Category: Accounting Technology

Contractor Has an ABN
Home / / Your Contractor Has an ABN — Does That Mean No Super?

Your Contractor Has an ABN — Does That Mean No Super?

A common assumption among Australian business owners is: “They have an ABN and send me an invoice, so they are responsible for their own super.” Unfortunately, it is not always that simple. 

For super guarantee purposes, the ATO looks at the substance of the arrangement. Some independent contractors must still receive super where the contract is wholly or principally for their labour. 

An ABN does not decide the issue

An ABN is a business identifier. It does not, by itself, determine whether a worker is an employee, an independent contractor, or an employee for super guarantee purposes. 

The ATO specifically notes that businesses may have to pay super for an individual contractor even where that contractor quotes an ABN.

When might super be payable to a contractor?

Broadly, an individual contractor may be treated as an employee for super guarantee purposes where they are paid under a contract that is wholly or principally for their labour. 

Relevant features can include that the person is being paid mainly for their personal labour and skills and must personally perform the work rather than being free to delegate it to someone else.

Example: an ABN but super may still be payable

Consider a freelance administrative worker who has an ABN, invoices weekly, is paid for hours worked and is required to personally perform the work. The ATO provides a similar example in which the worker is an employee for super guarantee purposes because the contract is for the person’s labour and skills, the worker is paid according to hours worked and must do the work personally. 

The important point is that invoicing through an ABN does not automatically make the super obligation disappear.

When might you not have to pay the individual's super?

The position can be different where your contract is with a company, trust or partnership rather than directly with the individual. The ATO states that if you enter into a contract with a company, trust or partnership, you generally do not have to pay super for the person that entity employs to perform the work. 

Similarly, a genuine contractor engaged to achieve a specified result, operating their own business and able to arrange how the result is delivered may have a different outcome. The complete working arrangement needs to be considered. 

Employee vs contractor still matters

Super is only one part of worker classification. Businesses also need to correctly determine whether a worker is genuinely an employee or independent contractor. The ATO says the whole working relationship and the terms and conditions of the arrangement need to be considered. 

Simply calling someone a contractor in an agreement, requiring them to obtain an ABN, or asking them to invoice the business does not override the true nature of the relationship. 

Why getting it wrong can be expensive

If a business was required to pay super and fails to do so correctly or on time, it may become liable for the super guarantee charge and associated compliance consequences. The cost can therefore be significantly greater than simply paying the correct super in the first place. 

What changed from 1 July 2026?

Payday Super commenced from 1 July 2026. Employers now generally need to make super guarantee contributions each time they pay eligible employees, with contributions required to reach the employee’s super fund within the applicable timeframe. 

The new timing rules also apply to workers who fall within the extended employee definition for super purposes, including relevant independent contractors paid for their labour. This makes correct worker classification even more important.

Questions to ask before deciding “no super”

Before treating an individual contractor as outside super guarantee, consider questions such as: 

  • Who is the contractactually with— the individual, a company, trust or partnership? 
    • Is the payment mainly for the person’s labour and skills? 
    • Must that individual personally perform the work? 
    • Can they delegate or subcontract the work? 
    • Are they being engaged to produce a specific result? 
    • How are they paid — hourly, daily, or for a completed result? 
    • What does the written agreement say, and does it match what actually happens in practice? 

The key takeaway

ABN does not equal “no super”. 

A contractor can have an ABN, issue invoices and still be an employee for super guarantee purposes in particular circumstances. Businesses should review the actual working arrangement rather than relying on the label used by the parties. 

Need help reviewing your contractor arrangements?

If your business regularly engages contractors, reviewing the arrangements before a super issue arises can save significant time and cost. 

Elite Plus Accounting can assist businesses with reviewing the accounting and super implications of contractor arrangements and identifying areas that may require further advice. 

Elite Plus Accounting 
From Chaos to Clarity. 
1300 744 733 
www.eliteplusaccounting.com.au 

Disclaimer

This article contains general information only and does not constitute taxation, superannuation, employment or legal advice. Worker classification and super guarantee obligations depend on the particular facts and contractual arrangements. Obtain professional advice relevant to your circumstances before acting. 

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Home / / Can You Claim the Tax-Free Threshold on Two Jobs in Australia?

Can You Claim the Tax-Free Threshold on Two Jobs in Australia?

Having two jobs can be a great way to increase your income, but it can also create an unexpected tax issue if your PAYG withholding is not set up correctly. One of the most common areas of confusion is the Australian tax-free threshold: can you claim it from both jobs, and what happens if you do? 

The answer depends on your circumstances, but for most people earning income from more than one employer, the tax-free threshold should generally be claimed from only one employer.

What is the tax-free threshold?

If you are an Australian resident for tax purposes, the tax-free threshold is currently $18,200. Broadly, this means you can earn up to $18,200 in an income year before income tax starts to apply. Your final tax position, however, is based on your total taxable income and your individual circumstances. 

When you start a job, the information you provide to your employer determines how much PAYG tax they withhold from your wages. Claiming the tax-free threshold generally results in less tax being withheld from that employment income. 

Can you claim the tax-free threshold from two jobs?

Generally, no. The Australian Taxation Office (ATO) states that if you receive income from more than one job, you should generally claim the tax-free threshold from only one employer. 

If you have multiple employers, the ATO guidance is generally to claim the threshold from the employer that pays you the highest salary or wage.

Why can claiming it from two employers cause a tax bill?

Each employer calculates PAYG withholding based largely on the information available to that employer. One employer does not normally calculate withholding by combining the wages you receive from your other job. 

If you claim the tax-free threshold from both employers, both payroll systems may withhold tax as though the tax-free threshold applies to the income they are paying you. When your income from both jobs is later combined in your income tax return, the total tax withheld may be less than the tax ultimately payable. 

The result can be an unexpected tax bill at tax time.

A simple example

Imagine Alex has two jobs during the same financial year. Job A is Alex’s main job and Job B provides additional income on evenings or weekends. If Alex claims the tax-free threshold from both employers, each employer may withhold less tax than if the second employer had been told not to apply the threshold. 

At tax time, the income from Job A and Job B is added together. The ATO then calculates Alex’s tax liability based on the combined taxable income. If the total PAYG withholding is not enough, Alex may have an amount to pay. 

Important: This does not mean that everyone with two jobs will automatically receive a tax bill. The final outcome depends on total income, tax withheld, deductions, offsets, Medicare-related amounts, study or training support loan obligations and other individual circumstances.

Which job should you claim it from?

Where you have more than one employer, the ATO generally recommends claiming the tax-free threshold from the employer paying the highest salary or wage. 

You would generally not claim the threshold from your other employer or employers. This allows more tax to be withheld from the additional income and can reduce the risk of an unexpected shortfall at tax time. 

Is there an exception if your total income is low?

Yes. The ATO recognises that you may be able to claim the tax-free threshold from more than one payer where your total income from all sources for the income year is expected to be below the tax-free threshold. 

This is why the right answer is not simply ‘never claim it twice’. Your expected total income and tax residency matter.

What if you have already claimed it from both jobs?

Do not wait until the end of the financial year if you think your withholding arrangements are incorrect. You can review your tax withholding details and, where appropriate, update the information provided to your employer. 

The ATO also allows employees to request additional tax to be withheld from their pay. This can be useful where you have multiple sources of income and are concerned that the standard withholding amounts may not be enough.

Can you still get a tax bill if you only claim the threshold once?

Yes. Claiming the tax-free threshold correctly does not guarantee a refund. Your final tax position is based on your overall circumstances. 

A tax bill can still arise because of factors such as: 

  • income from multiple employers or other sources
  • investment income such as bank interest or dividends
  • sole trader or side-hustle income
  • study or training support loan repayment obligations
  • Medicare levy or Medicare levy surcharge outcomes
  • insufficient PAYG withholding during the year

Key takeaways

  • Australian residents for tax purposes aregenerally entitledto the $18,200 tax-free threshold. 
  • If you have more than one employer, you shouldgenerally claimthe threshold from only one employer. 
  • The ATO generally recommendsclaiming it from the employer paying the highest salary or wage. 
  • Claiming it from multiple employers can result in too little tax being withheld and may contribute to a tax bill.
  • An exception can apply where your total income from all sources is expected to remain below the tax-free threshold.
  • If you are unsure whether enough tax is being withheld, review the position before the end of thefinancial year.

