Tax Minimisation Strategies Australia 2025/26
Tax Minimisation Strategies Australia 2025/26
Why the 2025/26 Tax Environment Matters
The 2025/26 financial year is a turning point for high‑income Australians. The long‑anticipated Stage 3 tax cuts are now fully in force, reshaping marginal tax rates and altering the importance of deductions, packaging, and structuring and Medicare Levy Surcharge (MLS) thresholds continue to catch out everyday Aussies.
Overlay this with a still‑elevated RBA cash rate, record property valuations, and a $3.9 trillion superannuation system and the message is clear: tax planning in 2025/26 is more important than ever.
For high‑income professionals, business owners, and investors, understanding this environment is the foundation for every other strategy we’ll explore.
1. The 2025/26 tax environment
The 2025/26 year lands after major reforms to personal tax rates amid an elevated interest rate environment. For high‑income professionals and business owners, this changes the significance of salary packaging, timing income events, private health decisions, and how you align strategy to the economic cycle.
Stage 3 tax cuts: a reshaped landscape for high‑income earners
From 1 July 2024, the Stage 3 tax cuts reconfigured brackets for Australian residents. As at 1 July 2025, the ATO publishes the following rates for residents: 0% up to $18,200; 16% from $18,201–$45,000; 30% from $45,001–$135,000; 37% from $135,001–$190,000; 45% above $190,000. See ATO: Tax rates (Australian residents).
Please note the tax rates above exclude the additional and mandatory 2% medicare.
Why this matters:
Reassess salary packaging: Given the severity of the marginal tax rates stated above the importance of correctly structuring any salary packaging options, where available, to minimise your tax liability is more important then ever. For example for someone earning less then $130,000 within the tax year a $10,000 salary packaged item now saves roughly $3,000 in income tax which is a far better use of monies than using post tax dollars to pay for the same expense.
Review investment structures: Trusts, companies and partnerships may need recalibration depending on how they were setup. For example, a company earning $100,000 is taxed at 25% (assuming a small company) however they have, on average, significantly reduced CGT exemptions as opposed to assets being held in your personal name or in a trust. Reviewing your entity structures to ensure they are optimised can be critically important. post‑Stage 3. ATO: Company tax rates
Plan timing of income events: Bonuses, special dividends, and asset sales can be timed to fall evenly across multiple financial years ensuring you’re not accidentally bumped into a higher tax bracket just because of a timing issue.
Medicare Levy Surcharge: updated 2025/26 thresholds
The Medicare Levy Surcharge (MLS) applies if you’re a higher‑income earner without private hospital cover. As at 12 June 2025, the ATO lists these thresholds and rates: Singles: 0% up to $101,000; 1% from $101,001–$118,000; 1.25% from $118,001–$158,000; 1.5% above $158,000. Families: 0% up to $202,000; 1% from $202,001–$236,000; 1.25% from $236,001–$316,000; 1.5% above $316,000. Thresholds rise by $1,500 per dependent child after the first.
Why this matters:
Singles above $101,000: A professional on $120,000 without private hospital cover pays $1,500 in MLS — often more than an entry‑level hospital policy, meaning you could be paying extra tax for no added benefit.
Families above $202,000: A dual‑income household on $280,000 would pay $3,500 in MLS if they didn’t have hospital cover. If an appropriate hospital policy costs ~$2,800, you avoid the surcharge and obtain cover — both a tax and risk‑management win.
Illustrative comparison: MLS vs entry‑level hospital cover
For example a family on an income of $220,000 would pay medicare levy surcharge of $2,200 per annum where a reasonable hospital cover could be $2,000 per annum effectively meaning the family is paying an extra $200 per annum in order to not have entry-level hospital cover.
These differences only become more pronounced as the family’s net taxable income increases.
The macro backdrop: interest rates and wealth trends
Tax planning doesn’t occur in a vacuum. The broader environment shapes the effectiveness — and risk — of each strategy.
Higher interest rates: With a cash rate target around 4.10% as at September 2025, debt is more expensive than it has been traditionally hence strategies such as debt recycling become more effective as this helps to convert non-tax deductible home loan interest into tax deductible investment interest which can lift after‑tax returns, but requires careful cash‑flow controls.
Rising property values: The ABS reports total residential dwellings are currently valued at ~$10.7 trillion as at June 2025 — a reminder that property dominates household balance sheets and drives potential exposures to land tax and CGT if not handled correctly.
