FY2025–26 | Australia | Personal & Business
The end of the financial year has come and gone — and that means tax time is here. Whether you’re an individual employee, a sole trader, or a small business owner, lodging your 2026 tax return deserves careful preparation. Getting it right the first time saves you stress, protects you from ATO scrutiny, and — more often than not — puts more money back in your pocket.
Here’s everything you need to think about before you sit down to lodge.
1. Know Your Lodgement Deadline
The self-lodgement deadline for FY2025–26 is Monday 3 November 2026 (31 October falls on a Saturday, so the ATO moves it to the next business day). If you use a registered tax agent, you have until 15 May 2027 — provided you are on their client list before 31 October 2026.
Don’t rush. The ATO’s pre-fill data — covering employer income statements, bank interest, dividends, private health insurance, and Centrelink payments — is not finalised until late July. Lodging too early risks leaving income out and triggers an amendment you’ll need to fix later.
2. What’s New for 2025–26: Key Changes You Need to Know
Tax Rate Cuts Are Now in Effect
The Stage 3 tax cuts have been redesigned and apply in full for FY2025–26. The 19% tax rate has dropped to 16%, and the 32.5% bracket has been absorbed into a 30% band. If you haven’t updated your withholding or PAYG instalment amounts, you may have over-withheld — meaning a refund is likely.
Super Guarantee is Now 12%
From 1 July 2025, the Superannuation Guarantee rate increased to 12%. Employers must now contribute 12% of eligible employees’ ordinary time earnings to their nominated super fund. If you’re an employer, check your payroll settings are correct. If you’re an employee, verify your payslips reflect the higher rate.
Interest Charges Are No Longer Deductible
If you were charged the General Interest Charge (GIC) or Shortfall Interest Charge (SIC) on or after 1 July 2025, you can no longer claim these as a tax deduction in your 2025–26 or later returns. This is a significant change for anyone with a tax debt.
No More $2 Minimum for Charitable Gifts
The $2 minimum threshold for deductible gifts to registered charities (Deductible Gift Recipients) has been removed. You can now claim a deduction for any amount donated to an eligible charity, no matter how small.
3. Personal Tax Return: What to Check
Income — Report Everything
Your assessable income isn’t just your salary. Before you lodge, collect records for all of the following:
- Wages, salary, and allowances (from your income statement)
- Interest from bank accounts
- Dividends from shares
- Rental income
- Capital gains from selling shares, property, or crypto assets
- Government payments (JobSeeker, Youth Allowance, Centrelink)
- Foreign income
- Side income from gig economy platforms (Uber, Airtasker, Airbnb, etc.)
Work-Related Deductions — The Three Golden Rules
To claim any work expense, you must be able to tick all three boxes: you paid for it yourself (no reimbursement), it was directly related to earning your income, and you have a record to prove it. If your total work-related claims exceed $300, written evidence is mandatory for the entire amount.
Common deductible work expenses include:
- Tools and equipment used for work
- Professional memberships and union fees
- Work-specific uniforms, protective clothing, and safety gear
- Laundry of eligible work clothing ($1 per load for work-only clothing; 50 cents per load for mixed loads)
- Home office expenses
- Self-education costs directly connected to your current role
Working From Home
There are two methods for claiming home office expenses in 2025–26:
The fixed rate method allows you to claim 70 cents per hour worked from home. This covers electricity, internet, phone, stationery, and computer consumables. You don’t need a dedicated home office — just a genuine record of hours worked from home (a diary or timesheet).
The actual cost method lets you claim the real additional costs of working from home, calculated by proportion. It requires more detailed records but can produce a larger deduction if your costs are high.
Vehicle and Travel Claims
For work-related driving in FY2025–26, the cents per kilometre rate is 88 cents per kilometre, capped at 5,000 km per year. For higher mileage, the logbook method lets you claim the actual work-related percentage of all vehicle running costs — but you need a valid 12-week logbook (which lasts five years once completed).
Work-related travel includes driving between separate workplaces, visiting clients, travelling to a different office or worksite, and carrying bulky equipment that cannot be stored at work. Ordinary home-to-work commutes are generally not deductible.
Rental Properties
The ATO has issued updated guidance this year on rental income and expenses. Ensure you’re declaring all rental income — including short-stay platforms like Airbnb — and check which expenses are deductible. Interest on your investment loan, council rates, property management fees, insurance, and repairs are typically deductible; capital improvements and private-use periods are not.
Private Health Insurance
If you don’t hold appropriate private hospital cover and earn above the Medicare Levy Surcharge (MLS) threshold, you may owe an additional levy of 1% to 1.5% of your income. Review your policy status before lodging.
