Payday Super, PSI Crackdowns, & Your New Financial Year Checklist
Payday Super, PSI Crackdowns, & Your New Financial Year Checklist
The new financial year is officially here, bringing some of the most significant shifts in Australian superannuation and tax compliance in decades. From the commencement of Payday Super to tightening rules on trusts and personal services income, here is your simplified, plain-English guide to staying compliant and protecting your cash flow in 2026–27.
⚠️ Important Corrections to Our Previous Newsletter
We wish to advise that our previous newsletter contained incorrect information relating to both FuseSign and the new Anti-Money Laundering legislation. We apologise for any confusion or concern this may have caused. Please note the corrected details below:
Our previous communication stated that the transition to FuseSign applied to all clients. This was incorrect. This transition applies only to our Superannuation Fund (SMSF) clients.
For first-time users of FuseSign, you will receive an email from a member of our Administration Team advising that your Superannuation Fund will be using FuseSign and outlining what to expect, including:
- You will receive an SMS notification from FuseSign advising that documents are ready for signing and have been sent to your email address.
- You will then receive an email from FuseSign containing the documents for review and electronic signature.
- Please monitor both your SMS messages and emails to ensure prompt completion of any signing requests.
If you have any questions or experience any difficulties accessing your documents, please contact our office and we will be happy to assist.
Our previous newsletter stated that the new Anti-Money Laundering laws would come into force for real estate agents. This was incorrect.
Corrected Update: The new Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 comes into force for accountants on 1 July 2026. These laws are designed to strengthen the ability of authorities to detect and prevent money laundering, organised crime, and terrorism financing.
In This Month's Update:
Updates to Budget Measures and New Developments
Since the Federal Treasurer handed down the 2026–27 Federal Budget on 12 May 2026, there has been a significant amount of commentary on some of the more controversial proposals, including the decision to replace the CGT discount with an indexation system and impose a 30% minimum tax rate on discretionary trusts. Here are the latest updates:
Federal Budget
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- Innovative Business CGT Concession: To support early-stage ventures, the Government plans to introduce a 50% CGT discount for founders, early investors, and employee share scheme participants in innovative start-ups.
- Small Business CGT Concession Threshold: The annual turnover threshold to access the 50% "active asset reduction" is proposed to increase from $2 million to $10 million starting 1 July 2027. Note that the other three small business concessions remain locked to the existing $2 million threshold (or the $6 million net asset value test).
- Testamentary Trusts Exempted: While the Budget proposed a 30% minimum tax rate on discretionary trusts starting 1 July 2028, the Government has confirmed that trusts established under a will (testamentary trusts) for "genuine testamentary purposes" will be fully exempt from this minimum tax.
- SMSF Residential Borrowing Ban: Following political negotiations, the Government has agreed to remove the ability for SMSFs to use new limited recourse borrowing arrangements (LRBAs) to purchase residential property. Existing borrowing arrangements will be grandfathered.
📖 Jargon Explained
- Active Asset Reduction: A concession that reduces the capital gain on an active business asset by 50%.
- Testamentary Trust: A trust created under a person's will that only comes into existence after their death.
- Grandfathered: An administrative rule allowing existing arrangements to continue under previous regulations, even after a new law is introduced.
Payday Super Has Arrived – What Employers Need to Know
From 1 July 2026, employers are required to ensure superannuation contributions reach their employees' funds within seven business days of each payday. This marks a major shift from the old quarterly payment cycle to real-time compliance.
Employers
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Key Operational Changes:
- Strict Seven-Day Limit: Super must be received and allocated by the fund within seven business days of a "Qualifying Earnings" (payday) day.
- Higher Penalties: Late payments are calculated per payday rather than quarterly. Administrative penalties for late lodgements can reach up to 60% of the super shortfall.
- Clearing House Changes: All business payrolls must now utilize a SuperStream-compliant commercial clearing house or software integration, as the ATO's Small Business Superannuation Clearing House has closed.
Three Practical Steps to Take Now:
- Review payroll systems: Confirm your software, clearing house, and pay codes correctly identify Qualifying Earnings days under the new rules.
- Monitor cash flow: Assess the impact of more frequent (weekly/fortnightly) super payments on your regular working capital.
- Strengthen approval controls: Ensure internal processes are fast enough to hit the 7-business-day window without compliance slip-ups.