Superannuation scale:APRA notes total super assets around ~$3.9 trillion as at June 2025. With super now the largest household financial asset pool, policy settings (e.g., Division 296) are increasingly targeted at high balances, changing the conversation between “more in super” vs “diversify outside super.”
FAQs: The 2025/26 tax environment
How much will I save from the Stage 3 tax cuts in 2025/26? Savings scale with taxable income. For example, at $200,000, indicative savings are around ~$4,000 per year relative to pre‑Stage 3 settings; at $250,000, closer to ~$5,000.
Do Stage 3 tax cuts reduce the benefit of salary packaging? They reshape it. The wider 30% bracket lowers marginal savings for some deductions, but for those still in the 37% or 45% brackets, packaging remains compelling and highly beneficial relative to the items being packaged and the FBT status of their employer.
What is the MLS in 2025/26 and who pays it? Singles earning above $101,000 per and families earning above $202,000 per annum without appropriate hospital cover pay 1.0%–1.5% of MLS on income for MLS purposes. For many high‑income households, an entry‑level hospital policy costs less than the surcharge.
Is private hospital insurance always cheaper than paying the MLS? Not always, but above common income points (e.g., families at $250k–$300k), MLS frequently exceeds the cost of a suitable hospital cover policy. Compare your MLS (rate × taxable income) to real quotes for hospital cover that meets ATO requirements.
How do interest rates affect tax planning? Higher rates amplify the value of strategies that reduce non‑deductible interest (offsets, accelerated repayment) or convert it to deductible interest (debt recycling). They also pressure leveraged investments, so buffers and sequencing risk management matter more.
Do Stage 3 tax cuts make trusts and companies less useful? Not particularly, whilst these structures remain essential for tax planning and asset protection they are not impacted by the Stage 3 tax cuts.Small Companies offer a 25% base income tax rate and the ability to retain profits; trusts offer distribution flexibility and asset protection. Structure choice should align with long‑term goals, risk, and succession planning — not just this year’s marginal tax rates.
Where does the economy fit into tax strategy? Macro conditions guide emphasis: with property at ~$10.7t and super at ~$3.9t, policy and price cycles can change optimal contribution levels, gearing choices, and whether to prioritise super vs. non‑super vehicles (trusts/companies) in 2025/26.
Want to see precisely how Stage 3, MLS, and the current rate cycle change your after‑tax cash flow? Summit FP can model your numbers and map the best‑fit strategy for 2025/26.
2. Superannuation Strategies for High‑Income Earners in 2025/26
Superannuation remains one of the most powerful tax minimisation tools available to Australians and is a very misunderstood investment vehicle. For high‑income earners, the 2025/26 year brings both opportunities and new challenges, particularly with the introduction of Division 296 on superannuation assets over $3,000,000 in value.
According to the ATO – Key superannuation rates and thresholds (as at 1 July 2025), whilst the contribution caps have increased, creating more room for tax‑effective savings. The government has introduced new taxes on large balances, requiring careful planning for high‑net‑worth individuals.
Concessional Contributions:
Maximising the $30,000 General Concessional Contributions Cap
From 1 July 2025, the general concessional contributions (CC) cap is $30,000 per year. These contributions predominantly include employer super guarantee (SG), salary sacrifice, and personal deductible contributions.
$30,000 cap: A $30,000 concessional contribution saves up to $13,500 in tax for someone on the top marginal rate excluding medicare at 2%
Carry‑forward rule: Generally speaking If your total super balance (TSB) is under $500,000 at the end of the prior financial year, you can utilise unused concessional contribution cap amounts from the past five years (ATO – Carry‑forward concessional contributions).Please note that there are some restrictions around this based on age and transfer balance caps.
For example if someone has $200,000 in super in 2025 and only contributed $10,000 into super over the last 5 years then they could use the bring forward rule to contribute $20,000 X 5 = $100,000 into super and get a full tax deduction.
Non‑Concessional Contributions: A much larger cap with different .
The non‑concessional contributions (NCC) cap is $120,000 per year as at 1 July 2025 (ATO – NCC cap).
$120,000 cap: The non-concessional contributions tax is currently at $120,000 per annum meaning any amounts put into super up to this amount are not subject to contributions tax at 15% and allow for tax-free withdrawals over 60.
