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 »

From 1996 starter to Partner in 2005: a career built on commitment and growth A Fellow of CPA Australia and CEO and Partner at Collins Hume, Christopher Atkinson is a practical, action-oriented leader who works closely with business owners to navigate complexity and make confident decisions. Drawing on his background in endurance racing and adventure sports, Chris brings a disciplined, adaptable mindset to business – focused on clear strategy, measured risk and consistent execution. Chris acts as a trusted advisor to clients and our team, providing a sounding board for opportunities and challenges while simplifying the path forward. His leadership style is grounded in clear communication, accountability and leading from the front, working alongside his team to deliver outcomes rather than directing from a distance. Chris has played a key role in modernising Collins Hume, expanding services, strengthening small business advisory capability and embedding technology to improve both client experience and team performance. His focus remains firmly on helping business owners build stronger, more sustainable businesses while contributing to their communities. Chris is also deeply committed to community impact In 2024, he participated in the Stars of Ballina Dance for Cancer raising funds and awareness for cancer research – an initiative closely aligned with both his own values and Collins Hume’s broader commitment to giving back. Also in 2024, Chris was named Outstanding Business Leader (21+ employees) at the Ballina Business Awards.

Can your business handle what’s coming next? Most business owners we speak with share the same quiet frustration: “I’m busy, revenue looks fine… but I don’t really know if the business is underperforming—or quietly leaking value and increasing risk.” Without clear benchmarks, it’s almost impossible to tell if: Cash flow pressure is temporary or structural Margins are acceptable or gradually eroding value Risk is increasing without showing up in the P&L. The bigger issue isn’t working too little; it’s working hard without knowing whether you’re focusing on the right things . To explore these insights, Nathan McGrath is inviting a small group of clients to a complimentary Top Performer Workshop at our Ballina office. During the session he: Compares your benchmark scorecard with real industry performance against profit, cash flow and valuation markers Works through a guided case study Identifies the specific drivers creating drag (or opportunity) in your business. Following the workshop, you receive: A personalised Risk & Value Driver Scorecard Relevant industry financial benchmarks A tailored Top Performer Report aligned to your profile Clear valuation multiple implications A one‑on‑one follow‑up to translate insight into strategic action and priorities. Places are limited — let us know you're coming To attend, just contact our Strategy360 team and we’ll ensure your spot is reserved. Before the workshop, you complete a short Risk–Profit–Value Driver Assessment , designed to identify how your business compares against top performers in areas most owners don’t measure. Without benchmarks, most decisions are made on instinct, with no external context to confirm whether the business is genuinely healthy or slowly drifting off‑track. This workshop is designed to quickly replace uncertainty with clarity so you can focus on what genuinely moves performance, rather than carrying another quarter of unanswered questions. About Top Performer Business Benchmarks Collins Hume has access to insights from data built on 1.77 million+ risk, profit and value‑driver data points . This data highlights which specific drivers top‑performing businesses consistently outperform on and, more importantly, which of those usually explain the biggest gaps in profit, cash flow and valuation. More workshop information »

What the New Div 296 Tax Means for Individuals with Large Super Balances The Better Targeted Superannuation Concessions measure (known as the Division 296 tax) is now law and takes effect from 1 July 2026. For those with large super balances, it’s important to understand what the new tax does, why it’s been introduced, and the practical steps you and your financial adviser should consider. The Purpose of the Tax Division 296 is designed to make superannuation tax concessions fairer and more sustainable. Rather than changing the way super is taxed for everyone, the law targets a small group of people who hold large super balances, ensuring they pay more tax on the portion of investment earnings that relate to those large balances. Who it Applies to — Thresholds and Rates This new measure, starting 1 July 2026 (first year is 2026-27), applies to an individual with total superannuation balances (TSBs) in excess of the following thresholds: Large balance threshold: $3.0 million  Very large threshold: $10.0 million. Both thresholds will be indexed in future years. This will mean that the overall tax imposed on superannuation fund earnings will be as follows: Division 296 TSB Div 296 tax rate on earnings relating to this band Total effective tax on those earnings Up to $3,000,000 0% 15% (standard fund tax) $3,000,001 to $10,000,000 15% 30% (15% + 15%) Above $10,000,000 25% 40% (15% + 25%)   Certain people will be excluded from having this new tax levied upon them, notwithstanding that their TSB may exceed the threshold. Excluded persons include child recipients of death benefit pensions and individuals who have made structured settlement superannuation contributions for a personal injury compensation payment. Further, where a person dies, they will no longer have a TSB. However, other than the first year of operation (ie, 2026-27), there can still be a Division 296 tax assessment in respect of the financial year in which they die, where they had a TSB of more than $3 million at the start of the year. Given superannuation is not an estate asset, this scenario should be considered as part of a review of an individual’s estate plan. How the Tax Works From an SMSF perspective, the fund will calculate its Division 296 earnings, which is based on its taxable income with adjustments for assessable contributions; net exempt income attributable to pensions; any non-arm’s length income (which is already taxed at 45%) and income relating to investments in a pooled superannuation trust. There may also be adjustments for any capital gains made from the disposal of fund assets, if the fund has made the relevant small-fund CGT election. The calculated Division 296 superannuation earnings is then attributed to fund members using an attribution percentage calculated by an actuary. This information will be used by the ATO to assess the member’s Division 296 tax liability. Division 296 tax is levied on the individual, not a superannuation fund. However, the tax can be paid either by the individual or they can elect for the amount to be deducted from their nominated superannuation interest. Division 296 Next Steps If your total super balance is near—or already above—the thresholds, it is important that you contact your financial adviser to arrange tailored modelling and to discuss if the small-fund CGT election is suitable. Early planning will help you manage cash flow, reporting and any actuarial requirements efficiently. This will also be an opportunity to review the suitability and benefits of holding investment capital in a superannuation structure versus alternatives for amounts in excess of the large threshold. Holding a large super balance? Review your retirement planning now to avoid future tax headaches. Ask to speak with Collins Hume's tax and superannuation advisers to  plan for Division 296 changes.