Need help understanding your tax position?

If you work multiple jobs or have several sources of income, it can be difficult to know whether enough tax is being withheld during the year. Elite Plus Accounting can help you review your circumstances, understand your likely tax position and identify whether your withholding arrangements may need attention. 

Elite Plus Accounting 
From Chaos to Clarity. 
1300 744 733 
www.eliteplusaccounting.com.au 

Disclaimer

This article contains general information only and does not constitute taxation, financial or legal advice. Tax outcomes depend on individual circumstances. You should obtain professional advice relevant to your circumstances before acting on the information contained in this article. 

Home / / 10 Xero Features Every Small Business Owner Should Be Using

10 Xero Features Every Small Business Owner Should Be Using

Are You Using Xero—or Simply Paying for It? 

Many Australian small businesses use Xero to send invoices and prepare their BAS. 

But Xero can do much more than basic bookkeeping. 

When it is set up and used properly, Xero can help you: 

  • reduce manual data entry;  
  • keep your accounts up to date;  
  • improve your invoicing and debt collection;  
  • monitor cash flow;  
  • simplify payroll;  
  • track project profitability; and  
  • collaborate with your accountant or bookkeeper.  

Xero includes tools for bank reconciliation, invoicing, payroll, reporting, expenses, mobile bookkeeping, app integrations and Australian compliance requirements. However, the features available to you may depend on your subscription plan.  

Here are 10 Xero features every small business owner should consider using. 

1. Automatic Bank Feeds

Manually entering every bank transaction takes time and increases the risk of errors. 

Xero bank feeds securely bring transactions from connected business bank accounts and credit cards into Xero. You can connect multiple accounts and, where an automatic feed is unavailable, upload transaction files manually.  

Why this matters 

With your bank transactions flowing into Xero regularly, you can: 

  • keep your bookkeeping current;  
  • reduce manual transaction entry;  
  • identify missing or duplicated transactions;  
  • monitor money coming in and going out; and  
  • prepare more accurate financial reports.  

Elite Plus Tip: Connect every business bank account, credit card and payment platform used by the business. Leaving one account outside Xero can result in incomplete reports. 

2. Bank Reconciliation and Bank Rules

A bank feed imports transactions—but those transactions must still be correctly matched and categorised. 

Xero can suggest matches between bank transactions and existing invoices, bills or transfers. It also allows bank rules to be created for recurring transactions. Xero’s newer automation features can perform or suggest more of the reconciliation process for review.  

Practical examples 

You may create rules for: 

  • monthly software subscriptions;  
  • bank fees;  
  • regular rent payments;  
  • merchant fees;  
  • fuel purchases; or  
  • recurring customer deposits.  

Bank rules should still be reviewed periodically. A poorly constructed rule can repeatedly code transactions to the wrong account or apply incorrect GST treatment. 

Best practice 

Reconcile your accounts regularly rather than waiting until BAS or tax time. 

Key takeaway: A reconciled bank account gives you confidence that the figures in Xero are based on complete and current transactions.

3. Professional Invoicing and Automatic Reminders

Creating an invoice is only the first step. The real goal is getting paid. 

Using Xero, businesses can create and send invoices, track whether invoices remain unpaid and add online payment options where supported. Mobile invoicing also allows an invoice to be issued soon after completing a job.  

Features worth setting up 

  • branded invoice templates;  
  • payment terms;  
  • automatic invoice numbering;  
  • repeating invoices;  
  • online payment options;  
  • payment reminders; and  
  • statements for overdue customers.  

Why it helps cash flow 

Sending invoices promptly gives the customer more time to pay before your own bills become due. Automatic reminders can also reduce the time you spend personally following up overdue accounts. 

4. Bills, Receipts and Expense Capture

Business owners often lose deductions because receipts are missing, faded or sitting in different email accounts. 

Xero’s expense tools can help businesses manage spending, submit claims and store supporting documents. Mobile receipt capture allows users to photograph receipts and keep the image with the accounting record.  

A better expense process 

Instead of placing receipts in a drawer: 

  1. Photograph or upload the receipt.  
  2. Record the supplier, date, amount and business purpose.  
  3. Check the GST treatment.  
  4. Attach the document to the relevant transaction.  
  5. Review and reconcile it promptly.  

This creates a stronger audit trail and makes it easier to answer questions from your accountant, bookkeeper or the ATO. 

Pro Tip: Do not rely only on the bank statement. A bank transaction confirms that money was spent, but it may not explain exactly what was purchased or why it was business-related.

5. The Xero Dashboard and Real-Time Reports

Your accounting software should do more than store historical transactions. 

Xero’s accounting dashboard can display bank balances, outstanding invoices, bills and other financial information. It also provides real-time reports when the underlying bookkeeping is current and accurate.  

Reports every business owner should review 

At a minimum, review: 

  • Profit and Loss: Is the business actually profitable?  
  • Balance Sheet: What does the business own and owe?  
  • Aged Receivables: Which customers have not paid?  
  • Aged Payables: Which suppliers need to be paid?  
  • Cash Summary or cash-flow report: Where is cash coming from and going?  
  • Budget versus Actual: Is performance aligned with the plan?  

Important reminder 

Real-time reporting is only useful when transactions are correctly coded and reconciled. 

Poor bookkeeping creates misleading reports—even when the software looks impressive. 

Good software does not automatically create good numbers. 
Correct setup, regular bookkeeping and meaningful review still matter. 

6. Payroll, STP and Employee Self-Service

Australian employers have payroll, PAYG withholding, superannuation, leave and Single Touch Payroll obligations. 

Xero Payroll can calculate employee pay, tax, superannuation and leave, while supporting STP reporting. Employees can use Xero Me to view payslips, submit leave requests and record timesheets from their phones.  

Why employee self-service is valuable 

It can reduce administration by allowing employees to: 

  • view their own payslips;  
  • check leave balances;  
  • submit leave requests;  
  • complete timesheets; and  
  • submit certain expense claims.  

What still requires attention 

Payroll software does not replace correct: 

  • employee classifications;  
  • pay rates;  
  • award interpretation;  
  • superannuation settings;  
  • leave setup; or  
  • payroll review.  

Review every pay run before finalising and lodging it. 

7. GST Tracking and BAS Preparation

Xero can track GST on transactions and assist with preparing BAS information. Cloud accounting software can also support Australian compliance tasks such as GST tracking, BAS preparation and STP reporting.  

Before relying on the BAS figures, check: 

  • all bank accounts are reconciled;  
  • sales have been completely recorded;  
  • supplier bills and expenses are entered;  
  • GST-free and input-taxed transactions are coded correctly;  
  • private expenses are separated;  
  • asset purchases are reviewed;  
  • payroll accounts agree with payroll reports; and  
  • clearing accounts do not contain unexplained balances.  

BAS Tip: Xero calculates based on how transactions have been entered. It cannot determine whether an incorrect GST code reflects the actual tax treatment. 

For this reason, the BAS should be reviewed before lodgement.

8. Xero Projects and Job Profitability

A business can be busy and still lose money on individual jobs. 

Xero Projects can track time, expenses, project budgets, invoices and job profitability. Tracked time and costs can feed into project invoices, while reports compare estimates against actual results.  

This feature may be useful for: 

  • consultants;  
  • trades businesses;  
  • agencies;  
  • designers;  
  • engineers;  
  • builders;  
  • IT providers; and  
  • other project-based businesses.  

Questions project tracking can help answer 

  • Which jobs are most profitable?  
  • Are quoted hours realistic?  
  • Are material costs increasing?  
  • Is too much time being written off?  
  • Has all billable work been invoiced?  
  • Is a project going over budget?  

Revenue alone does not show whether a job was successful. 

You need to compare revenue against the labour, materials and overheads required to deliver it. 

9. The Xero Mobile App

Small business owners are rarely sitting at a desk all day. 

A mobile accounting app can allow you to send invoices, capture receipts, reconcile transactions and review cash flow from a phone or tablet.  

Useful mobile habits 

Use the app to: 

  • photograph a receipt immediately;  
  • send an invoice after completing a job;  
  • check whether a customer has paid;  
  • reconcile simple transactions;  
  • monitor overdue invoices; and  
  • review key figures before a meeting.  

Small actions completed regularly can prevent a large backlog from developing. 

10. Xero Integrations and Automation

Your accounting system does not need to operate by itself. 

