What’s Changing from 1 July 2026
- Rate on income between AUD 18,201 and AUD 45,000 drops from 16% to 15%, with a further cut to 14% from 1 July 2027. (ato.gov.au)
- Increased thresholds for the Medicare levy low-income exemption, benefiting over one million low-income Australians. (ashurst.com)
- New obligations under Pillar Two global minimum tax rules for multinational or multiple entity consolidated groups. Compliance & reporting guidance is now published. (ey.com)
Key Planning Moves Before 30 June 2026
Defer Income or Bring Forward Expenses
- If you expect to be in the 16% bracket, consider deferring some income into the 2026-27 year so lower rate applies.
- Prepay deductible expenses to bring forward deductions into earlier year if you are already in a higher bracket.
Reassess Entity Distributions and Profit Retention
- If using companies or trusts, review distributions: taxable distributions before 30 June might still be taxed under old bracket.
- For entities with global operations, assess impact of Pillar Two rules—take steps to minimise top-up tax exposure.
Superannuation Strategies
- The ATO is signalling tighter integrity measures and possible restrictions. Review whether your super balances are near new thresholds for possible additional taxation (e.g. high-balance super rules forthcoming).
Maximise low-income rebates and levy exemptions
- With Medicare levy threshold increases, some who previously paid levy may now be exempt or pay reduced levy. Ensure your taxable income is assessed accurately factoring in all deductions.
Compliance Considerations During Planning
- Ensure any accelerated deductions or deferrals are legitimate and well-documented—ATO has increased integrity programs and audit focus.
- Keep tight records: invoices, prepayments, beneficiary statements (for trusts), international income reporting.
Actionable Steps List
- Review your 2025-26 year budget forecasts; simulate after new rates.
- Meet with an accountant if you have complex income or entities.
- If in multinational/consolidated group, register for Pillar Two reporting and understand obligations due 30 June 2026.
- Take advantage of low income thresholds and levy exemptions now—ensure eligibility.
Final Thought: With tax cuts coming, aligning your income timings, deductions, and entity structure before 30 June 2026 can make a noticeable difference to your tax outcome.