Bring‑forward rule: Eligible individuals under age 75 can bring forward up to three years’ worth of NCCs, contributing up to $360,000 in one year on the proviso this doesn’t bring the total super balance to being over $1.9 Million after the contribution. This accelerates compounding and estate planning benefits.
Other Strategies: Non concessional contributions allow for a range of other strategies as well including tax free distributions to adult children, spouse and contribution splitting.
Division 293 Tax: The Extra 15% for High Incomes
High‑income earners with assessable taxable income above $250,000 will pay an additional 15% tax on concessional contributions on top of the standard contributions tax of 15% i.e. 30% in total. (ATO – Division 293 tax).
Extra 15% tax on concessional contributions: A $30,000 concessional contribution taxed at the next Division 293 30% rate results in contribution tax of $9,000 whilst if this were purely income it would be $14,100 in income tax.
Consequently, even with the additional division 293 15% contribution tax a $30,000 contribution still results in $5,100 of less taxes being paid relative to receiving this as income if you’re on the top marginal tax rate.
Division 296 Tax: The New 15% tax on Large Balances
From 1 July 2025, the government is attempting to ratify Division 296 which is a new tax on earnings for individuals with super balances above $3 million.
Is applicable across a range of situations. Unlike a lot of other legislation regarding superannuation the proposed Division 296 tax is applicable whenever the total super balance is $3 million at 30 June regardless of age or whether you’re in accumulation or pension phase which makes this proposal a rarity.
The additional 15% tax is applicable on the proportion of the earnings over the $3 million hurdle requirement.
There is significant misunderstanding within the wider Australian public that this tax is on the entire balance once it “clips over” the $3 million total super balance which simply isn’t the case.
The additional tax is aimed at the “earnings” for the year which are provided in a formula by treasury: Opening - Closing Total Super Balance + Withdrawals – Contributions = Assessable Earnings.
Example:
John’s super balance is $4.6M i.e. it’s $1.6M over the threshold so as a percentage this is $1.6M/$4.6M = 34% i.e. 34% of his total super balance is over the $3 million threshold.
Based on the earnings calculation provided in the dot points above let’s assume his assessable earnings are $672,500 for that financial year.
Consequently $672,500 X 34% = $228,650 is subject to Division 296 at 15% i.e. $34,298.
Other considerations:
Cash‑flow risk: Tax is payable in cash, not from super, creating liquidity challenges.
Planning point: Diversify outside super to manage exposure however this comes at the risk that your new marginal tax rate is still in excess to the division 296 taxes.
Strategies to Manage Division 296 Exposure
Strategic withdrawals: Drawing down super and investing personally may reduce Division 296 exposure while providing liquidity especially if you have tax dependants on very low marginal tax rates.
SMSF property strategies: Review gearing and liquidity to ensure the fund can meet Division 296 liabilities without forced asset sales.
Reconsider spouse contributions where applicable. The Total Super Balance calculation is done on an individual superannuation fund level so, if possible, if one spouse is close to the $3 million limit consider putting additional contributions into the spouse’s superannuation fund if theirs is significantly lower.
If your super balance is approaching $3 million, now is the time to review diversification strategies with Summit FP.
Case Study: Balancing Contributions and Division 296
Scenario:
Client: 52‑year‑old executive with $2.9m in super.
Income: $400,000.
Goal: Maximise retirement savings while avoiding Division 296 exposure.
Strategy:
Consider spouse contribution to ensure prop up their super balance if theirs is less than the $3 million total super balance.
Avoid large NCCs that would push balance above $3m.
Hold high growth assets in your personal name.
Outcome:
Balance remains under $3m, avoiding Division 296 in 2025/26.
Diversification achieved outside super.
FAQs: Superannuation Strategies in 2025/26
1. What is the concessional contributions cap in 2025/26?
The general cap is $30,000 per year as at 1 July 2025 subject to other considerations such as your total super balance and your age. (ATO – Contributions caps).
2. Can I still use the bring‑forward rule in 2025/26?
Yes. Eligible individuals under 75 can contribute up to $360,000 as non-concessional contributions in one year, subject to TSB thresholds, age and contributions history. (ATO – NCC cap).
3. How does Division 293 tax work?
If your income plus concessional contributions exceed $250,000, an extra 15% tax applies to your concessional contributions (ATO – Division 293 tax).
4. What is Division 296 and when does it start?
Division 296 is a new 15% tax on earnings for super balances above $3 million, currently being reviewed and planned to be ratified and back dated to be in effect from 1 July 2025 (Treasury – Division 296 EM).