What Business Leaders Say Actually Works When Motivation Fades Business owners often assume a loss of motivation means they need to push harder. But insights from more than 30 founders, executives and advisers suggest the opposite. When motivation drops, it’s usually a signal that the business has become noisy, reactive or misaligned with its original purpose. Here are the key takeaways — and what owners can do about them. Reconnect With Purpose Motivation often fades when leaders lose sight of why their business exists. Stepping back to focus on the impact your work has on customers (rather than the daily workload) can quickly restore perspective and energy. TIP: Schedule regular time to review your purpose and speak directly with customers about outcomes. Install Simple Structure What looks like a motivation problem is often a systems problem. Clear priorities, weekly planning and tracking your key metrics can help restore control and reduce overwhelm. TIP: Block out weekly “CEO time” to focus on strategy and key numbers. Delegate Properly Many founders hit a wall because every decision runs through them. Businesses only scale — and leaders regain energy — when responsibility is genuinely shared with capable team members. TIP: Identify tasks only you can do and actively delegate the rest. Create Momentum Motivation doesn’t usually come first — progress does. Leaders reported that small wins and visible progress rebuild energy far faster than waiting to “feel motivated”. TIP: Break goals into smaller weekly actions and track progress. Build A Support Network Leadership can be isolating. Talking with peers, mentors and advisers provides perspective and reminds owners that many challenges are shared. TIP: Stay connected to others who understand the pressure. Protect Your Energy Exhaustion leads to poor decisions and reactive leadership. Sustainable businesses require leaders who protect their time, boundaries and capacity to think clearly. TIP: Build systems and boundaries that allow time away from day-to-day operations. The Bottom Line Motivation usually doesn’t disappear — it gets buried under complexity and constant demands. The leaders in the study consistently pointed to the same solution: simplify priorities, build stronger systems, and reclaim control of the business. Feeling stuck or stretched running your business? Step back and focus on the systems, priorities and leadership habits that drive real momentum. For a clearer roadmap for strengthening your business performance, speak with our Strategy360 team about practical strategies that help owners regain control and move forward with confidence.

Collins Hume sponsors free non-profit workshops May & August Strategy360 By Collins Hume is delighted to support a series of free grant writing workshops delivered by the Northern Rivers Community Foundation (NRCF) in May and August 2026. Designed to help not-for-profit organisations strengthen their funding applications and secure vital support for their communities, these practical, hands-on sessions are tailored for local charities, community groups and NFP leaders who want to improve their success in an increasingly competitive funding environment. Whether you are new to grant writing or looking to refine your approach, each workshop provides clear, actionable guidance you can apply immediately. Learn how to structure compelling applications, align projects with funding priorities and clearly demonstrate community impact. Sessions also cover common pitfalls, budgeting fundamentals and how to build strong evaluation frameworks that stand up to scrutiny. Delivered by NRCF’s experienced grants team, the workshops draw on real examples from successful local initiatives and include time for questions, discussion and shared learning. Collins Hume Senior Business Adviser Nathan McGrath says, “Grant success depends on how clearly organisations can evidence need, impact and alignment.” “These workshops help not‑for‑profits sharpen their applications and compete more confidently for funding.” Places are limited and bookings are essential Open to organisations of all sizes from grassroots groups to established charities, these sessions are expected to fill quickly: 4 May Mullumbimby 5 May Hastings Point 6 May Lennox Head 20 May Grafton 21 May Lismore 22 May Nimbin 11 August Byron Bay Practical Strategies for NFP Growth, Governance and Sustainability Learn more about Collins Hume’s Not-for-Profit Services at collinshume.com/nfp . Northern Rivers Community Foundation is a not-for-profit, philanthropic foundation providing evidence-based community grants. Read more at https://nrcf.org.au/ . These workshops are sponsored by Strategy360 By Collins Hume - providing practical strategies for NFP growth, governance and sustainability.