Xero supports connected apps and integrations that can extend functions such as document capture, approvals, payroll, inventory, ecommerce, payments, forecasting and reporting.  

Depending on your business, integrations may help connect Xero with: 

  • receipt and bill-capture software;  
  • expense approval systems;  
  • ecommerce platforms;  
  • point-of-sale systems;  
  • inventory management;  
  • time tracking;  
  • rostering;  
  • payroll tools;  
  • payment gateways;  
  • cash-flow forecasting; and  
  • management reporting.  

Xero is also introducing more AI-supported functionality through JAX, including transaction reconciliation, bill and receipt capture, GST and BAS visibility, and plain-language questions based on current Xero data. Availability may vary by plan and the feature may still be in beta.  

Do not add apps without a plan 

Before connecting an app, ask: 

  1. What problem will it solve?  
  2. Who will use it?  
  3. Will it replace an existing process?  
  4. Will the data flow correctly into Xero?  
  5. Who will review errors or exceptions?  
  6. Does the benefit justify the monthly cost?  

Automation should simplify the workflow—not create another system that nobody manages. 

Bonus Feature: Invite Your Accountant or Bookkeeper

One major benefit of cloud accounting is that authorised users can work from the same current information. 

This means your accountant or bookkeeper can review the file without waiting for backups, emailed spreadsheets or paper reports. Xero describes its software as connecting business owners with their bank, advisers and other business apps.  

Use appropriate user permissions so each person only has access to the information they need. 

How Many of These Features Are You Actually Using?

Using Xero effectively is not about activating every available feature. 

It is about selecting the tools that: 

  • suit your business;  
  • reduce unnecessary administration;  
  • improve the accuracy of your records;  
  • provide better financial visibility; and  
  • help you make decisions earlier.  

A simple, well-managed Xero file is more valuable than a complicated file full of unused apps, duplicated processes and unreconciled transactions. 

Quick Xero Health Check

Ask yourself: 

  • Are all business accounts connected?  
  • Is the bank reconciled regularly?  
  • Are invoices sent promptly?  
  • Are automatic reminders active?  
  • Are receipts attached to transactions?  
  • Do I review reports every month?  
  • Is payroll reviewed before finalisation?  
  • Are GST and BAS figures checked?  
  • Do I know which projects are profitable?  
  • Are my connected apps genuinely saving time?  

If several answers are no, you may not be receiving the full value from your Xero subscription. 

Need Help Getting More From Xero?

At Elite Plus Accounting, we help Australian small businesses use Xero more effectively. 

We can assist with: 

  • Xero setup and conversion;  
  • chart-of-accounts review;  
  • bank feeds and reconciliation;  
  • invoice and payment workflow setup;  
  • payroll setup and processing;  
  • BAS and GST reviews;  
  • bookkeeping;  
  • management reporting;  
  • app integrations; and  
  • Xero training for business owners and teams.  

Stop Using Xero as a Digital Filing Cabinet 

Use it as a tool to understand your business, improve your processes and make more confident decisions. 

Elite Plus Accounting 

From Chaos To Clarity. 

📞 1300 744 733 
📧 info@eliteplusaccounting.com.au 
🌐 eliteplusaccounting.com.au 

Disclaimer

This article contains general information only and does not take into account your individual objectives, financial circumstances, software requirements or business needs. Xero features, subscription plans and availability may change. Please obtain professional advice and confirm current functionality before making accounting, taxation or software decisions. 

Penalty Notices
Home / / Director Penalty Notices (DPNs): What Every Company Director Needs to Know

Director Penalty Notices (DPNs): What Every Company Director Needs to Know

For many company directors, one of the biggest misconceptions is that business debts always remain the responsibility of the company. Unfortunately, that is not always the case. 

Under Australian taxation law, company directors can become personally liable for certain unpaid tax obligations through a mechanism known as a Director Penalty Notice (DPN). Many directors only learn about DPNs when they receive a notice from the Australian Taxation Office (ATO), and by that stage, their options may already be limited. 

Understanding how Director Penalty Notices work can help directors protect themselves, their business, and their personal assets. 

What Is a Director Penalty Notice?

A Director Penalty Notice is a formal notice issued by the Australian Taxation Office that makes a company director personally liable for specific unpaid company tax obligations. 

The purpose of the DPN regime is to encourage directors to ensure that employee withholding taxes and superannuation obligations are reported and paid on time. 

If a company fails to meet these obligations, the ATO can pursue directors personally, even though the debts originally belong to the company. This means personal assets such as bank accounts, investment properties, and other assets may potentially be exposed if the debt remains unresolved.

Which Debts Can Trigger a DPN?

Director Penalty Notices commonly relate to: 

  • PAYG Withholding liabilities 
  • Superannuation Guarantee Charge (SGC) 
  • GST liabilities in certain circumstances 

The most common triggers are unpaid PAYG withholding and unpaid superannuation obligations. 

Many directors assume that because the business is struggling financially, they can simply delay these payments until cash flow improves. Unfortunately, delaying action can significantly increase the risk of personal liability. 

What Is a Lockdown DPN?

One of the most important concepts directors need to understand is the difference between a standard DPN and a lockdown DPN. 

If PAYG withholding or Superannuation Guarantee obligations are not lodged within the required timeframes, the ATO may issue what is commonly referred to as a “Lockdown DPN.” 

A lockdown DPN is particularly serious because the director may no longer be able to avoid personal liability by: 

  • Appointing an administrator 
  • Liquidating the company 
  • Restructuring the business 

In simple terms, the debt becomes locked to the director personally. This is why timely lodgement is just as important as timely payment. 

Many directors focus on paying the debt but forget that lodging BAS and payroll obligations on time can be equally critical. 

Why Do Directors Receive DPNs?

Director Penalty Notices are often issued when businesses experience: 

  • Cash flow difficulties 
  • Poor bookkeeping 
  • Unlodged BAS statements 
  • Payroll compliance issues 
  • Unpaid superannuation 
  • Rapid business growth without proper financial controls 

In many cases, the underlying issue is not profitability. 

We frequently see profitable businesses fall behind simply because they lack visibility over upcoming obligations and cash flow requirements.

The Warning Signs

Businesses often show warning signs well before a Director Penalty Notice arrives. 

Common indicators include: 

  • Constantly paying the ATO late 
  • BAS lodgements falling behind 
  • Superannuation remaining unpaid 
  • Using GST funds to cover operating expenses 
  • Missing payroll obligations 
  • Poor cash flow forecasting 

Unfortunately, many business owners only seek help after receiving an ATO notice. By then, available options may be significantly reduced.

Can a Director Avoid Personal Liability?

The best way to avoid Director Penalty Notices is prevention. 

Directors should ensure: 

  • BAS are lodged on time 
  • PAYG withholding is reported correctly 
  • Superannuation is paid by due dates 
  • Cash flow is monitored regularly 
  • Payroll obligations are reviewed monthly 

Regular financial reporting can help identify issues long before they become compliance problems. 

When directors understand exactly what is owed, when it is due, and how much cash is available, they are in a much stronger position to make informed decisions.

What Should You Do If You Receive a DPN?

If you receive a Director Penalty Notice: 

  1. Do not ignore it. 
  1. Review the notice carefully. 
  1. Determine the debts involved. 
  1. Obtain professional advice immediately. 
  1. Engage with the ATO as soon as possible. 

Time is critical. 

The earlier action is taken, the more options may be available. 

Ignoring the notice can result in significant personal financial consequences.

How Elite Plus Accounting Can Help

At Elite Plus Accounting, we help business owners stay ahead of ATO obligations through proactive bookkeeping, payroll management, BAS lodgements, management reporting, and Virtual CFO services. 

Our goal is to identify risks before they become serious compliance issues. 

By maintaining accurate records, monitoring cash flow, and ensuring obligations are lodged on time, directors can significantly reduce their exposure to Director Penalty Notices.

Final Thoughts

Director Penalty Notices are one of the most significant risks company directors faces. 

Many directors are surprised to learn that unpaid PAYG withholding, and superannuation obligations can potentially become personal liabilities. 

The key takeaway is simple: 

Don’t wait for an ATO notice before taking action. 

Strong bookkeeping, timely lodgements, regular reporting, and proactive financial management are often the best defence against Director Penalty Notices. 

If you are concerned about overdue BAS, unpaid superannuation, payroll compliance, or potential director exposure, speak with Elite Plus Accounting today. 

