The start of a new financial year always brings change, however 1 July 2026 introduces some of the most significant tax, superannuation, employment and government reforms seen in recent years.
Below is a summary of the major Federal and NSW changes that may affect individuals, families, investors and businesses.
1. Personal Income Tax Cuts
The personal income tax rate applying to taxable income between $18,201 and $45,000 has reduced from 16% to 15% from 1 July 2026.
This means most Australian taxpayers will receive a small tax cut automatically through reduced PAYG withholding and increased take-home pay. The government estimates the average taxpayer will receive up to approximately $268 per year in tax savings. A further reduction to 14% is already legislated from 1 July 2027.
2. Pay Day Super Commences
One of the biggest changes for employers is the introduction of Pay Day Super.
Employers are now generally required to pay employee superannuation contributions at the same time wages are paid, with contributions needing to reach the employee’s super fund within the required timeframe rather than quarterly.
This applies to:
- Full-time employees
- Part-time employees
- Casual employees
- Directors receiving wages
- Closely held employees and family members on payroll
Businesses that previously paid super quarterly will need to adjust their payroll processes and cash flow planning accordingly.
3. Superannuation Contribution Caps Increase
Several superannuation limits have increased from 1 July 2026:
- Concessional contribution cap increases from $30,000 to $32,500.
- Non-concessional contribution cap increases from $120,000 to $130,000.
- The three-year bring-forward cap increases from $360,000 to $390,000.
- The Transfer Balance Cap increases to $2.1 million.
These increases create additional opportunities for tax-effective retirement planning and contribution strategies.
4. National Minimum Wage Increase
The Fair Work Commission has increased the National Minimum Wage and modern award wages by 4.75%.
The National Minimum Wage is now approximately:
- $26.44 per hour
- $1,004.90 per week
Businesses should ensure payroll systems and employee rates have been updated to reflect the increase.
5. Centrelink Payment Increases
Many Centrelink payments have increased due to indexation.
This includes increases to:
- Age Pension
- Disability Support Pension
- Carer Payment
- JobSeeker Payment
- Parenting Payment
- Youth Allowance
- Family Tax Benefit
While the increases are relatively modest, they provide additional support in response to ongoing cost-of-living pressures.
6. Paid Parental Leave Expansion
Government-funded Paid Parental Leave has increased from 120 days to 130 days, or 26 weeks, for children born or adopted on or after 1 July 2026.
Additional days have also been reserved for partners to encourage greater flexibility and shared parenting arrangements.
7. Medicare Levy Surcharge Thresholds Increase
The income thresholds for the Medicare Levy Surcharge have increased from 1 July 2026, meaning more taxpayers may fall into lower surcharge tiers or avoid the surcharge altogether if they do not hold private hospital cover.
The updated thresholds are:
Singles
- Tier 1: $97,001 – $113,000
- Tier 2: $113,001 – $151,000
- Tier 3: $151,001 and above
Families, including couples and single parents
- Tier 1: $194,001 – $226,000
- Tier 2: $226,001 – $302,000
- Tier 3: $302,001 and above
For families with dependent children, the threshold increases by $1,500 for each child after the first.
The surcharge rates remain unchanged at:
- 1% for Tier 1
- 1.25% for Tier 2
- 1.5% for Tier 3
Taxpayers without appropriate private hospital cover who exceed these thresholds may be liable for the surcharge, making it important to review both income levels and health insurance arrangements as part of tax planning.
8. Small Business Instant Asset Write-Off Continues
The Federal Government has made the $20,000 Instant Asset Write-Off permanent for eligible small businesses.
Eligible businesses can immediately deduct qualifying assets costing less than $20,000 rather than depreciating them over several years.
9. Proposed $1,000 Instant Tax Deduction
The Federal Government has proposed a new $1,000 standard work-related deduction for individual taxpayers.
If legislated, taxpayers claiming less than $1,000 in work-related deductions may no longer need receipts for those claims.
At the time of writing, this measure has been announced but has not yet been fully implemented.
10. New Anti-Money Laundering Rules
Australia’s anti-money laundering laws have expanded significantly.
Additional industries now captured include:
- Accountants
- Lawyers
- Real estate professionals
- Trust and company service providers
Businesses operating within these industries may now have additional compliance, customer due diligence and record keeping obligations.
11. Scam SMS Protections Strengthened
Businesses sending SMS marketing messages or notifications must now comply with stricter sender identification requirements.
The changes aim to reduce scam messages and protect consumers from fraudulent communications.
12. NSW Electricity Support Programs
NSW households will have access to new energy initiatives including expanded shared solar programs and additional cost-of-living energy support measures designed to reduce electricity bills.
13. NSW Food Waste and Recycling Changes
NSW businesses and councils will see further expansion of food waste management and recycling requirements as the state continues transitioning towards circular economy targets and landfill reduction initiatives.
14. ASIC Fee Increases
Many ASIC fees and business registration fees increase from 1 July each year.
This includes various company registration, annual review and lodgement fees affecting companies and business owners.
15. Looking Ahead – Future Tax Changes
Several major tax reforms have been announced but do not commence on 1 July 2026.
These include:
- Changes to negative gearing for established residential properties.
- Changes to Capital Gains Tax concessions.
- Proposed changes affecting discretionary trusts.
- SMSF borrowing restrictions for future residential property investments.
As these measures are still progressing through legislation or have future commencement dates, investors and business owners should obtain advice before making major decisions.
Final Thoughts
The 2026 financial year introduces significant changes affecting employees, employers, retirees, families, investors and business owners.
The key themes are:
- Lower personal income tax
- More frequent super payments
- Higher wages
- Increased Centrelink support
- Expanded parental leave
- Additional compliance obligations for businesses
If you are unsure how these changes affect your personal circumstances or business operations, please contact our office.
Our team can assist with tax planning, payroll compliance, superannuation strategies, business restructuring and cash flow planning to ensure you are making the most of the opportunities available under the new rules.
Ahmad El Masri
Principal Accountant & Registered Tax Agent
El Masri Accounting Services
Phone: 02 8606 5915
Email: a_elmasri@elmasriaccounting.com.au
Website: www.elmasriaccounting.com.au
Address: Suite 1, 4 McFarlane St, Merrylands NSW 2160
ABN: 88 656 114 368
