If you're the type who checks your bank balance before checking your tax obligations, we hear you. But here's the thing: FY2026 has rolled around with some seriously noteworthy changes that'll hit your hip pocket — especially if you're running a creative business or navigating the Australian tax landscape. Think of this year's tax changes like a remix of last year's track: same melody in places, but with some significant new beats that could throw you off rhythm if you're not prepared.
Here's the good news for your wallet: personal income tax rates remain unchanged from FY2025, giving Australian taxpayers a year of stability before future cuts kick in. If you're earning income in FY2026, you'll see the same tax brackets that applied last year.
For Australian residents, the tax rates for FY2026 are:
These rates don't include the Medicare Levy of 2%, which applies to most residents. The Low Income Tax Offset (LITO) also remains unchanged, providing up to $700 for those earning up to $37,500, then gradually phasing out until it ceases at $66,668.
But here's the forward-looking harmony: From 1 July 2026, the 16% rate will reduce to 15%, saving taxpayers up to $268 annually. Come 1 July 2027, it'll drop again to 14%, providing additional savings of up to $536 each year. While these changes aren't hitting your FY2026 return, they're worth noting for your long-term financial planning.
The Medicare Levy low-income thresholds have increased by 4.7%, ensuring over one million lower-income Australians remain exempt or pay reduced rates. For singles, the lower threshold is now $27,222, whilst families enjoy a lower threshold of $45,907.
If superannuation were a song, FY2026 would be the final verse of a long composition. The superannuation guarantee (SG) rate has reached its legislative maximum of 12% as of 1 July 2025 — up from 11.5% in FY2025. This is the first time in 33 years that the SG rate has hit its target, and no further increases are currently proposed.
What this means for employers: That 0.5% increase translates to real dollars. An employee earning $50,000 will now receive $6,000 in SG contributions annually instead of $5,750. It's like adding an extra instrument to your ensemble — the sound gets richer, but the arrangement costs more.
However, there's a twist in the tune: the maximum contribution base has actually decreased for the first time in years, dropping from $65,070 per quarter in FY2025 to $62,500 per quarter in FY2026. This primarily affects high-income earners and requires payroll system reviews to ensure compliance.
The good news is that contribution caps remain stable for FY2026:
Concessional (before-tax) contributions cap: $30,000 per annum for all ages. This includes employer contributions, salary sacrifice, and personal contributions you claim as tax deductions. Tax on contributions within the cap is 15% (or 30% if your income plus concessional contributions exceed $250,000).
Non-concessional (after-tax) contributions cap: $120,000 per annum for individuals under age 75. If your total superannuation balance (TSB) is $2 million or more at 30 June 2025, your cap becomes $0 — no non-concessional contributions allowed.
The transfer balance cap has increased from $1.9 million to $2.0 million, affecting the maximum amount you can transfer into retirement phase pension accounts. This is particularly relevant for those nearing retirement or planning long-term wealth strategies.
For self-employed creatives: If you're a solo operator juggling gigs, commissions, and project work, making personal concessional contributions to super can reduce your taxable income whilst building your retirement nest egg. With a TSB under $500,000, you can even carry forward unused concessional caps from the previous five years — unused caps expire after five years, so don't let them fade into silence.
Here's where FY2026 hits a dramatically different note: the instant asset write-off threshold has plummeted from $20,000 to just $1,000 as of 1 July 2025. This is arguably the most significant small business change for the year.
Previously, small businesses with aggregated turnover under $10 million could claim the full cost of assets up to $20,000 as an immediate deduction. Now, only assets costing $1,000 or less qualify for instant write-off. Assets above this threshold must be placed into the simplified depreciation pool, where they're depreciated at 15% in the first year and 30% in subsequent years.
The real-world impact: That $5,000 synthesiser or $8,000 camera rig you could have written off in one hit last year now requires 5–6 years to fully depreciate. It's like stretching a four-minute song into a 20-minute extended mix — same asset, vastly different timeline.
| Asset Cost | FY2025 Treatment | FY2026 Treatment |
|---|---|---|
| $1,000 or less | Instant write-off | Instant write-off |
| $1,001–$20,000 | Instant write-off | Simplified depreciation pool (15% then 30% pa) |
| Over $20,000 | Simplified depreciation pool | Simplified depreciation pool |
A note of caution: The Government announced on 4 April 2025 that it would extend the $20,000 threshold for a further 12 months, but this legislation has not yet been passed by Parliament. Until it becomes law, the $1,000 threshold applies. Don't bank on the extension when making purchasing decisions.
For creative professionals investing in equipment — whether that's musical instruments, recording gear, design hardware, or production tools — this change demands more strategic planning. Consider timing major purchases around your business needs and tax position, and ensure you're maximising other available deductions.
The ATO has turned up the amplifier on compliance with an additional $1 billion in funding over four years. This isn't background noise — it's a full-throttle focus on collecting unpaid tax and closing compliance gaps. The expected additional collections? A hefty $3.2 billion over five years.
Division 7A shareholder loans: This is a major focus area for the ATO. Division 7A benchmark interest rates have increased significantly, currently sitting at 6.78% per annum for the July–September 2025 quarter. If you've got shareholder loan arrangements in your private company structure and the repayment terms aren't complied with, the loan is treated as a dividend for tax purposes. Many businesses have shareholder loans at outdated interest rates, creating compliance risks that could hit hard.
