The 'Resilience and Reform' Budget On Tuesday 12 May 2026 the Treasurer Jim Chalmers handed down the 2026-27 Federal Budget, framing some of the more significant announcements as part of a broader plan to help young Australians access the property market. While acknowledging that the key to housing affordability is supply, the Government clearly sees changes to negative gearing and the capital gains tax (CGT) discount as being important pieces in the housing affordability puzzle. The Government has called this its most ambitious budget and if the proposed measures are implemented, the impact will be felt directly by a wide cross-section of Australian society, including individual taxpayers, investors, businesses, employers and those suffering from a disability. The year’s budget has been released against a backdrop of significant economic challenges, including global fuel price shocks, persistent inflation, rising interest rates and growing concerns around housing affordability. These themes are reflected in the measures that have been announced by the Treasurer. While the Government has announced some significant changes to the tax system, the superannuation system looks to have been left alone this year. Key initiatives include: Business and Employers The cost threshold for the purpose of applying the instant asset write-off for small business entities will be permanently increased to $20,000 from 1 July 2026. On 5 May 2026 the Government announced that the FBT exemption for electric cars would be gradually scaled back over the next few years. For income years commencing on or after 1 July 2026 the Government will allow companies with aggregated annual global turnover of less than $1 billion to carry back a tax loss and offset it against tax paid up to two years earlier. Start‑up companies with aggregated annual turnover of less than $10 million that generate a tax loss in their first two years of operation will be able to utilise the loss to generate a refundable tax offset. From 1 July 2027, small and medium businesses will be able to opt in to reporting and paying PAYG instalments monthly and will be able to use an ATO-approved calculation that is embedded in accounting software to calculate and vary instalments. The Government will reform the Research and Development (R&D) Tax Incentive which provides a tax offset for eligible companies that undertake R&D activities. Fuel A $14.8 billion package will be used to help Australia strengthen fuel supply. A reduction in the fuel excise and heavy vehicle road user charge will continue to apply for three months from 1 April 2026. Taxpayers The Government will provide a $250 ‘Working Australians Tax Offset’ from the 2027–28 income year. During the 2025 federal election campaign the Labor party committed to introduce a $1,000 instant tax deduction for work-related expenses. On 20 April 2026 Treasury released draft legislation on this proposal for public consultation. Legislation has already been passed to ensure that the 16% tax rate on taxable income between $18,201 and $45,000 will drop to 15%. The rate will then drop to 14% from 1 July 2027 (already announced in the 2025-26 Federal Budget). The Government will increase the Medicare levy low‑income thresholds for singles, families, and seniors and pensioners. The threshold for singles will be increased from $27,222 to $28,011. The family threshold will be increased from $45,907 to $47,238. Investors The parameters around negative gearing for residential property are set to change with the Government announcing that existing negative gearing rules will only be available in connection with new builds from 1 July 2027. The Government is planning to revert to a CGT indexation system based on the Consumer Price Index (CPI), much like the system that applied between 1985 and 1999. Indexation would only be available for assets that have been held for more than 12 months. The Government has announced that a minimum 30% tax rate will apply to distributions made by discretionary trusts. The Government will provide a concession in the foreign resident CGT regime for investment in the renewables sector. The Government will expand the scope of existing tax incentives which relate to venture capital limited partnerships and early stage venture capital limited partnerships. Important Unless otherwise noted, the measures outlined here are only announcements at this stage. There is no guarantee that they will be implemented as per the Government’s announcements (or at all). The Collins Hume team are available to help you understand how the Budget and any enacted measures might impact on you. We can assist you to capitalise on any opportunities or minimise your risk. As always, the detail is important so please let us know if we can assist. We will keep you up to date with key developments as things progress.