Business owners and leaders will have the opportunity to benchmark their performance against industry leaders at an upcoming Top Performer Workshop this May (date TBC), presented by Nathan McGrath. Designed for SMEs and growth-focused organisations, the workshop provides practical insights into what consistently high-performing businesses do differently, particularly in challenging and uncertain conditions. Participants will complete a personalised Risk-Profit-Value Driver Assessment ahead of the session, forming the foundation for a guided workshop experience. Using robust financial and non-financial benchmarks, attendees will gain a clear understanding of their business strengths, exposure areas, and the key drivers influencing profitability, risk and long-term value. The session will also include real-world case studies, Top Performer strategies and practical actions that can be applied immediately to improve performance and decision-making. Attendees will leave with a personalised driver scorecard, profitability insights, industry valuation perspectives and a clear set of priority actions. This workshop is suited to business owners, directors, executives, CFOs and leaders focused on strengthening performance, improving resilience and building long-term business value. Further details, including date, time and venue, will be confirmed shortly. Request a workshop brochure » About Nathan McGrath Nathan McGrath is a Senior Business Advisor at Strategy360 By Collins Hume, bringing more than a decade of hands-on advisory experience across SMEs, corporates and government programs, complemented by leadership roles at General Manager and Director level. His work centres on helping business owners step back from day-to-day pressures to clarify direction, strengthen performance and make confident decisions around growth, funding and transition.  Nathan brings practical, real-world insight, cutting through theory to focus on what actually works inside a business. He is known for translating financial and strategic complexity into clear, actionable steps, helping leaders improve profitability, manage risk and position their businesses for sustainable growth and long-term value.

The Payday Super Penalty Framework is stricter than you think Read What’s at Stake   One of the most important things to understand about Payday Super isn’t just that you need to pay super more often. It’s that the consequences of getting it wrong are more severe than under the current system. Under today’s rules, if you miss a quarterly super deadline, you face the Superannuation Guarantee Charge (SGC). It’s not pleasant, but the quarterly cycle means you have larger windows and fewer deadlines to manage. From 1 July 2026, the compliance framework tightens significantly. And for small businesses, the risks are real. How the New Penalties Work Under Payday Super, the SGC is assessed per payday, not per quarter. Every time you pay wages, you trigger a super obligation. If that contribution doesn’t reach the employee’s super fund within seven business days, the SGC clock starts ticking. The new SGC includes: The shortfall amount — the super you should have paid. Interest (notional earnings) — calculated on the unpaid amount. An administrative uplift of up to 60% — this is the real sting. It’s a penalty applied on top of the shortfall and interest, and it can vary depending on your compliance history. If you’ve been consistently paying on time and make a genuine mistake, the uplift may be reduced. But if you have a pattern of late payments, expect the full force of the penalty. On top of the SGC, additional penalties may apply if you don’t pay the charge within 28 days of receiving an ATO notice. Unlike regular super contributions, SGC amounts and penalties are generally not tax-deductible. Take Payday Super Compliance Seriously The penalty framework under Payday Super is designed to be taken seriously. A 60% administrative uplift on top of shortfall amounts can turn a small oversight into an expensive problem. The Hidden Risk: Processing Delays Here’s something many small businesses don’t realise yet: even if you initiate a super payment on time, it might not arrive at the fund within seven business days. Standard bank transfers can take up to three business days. If your clearing house or payment gateway adds another day or two for processing, you’re already eating into your seven-day window. A rejection or error could push you over the line entirely — and you may not even know it happened until the ATO flags it. This is one of the trickiest aspects of Payday Super for small businesses. You can do everything right on your end and still be caught out by the payment infrastructure. The First-Year Grace Period (With Conditions) The ATO has said it will take a “measured approach” to compliance during the first 12 months. In practice, this means they’ll differentiate between businesses that are genuinely trying to comply and those that aren’t. If you can show that you’ve updated your systems, are making payments on time, and are actively addressing any issues, you’re likely to be treated as low risk. But this is not a free pass. The ATO will still be monitoring, and repeated or careless non-compliance will be met with enforcement action. How to Protect Yourself Understand the seven-day rule inside out. Know how long your payments take from initiation to fund receipt, and build in a buffer. Automate your payments. The less manual intervention required, the lower your risk of delays and errors. Keep records. Maintain clear proof-of-payment documentation for every pay run. If the ATO comes knocking, you want a clean paper trail. Monitor your compliance history. A strong track record may reduce penalties if something goes wrong. If you’re unsure about your exposure under the new rules, speak with us sooner rather than later . We can review your current super processes, identify potential compliance risks, and help you put the right safeguards in place before Payday Super begins. Access our free Payday Super resources here »

