August 2026 Newsletter
Please click on the following link to view this month's newsletter for August 2026. We would like to highlight the following articles:-
Division 296 Tax on Large Super Balances
From the 2026–2027 income year, a new layer of tax applies to earnings attributable to the portion of your total superannuation balance (TSB) above $3 million. Division 296 tax is levied directly on you as an individual, separate from personal income tax and the tax your fund pays, and it applies to balances in the retirement phase as well as accumulation. The rates are tiered: no tax up to $3 million, 15% on earnings attributable to the balance above $3 million, and a further 10% on earnings attributable to the balance above $10 million. Both thresholds are indexed to CPI.
You may be liable if your TSB just before the start of the year, or at year end, exceeds $3 million and your total superannuation earnings for the year are greater than nil — although for the first year the ATO will only look at your TSB on 30 June 2027. Your TSB generally includes Australian interests in APRA-regulated funds, SMSFs and relevant public sector schemes; foreign superannuation interests are excluded, as are child recipients of a super income stream and individuals who have received a structured settlement contribution.
The ATO issues the assessment, with payment generally due within 84 days of the notice. You can pay personally, elect to release the amount from your super, or use a combination — but a release election generally must be lodged within 60 days of the assessment. Tax attributable to a defined benefit interest is usually deferred until benefits become payable. If your balance is approaching or above $3 million, please contact us so we can review how this may affect you.
Take Care When Claiming Occupancy Expenses for Working From Home
The ATO has found some taxpayers incorrectly claiming rent, mortgage interest and other occupancy costs as part of their working from home expenses. The key is the difference between the two categories. Running expenses are the extra costs you incur working from home — heating, cooling and lighting, internet or data, phone, stationery, computer consumables, and the decline in value of office furniture or equipment your employer hasn't provided. Occupancy expenses are the costs of owning or renting your home, including mortgage interest, rent, council and water rates, land tax and house insurance premiums.
As an employee, you can generally claim running expenses if you work from home to perform your substantive employment duties — not just answering a few emails or taking phone calls — incur additional costs as a result, and keep records to support the claim. You can't claim anything your employer has reimbursed. The deduction can be calculated using either the fixed rate method or the actual cost method.
Occupancy expenses are rarely deductible for employees. To claim them you generally need to show your home work area has the character of a place of business, and even then you must apportion the costs between private and work use based on floor area, the period the area was used for work, and your ownership or rental share. Using part of your home as business premises can also have capital gains tax consequences.
Please do not hesitate to contact us if you have any queries in relation to your tax and accounting matters.
Important: Clients should not act solely on the basis of the material contained in Client Alert. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Client Alert is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.