Key Lessons from the Kilgour Case When selling a business—or even a slice of one—how you value the assets involved can have a major impact on the tax bill. A recent Full Federal Court decision, Kilgour v Commissioner of Taxation [2025] FCAFC 183, offers timely guidance on how “market value” is really determined for capital gains tax (CGT) purposes. When preparing for transactions, restructures or potential exit events, the case is a useful reminder: valuations must reflect real commercial conditions, not just theoretical models. Case Summary In 2016, three family trusts sold 100% of the shares in Punters Paradise Pty Ltd, an online wagering business, to News Corp for approximately $31 million. The ownership split was: Pettett Trust – 60% Kilgour Family Trust – 20% Reuhl Family Trust – 20% The sale was negotiated at arm’s length, involved extensive due diligence and included a working-capital adjustment after completion. The minority beneficiaries (20% holders) sought to use the small business CGT concessions, which in this case required the seller’s net assets to be below $6 million. To fall below the threshold, they argued their 20% minority interests should be heavily discounted in value—because a small holding is usually worth less on a standalone basis. The ATO disagreed, saying each 20% parcel formed part of a coordinated 100% sale and should simply be valued as 20% of the final $31 million deal price. The Court agreed with the ATO. How the Court Approached Market Value The Court applied the long-standing “willing buyer/willing seller” principles from Spencer v Commonwealth—but with a modern, commercial twist. Two practical messages emerge: 1. Real-world expectations matter more than rigid valuation dates Although the tax rules in this area require looking at value “just before” signing the sale contract, the Court said you cannot ignore things that were reasonably predictable at that point. Here, the sale was essentially locked in through negotiations, so the final agreed price was the best evidence of market value. Practical takeaway: If a purchaser is clearly willing to pay a premium—for control, synergies, strategic value or expansion opportunities—those factors will likely shape the valuation for tax purposes. 2. Actual deal terms beat theoretical discounts The taxpayers tried to argue for a typical “minority discount”. However, the Court said the real commercial context matters more: All shareholders intended to sell together. The buyer wanted all the shares, not bits and pieces. A coordinated, 100% sale typically lifts the value of each parcel. Because of that, the hypothetical buyer would not insist on a discount. The minority interests effectively rode on the value of the full-stake sale. Practical takeaway: When shareholders act collectively, the tax valuation of each interest can increase—sometimes significantly. What This Means for Business Owners Don’t undervalue your stake: If the buyer is pursuing synergies or control, your interest might be worth more than a textbook minority valuation suggests. Make sure your advisers consider the wider commercial picture. Evidence is everything: Keep thorough records such as negotiations, emails, valuations, buyer motivations. These can be powerful in supporting your tax position and accessing concessions. Plan CGT concession eligibility early: If you’re relying on the small business concessions, test different deal scenarios before signing any contracts or other paperwork, including a heads of agreement. Sometimes restructuring ownership or staging a sale can make a material difference, but integrity and anti-avoidance rules in the tax system still need to be considered carefully. Align shareholder expectations: In family groups and private companies, minority owners often assume their shares will be valued as a standalone piece. Kilgour shows that courts will often look at the transaction as a whole—not each slice in isolation. The Bottom Line Kilgour reinforces that valuations for tax purposes work best when they reflect the real commercial world, not theoretical models. Before you sell, restructure or negotiate with a potential buyer, involve Collins Hume early. A well-supported valuation can mean the difference between accessing valuable CGT concessions or missing out!

SG Calculations Are Changing — What “Qualifying Earnings” Means for Your Business Payday Super doesn’t just change when you pay super. It also changes how super is calculated. If you’re a small business owner, it’s important to understand these shifts — because they could affect how much you owe and for which employees. From OTE to Qualifying Earnings Under the current system, super guarantee is calculated as 12% of an employee’s “ordinary time earnings” (OTE). OTE generally includes base salary, commissions, shift loadings, and some allowances, but excludes overtime. From 1 July 2026, the calculation shifts to “qualifying earnings” (QE). QE is a broader concept that brings together OTE, salary sacrifice contributions, and certain other amounts that are currently part of an employee’s salary or wages for super guarantee purposes. For most employees on straightforward pay arrangements, the practical difference may be minimal. But if you have staff on salary sacrifice arrangements, complex pay structures, or variable earnings, QE could change your super liability. It’s worth understanding exactly which payments are now captured. The Maximum Contribution Base Is Going Annual Here’s a change that could affect businesses with higher-income employees. Currently, there’s a maximum super contribution base (MSCB) applied quarterly. If an employee’s earnings exceed the quarterly cap, you’re not obligated to pay SG on the amount above it. Under Payday Super, the MSCB moves from a quarterly threshold to an indexed annual threshold. This smooths out the calculation across the full year. Why does this matter? Consider an employee who earns a steady salary but receives a large one-off bonus in one quarter. Under the current system, that bonus might push them over the quarterly cap, meaning you don’t owe super on the excess. Under the annual threshold, that same bonus is spread across the year’s cap. If the employee’s total annual earnings stay below the annual limit, you’ll owe SG on the full amount — including the bonus. For some businesses, this will mean paying more super for certain employees than they do today. For others, it may simplify things by removing the need to monitor quarterly caps. Per-Payday Calculations Another practical shift is that SG will be calculated on a per-payday basis rather than accumulated quarterly. This means your payroll system needs to correctly determine QE for each pay run, apply the 12% rate, and submit the contribution — all within the seven-day window. If you have employees with variable hours, fluctuating earnings, or irregular payment schedules, this adds complexity. Each pay run becomes its own SG event, and errors compound faster when you’re processing 26 or 52 times a year instead of four. How to Prepare Review your employee pay structures. Identify anyone on salary sacrifice, variable pay, or earnings near the MSCB. These are the areas most likely to be affected by the calculation changes. Update your payroll system. Ensure it can calculate SG based on qualifying earnings (not just OTE) and apply the new annual MSCB threshold correctly. Understand the QE definition. Work with your accountant to confirm which payments are included in qualifying earnings for each employee. Plan for the annual cap. If you’ve been monitoring quarterly caps for high-income employees, you’ll need to adjust your approach. Get Clarity Before 1 July The shift from OTE to qualifying earnings might sound like a technicality, but it can have real dollar implications for your business. The annual MSCB change could also affect your super obligations for certain employees. If you’re unsure how these calculation changes apply to your workforce, contact Collins Hume. We can review your payroll, identify any employees affected by the changes and make sure your calculations are correct from Day 1 of Payday Super. Access free Payday Super resources and factsheets »

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YOU. That’s all we focus on. You, your family, your wealth and the legacy you (and we) leave. That’s it. Join us on this amazing journey. WHY US? Great Question. It's a simple answer. Our purpose is to inspire business owners to achieve success in powerful and meaningful ways. Our clients say it's a journey that starts where the others stopped. Of course, the challenge is that many business owners have a limited perception of what an accountant is or does. We broke the mould at Collins Hume and changed that perception many years ago. Your journey with Collins Hume does start where the others stop. Because we have one focus — YOU —with us, you'll look way beyond the traditional horizons most accountants restrict themselves to. We challenge the status quo and ask tough 'What if…' questions. We employ holistic strategies that will benefit YOU well in the future. All with the ultimate aim of giving you precisely what you're seeking. Let's Begin

Collins Hume | YOU. That’s all we focus on. You, your family, your wealth and the legacy you (and we) leave. That’s it. Join us on this amazing journey. Discover the Power of 360° Business Solutions At Collins Hume, our "360" approach means comprehensive, all-encompassing solutions tailored to your needs. Because everyone’s journey is different, we take a holistic approach to helping You. Whether optimising finances, growing your business or securing your legacy, we provide a full-circle strategy that puts you at the centre. Let’s navigate your success together. Strategy360° Business owners often face challenges like unpredictable growth, financial inefficiencies and navigating complex market environments. Strategy360 by Collins Hume simplifies these complexities by providing tailored strategic advisory services designed to improve profit, boost cash flow and enhance your business’s long-term value. Through expert guidance in financial management, business restructuring and succession planning, we help you overcome operational hurdles and maximise opportunities. Our proactive approach ensures we address common frustrations, such as poor cash flow management or inadequate risk mitigation, transforming them into strategic advantages. By partnering with Strategy360, you’ll gain clarity and control over your operations, improve profitability, increase business value, and secure a sustainable future for your business. Elevate your business to new heights. Contact Nathan McGrath on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you tailor a program to suit your requirements. Business Advice Not-For-Profits Wealth360° Do you ever wonder if you're on the right path to creating wealth and securing your financial future? Is your superannuation working as hard as it could be? Are you paying too much tax, or could your investments be better structured? What about leaving a legacy—will your family be hit with significant taxes or risk losing it due to failed business operations, bankruptcy or divorce? At Collins Hume, we bring the experience and expertise to guide you through these important decisions. Working closely with a trusted network of financial planners, lawyers, finance brokers, and retirement specialists, we tailor personalised solutions to maximise wealth, protect assets, and pass them on to future generations. With our proactive, holistic approach, you’ll have peace of mind knowing your financial affairs are in order—so you can enjoy a comfortable retirement. Partner with Collins Hume today to safeguard your future, minimise tax, and secure financial stability. Tax360° At Collins Hume, we provide strategic tax solutions that minimise your tax, create wealth, and protect your assets. We go beyond the usual ATO compliance lodgements and work with YOU to educate and empower you to make smarter, more informed financial and tax decisions. By focusing on business and investment structuring, tax minimisation, and long-term wealth creation, we help you optimise your tax position and meet ATO deadlines so you can focus on yourself and your business. Whether you're an investor or a business owner, we partner with you to minimise tax, safeguard your family’s assets, and achieve your financial goals. Let us guide you through the complexities of the tax system to build a secure, successful future. Books360° Managing the books can be overwhelming and time-consuming for business owners. And let’s face it, your time and expertise are better focused on other parts of your business. Books360 by Collins Hume takes the stress out of managing your ATO obligations. Whether you need BAS lodgement, payroll, or one-off bookkeeping expertise, our specialist team ensures accuracy and compliance, allowing you to focus on growing your business. Work with us today to streamline your bookkeeping and ensure you keep up with the ATO’s relentless deadlines. We help simplify your operations and provide real-time financial insights. Being efficient and adopting technology saves you time, reduces costly errors, and improves cash flow, directly benefiting your bottom line. With the expertise of our experienced bookkeepers, including Certified Xero Professionals, you’ll have peace of mind knowing your books are in order. Let Books360 by Collins Hume keep your business running smoothly.