Every decision you make as a business owner has consequences. Some choices move the business forward. Others quietly set it back. What many underestimate is how often the real damage comes not from big mistakes, but from small, repeated losses that go unnoticed. Cue sporting analogy Anyone who has trained for a triathlon knows that success isn’t about dominating one discipline. It’s about consistency across three. You might shave a few seconds off your swim with months of training. The same goes for improving your cycling power or running pace. Marginal gains are possible, but they take time and discipline. But go the other way? Miss a transition. Forget hydration. Push too hard early in the bike leg and fade on the run. Suddenly minutes disappear from your race time. Triathlon teaches a simple lesson: small mistakes compound faster than small improvements. Business works exactly the same way. Running a business is a constant balancing act. Pricing, staffing, marketing, service delivery and cash management all interact with each other. Each decision nudges performance slightly forward or slightly backward. And just like in triathlon, it’s often easier to lose ground than to gain it. Another parallel comes from training itself. When you’re preparing for endurance events, consistency matters more than intensity. Missing a few sessions might not feel like a big deal at the time, but over weeks those gaps show up in performance. Business behaves the same way. Small inefficiencies left unattended build into real problems. That might look like: Debtors sitting unpaid while cash flow tightens Labour not being properly recovered through pricing Small operational inefficiencies quietly eroding margin Owners coasting without fully understanding the numbers. Individually, none of these issues seem dramatic. But together they act like friction, slowing the entire business down. Many owners believe growth comes from constantly pushing harder — more customers, more sales, more activity. But often the bigger opportunity lies somewhere else entirely. It lies in stopping the easy losses. When those gaps are addressed, the gains you are already making begin to compound properly. Another truth about endurance sport applies here too: performance can be disguised in the short term. A strong race, favourable conditions or a good training block can mask underlying weaknesses. But over time the fundamentals catch up. Business is no different. A big project, a strong year, or a lucky run can hide inefficiencies for a while. But the organisations that endure are the ones that consistently manage the basics and avoid repeated performance leaks. Winning in business isn’t about perfection. It’s about staying steady, protecting the fundamentals, and giving your successes the time to compound. So the next time you find yourself pushing harder for incremental improvement, pause for a moment. Instead, ask a different question: Where might our business be quietly losing ground? Because fixing those hidden drop-offs will often deliver far greater long-term results than chasing small wins ever could. Ready to Find the Hidden Gaps? To gain a clearer picture of where your business may be leaking performance — from pricing and labour recovery to cash flow and operational efficiency — start with a structured review of the key drivers of business value. Speak with our Strategy360 team about a Value Driver Assessment and discover the areas where small improvements could deliver the biggest long-term impact.