5. Does Division 296 apply to unrealised gains?
Yes. The tax is calculated on the change in your TSB, which includes unrealised gains. This may create cash‑flow challenges hence planning is paramount.
6. Should I stop contributing to super if I’m close to $3m?
Not necessarily as this depends on other factors and your overall financial goals. Concessional contributions may still provide tax savings, but additional NCCs could push you into Division 296 territory. A tailored strategy is essential.
7. What are the best alternatives to super for high‑income earners?
Family trusts, companies, and direct investments outside super are common alternatives. Each has different tax and estate planning implications.
3. Business Owner Strategies in 2025/26
For business owners, tax planning is not just about reducing personal income tax — it’s about structuring the business to maximise after‑tax wealth, fund retirement, and create flexibility for succession. The 2025/26 financial year offers opportunities through the small business CGT concessions and the instant asset write‑off, but both come with strict eligibility rules.
Small Business CGT Concessions: Unlocking Retirement Wealth
The small business CGT concessions allow eligible business owners to reduce or eliminate capital gains tax when selling active business assets. According to the ATO – Small business CGT concessions (as at 1 July 2025), there are four key concessions:
15‑year exemption – If you’ve owned the business for at least 15 years, are over 55 and retiring, you may be able to disregard the entire capital gain.
50% active asset reduction – Reduces the capital gain on an active business asset by 50%.
Retirement exemption – Allows you to disregard up to $500,000 of capital gains over your lifetime. If you’re under 55, the exempt amount must be contributed to super.
Rollover relief – Defer all or part of a capital gain for up to two years, or longer if you acquire a replacement asset.
Eligibility Tests
To access these concessions, you must satisfy conditions such as:
Small business entity test: Turnover under $2m.
Maximum net asset value test: Net assets under $6m.
Active asset test: The asset must be actively used in the business as part of their operations.
Example: Sale of a Business
A business owner sells their practice for $2m, with a capital gain of $1.5m and assuming all Eligibility tests above i.e. small business and active asset tests.
They apply the 50% active asset reduction → meaning the assessable taxable capital gains decreases from $1.5M to $750K.
They then use the retirement exemption – this means another $500,000 of assessable capital gains are reduced so the new assessable balance is now $250,000.
The $500,000 exempt amount must be contributed into super, boosting retirement savings.
The business owner can also use the 50% CGT discount provided the business was structured within a trust or held personally further reducing the gain from $250,000 to $125,000.
If the business was setup in a company this is not possible as this CGT concession is not allowed to companies.
Result: Only $125,000 of the $1.5m gain is taxable.
If you’re planning to sell your business in the next few years, structuring the sale to maximise CGT concessions can save hundreds of thousands in tax.
Instant Asset Write‑Off: Timing Purchases for Maximum Benefit
The instant asset write‑off allows eligible small businesses to immediately deduct the cost of assets up to a threshold. For 2024–25, the threshold is $20,000 per asset (ATO – Instant asset write‑off).
Applies to businesses with turnover under $10m.
Assets must be first used or installed ready for use by the deadline.
Legislation is before Parliament to extend this into 2025–26 (ATO – New legislation note).
Example: Equipment Purchase
A café owner buys new kitchen equipment for $18,000 in August 2025.
Entire cost is deductible in 2025/26.
At a 25% company tax rate for small companies, this saves $4,500 in income tax.
If the purchase had been delayed until after the threshold expired, the deduction would have been spread over several years.
Case Study: Business Sale and Super Contribution
Scenario:
Client: 60‑year‑old business owner selling a manufacturing business that they’ve owned and run for 20 years.
Sale price: $2.5m.
Capital gain: $1.8m.
Strategy:
Apply the 15‑year exemption (business owned for 20 years, client retiring).
Entire $1.8m gain disregarded.
Proceeds contributed into super under the CGT cap (separate from NCC cap).
Outcome:
No CGT payable on the sale.
Retirement savings boosted by $1.8m.
Client transitions into retirement with a tax‑free income stream.
FAQs: Business Owner Tax Strategies in 2025/26
1. What are the small business CGT concessions?
They are four main concessions — 15‑year exemption, 50% active asset reduction, retirement exemption, and rollover relief — that can reduce or eliminate CGT on the sale of active business assets for small businesses (ATO – Small business CGT concessions).
