The Government has released an exposure draft Bill for the previously announced $1,000 standard deduction for work-related expenses, which is expected to apply from 1 July 2026 (if passed in its current form). However, there are flow-on impacts to other areas of the tax system, including FBT exemptions and the tax depreciation rules.
The ATO has also announced that it will be providing targeted support to businesses that are unable to meet the normal tax obligations due to higher fuel costs. Clients who are affected can potentially apply for a payment plan by 30 June 2026.
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Inside this month, Ann Dai (Tax Adviser), Michael Carruthers (Tax Director), and Amy Yan (Associate Tax Director) bring you:
$1,000 Instant tax deduction – exposure draft
The Government has released an exposure draft Bill proposing a new $1,000 standard deduction for work-related expenses, to apply from the 2026-27 income year onwards. The measure is aimed at Australian tax residents who earn assessable labour income and is intended to simplify compliance. The draft Bill also includes consequential changes to substantiation rules, the capital allowances rules, capital gains tax provisions and integrity measures within the FBT system to prevent double benefits from being obtained.
Under the proposal, eligible individuals can claim a standard deduction of up to $1,000 for work-related expenses, capped at the lesser of $1,000 or their total assessable labour income. The deduction is reduced by any work-related expense deductions claimed (such as car, travel, repairs, depreciation) to ensure taxpayers do not receive a double benefit. Where total eligible deductions exceed $1,000, the standard deduction will not apply, and taxpayers will instead claim their actual expenses.
Certain deductions remain outside the scope of the standard deduction and can still be claimed separately. These include expenses not related to labour income (for example, interest deductions), as well as specific deductions such as gifts or donations, tax agent fees, income protection insurance premiums, and union or professional association fees.
From 1 July 2026, depreciating assets primarily used to generate assessable labour income will no longer be eligible for low-value pooling. However, where a balancing adjustment event occurs and the taxpayer has claimed the standard deduction during the asset’s effective life, the balancing adjustment amount may be reduced by 50%.
For FBT purposes, where an expense payment fringe benefit falls within the scope of the standard deduction and is provided via a salary packaging arrangement, the otherwise deductible rule will not apply. As a result, employers will be liable for FBT on the full taxable value. In addition, the exemption for eligible work-related items under section 58X will be limited to non-salary packaged benefits, and the restriction on substantially identical items within the same FBT year will be removed.
The new standard deduction will replace the existing $300 no-receipts threshold and the $150 laundry concession, with the relevant provisions in Division 900 to be repealed.
Superannuation advertising ban
The Government has released exposure draft regulations to support new laws banning the advertising of certain superannuation products to new employees during onboarding, with the underlying legislation having received Royal Assent on 26 March 2026.
The regulations insert a new reg 7.8.26 into the Corporations Regulations 2001 and are proposed to commence 1 January 2027, six months after the enabling legislation takes effect on 1 July 2026.
The regulations set out detailed conditions that must be met when advertising a MySuper product during the onboarding process.
Payday super
The ATO has issued further website guidance on Payday Super changes that apply from 1 July 2026.
The ATO has also issued website guidance explaining the concept of ‘qualifying earnings’ (QE). The total QE for a pay period is determined by aggregating all qualifying payments made to or for an employee on the relevant day, forming the basis for calculating SG contributions.
From 1 July, employers are responsible for ensuring that super contributions reach super funds within 7 business days of the relevant payday, calculated on the QE amount. Funds will have 3 business days (down from 20 days) to allocate or return contributions that cannot be allocated.
The ATO is also reminding employers of their key obligations in relation to super fund stapling. Stapling is designed to reduce the creation of multiple superannuation accounts by ensuring an employee’s existing super fund follows them between jobs, thereby minimising unnecessary fees and account duplication.
Employers are required to follow the correct onboarding process when engaging new employees. This includes first offering the employee a choice of super fund. If the employee does not make a choice, the employer must request the employee’s stapled fund details from the ATO before making any SG contributions.
Where the ATO identifies a stapled fund, employers must pay contributions into that fund. If no stapled fund exists, the employer may instead make contributions to their nominated default super fund.
Temporary reduction in fuel excise
The ATO has issued a legislative instrument LI 2026/5, Excise Tariff (Fuel Duty Temporary Reduction) Determination 2026, which provides a temporary further reduction in fuel excise and excise-equivalent customs duties beyond the 50% reduction that would otherwise apply for the period 1 April 2026 to 30 June 2026.
The Treasurer has determined 39.1 per cent is the lower percentage. This has the effect of reducing the CPI indexed fuel rate to 39.1%, which has the effect of providing an overall 60.9% reduction in the fuel excise under the Act.
The instrument commenced on 1 April 2026.
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