A Wake-Up Call for Family Businesses on Fringe Benefits Tax With Fringe Benefits Tax (FBT) lodgement season, family businesses should carefully review the perks they provide to working directors and family members. A high-profile case involving luxury vehicles provided to three brothers who run a large business empire through a discretionary trust highlights the complexities — and potential risks — of informal arrangements. While the case initially appeared to expand FBT exposure, the latest decision handed down by the Full Federal Court offers reassurance that not all benefits provided to working owners will automatically trigger FBT. What may seem like harmless "owner entitlements" or beneficiary perks can still attract scrutiny from the Australian Taxation Office (ATO). However, the courts have emphasised the importance of substance, documentation, and the capacity in which benefits are provided. The Background Three brothers operate a substantial business involving petrol stations, convenience stores, fast food, tobacco outlets and gift shops. They serve as shareholders, directors and key decision-makers (with powers as appointors under the trust deed), working long hours in executive-style roles without drawing formal cash salaries or wages. Profits and benefits flow through the family discretionary trust (SFT Trust), of which their corporate trustee (SEPL Pty Ltd) is the trustee. The brothers and family members are beneficiaries. The business provided them with exclusive access to over 40 luxury and high-performance vehicles (including Bentleys and Ferraris) for both business and personal use. Costs associated with personal use were debited to the matriarch’s beneficiary account and later cleared by trust distributions — a mechanism consistent with beneficiary entitlements rather than employment remuneration. The ATO assessed FBT on the private use component of these car benefits, arguing they were fringe benefits provided to the brothers as "employees" in respect of their employment. What the Court Decided The Administrative Appeals Tribunal (AAT) initially ruled in favour of the taxpayer ( Re BQKD and Commissioner of Taxation  [2024] AATA 1796). It found that the brothers were not "employees" for FBT purposes and that, even on a hypothetical basis, the vehicle benefits were not provided "in respect of" any employment. The benefits were instead linked to their capacities as beneficiaries, proprietors, and controlling family members. The Commissioner appealed to a single judge of the Federal Court, who in June 2025 ( Commissioner of Taxation v SEPL Pty Ltd as trustee of the SFT Trust  [2025] FCA 581) allowed the appeal. Justice O'Sullivan held that the brothers were employees under the broad FBT definitions (including via the hypothetical deeming rule in s 137 of the Fringe Benefits Tax Assessment Act 1986 (Cth) — FBTAA) and that the benefits were provided in respect of their employment. The taxpayer then appealed to the Full Federal Court. On 27 March 2026, in SEPL Pty Ltd as trustee of the SFT Trust v Commissioner of Taxation  [2026] FCAFC 36 (Perry, O’Callaghan and Thawley JJ), the Full Court unanimously allowed the appeal. The Full Federal Court basically restored the AAT's decision. Key findings: Employee status: It was open to the AAT to conclude the brothers were not "employees" for FBT purposes. The definitions of "employee" and "salary or wages" ultimately draw on common law concepts of employment. The AAT properly considered factors such as the absence of employment contracts, no wages or leave entitlements, the presence of employed managers for operational roles, and the brothers' control being referable to their proprietorial and governance roles rather than traditional employment. "In respect of" employment: Even assuming (hypothetically) that the brothers were employees, it was open to the AAT to find there was no sufficient material connection between the benefits and any employment relationship. Here, access to the vehicles was not a substitute for salary or wages. The AAT correctly weighed competing explanations and found the benefits arose primarily from family/trust relationships, not employment. Why This Matters for Your Business The case underscores the ATO's ongoing focus on dual-capacity individuals (e.g., directors who are also beneficiaries and active workers in trust structures). However, the Full Court's reasoning provides important boundaries: Informal perks for working family members in discretionary trusts are not automatically subject to FBT. Substance and documentation matter: How benefits are provided, funded, and recorded (e.g., via trust distributions vs. remuneration) can help in determining the outcome. Common law employment concepts remain relevant in interpreting FBT definitions. Blending roles does not inevitably trigger FBT if the dominant characterisation is beneficiary-based. Family businesses should still exercise caution. The ATO may continue to scrutinise similar arrangements, particularly where benefits appear to represent a substitute for remuneration or lack clear documentation. Superannuation contributions or executive titles can sometimes support employee characterisation, though they were not decisive here. Practical Steps to Protect Your Business Don't wait for an audit — review your arrangements now: Document clearly: If a benefit is a trust distribution to a beneficiary, record it via trustee resolutions. If it's tied to work duties, treat it as a fringe benefit and calculate FBT accordingly. Or confirm why they fall outside the regime. Consider FBT properly: Apply statutory formulas or operating cost methods for cars. Employee contributions (e.g., reimbursing personal use) can reduce or eliminate liability. Consider exemptions/concessions: Minor benefits under $300, or salary packaging for EVs, might help. Audit overlaps: We also need to check for Division 7A loan issues or deemed dividends if benefits flow through private companies. Plan proactively: With ATO focus intensifying (as highlighted in recent compliance updates), model scenarios to minimise tax without losing commercial perks. Remember that if the ATO discovers some unreported FBT liabilities then the business can also be exposed to penalties and interest. The SEPL case ultimately favours the taxpayer and reinforces that FBT does not capture every benefit provided to working owners in family trust structures. However, every arrangement turns on its specific facts and evidence. If your business provides vehicles, phones, travel, or other perks to family members actively involved in operations — especially without formal salaries — now is a good time to review. Our team can help analyse your structures, run FBT calculations or risk assessments, and implement practical fixes to protect profits while maintaining flexibility. The law in this area is fact-sensitive and continues to evolve. Professional advice tailored to your circumstances is essential. Remember: FBT assumptions can be costly, but a proactive approach protects your business, your people and your peace of mind. Call Collins Hume in Ballina for FBT help on 02 6686 3000.