates. The changes will apply to fund payments from 13 March 2025 and will complement the ATO’s increased focus in this area to prevent misuse – see Taxpayer Alert 2025/1.

Building a Future Made in Australia

This Budget expands the Government’s industry policy with substantial co-investment into key sectors via the Green Iron Investment Fund and related initiatives. Measures include:

• $1 billion for steelmakers to transition to low-emissions green iron production.
• $750 million for green metals.
• $250 million for low-carbon liquid fuels.

Infrastructure Boost

The Budget also confirms joint federal and state funding for the $700 million Kwinana Freeway upgrade, with the federal Government covering 50% of the project.

Australia-India Trade Accelerator

A $16 million fund will support Australian-Indian business partnerships by reducing trade barriers and enabling technical cooperation.

Residency Tax Reforms – Still No Clarity

In the 2020/21 Budget, the former Government announced proposed changes to the corporate tax residency rules, following the release by the ATO of a controversial tax ruling in 2018 that redefined their application of the central management and control tests to foreign subsidiaries, to legislate to effectively revert back to the position prior to the release of the ruling.  A transitional period on the application of the tax ruling ended on 30 June 2023, however corporate taxpayers remain left in the dark as to whether any reforms will be undertaken in this area, with no further mentions in the current Budget.

Similarly, there has been no further updates from Treasury regarding previous consultations to modernise the individual tax residency framework, or relax some of the stringent rules around SMSF trustees and temporary relocations.

In this modern era of global mobility and remote technology capabilities, reforms in these areas are a high priority to provide taxpayers whether individuals or corporates alike certainty when considering movements and establishing corporate governance protocols.

Coalition Contrast: What the Opposition Said

Peter Dutton’s Budget reply delivered a sharp contrast in approach — focussing less on tax cuts and more on energy and migration levers for cost relief:

• Fuel Excise Halved: A temporary 25c/L saving for motorists.
• National Gas Plan: Reserve up to 20% of east coast gas for domestic use to bring prices below $10/GJ.
• Migration Cuts: 25% reduction in permanent migration; 2-year ban on foreign purchases of existing dwellings.
• Public Service: Reduction of ~41,000 roles, with savings redirected to fund healthcare.
• Tax Cuts Repealed: Dutton confirmed the Coalition will repeal the newly legislated individual tax rate cuts.

Summary

The 2025/26 Budget delivers targeted relief and strategic investment — but leaves deeper reform and long-standing technical issues on the table. With an election now set for May 3, many measures remain promises, not law.

From a tax perspective, while households and select industries may welcome immediate support, unresolved areas such as Division 7A, tax residency, and small business incentives continue to build uncertainty.

As always, we’ll keep you informed as the legislative landscape evolves — and what it means for your structuring, planning, and compliance obligations.

If you have questions about how these announcements may impact you or your business, please get in touch with your Cooper Partners engagement team.

This newsletter is current as of 28 March 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

21 March 2025

The Full Federal Court (FFC) has ruled that unpaid present entitlements (UPEs) to corporate beneficiaries are not loans under Division 7A.

This landmark decision challenges the longstanding ATO view that UPEs should be treated as loans and can trigger deemed unfranked dividends for tax purposes.

However, in a move that surprises no one, the ATO has now applied for special leave to appeal the decision to the High Court.

At the same time, the ATO has issued a Decision Impact Statement (DIS), reaffirming its administrative position as outlined in Taxation Determination TD 2022/11 Income tax: Division 7A:  ‘when will an unpaid present entitlement or amount held on sub-trust become the provision of ‘financial accommodation’? —meaning it will continue treating UPEs as Division 7A loans until the appeal process is finalised.

What Arrangement is Under Debate?

Key Differences Between ATO’s View and Court Decision

How Did We Get Here?

Since 16 December 2009, the vast majority of taxpayers have adhered to the ATO’s stance that UPEs to corporate beneficiaries constitute loans to the trust.