Important Disclaimer 

This article contains general information only and does not constitute taxation, legal, financial, or business advice. Professional advice should be obtained before acting on any information contained in this article. 

Paying Yourself More Wages Doesn't Always Mean Less Tax
Home / / Paying Yourself More Wages Doesn’t Always Mean Less Tax

Paying Yourself More Wages Doesn’t Always Mean Less Tax

A lot of business owners believe one simple idea: pay yourself more wages, and you’ll pay less tax. It makes sense on the surface. Less profit in the company should mean a smaller tax bill, right?

But this is one of the most common tax myths we hear at Elite Plus Accounting. And it can lead to some costly decisions.

The truth is, tax planning isn’t about reducing the tax bill in one part of your business. It’s about looking at your whole financial picture, your company, yourself, and any trusts you run, and working out the best result across all of them together.

The Myth: "Extra Wages Will Save Me Tax"

Here’s the thinking many directors follow: take more wages out of the company before the financial year ends, and the company will owe less tax.

It sounds like a smart move. But it often isn’t.

What Actually Happens When You Take More Wages

Yes, extra wages lower your company’s profit, and that does lower the company’s tax bill. But that’s only half the story. When you pay yourself more, a few other things happen too:

  • Your own personal taxable income goes up
  • More PAYG withholding gets taken out
  • You might get pushed into a higher tax bracket
  • Your Medicare Levy could increase
  • You may owe more in superannuation
  • Your business has less cash left over for growth

So the tax hasn’t disappeared. It has just moved from the company to you personally.

A Simple Example

Let’s say your company makes a profit of $100,000 before you take any director wages. You decide to pay yourself an extra $50,000.

At first, this looks great:

  • The company’s profit drops
  • The company’s tax bill drops

But then look at what happens on your side:

  • You now have an extra $50,000 counted as your personal income
  • More tax gets withheld from your pay
  • Your personal tax bill can jump up
  • Your overall cash flow might actually get worse

When you add it all up, the total tax you save could be much smaller than you expected. In some cases, you might barely save anything at all.

Isn't a Tax Deduction Always a Good Thing?

Not really. Just because the company gets to claim a deduction doesn’t mean that money is free.

Every dollar paid out as wages works like this:

  • The company claims it as a deduction
  • You, the individual, have to declare it as income

So the real question isn’t whether the company gets a deduction. It’s this: which part of your business structure is paying the tax, and how much tax will it pay?

Looking only at the company’s numbers, without checking your personal tax position too, can lead you to make the wrong call.

What Real Tax Planning Looks Like

Good tax planning isn’t just about one number on one tax return. It looks at the full picture, including:

  • Company tax: What your company owes after claiming wages, expenses, and other deductions. This is only one piece of the puzzle, not the whole picture.
  • Personal tax: What you owe as an individual once wages, dividends, or trust income are added to your tax return. This can shift dramatically depending on how you’re paid.
  • Trust distributions: If you run a trust, income can be spread among family members or beneficiaries, sometimes lowering the total tax paid across the group.
  • Dividends and franking credits: Dividends paid from company profits often come with franking credits, which can reduce or offset the tax you personally pay on that income.
  • Director loan accounts: Money you borrow from or lend to your company needs careful handling, or it can create unexpected tax bills or compliance issues down the track.
  • Superannuation opportunities: Contributing to super can lower taxable income now while building long-term savings, often at a much lower tax rate than wages.
  • Asset protection: The way you structure wages, dividends, and trusts can affect how well your personal and business assets are protected from risk or legal claims.
  • Cash flow needs: Even the best tax strategy is useless if it leaves you short on cash. Your day-to-day running costs always need to be considered first.
  • Future investment plans: If you’re planning to buy equipment, expand, or invest, keeping profit in the company might serve you better than taking it out now.
  • Long-term goals for your business: Where you want your business to be in five or ten years should shape today’s decisions, not just this year’s tax bill.

No two businesses are the same. What works well for one business owner might be the wrong choice for someone else, even if their businesses look similar on paper.

The Right Question to Ask

Most business owners ask, “How do I pay less company tax?” That’s the wrong question. The better question is: “How do I legally pay less tax across my whole business, while keeping enough cash flow and setting myself up for long-term growth?”

Sometimes taking extra wages really is the smart move. Other times, dividends work out better. Sometimes trust distributions make more sense. And sometimes, leaving the profit inside the company is the best choice of all. There’s no single right answer. It depends on your full financial picture, not just one figure on one tax return.

Talk to Elite Plus Accounting Before You Decide

Before you increase your wages, take extra drawings, declare dividends, or make any tax move, it pays to check the full picture first, not just what it does to your company’s tax bill.

Getting this wrong can cost you thousands of dollars. Getting it right can save you thousands more.

Get in touch with the team at Elite Plus Accounting today, and let’s work out the smartest way to structure your pay, your business, and your future.

Accountants call on tax time
Home / / Your Accountant Shouldn’t Only Speak To You At Tax Time

Your Accountant Shouldn’t Only Speak To You At Tax Time

Many business owners only hear from their accountant when something is due. 

A BAS lodgement deadline arrives. 

A tax return becomes overdue. 

An ATO letter lands in the inbox. 

A compliance issue needs urgent attention. 

The problem is that by the time these conversations happen, the opportunity to improve business performance may already have been missed. 

Compliance Is Important But It's Not Enough

Most business owners understand they need an accountant to help with tax and compliance obligations. However, successful businesses rarely grow simply because their tax returns are lodged on time. 

The businesses that perform best financially are usually the ones that understand their numbers throughout the year, not just at year-end. 

Knowing what happened last financial year is useful. 

Knowing what is happening right now is far more valuable.

The Cost of Flying Blind

One of the most common issues we see is business owners making decisions without clear financial visibility. 

Questions such as: 

  • Where is all the cash going? 
  • Why is there profit in the reports but little money in the bank account? 
  • How much GST is building up for the next BAS? 
  • Can the business afford to hire another employee? 
  • Is revenue actually increasing, or are costs simply rising faster? 

Without regular financial reporting and guidance, many of these questions remain unanswered until problems become difficult to fix. 

What Business Owners Actually Need

Modern accounting should be about more than historical reporting. 

Business owners need access to: 

Cash Flow Visibility 

Cash flow is often more important than profit. 

Understanding future cash movements helps businesses avoid unexpected shortfalls and make confident decisions. 

Management Reporting 

Monthly management reports provide insight into revenue, expenses, profitability and key performance indicators. 

Good reporting turns financial data into meaningful business information. 

Proactive Tax Planning 

Effective tax planning should happen before the end of the financial year, not after. 

Planning ahead allows business owners to make informed decisions and avoid surprises. 

Payroll and Super Compliance Support 

Payroll obligations continue to become more complex. 

Regular reviews help ensure employee payments, superannuation obligations and reporting requirements remain compliant. 

Strategic Financial Guidance 

Business owners need trusted advisors who can help interpret the numbers and identify opportunities for growth, efficiency and improved profitability. 

The Most Successful Businesses Review Their Numbers Regularly

Businesses that regularly review their financial performance are generally better positioned to: 

  • Improve profitability 
  • Manage cash flow 
  • Plan for growth 
  • Reduce financial stress 
  • Make informed business decisions 

They are not waiting until tax time to understand how their business is performing. 

They already know.

From Compliance To Clarity

At Elite Plus Accounting, we believe accounting should provide more than compliance support. 

It should provide clarity. 

The right accountant helps you understand where your business stands today, where it is heading tomorrow, and what actions you can take to improve results. 

Because good accounting is not just about lodging tax returns. 

It’s about: 

✔ Clarity 

✔ Visibility 

✔ Planning 

✔ Better Business Decisions 

If you only hear from your accountant at tax time, it may be time to consider a more proactive approach. 

Elite Plus Accounting 

From Chaos To Clarity 

Payday Super
Home / / Payday Super Starts 1 July 2026: The Complete Guide for Australian Employers

Payday Super Starts 1 July 2026: The Complete Guide for Australian Employers

Australian businesses are about to experience one of the biggest payroll and superannuation changes in years.

From 1 July 2026, the Federal Government’s new “Payday Super” reforms will require employers to pay superannuation at the same time as wages instead of quarterly. (Australian Taxation Office)

For many businesses, this is far more than a simple payroll update.