Fringe Benefits Tax (FBT): The ATO is scrutinising car parking benefits, entertainment expenses, and contractor vs employee classifications. Since 1 April 2025, plug-in hybrid electric vehicles (PHEVs) are no longer considered zero or low emissions vehicles for FBT purposes and aren't eligible for the FBT exemption. If you purchased a PHEV before 1 April 2025, it remains exempt only if there's a financially binding commitment to continue providing private use. Fully electric vehicles remain exempt if valued under the luxury car tax threshold of $91,387.
Interest deduction denial: From 1 July 2025, businesses can no longer claim tax deductions for General Interest Charges (GIC) or Shortfall Interest Charges (SIC) incurred on or after that date. Late tax payments now cost more as the interest becomes non-deductible, increasing the penalty for non-compliance.
Shadow economy and cash income: The ATO's Shadow Economy Compliance Programme targets unreported cash income, illicit tobacco, and non-compliant businesses. If you're accepting cash payments for gigs, commissions, or creative services, ensure every dollar is properly recorded and declared.
If you're working in music, art, design, or other creative fields, maintaining impeccable records is non-negotiable. The ATO expects:
Think of compliance like mastering a track — the cleaner your inputs, the better your output. Sloppy record-keeping creates distortion that the ATO will pick up in their compliance activities.
For creatives who operate from home studios, design spaces, or practice rooms, the fixed rate method for working from home deductions remains at $0.70 per hour for FY2026. This rate covers electricity, gas, phone, internet, computer consumables, stationery, and depreciation of office equipment.
Critical requirement: You must maintain records of hours worked from home throughout the entire year. Estimates are no longer acceptable. Use diaries, timesheets, rosters, or digital time-tracking tools to document every hour. Alternatively, you can claim actual expenses using the actual cost method if it provides a better outcome.
For motor vehicle deductions using the cents per kilometre method, the rate remains 88 cents per kilometre with an annual limit of 5,000 kilometres. This applies when you're travelling to gigs, performances, client meetings, or recording sessions. You must maintain logbook and odometer readings to substantiate your claims.
Common deductions for creative professionals include:
The key is proper documentation. Every receipt, every invoice, every bank statement tells the story of your business expenses. Keep them organised, categorised, and accessible.
Whilst payday super doesn't commence until 1 July 2026 (just outside FY2026), the preparations need to start now. This is one of the most significant operational changes to superannuation in decades, shifting from quarterly payments to payments aligned with each payday.
Currently, employers pay SG quarterly, due 28 days after quarter-end. From 1 July 2026, SG must be paid within seven business days of the employee's payday, and it must reach the employee's super fund within that timeframe. This affects cash flow, payroll processes, and compliance obligations.
The Small Business Superannuation Clearing House (SBSCH) is closing to new users from 1 October 2025 and will fully close from 1 July 2026. If you're currently using SBSCH, you need to transition to alternative clearing houses or integrated payroll software before the deadline.
Before 30 June 2026, businesses should:
The penalties for non-compliance are substantial and have been updated. The new SG charge includes unpaid SG, daily compound interest at the general interest charge rate, administrative uplift (up to 60%), and payment penalties (25–50%). These penalties are now tax-deductible (unlike the current SGC), but they're significantly higher than before.
For creative businesses employing staff or contractors: Understanding the distinction between employees and contractors is crucial, as it affects superannuation obligations, FBT, and payroll tax. The ATO has flagged contractor misclassification as a high-risk compliance area, so ensure your worker arrangements are properly structured.
Navigating what's new in tax for the 2026 financial year requires a mix of strategic planning, meticulous record-keeping, and staying ahead of compliance requirements. The reduction in the instant asset write-off from $20,000 to $1,000 fundamentally changes how small businesses approach equipment purchases. The superannuation guarantee reaching 12% adds to employer costs but builds long-term retirement savings. The ATO's increased compliance focus means errors and omissions carry higher consequences than ever before.
For creative professionals and businesses, the key is treating your financial management like you would your creative work: with attention to detail, consistent practice, and professional expertise when needed. Document your income meticulously, substantiate every deduction, maintain proper separation between personal and business expenses, and prepare for upcoming changes like payday super well before they take effect.
The tax landscape in FY2026 rewards those who stay organised, compliant, and proactive. Whether you're claiming working from home deductions at $0.70 per hour, depreciating that new equipment through the simplified depreciation pool, or ensuring your Division 7A shareholder loans meet benchmark interest rates, the fundamentals remain unchanged: accurate records, timely compliance, and strategic planning create the foundation for financial success.
The superannuation guarantee rate is 12% for FY2026, effective from 1 July 2025. This rate represents an increase from 11.5% in FY2025, ensuring eligible employees receive the correct SG contributions up to the maximum quarterly base of $62,500.
No, the instant asset write-off threshold has been reduced to $1,000 for FY2026, effective from 1 July 2025. Assets costing more than $1,000 must be depreciated through the simplified depreciation pool with 15% depreciation in the first year and 30% in subsequent years.
Personal income tax rates remain unchanged for FY2026, maintaining the same brackets as FY2025. However, future reductions are scheduled from 1 July 2026, where the 16% bracket will decrease to 15% and then to 14% from 1 July 2027.
The fixed rate method for working from home deductions remains at $0.70 per hour for FY2026. This rate covers a variety of home office expenses, but detailed records of hours worked from home are required for substantiation.
Payday superannuation starts on 1 July 2026, requiring employers to pay SG within seven business days of each payday. Businesses should review payroll systems, assess the cash flow impact, transition from the SBSCH, and conduct thorough end-to-end testing to ensure compliance.
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