AAT decision

This view was first challenged in September 2023 by the Administrative Appeals Tribunal (AAT) finding on the Bendel case.  A detailed summary of the facts and ruling was provided in a newsletter we published in October 2023.

Following its loss at the AAT, the ATO lodged a notice of appeal. The ATO also released an interim DIS which outlined that the ATO would continue to administer its views on UPEs to corporate beneficiaries in accordance with TD 2022/11, and ominously made specific mention of the fact that section 100A may also apply to UPEs to corporate beneficiaries.

FFC decision

In dismissing the ATO appeal to the AAT decision, the FFC found that under section 109D(3), a ‘loan’ refers to a transaction that creates an express or implied obligation to repay an amount. While a beneficiary has a present legal right to demand and receive payment of a UPE from the trustee, which creates a debtor-creditor relationship, there is no obligation to repay the UPE.

The Court reiterated that Division 7A makes specific distinction between a ‘loan’ (section 109D) and a ‘debt’ (debt forgiveness in section 109F), and that section 109D(3) cannot be read as extending to any form of debtor-creditor relationship.

Further to the AAT’s focus on the statutory context of Subdivision EA, the FFC made the comment that there must be a ‘harmonious operation to the language of the division in its entirety’.  That the government introduced Subdivision EA shows that there was no ‘mischief’ in respect of UPEs in the way that the Commissioner now perceives.

Where Does This Leave Taxpayers?

Although the FFC decision that UPEs are not loans under Division 7A was unanimous, the ATO is clearly determined to fight and will doggedly pursue through the appeal process.

In its updated DIS, the ATO reiterates that regardless of the Division 7A position, the reimbursement agreement rules in section 100A must also be considered.

• While the ATO accepts corporate beneficiary structures, it expects UPEs to be paid within two years from the year of distribution or otherwise put on a complying Division 7A loan agreement (usually 7 years, with interest).  If a UPE is not on terms at least as commercial as a Division 7A loan agreement, the arrangement would fall outside the ATO’s “green zone” under PCG 2022/2, increasing the risk of the ATO applying section 100A.
   
• For some taxpayers, a Division 7A loan agreement may be a preferable alternative to the risk of section 100A being applied by the ATO.

Trusts as investment vehicles are back in favour. The ATO’s strict administration of UPEs has made it increasingly difficult to use trusts as long-term wealth creation vehicles, given the requirement to pay out UPEs within specific timeframes—which may not always align with a trust’s investment strategy. If the FFC decision is upheld, this will remove the Division 7A imposed restrictions for payment of UPEs. This is particularly beneficial for trustees making long-term investments, such as property acquisitions or seed capital investments, where retaining funds in the trust is a key part of the strategy.

Subject to the ATO’s success in appealing the FFC decision, we expect that the ATO will engage in discussions with the Government to finally push through the long-awaited legislative amendments to Division 7A. Given the upcoming Federal election, legislative reforms will be impeded.

While media reports suggest that hundreds of thousands of taxpayers may now be entitled to refunds, this primarily applies to trusts that distributed income to a corporate beneficiary and were subsequently assessed by the ATO on a deemed Division 7A dividend following an audit or review. These trusts may have grounds to object to their assessment and seek a refund of taxes paid, provided the amendment period remains open (typically four years). However, trusts that have complied with the ATO’s practice guidelines are unlikely to be eligible for refunds. The ATO has confirmed that it will not process any refund requests until the appeal process is finalised.

Next Steps

The impact of the Bendel decision on your UPE arrangements depends on your specific facts and circumstances.

Your Cooper Partners engagement team will be reaching out to you imminently to discuss your specific UPE arrangements, which will include discussion of the following:

• Looking towards 2025 year-end tax planning and any intentions to distribute to corporate beneficiaries in light of the FFC decision.
   
• The payment of UPEs should not be overlooked from a commercial and investment strategy perspective. A distribution to a corporate beneficiary should not occur unless there is an intention for cash or assets to be transferred to and be retained at the company level; otherwise it would constitute an invalid distribution.
   