2. Can I use the small business CGT concessions to contribute to super?
Yes. Under the retirement exemption, up to $500,000 of capital gains can be contributed to super. Under the 15‑year exemption, the entire gain may be contributed, subject to the CGT cap.
3. What is the instant asset write‑off threshold in 2025/26?
As at September 2025, the threshold is $20,000 per asset, with legislation before Parliament to extend it into 2025/26 (ATO – Instant asset write‑off).
4. Does the instant asset write‑off apply to second‑hand assets?
Yes, provided the asset is used in the business and meets the eligibility criteria.
5. What’s the maximum net asset value test for CGT concessions?
Your net assets must not exceed $6m (excluding personal use assets like your home).
6. Can I combine multiple CGT concessions?
Yes. For example, you can apply the 50% active asset reduction and then the retirement exemption, significantly reducing taxable gains.
7. What’s the biggest mistake business owners make when selling?
Failing to plan early. Many concessions require ownership or active use tests over several years. Leaving planning until the year of sale can mean missing out on major tax savings.
If you’re planning to sell your business or make major investments in 2025/26, Summit FP can help you structure the transaction to maximise concessions, minimise tax, and boost retirement wealth.
4. Investment Structuring for High‑Income Australians in 2025/26
For high‑income professionals, business owners, and investors, the way wealth is structured can be just as important as the investments themselves. The 2025/26 financial year is particularly significant, with the Stage 3 tax cuts reshaping marginal rates and the new Division 296 tax encouraging diversification outside superannuation.
The right structure can reduce tax, protect assets, and create flexibility for wealth transfer. The most common vehicles are family trusts, companies, and direct property ownership, each with distinct advantages and limitations.
Family Trusts: Flexibility and Income Streaming
A discretionary (family) trust allows income to be distributed among beneficiaries in a tax‑effective way.
Income streaming: A family trust can distribute $100,000 of investment income across a spouse, adult children, and a corporate beneficiary. Instead of one person paying $45,000 in tax at 45%, the family pays closer to $25,000 — a $20,000 saving, plus asset protection benefits.
Types of income streaming: A trust can also distribute capital gains separately to certain beneficiaries allowing for even greater tax planning and minimisation.
Asset protection: Trust assets are generally shielded from personal creditors, protecting family wealth from litigation or bankruptcy however this isn’t always the case so care is always required.
Succession planning: Trust deeds can be structured to pass control to the next generation without triggering CGT or stamp duty but a corporate trustee must be utilised.
Companies: Flat 25% Tax Rate for Base Rate Entities
Companies can be effective investment vehicles, particularly for retained earnings.
Flat 25% rate: Retaining $200,000 in a company saves $40,000 compared to taking it personally at 45%. This allows faster compounding of retained profits.
Franking credits: When profits are distributed as dividends, shareholders receive franking credits, reducing double taxation.
Limitations: Companies cannot access the 50% CGT discount available to individuals and trusts.
Please note once a company is considered a large company the income tax rate increases from 25% to 30% which usually occurs once annual turn over exceeds $50 million per annum.
Property Investment: Gearing and CGT Benefits
Property remains a cornerstone of wealth for many Australians.
Negative gearing: A $20,000 rental loss offsets other income, saving up to $9,000 in tax at the top marginal rate.
CGT discount: A $200,000 gain held >12 months is reduced to $100,000 taxable for individuals and trusts. (ATO – CGT discount).
SMSFs: Can invest in property, but gearing rules are strict under the SIS Act 1993. Liquidity must be carefully managed to avoid breaches.
Comparative Example: Structuring Investment Income
Diversification Outside Super
With Division 296 taxing balances above $3m, high‑net‑worth investors are increasingly looking beyond super. Options include:
Trusts and companies: Provide tax efficiency, asset protection, and succession flexibility.
Insurance bonds: Offer long‑term, tax‑deferred growth with a 10‑year rule for tax‑free withdrawals.
Direct investments: Equities, property, or private markets allow control and diversification outside the super system.
If your super balance is approaching $3m, now is the time to explore alternative structures with Summit FP.
FAQs: Investment Structuring in 2025/26
1. What is the company tax rate in 2025/26? 25% for base rate entities with turnover under $50m and passive income <80% (ATO – Company tax rates).
2. Do trusts still make sense after the Stage 3 tax cuts? Yes. While the 30% bracket is broader, trusts still provide flexibility to distribute income across family members and corporate beneficiaries, often saving tens of thousands in tax annually.