Get Ready for 2026–27: Practical Steps SMSF Trustees Must Take Now
To ensure your Self-Managed Super Fund remains compliant under the new financial year rules, we have compiled a high-priority checklist of legislative changes and deadlines:
SMSF
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- 1. Review Contribution Caps: The annual concessional (pre-tax) contribution cap has increased to $32,500. The standard non-concessional (after-tax) cap has increased to $130,000 (subject to your Total Super Balance being under $2.1 million at 30 June 2026).
- 2. Bring-Forward Rules: The maximum non-concessional bring-forward cap has risen to $390,000. However, if the bring-forward rule was already triggered in 2024–25 or 2025–26, you do not get the benefit of this increase.
- 3. Audit Pension Minimums: Ensure you withdraw your fund’s required minimum pension percentages for your age group to avoid triggering penalty taxes and losing your fund’s tax-exempt status. Transition to Retirement (TTR) pensions must strictly remain below the 10% maximum annual limit.
- 4. Update Related Party Loan Interest Rates: Following recent RBA cash rate increases, the ATO's safe harbour interest rates (PCG 2016/5) have risen to 9.35% for real property and 11.35% for listed securities. All repayments must be adjusted to reflect these new rates.
- 5. Ensure SuperStream 3.0 & NPP Readiness: From 1 July 2026, all SMSF bank accounts must be capable of receiving employer payments through the New Payments Platform (NPP) via Osko or PayID. Trustees must also prepare to promptly respond to employer Member Verification Requests (MVRs).
- 6. Address the Division 296 Transition: If your Total Super Balance exceeds $3 million, assess whether electing to set your Division 296 cost base to 30 June 2026 market values is appropriate. This election does not need to be made until lodging your 2027 SMSF annual return.
ATO Cracks Down on Personal Services Income Arrangements: Is Your Business at Risk?
The ATO is sharpening its focus on how taxpayers generating income from personal services deal with that income for tax purposes. In a recent Spotlight bulletin, the ATO highlighted the release of Practical Compliance Guideline PCG 2025/5, which targets business owners who route professional services income through companies or trusts to lower their tax bills.
ATO Compliance
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Identifying Your Risk Level:
- Low-Risk Setup: The individual generating the income receives most of the profits directly as salary, wages, bonuses, or trust distributions. Any retained profits must be for clear, documented, and short-term commercial reasons.
- High-Risk Setup: The business splits income with family members who made little or no contribution to earning it, retains substantial company profits without a commercial business case, or directs profits to entities with low tax rates or accumulated losses.
Tax Ombudsman Sees 127% Surge in Complaints: What It Means for You
The Tax Ombudsman has reported a dramatic 127% increase in complaints. Outstanding tax debt recoveries, Director Penalty Notices (DPNs), payment plan hurdles, and interest charges make up the vast majority of disputes as the ATO intensifies debt collection under tight economic conditions.
Tax Disputes
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Key Findings & Relief Opportunities:
- Remissions are Achievable: Around 31% of complaints escalated to the Ombudsman regarding interest charges and penalties successfully resulted in debt reduction or remission.
- ATO GIC Remission Improvements: Following the landmark *In the Interest of Fairness* report, the ATO has introduced clearer upfront interest-free payment plans for compliant taxpayers, simpler remission forms, and a $2,500 cap on standard phone approvals to streamline outcomes.
Clearer Guidance
Enhanced website guidance with practical examples, plus simpler remission application forms.
$2,500 Phone Cap
A $2,500 cap on phone approvals, with a dedicated review team handling larger remission requests.
Vulnerable Support
Better support frameworks for vulnerable taxpayers navigating the remission process.
What this means for you:
- Act early on tax debts: Don't wait for the ATO to contact you. Proactive engagement before penalties and GIC escalate often leads to better terms.
- Keep detailed records: Document why any delays occurred (e.g. revenue drops or illness) to support penalty remission submissions.
- Use professional representation: We can liaise with the ATO on your behalf, prepare strong submissions, and escalate to the Ombudsman if required.
The Bottom Line
With major compliance timelines like Payday Super commencing, the ATO enforcing tighter risk profiles on business trust distributions, and SMSF thresholds rising, proactive planning is essential to safeguard your finances. Navigating these changes early keeps your entities compliant, protects your cash reserves, and prevents unexpected year-end stress.
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Disclaimer: This newsletter is for general educational purposes only and does not constitute formal financial, investment, legal, or tax advice. Laws, caps, and guidelines change regularly. Please consult the professional advisory team at JPR Business Group for assistance specific to your personal or business circumstances.