4. Business Tax Return: What to Check
Separate Your Business and Personal Finances
Before anything else: are your business records clean? If you’ve been running business transactions through a personal account (or vice versa), now is the time to reconcile. Mixed records are a red flag for the ATO and can make your deductions hard to substantiate.
Report All Business Income
Every dollar your business received is assessable unless a specific exemption applies. This includes cash sales, online payment platforms (Stripe, Square, PayPal), grants, insurance proceeds, and trade discounts received. If you’re using accounting software, reconcile it against your bank statements.
Maximise Your Business Deductions
The ATO allows you to deduct most expenses incurred in earning your business income, as long as they are genuine business costs and properly documented. Key deductible business expenses include:
- Wages and super (at the new 12% rate)
- Rent, utilities, and premises costs
- Accounting, legal, and professional fees
- Insurance premiums
- Marketing, advertising, and website costs
- Bank fees, merchant fees, and interest on business loans
- Subscriptions and software licences
- Stock and cost of goods sold (COGS)
- Training and professional development directly relevant to your business
Instant Asset Write-Off — $20,000 Threshold
If your business has an aggregated annual turnover of less than $10 million, you can immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed and ready for use in FY2025–26. This applies per asset — not in total — so you can write off multiple qualifying items in the same year.
Home-Based Business Expenses
Running your business from home? You can claim the business-use portion of occupancy expenses (rent or mortgage interest, rates, insurance) if a part of your home is set aside exclusively for business. For running expenses, the fixed rate of 70 cents per hour applies, or you can use the actual cost method.
Goods and Services Tax (GST)
If your business is registered for GST, make sure your BAS lodgements and GST credits are reconciled before you lodge your income tax return. Overclaiming input tax credits is a common area of ATO scrutiny.
Trust Distributions
If your business operates through a family trust, trustees must make and document distribution resolutions before 30 June each year. The ATO scrutinises trust distributions closely — particularly to low-income beneficiaries — following the Section 100A guidance.
Superannuation Contributions for Business Owners
As a self-employed individual or business owner, you may be able to claim a tax deduction for personal super contributions — up to the concessional contributions cap of $30,000 for FY2025–26 (including any employer contributions). You must lodge a valid Notice of Intent to Claim with your super fund before lodging your return.
5. Record-Keeping: The Foundation of Every Good Return
The ATO requires you to keep records for five years from the date you lodge your return. At minimum, have the following on hand:
- PAYG payment summaries / income statements (confirmed via myGov)
- Bank statements for all accounts (personal and business)
- Receipts and invoices for all claimed deductions
- Logbooks if claiming vehicle expenses
- Depreciation schedules for business assets
- Contracts or settlement statements for any property transactions
- Records of all crypto asset purchases, sales, and disposals
Digital records are fully acceptable. Use a cloud-based folder, your accounting software, or the ATO’s free myDeductions tool in the ATO app to keep photos of receipts throughout the year.
6. Don’t Forget Capital Gains
If you sold shares, property, cryptocurrency, or any other capital asset during FY2025–26, you need to include the capital gain (or loss) in your return. Key points:
- Assets held for more than 12 months qualify for a 50% CGT discount (individuals and trusts).
- Capital losses in the same year offset capital gains before the discount applies.
- Prior-year carried forward capital losses can also reduce this year’s gains.
- Crypto is treated as property, not currency — every disposal is a CGT event.
7. Common Mistakes to Avoid
Lodging too early. Wait until late July for pre-fill data to populate fully.
Overclaiming personal expenses. The ATO uses data analytics to detect inflated or unusual claims. Only claim what you genuinely spent for work.
Forgetting bank interest. Even a small savings account generates assessable interest that must be declared.
Missing crypto transactions. The ATO receives data from exchanges. If you bought, sold, or swapped crypto, it needs to be reported.
Neglecting prior-year losses. Check whether you have carry-forward capital losses or prior-year business losses you can offset against this year’s income.
Not lodging at all. Failure to lodge carries significant penalties. If you’re worried about a tax debt, it’s still better to lodge and arrange a payment plan than to ignore it.
8. Should You Use a Tax Agent?
A registered tax agent can save you time, find deductions you might miss, and provide peace of mind that your return is compliant. The cost of their fee is itself tax-deductible in the following year. If you have a complex return — multiple income streams, a business, rental properties, investments, or a significant CGT event — professional advice is well worth the investment.
Final Thought
Tax time doesn’t need to be stressful. The key is preparation: gather your records, understand what’s changed for FY2025–26, and take your time. Whether you’re lodging yourself via myTax or working with a registered agent, a well-prepared return means a more accurate outcome — and the best possible refund.
This article is intended as general information only and does not constitute financial or tax advice. For advice specific to your circumstances, consult a registered tax agent or financial adviser.
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