It is:

  • A cash flow change
  • A compliance change
  • A payroll systems change
  • A business process change
  • A bookkeeping and reporting change

Businesses that prepare early are likely to have a much smoother transition than those waiting until the last minute.

At Elite Plus Accounting, we believe employers should start preparing now — especially businesses with manual payroll systems, poor bookkeeping processes, or existing payroll compliance issues.

What Is Payday Super?

Under the current system, employers generally pay superannuation quarterly.

From 1 July 2026, employers will instead need to ensure super contributions are paid at the same time as salary and wages. Contributions will generally need to reach employees’ super funds within 7 business days of payday. (Australian Taxation Office)

This means: 

  • Weekly payroll = weekly super payments
  • Fortnightly payroll = fortnightly super payments
  • Monthly payroll = monthly super payments

The reform aims to reduce unpaid super, improve employee retirement outcomes, and give the ATO greater visibility over unpaid or late super obligations. (Australian Taxation Office)

Why Is Payday Super Being Introduced?

According to Treasury and the ATO, billions of dollars in superannuation have historically gone unpaid or been paid late.

The Government introduced Payday Super to:

  • Reduce unpaid super
  • Improve retirement savings for employees
  • Increase transparency
  • Help employees identify unpaid super earlier
  • Prevent large unpaid quarterly liabilities from accumulating
  • Improve real-time reporting through STP systems (Treasury)

For employees, this means greater visibility and faster payments.

For employers, it means much tighter payroll compliance obligations.

What Changes From 1 July 2026?

Super Must Be Paid With Wages

The biggest change is timing.

Businesses can no longer wait until quarterly due dates to process super.

Instead, super will generally need to be paid every pay cycle. (Fair Work Ombudsman)

For example:

  • Weekly payroll = super paid weekly
  • Fortnightly payroll = super paid fortnightly
  • Monthly payroll = super paid monthly

This will significantly change payroll workflows for many businesses.

The 7 Business Day Rule

One of the most important parts of the reform is the new payment deadline.

Super contributions must generally reach the employee’s super fund within 7 business days after payday. (Australian Taxation Office)

Importantly:

  • The payment is not considered complete when it leaves your bank account
  • The funds must actually reach the employee’s super fund

This means businesses may need to:

  • Process payroll earlier
  • Approve payroll faster
  • Ensure super data is accurate
  • Avoid rejected super transactions

Exceptions To The 7 Day Rule

There are limited exceptions.

For example:

  • New employees generally allow a 20-business-day timeframe for the first contribution
  • Employees changing super funds may also have longer initial deadlines (Fair Work Ombudsman)

However, these are exceptions — not the standard rule.

Most businesses will still need systems capable of processing super very quickly.

Why Small Businesses May Feel The Biggest Impact

Small businesses are likely to experience the biggest operational pressure under Payday Super. 

Many small businesses currently: 

  • Pay super quarterly 
  • Rely on the extra cash flow buffer 
  • Use manual payroll systems 
  • Have inconsistent bookkeeping 
  • Delay payroll reconciliations 

That flexibility largely disappears under Payday Super. 

Instead of holding super liabilities for up to three months, businesses will need to fund super much sooner.

The Cash Flow Impact Could Be Significant

This is one of the most overlooked aspects of Payday Super. 

Many employers are focusing only on payroll processing — but cash flow may become the real challenge. 

Under the current system, a business may hold super liabilities for several weeks or months before payment. 

From July 2026: 

  • Super becomes a much more immediate cash outflow 
  • Payroll funding pressure increases 
  • Cash flow forecasting becomes more important 

This may particularly affect: 

  • Construction businesses 
  • Hospitality businesses 
  • Medical practices 
  • Retail businesses 
  • Seasonal businesses 
  • Labour-intensive businesses

Businesses With Poor Bookkeeping May Struggle

Businesses with weak bookkeeping systems may face serious compliance risks under Payday Super. 

Common issues we often see include: 

  • Unreconciled payroll accounts 
  • Incorrect employee setup 
  • Incorrect super calculations 
  • Payroll journals not reconciled 
  • Missing employee details 
  • Incorrect award classifications 
  • Manual spreadsheets 
  • Delayed payroll processing 

Under the new rules, these issues could result in: 

  • Missed deadlines 
  • Rejected super payments 
  • Penalties 
  • ATO scrutiny

Increased ATO Visibility Through STP

Single Touch Payroll (STP) already gives the ATO real-time payroll visibility.

Under Payday Super, the ATO’s visibility will increase significantly. (AustralianSuper)

This means:

  • Late payments may be detected faster
  • Errors may become easier to identify
  • Non-compliance could be identified sooner
  • Businesses may face quicker enforcement action

The days of fixing payroll issues months later may become much harder.

The SBSCH Is Closing

Another major change is the closure of the ATO Small Business Superannuation Clearing House (SBSCH).

The SBSCH will close from 1 July 2026. (CommBank)

This means businesses currently relying on SBSCH must:

  • Find a replacement system
  • Update payroll workflows
  • Potentially migrate software platforms

Businesses leaving this too late may face major operational disruption.

Payroll Software Will Become More Important Than Ever

Businesses still relying on:

  • Manual payroll systems
  • Spreadsheets
  • Older software
  • Non-integrated systems

may face significant compliance challenges.

Cloud payroll systems such as Xero are already preparing businesses for the transition.

Modern payroll systems can help automate:

  • Payroll calculations
  • STP reporting
  • Super processing
  • Employee onboarding
  • Payroll compliance
  • Super reconciliation

Qualifying Earnings Will Also Change

Another important change is the move toward “Qualifying Earnings” (QE).

Currently, super is generally calculated using Ordinary Time Earnings (OTE).

Under Payday Super, super calculations may broaden to include additional earnings categories. (AustralianSuper)

This means some businesses may need to review:

  • Payroll classifications
  • Salary sacrifice arrangements
  • Contractor arrangements
  • Commission structures

Real-Time Payment Infrastructure Is Expanding

The reforms are also linked to broader payment infrastructure changes.

Super funds will increasingly move toward real-time payment processing using Australia’s New Payments Platform (NPP). (AustralianSuper)

This aims to:

  • Reduce payment delays
  • Improve data matching
  • Speed up processing
  • Reduce rejected transactions

However, businesses must ensure payroll data accuracy becomes much stronger.

What Happens If You Get It Wrong?

Businesses failing to comply may face:

  • Super Guarantee Charge (SGC)
  • Interest charges
  • Administrative penalties
  • Additional compliance scrutiny

Late super payments may still create non-deductible consequences in certain circumstances. (Fair Work Ombudsman)

Importantly, rejected payments may still be treated as unpaid if they do not reach the fund within required timeframes. (Mercer Super Australia)

Example: How Payday Super Changes Cash Flow

Let’s say a business has: 

  • 15 employees 
  • $18,000 monthly super obligations 

Under the current quarterly model, the business may hold that cash for several months before payment. 

Under Payday Super: 

  • Super may need to leave the business account weekly or fortnightly 
  • Cash reserves reduce faster 
  • Payroll timing becomes critical 

This is why cash flow forecasting is now more important than ever.

Businesses Should Start Preparing Now

Waiting until June 2026 is risky. 

Businesses should begin preparing now by reviewing: 

1. Payroll Software

Ask: 

  • Is your software Payday Super ready? 
  • Can it automate super? 
  • Can it process real-time reporting? 

2. Cash Flow Forecasting

Businesses should: 

  • Review payroll funding 
  • Build cash buffers 
  • Forecast super liabilities more frequently 

3. Bookkeeping Accuracy

Now is the time to: 

  • Reconcile payroll 
  • Fix super discrepancies 
  • Review payroll coding 
  • Confirm employee setup accuracy 

4. Employee Onboarding Processes

Businesses should ensure: 

  • Employee super details are correct 
  • Stapled fund processes are working 
  • Payroll records are updated 

5. Payroll Approval Timing

Businesses may need: 

  • Faster approval workflows 
  • Better payroll delegation 
  • Improved internal controls

Industries Likely To Be Most Affected

Some industries may experience greater operational pressure, including: 

  • Hospitality 
  • Construction 
  • Medical practices 
  • Manufacturing 
  • Labour hire 
  • Transport 
  • Retail 
  • Aged care 
  • NDIS providers 

These industries often have: 

  • Large payrolls 
  • Casual staff 
  • High employee turnover 
  • Complex awards 
  • Variable payroll cycles

Common Mistakes Businesses May Make

We expect many businesses may: 

  • Leave preparations too late 
  • Ignore cash flow impacts 
  • Continue using outdated payroll systems 
  • Fail to reconcile payroll 
  • Miss super deadlines 
  • Underestimate compliance complexity 

Early preparation will likely provide a major advantage.