3. Can companies access the CGT discount? No. Companies do not receive the 50% CGT discount available to individuals and trusts.
4. How does Division 296 affect investment structuring? It encourages diversification outside super, as balances above $3m are subject to an additional 15% tax on earnings.
5. Are SMSFs still attractive for property investment? Yes, but borrowing is tightly regulated under the SIS Act 1993. Liquidity and diversification must be carefully managed.
6. What’s the biggest mistake investors make with structuring? Focusing only on immediate tax savings. Structures should balance tax efficiency with long‑term succession and estate planning goals.
The right structure can save thousands in tax and protect your wealth for the next generation. Summit FP can help you model the outcomes across trusts, companies, and super to find the best fit.
5. Macro & Wealth Context in 2025/26
Tax planning is never just about legislation — it’s also about the broader economic and wealth environment. For high‑income Australians, understanding the macro context is critical to making informed decisions about structuring, investing, and wealth transfer.
Superannuation: A $3.9 Trillion System
The Australian Prudential Regulation Authority (APRA) reported that total superannuation assets reached $3.9 trillion as at June 2025 (APRA – June 2025 release).
Scale and growth: Super is now the largest pool of household financial assets, growing steadily through compulsory contributions and investment returns.
Policy focus: With balances this large, government policy is increasingly targeting high‑balance members (e.g., Division 296).
Planning point: High‑income earners must weigh the benefits of concessional contributions against the risk of additional taxes on large balances.
Household Wealth: Property and Financial Assets
The Australian Bureau of Statistics (ABS) reported that the total value of residential dwellings was $10.7 trillion as at June 2025 (ABS – Total value of dwellings).
Property dominance: Residential property remains the largest component of household wealth. For high‑income households, multiple properties increase exposure to land tax and CGT.
Wealth inequality: Property ownership is concentrated, meaning tax policy changes (e.g., land tax reforms) disproportionately affect high‑income investors.
Planning point: Structuring property ownership through trusts or companies can help manage tax and succession.
Interest Rates and Inflation
The Reserve Bank of Australia (RBA) maintained the cash rate target at 4.10% as at September 2025 (RBA – Cash rate).
Debt costs: Higher rates increase the cost of borrowing. For example, a $1m mortgage at 4.10% costs $41,000 per year in interest. Converting this into deductible investment debt through debt recycling can save up to $18,450 in tax at the top marginal rate.
Investment returns: Rising rates affect valuations of equities and property, influencing portfolio allocation.
Inflation pressures: Elevated inflation means bracket creep remains a risk, even under the Stage 3 tax system.
Why the Macro Context Matters for High‑Income Earners
Superannuation: With $3.9 trillion in assets, super is the government’s focus for new taxes. High‑balance members must plan for Division 296.
Property: At $10.7 trillion, property dominates wealth. Investors face higher land tax and CGT exposure, especially with multiple properties.
Debt: At a 4.10% cash rate, debt is expensive. Recycling strategies and offset accounts deliver greater value than in low‑rate environments.
Aligning your tax strategy with the broader economic cycle can amplify outcomes — Summit FP can help you position your wealth effectively.
FAQs: Macro & Wealth Context in 2025/26
1. How large is Australia’s superannuation system in 2025?
APRA reports total super assets of $3.9 trillion as at June 2025 (APRA – June 2025 release).
2. What is the total value of Australian residential property in 2025?
The ABS reports $10.7 trillion as at June 2025 (ABS – Total value of dwellings).
3. What is the RBA cash rate in September 2025?
The RBA cash rate target is 4.10% (RBA – Cash rate).
4. How do higher interest rates affect tax planning?
They increase the value of strategies like debt recycling, offset accounts, and deductible investment loans. For example, recycling a $1m mortgage at 4.10% can turn $41,000 of annual interest into a deductible expense.
5. Why does property wealth matter for tax planning?
Rising property values increase exposure to land tax, CGT, and succession planning issues. Structuring ownership through trusts or companies can mitigate these risks.
6. How does inflation affect high‑income earners?
Even with Stage 3 cuts, inflation can push more income into higher brackets over time, reducing the real benefit of tax cuts.
6. Compliance and legal framework
High‑income strategies only stand up if they’re built on current law and regulator guidance. Compliance isn’t red tape — it’s how you protect outcomes, avoid penalties, and keep every recommendation defensible under audit. The focus areas below anchor all strategies to in‑force obligations and documentation standards.