• For any UPEs that have already been placed on complying Division 7A loan agreements and therefore converted to loans, it is unlikely that amendments can be made to these arrangements.
   
• It’s important to consider not only the Bendel decision but also the ATO’s administration of section 100A (PCG 2022/2).

In the meantime, we will monitor developments regarding:

• Whether the High Court grants special leave for the appeal.
   
• Any further updates to the ATO’s section 100A guidance.

Whether David or Goliath prevails, the implications will be significant.

We will keep you informed for whatever comes next!

This newsletter is current as of 21 March 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

This information is general advice only and neither purports, nor is intended to be advice on any particular matter.
No responsibility can be accepted for those who act on the contents of this publication without first contacting us and obtaining specific advice.
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28 February 2025

Being classified as a wholesale investor opens doors to exclusive investment opportunities that retail clients cannot access. For many Self-Managed Superannuation Fund (SMSF) trustees, this classification has allowed participation in placements and other high-net-worth investment opportunities. However, recent AFCA rulings and regulatory scrutiny may impact how SMSFs qualify as wholesale investors, potentially challenging long-standing industry practices.

Understanding Wholesale Client Classification

A wholesale investor benefits from fewer compliance obligations and broader investment opportunities but also faces reduced consumer protections.

Wholesale clients:

• Are not subject to the same disclosure requirements as retail clients.
• Have limited access to compensation claims under the Australian Financial Complaints Authority (AFCA).
• Must meet financial thresholds as outlined in the Corporations Act 2001.

Financial Thresholds for Wholesale Status

Under the Corporations Act 2001, an entity may qualify as a wholesale client if it meets one of the following financial criteria:

• Net assets of $2.5 million or more,
• Gross income of at least $250,000 per year for the last two years,
• Investment of $500,000 or more in a single transaction.

Special Considerations for SMSFs

A key point of contention has been whether SMSFs should be classified based on these general tests or if stricter rules apply due to their superannuation status.

According to the Corporations Act, an entity accessing a financial service related to a superannuation product is automatically classified as a retail client unless it holds net assets of at least $10 million at the time of service.

In 2014, ASIC provided industry guidance (14-191MR), suggesting it would not enforce the $10 million threshold strictly. This led many SMSF trustees to rely on the $2.5 million net asset test to obtain wholesale status.

Is AFCA’s Recent Ruling A Game Changer?

A recent AFCA determination has challenged this long-standing interpretation, stating that SMSFs accessing financial services related to superannuation should be subject to the $10 million asset test, not the general $2.5 million test.

This ruling has significant implications:

• The industry’s reliance on the $2.5 million net asset test is now in question.
• Accountants certifying SMSFs under the $2.5M test should exercise caution, as incorrect certification could expose professionals to regulatory scrutiny.
• SMSFs that previously qualified as wholesale investors under the lower threshold may need to reassess their classification and potentially unwind investments if found non-compliant.
• Trustees who invested under the wholesale classification may now have access to AFCA’s dispute resolution process as retail clients.

What This Means for SMSF Trustees

Accountants and advisers are often asked to certify SMSF Trustees as wholesale investors through Statements of Independent Certification (SICs). However, with increased regulatory focus, professionals must be cautious about relying solely on the $2.5 million net asset test.

Trustees should also weigh the benefits and risks of being classified as a wholesale client, considering:

• Their level of financial literacy and investment experience.
• The reduced consumer protections available to wholesale investors.
• The risk that wholesale classification decisions may be challenged in the future.

Next Steps

With conflicting guidance from AFCA and ASIC, there is growing industry pressure for regulatory reform to establish clearer wholesale investor classifications. The Government must act swiftly to preserve investment choice for SMSFs and ensure that the wholesale investor framework operates as originally intended. Until then, SMSF Trustees and their advisers should stay informed and give appropriate consideration before proceeding with wholesale investor certifications.

This newsletter is current as of 28 February 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

Cooper Partners Financial Services Pty Ltd AFSL 000 327 033