Payday Super Could Actually Benefit Some Businesses

While many businesses see this as a compliance burden, there may also be benefits. 

More frequent super payments may: 

  • Reduce end-of-quarter stress 
  • Improve payroll discipline 
  • Reduce accumulated liabilities 
  • Improve employee trust 
  • Create cleaner payroll reporting 

Businesses with strong systems may actually find payroll becomes more streamlined over time.

How Elite Plus Accounting Can Help

At Elite Plus Accounting, we are already helping businesses prepare for Payday Super by reviewing:

  • Payroll systems
  • STP compliance
  • Super reconciliation
  • Cash flow forecasting
  • Payroll software
  • Xero payroll setup
  • Payroll workflows
  • Bookkeeping systems

We can also help identify compliance risks before the reforms become mandatory.

Final Thoughts

Payday Super is one of the most significant payroll reforms Australian businesses have faced in recent years. 

Businesses that prepare early are likely to: 

  • Reduce stress 
  • Improve compliance 
  • Avoid penalties 
  • Improve payroll accuracy 
  • Transition more smoothly 

Businesses that ignore the reforms until the last minute may face operational and cash flow challenges. 

The best time to prepare is now.

Need Help Preparing For Payday Super?

If you would like assistance reviewing your payroll systems, bookkeeping, payroll compliance, or cash flow processes before 1 July 2026, contact Elite Plus Accounting today.

Important Disclaimer

This article contains general information only and does not constitute taxation, accounting, payroll, financial, or legal advice.

The Payday Super reforms continue to evolve, and legislation, ATO guidance, and implementation requirements may change over time. Businesses should obtain professional advice tailored to their specific circumstances before acting on any information contained in this article.

Elite Plus Accounting accepts no liability for reliance placed on this article without obtaining professional advice specific to your business circumstances. (Australian Taxation Office)

Cents per Kilometre Method
Home / / What You Can and Cannot Claim Under the Cents per Kilometre Method

What You Can and Cannot Claim Under the Cents per Kilometre Method

Work-related car expense claims are one of the most common deductions claimed in Australian tax returns each year. However, they are also one of the areas most closely reviewed by the Australian Taxation Office (ATO). 

Many taxpayers incorrectly assume that simply using their vehicle for work means all travel is deductible. Unfortunately, this is not always the case. 

Understanding the rules around the Cents per Kilometre Method is essential to ensuring your claim is both accurate and compliant. 

At Elite Plus Accounting, we regularly assist individuals and businesses with tax returns, financial reporting, advisory services, and strategic insights to help clients maximise legitimate deductions while remaining compliant with Australian taxation laws. 

This guide explains: 

  • what the cents per kilometre method is,  
  • what travel may be claimable,  
  • what cannot generally be claimed,  
  • common mistakes taxpayers make,  
  • and the records you should keep.

What is the Cents per Kilometre Method?

The cents per kilometre method is a simplified way of claiming work-related car expenses in your Australian tax return. 

Rather than separately claiming: 

  • fuel,  
  • registration,  
  • insurance,  
  • servicing,  
  • depreciation,  
  • and repairs,  

the ATO allows eligible taxpayers to claim a fixed rate for each work-related kilometre travelled. 

Deduction=Business Kilometres×ATO Rate per km\text{Deduction} = \text{Business Kilometres} \times \text{ATO Rate per km}Deduction=Business Kilometres×ATO Rate per km 

The ATO rate is designed to cover the general running costs of operating a vehicle. 

Because these costs are already included in the rate, taxpayers generally cannot separately claim: 

  • petrol,  
  • insurance,  
  • servicing,  
  • tyres,  
  • or depreciation again under this method.

Maximum Kilometres You Can Claim

Under the cents per kilometre method: 

  • taxpayers may generally claim up to 5,000 business kilometres per vehicle, per financial year.  

Importantly, this does not mean: 

  • everyone is automatically entitled to claim 5,000 kilometres.  

Taxpayers should still be able to reasonably explain: 

  • how the kilometres were calculated,  
  • why the travel was work-related,  
  • and how the estimate was determined.  

The ATO may request supporting information if a claim is reviewed.

What You May Be Able to Claim

The deductibility of travel depends heavily on the individual circumstances of each taxpayer and the nature of the travel undertaken. 

Examples of travel that may generally qualify include: 

Travel Between Work Locations 

Travel between separate workplaces during the day may be deductible. 

Examples may include: 

  • travelling from the office to a client site,  
  • attending external meetings,  
  • travelling between multiple worksites,  
  • or visiting suppliers and customers.  

Example 

An employee travels: 

  • from their office,  
  • to a client meeting,  
  • then to another work location.  

The travel between those locations may generally qualify as deductible. 

Client Visits and Business Appointments 

Taxpayers whose work requires them to travel to clients or customers may potentially claim those kilometres. 

This commonly applies to: 

  • consultants,  
  • tradies,  
  • sales representatives,  
  • mobile service providers,  
  • real estate professionals,  
  • and accountants attending client meetings.  

Travel Between Two Separate Jobs 

Travel directly between two unrelated jobs may generally be deductible. 

Example 

A taxpayer: 

  • works at one employer during the day,  
  • then travels directly to another employer for an evening shift.  

The travel between the two workplaces may qualify. 

Carrying Bulky Equipment 

In limited situations, home-to-work travel may become deductible where: 

  • bulky tools or equipment are essential,  
  • transportation is necessary,  
  • and secure storage is unavailable at the workplace.  

This exception is interpreted narrowly and should not automatically be assumed. 

What Generally Cannot Be Claimed

Understanding what cannot be claimed is equally important. 

Normal Home to Work Travel 

Ordinary travel between home and a regular workplace is generally considered private in nature and is typically not deductible. 

This remains the case even where: 

  • the commute is long,  
  • overtime is worked,  
  • or minor work items are carried.  

Example 

Driving: 

  • from home to your regular office,  
  • then returning home,  

will generally not qualify as deductible travel. 

Personal or Domestic Travel 

Private travel is generally not deductible. 

Examples include: 

  • shopping trips,  
  • school drop-offs,  
  • holidays,  
  • personal errands,  
  • and family-related travel.  

Only genuine income-producing travel may potentially qualify. 

Reimbursed Expenses 

If an employer has already reimbursed a taxpayer for travel expenses, those same expenses generally cannot also be claimed as a tax deduction. 

Parking and Traffic Fines 

Fines and penalties are generally not deductible under Australian taxation law. 

This includes: 

  • speeding fines,  
  • parking infringements,  
  • toll penalties,  
  • and traffic-related fines.

Do You Need Receipts?

One of the advantages of the cents per kilometre method is that detailed receipts for: 

  • fuel,  
  • servicing,  
  • registration,  
  • and insurance  

are generally not required. 

However, taxpayers should still maintain records supporting: 

  • how business kilometres were calculated,  
  • the purpose of the travel,  
  • and how the estimate was determined.  

Supporting evidence may include: 

  • diaries,  
  • appointment books,  
  • calendars,  
  • spreadsheets,  
  • odometer readings,  
  • or work schedules.

Common Mistakes Taxpayers Make

The ATO regularly reviews work-related car expense claims and may closely examine claims that appear excessive or unsupported. 

Common mistakes include: 

  • claiming exactly 5,000 kilometres every year without evidence,  
  • incorrectly claiming home-to-work travel,  
  • claiming private trips as work-related,  
  • or attempting to separately claim fuel and servicing costs under this method.  

Taxpayers should ensure claims are: 

  • reasonable,  
  • properly substantiated,  
  • and consistent with their occupation and work duties.

Example Calculation

If a taxpayer travelled 2,500 genuine work-related kilometres during the financial year, the deduction may generally be calculated as follows: 

2500×ATO Rate per km2500 \times \text{ATO Rate per km}2500×ATO Rate per km 

The final deductible amount will depend on the applicable ATO rate for the relevant financial year.