Core compliance pillars
Record‑keeping (business): Keep accurate, complete records for all tax, super and registration affairs — including documents supporting elections, estimates and calculations — generally for at least five years, in a form the ATO can verify and reconstruct if systems change.
Examples include invoices, contracts, bank statements, payroll, and super contribution confirmations; protect integrity, retain access keys for encrypted data, and ensure data can be exported in standard formats.Record‑keeping (individuals): To substantiate deductions and report income, keep written evidence (receipts, statements, logbooks, diary notes explaining work vs private use) for the required retention period and in a format the ATO accepts.
Financial advice obligations: If providing financial product advice, you must be authorised under an AFS licence; disclosure and conduct duties differ for personal vs general advice (e.g., FSG, general advice warnings, SOA for personal advice, best interests duty under Pt 7.7A).
Design and distribution obligations (DDO): Product issuers and distributors must meet DDO; advice businesses need to align recommendations and disclosures with these requirements where relevant to retail clients.
Superannuation oversight (APRA): RSE licensees face prudential and reporting standards (e.g., SPS 220 Risk Management, SPS 310 Audit and Related Matters) and ongoing APRA data/reporting obligations. SMSF advice must acknowledge the prudential context applying to APRA‑regulated funds versus SMSFs.
Legislative updates and EMs: Treasury bills and explanatory memoranda provide authoritative intent and technical detail; complex measures (e.g., thin capitalisation reforms, corporate reporting changes) should be cross‑checked here during implementation reviews.
Documentation essentials for audit‑ready advice
Scope and basis: File advice scope, assumptions, projections, alternatives considered, and rationale for chosen strategies (e.g., why trust streaming vs corporate retention). Tie back to client goals and risk.
Evidence and calculations: Save working papers for tax estimates, contribution cap tests, TSB checks, Division 293/Division 296 modelling, and CGT concession eligibility tests.
Disclosures and consents: Maintain signed FSG acknowledgements, general advice warnings (if applicable), SOAs/ROAs, conflicts disclosures, and product PDS references where relevant.
Review cadence: Diary periodic compliance reviews to catch threshold changes (caps, rates, surcharges) and update advice before lodgements or transactions.
FAQs: Compliance and legal framework
How long should I keep my tax and business records?
Generally five years from preparation/transaction completion; some records (FBT, employee super, fund choice) run from different start dates. Keep data reconstructible if systems change and provide access keys if encrypted.What counts as acceptable evidence for personal deductions?
Written evidence from the supplier plus notes showing work‑related vs private use, and how amounts were calculated (logbooks, diaries, spreadsheets).When do I need an SOA versus general advice warnings?
Personal advice to retail clients requires an SOA and best interests duty compliance; general advice requires a general advice warning and FSG. You must be licensed/authorised to provide financial product advice.What APRA standards are relevant for super funds I invest through or advise on?
RSE licensees must meet prudential and reporting standards (e.g., SPS 220, SPS 310; associated reporting forms), with ASIC oversight of financial statements for most RSEs from 30 June 2024 reporting periods.
Sources: ATO, ASIC, APRA, Treasury, Parliament of Australia
Conclusion: Turning Complexity into Clarity
The 2025/26 financial year is one of the most significant in recent memory for high‑income Australians. The Stage 3 tax cuts reshape marginal rates, while new measures like Division 296 alter the landscape for superannuation. Business owners face both opportunities and risks through the small business CGT concessions and the instant asset write‑off, while investors must weigh the benefits of trusts, companies, and direct property ownership against compliance and succession needs.
Overlaying this is the macro environment: a $3.9 trillion super system, $10.7 trillion in residential property, and a 4.10% cash rate that makes debt strategies more powerful but also more expensive. In this context, tax minimisation is not about loopholes — it’s about aligning your wealth with current law, regulator guidance, and economic reality.
For high‑income professionals, business owners, and investors, the challenge is not just knowing the rules, but applying them in a way that is compliant, audit‑ready, and strategically aligned with long‑term goals. That’s where Summit FP positions itself: translating complexity into clarity, and ensuring every strategy is both effective and defensible.
Next step: If you’re ready to model your 2025/26 position — from super contributions to business exits, investment structuring, and compliance — Summit FP can help you design a plan that minimises tax, protects wealth, and builds lasting confidence.