Why Professional Advice Matters

Work-related vehicle deductions can become more complex where taxpayers: 

  • work from home,  
  • operate a business,  
  • receive travel allowances,  
  • use multiple vehicles,  
  • or have novated lease arrangements.  

Obtaining advice from a qualified tax professional can help ensure: 

  • deductions are correctly claimed,  
  • risks are minimised,  
  • and compliance obligations are properly managed.  

At Elite Plus Accounting, our CPA-led finance team provides tax returns, bookkeeping, financial services, virtual CFOs, financial reporting, financial planning, and CFO services tailored to businesses and individuals across Australia and New Zealand. 

From strategic insights and cash flow management to international finance and long term business growth planning, we help clients move from chaos to clarity with practical and commercially focused support.

Important Disclaimer

This article contains general information only and does not constitute taxation, financial, or legal advice. The deductibility of car expenses depends on each taxpayer’s individual circumstances, employment arrangements, and the specific nature of the travel undertaken. 

While every effort has been made to ensure the accuracy of the information provided, taxation laws and ATO interpretations may change over time and may differ based on individual circumstances. Readers should seek professional advice tailored to their specific situation before relying on or acting upon any information contained in this article. 

Elite Plus Accounting accepts no liability for any loss, damage, or decisions made as a result of reliance on this content. Taxpayers remain responsible for ensuring that all deductions claimed are accurate, properly substantiated, and compliant with Australian taxation laws and ATO requirements. 

Liability limited by a scheme approved under Professional Standards Legislation.

tax deduction
Home / / $1,000 Tax Deduction Australia: What It Really Means (And How to Maximise Your Refund)

$1,000 Tax Deduction Australia: What It Really Means (And How to Maximise Your Refund)

Most Australians Will Get This Wrong

You’ve probably seen headlines about the “$1,000 tax deduction” and thought: 

👉 “Great — I’ll get an extra $1,000 back this year.” 

That’s one of the biggest misconceptions we’re seeing right now. 

In reality: 

It’s not a $1,000 refund 
It doesn’t apply yet 
And choosing it blindly

could actually reduce your tax return 

At Elite Plus Accounting, we’re already seeing confusion around this — and it’s exactly how people end up overpaying tax without realising it. 

What Is the $1,000 Tax Deduction?

The government has proposed a standard $1,000 work-related deduction to simplify tax returns for individuals. 

Instead of tracking receipts and claiming each expense separately, you’ll be able to: 

  • Claim a flat $1,000  
  • Avoid keeping detailed records (for this portion)  
  • Lodge your tax return faster  

👉 On the surface, it sounds simple and convenient. 

But tax isn’t just about simplicity — it’s about optimisation. 

Important: It Does NOT Apply Yet

This is where most people get caught out. 

The $1,000 deduction: 

  • Starts from 1 July 2026  
  • Applies to the 2026–27 financial year  
  • First available in tax returns lodged from July 2027  

That means: You cannot claim this in your current tax return 

If you’re hearing otherwise — that’s a red flag. 

It’s Not a $1,000 Refund

Let’s clear this up. 

A deduction reduces your taxable income, not the amount you receive. 

Example: 

If you earn $80,000: 

  • A $1,000 deduction reduces taxable income to $79,000  
  • Tax saving ≈ $300 (depending on your tax bracket)  

👉 So no — you’re not getting $1,000 back in cash.

Standard vs Actual Deductions (This Is Where It Matters)

When the rule comes into effect, you’ll have two choices: 

Option What It Means Best For Risk
Standard $1,000 No receipts, fixed claim Low expenses Miss out on higher deductions
Actual Expenses Claim real costs Business owners, professionals Requires records

You must choose one — not both

Where Most People Lose Money

This is what we see in real life: 

  • Someone hears about the $1,000 deduction  
  • They choose it because it’s “easy”  
  • They actually had $2,000–$5,000 in legitimate expenses  

Result: They overpay tax — legally, but unnecessarily. 

ATO Rules: What You Must Know Before Claiming Deductions

Whether you use the standard deduction or claim actual expenses, the ATO rules still matter. 

To claim a deduction, all three conditions must be met: 

  1. The expense must be directly related to earning your income  
  2. You must have paid for it yourself  
  3. You must have records to prove it  

👉 If even one of these is missing, your claim can be denied. 

This is where many taxpayers go wrong — especially when relying on simplified methods.

What You Can Claim Right Now

Until the new rule begins, current ATO deduction rules still apply. 

You may be eligible to claim: 

  • Work-related travel  
  • Home office expenses  
  • Phone and internet usage  
  • Tools and equipment  
  • Work-related education  
  • Uniforms and protective clothing  

But only if: 

  • It’s work-related  
  • You paid for it  
  • You have evidence (receipts, logs, etc.)

5 Common Tax Deduction Mistakes (That Cost You Money)

1. Assuming everything work-related is deductible

Not all expenses qualify — personal use must be excluded. 

2. Claiming without proper records

ATO audits often focus on missing documentation. 

3. Double-claiming expenses

You cannot claim the same expense twice under different categories. 

4. Choosing the $1,000 deduction without comparison

This is one of the biggest risks once it becomes available. 

5. Relying on outdated or incorrect advice

Tax rules change — what worked last year may not apply now. 

Who Should Avoid the $1,000 Deduction?

The standard deduction may not suit you if you are: 

  • A business owner or sole trader  
  • A contractor with varying expenses  
  • Working from home regularly  
  • Using your personal vehicle for work  
  • Paying for tools, subscriptions, or training  

👉 In these cases, detailed claims usually result in higher deductions

Real Insight From Our Work

We recently reviewed a client’s financials and discovered: 

$16,500 in GST had been overpaid due to incorrect treatment over multiple years 

This wasn’t intentional — it was due to misunderstanding the rules. 

The same thing happens with tax deductions every year. 

Smart Strategy: Simplicity vs Optimisation 

The $1,000 deduction is designed for: 
Simplicity 

But most individuals — especially professionals and business owners — benefit more from:

Strategic tax planning 

If your goal is: 

  • Higher refund  
  • Lower tax liability  
  • Better financial clarity  

Then a proper review is essential. 

How to Actually Maximise Your Tax Refund

Here’s what we recommend: 

  • Review all eligible deductions  
  • Compare standard vs actual claims  
  • Ensure compliance with ATO rules  
  • Identify missed opportunities  
  • Correct past errors if needed  

👉 This is where most value is created — not just lodging a return. 

Before You Lodge Your Tax Return

Most people ask: 
“Am I paying the right amount of tax?” 

But the better question is: 
“Am I overpaying without realising it?”

Get a Free Financial Health Check

At Elite Plus Accounting, we go beyond basic tax returns. 

We help you: 

  • Identify missed deductions  
  • Fix past mistakes  
  • Improve your financial position  
  • Ensure full ATO compliance  

Many clients discover thousands in missed opportunities 

Your Options

Book a consultation 
Send us your last tax return for review 
Quick 10-minute clarity call 

Contact us today and take control of your tax position 

Why Choose Elite Plus Accounting?

  • CPA & Registered Tax Agent  
  • Xero Certified Advisors  
  • Expertise across SMEs, contractors & professionals  
  • Focus on clarity, strategy, and long-term financial outcomes 

Frequently Asked Questions

Can I claim the $1,000 deduction and other expenses?

No — you must choose either the standard deduction or actual expenses.

No — it applies from the 2026–27 financial year.

No, but only if you choose the standard method once it becomes available.

You are better off claiming actual expenses with proper records.

Yes — especially if claims appear inconsistent or unsupported.

Common Tax Mistakes Small
Home / / 9 Common Tax Mistakes Small Businesses Make and How to Avoid Them

9 Common Tax Mistakes Small Businesses Make and How to Avoid Them

Tax time catches a lot of small business owners off guard. Not because they are doing the wrong thing on purpose, but because running a business is busy, and Australian tax rules are not simple. Things slip. Records go missing. Deadlines sneak up.

The problem is, the ATO does not really care why it happened. Late lodgements, under-reported income, and missed super payments all come with penalties. And those costs can hit hard when you are already watching every dollar. Knowing what the common mistakes are is a decent first step toward not making them.

Why Small Businesses Get Tax Wrong More Often

Small business owners are usually doing five jobs at once. You are the operator, the salesperson, the customer service rep, and sometimes the bookkeeper too. Tax tends to sit at the bottom of the to-do list until it becomes urgent.

Most mistakes are not about tax knowledge at all. They come down to messy records, missed deadlines, or assumptions that turn out to be wrong. The nine mistakes below are the ones that show up most often, and they are all avoidable.

1. Poor Record-Keeping

Good tax compliance starts with good records. If you cannot show where your income came from and what your expenses were, your tax return is already on shaky ground.

The ATO can ask you to back up any claim you make, from a deduction for tools to a GST credit on a supplier invoice. Without proper documentation, you may lose deductions you were entitled to, or end up on the ATO’s radar. Tools like Xero or MYOB make this much easier, and solid bookkeeping does not have to take hours each week.

What to keep:

  • Invoices and receipts for all business expenses
  • Bank statements showing income and payments
  • Payroll records for all employees
  • Records of any asset purchases or disposals
  • Motor vehicle logbooks if claiming vehicle costs

2. Mixing Personal and Business Finances

This is one of the most common issues for sole traders and small business owners. Using the same bank account for personal spending and business transactions makes it very hard to track what is actually a business expense.

When it comes time to prepare your tax return, sorting through mixed transactions is time-consuming and error-prone. You might miss legitimate deductions, or accidentally claim personal spending as a business cost, which the ATO treats as overclaiming. The fix is simple: open a separate business bank account and use it only for business.

3. Not Registering for GST When Required

Businesses with annual turnover of $75,000 or more must register for GST. If you cross that threshold and do not register, you are still liable for the GST you should have been collecting, and the ATO can backdate that liability.

A lot of growing businesses hit that mark without realising it, especially if turnover picks up quickly. If you are getting close to $75,000, keep an eye on your numbers. Once you are registered, you lodge a BAS each quarter and report the GST you have collected and claimed.

GST Threshold Requirement
Under $75,000 per year Registration is optional
$75,000 or more per year Must register for GST
Taxi, rideshare, or Uber drivers Must register regardless of turnover
Non-profit organisations Must register if turnover is $150,000 or more

4. Missing BAS and Tax Return Deadlines

Missing a lodgement date means penalties before you have even looked at what you owe. The ATO charges a failure-to-lodge penalty, and interest can add up on top of that.

Quarterly BAS is due 28 days after the end of each quarter. Individual and company tax returns have their own deadlines, usually October for individuals lodging on their own, or later if you use a registered tax agent. If keeping track of dates is a problem, having someone handle your lodgements for you takes that risk off your plate entirely.

5. Getting Worker Classifications Wrong

Whether someone is an employee or a contractor makes a real difference to your obligations. Get it wrong and you could owe unpaid super, PAYG withholding, and leave entitlements you did not budget for.

The distinction is not just about whether someone has an ABN. The ATO looks at the actual nature of the arrangement, things like who controls how the work is done, whether the person works for multiple clients, and whether they take on financial risk. A lot of small businesses have misclassified workers as contractors when the ATO considers them employees. That can be a costly correction to make down the line.

Key differences between employees and contractors:

  • Employees work regular hours, follow your direction, and are entitled to super, leave, and PAYG withholding
  • Contractors run their own business, set their own hours, and are responsible for their own tax
  • Having an ABN does not automatically make someone a contractor
  • The ATO’s Employee/Contractor Decision Tool is free and worth using if you are unsure

6. Missing Superannuation Obligations

Super is not optional. If you have employees who earn $450 or more per month (and from July 2022, this threshold was removed, so super applies regardless of earnings), you need to make super contributions of at least 11.5% of their ordinary time earnings for 2024-25.

Super must be paid by the quarterly due date. If it is late, even by a day, you cannot claim it as a tax deduction, and you may have to pay the Superannuation Guarantee Charge on top. This catches a lot of employers out, especially when cash flow is tight near the end of a quarter. Good payroll management means super is scheduled properly, not scrambled at the last minute.

Quarter Super Contribution Due Date
1 July to 30 September 28 October
1 October to 31 December 28 January
1 January to 31 March 28 April
1 April to 30 June 28 July

7. Claiming Deductions Without Proper Evidence

Claiming deductions you are not entitled to is one of the ATO’s main data-matching targets. But the more common issue is actually businesses missing deductions they are entitled to because they did not keep records.

Both situations are a problem. Overclaiming without receipts can lead to penalties. Under-claiming means paying more tax than you should. Put simply: if it is a genuine business expense, keep the evidence. If it is partly personal, you can only claim the business portion.

Common deductions small businesses often miss:

  • Home office costs if you work from home
  • Accounting and bookkeeping fees
  • Bank fees on business accounts
  • Business insurance premiums
  • Subscriptions to industry-specific software or publications
  • Training and professional development costs

8. Not Planning for Tax During the Year

A lot of small business owners treat tax as a once-a-year problem. They wait until June, or later, and then deal with whatever the number turns out to be. By then, most of the moves that could have reduced the bill are off the table.

Things like prepaying certain expenses before 30 June, topping up super contributions, or using the instant asset write-off all need to happen before the financial year ends. If you are not watching your numbers during the year, those options are not available to you. This is one of the main reasons ongoing financial visibility, whether through management reports or a virtual CFO, can make a real difference to what you end up paying.

9. Trying to Handle Everything Alone

Tax law changes. Rates change. ATO focus areas shift from year to year. It is hard to stay across all of it when your main job is running a business.

The cost of getting it wrong, whether that is a penalty, a missed deduction, or a payroll error, is usually more than the cost of getting help. A registered tax agent or accountant does not just do the paperwork. They spot things you would not notice, and they make sure your obligations are met properly. If you are setting up for the first time and want to get things right from the start, proper business setup support covers registrations, structure, and obligations before any of these mistakes have a chance to happen.

Common Mistakes and How to Avoid Them

Mistake Why It Happens How to Avoid It
Poor record-keeping No system in place Use accounting software; keep all receipts
Mixing personal and business funds Convenience Separate bank account for business only
Not registering for GST Unaware of threshold Monitor annual turnover; register at $75,000
Missing lodgement deadlines No reminder system Use a tax agent or calendar reminders
Wrong worker classification Misunderstanding the rules Use the ATO's decision tool; get advice
Late super payments Cash flow issues Schedule contributions in advance each quarter
Claiming without evidence Records not kept Keep receipts and logs for all business expenses
No tax planning during the year Reactive approach Review numbers quarterly with an accountant
Doing everything alone Trying to save money Work with a registered tax agent or bookkeeper

Sorting It Out Before It Becomes a Problem

Most of these mistakes are fixable. Better records, a separate business account, and keeping track of lodgement dates will take care of several of them right away. The trickier ones, like worker classification and tax planning, are worth getting proper advice on.

Tax does not need to be the most stressful part of running a business. With the right systems in place, it just becomes another thing that gets done on time.

Working with Your Numbers, Not Against Them

Small businesses in Melbourne and across Australia lose real money every year through avoidable tax mistakes. Not from dishonesty, just from being busy and not having the right setup. Getting on top of it now, rather than after the ATO sends a letter, is almost always easier and cheaper.

At Elite Plus Accounting, we work with small business owners on exactly this kind of thing, from keeping books clean to lodging BAS on time and making sure super is right. If your tax situation feels messy or uncertain, book a free consultation and we can take a look at where things stand.

Frequently Asked Questions

What are the most common tax mistakes small businesses make in Australia?
The most common ones are poor record-keeping, missing BAS and tax return deadlines, not registering for GST when required, and making late super payments. Most of these come down to not having systems in place rather than deliberate non-compliance.
The ATO charges a failure-to-lodge penalty based on your business size. For small businesses, the base penalty unit is currently $330, and penalties accrue for every 28 days the lodgement is late, up to a maximum of five penalty units. Interest on unpaid amounts adds on top of that.
Businesses with a GST turnover of $75,000 or more per year must register for GST. Taxi, rideshare, and Uber drivers must register regardless of their turnover. Non-profit organisations have a higher threshold of $150,000.
Yes. If you use part of your home regularly for business, you can claim a portion of home expenses like electricity, internet, and rent or mortgage interest. The ATO has a fixed rate method and an actual cost method for calculating the deduction. Records are required either way.
If the ATO determines a worker you classified as a contractor is actually an employee, you may owe unpaid PAYG withholding, superannuation, and potentially penalties and interest on top. In serious cases, the Superannuation Guarantee Charge also applies, which is not deductible. It is worth getting classification right from the start.
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