Succession planning to remain major focus for ATO this year

The Tax Office continues to see situations where tax planning decisions from many years ago are giving rise to significant consequences.

The ATO has warned privately owned and wealthy groups that succession planning will remain a major focus in 2026 and advised groups to carefully review their arrangements.

ATO deputy commissioner Louise Clarke said among its engagements with private groups, the ATO is still seeing situations where planning has been undertaken without a full appreciation of the tax consequences. In some cases, decisions made many years ago have given rise to unforeseen consequences and sometimes significant tax consequences, Clarke said.

Clarke said the ATO was also noticing errors around fundamentals such as eligibility for concessions and rollovers, sometimes caused by, or exacerbated by, poor governance or record keeping.

Another key theme among engagements with private groups is arrangements that appear to have been put in place to access concessions and rollovers, she said.

The Tax Office previously announced plans to publish a practical compliance guideline on back-to-back rollovers.

“It will explain when we're more likely to apply compliance resources to consider the application of Part IVA of the Income Tax Assessment Act 1936 to an arrangement that comprises multiple CGT rollovers,” Clarke said.

“Looking ahead, succession planning will remain a key focus area for us, and our message to privately owned and wealthy groups is consistent: start early, review plans regularly as circumstances change, and fully consider tax implications – not just at the point of transition but over the life of the arrangement and for the next generation.”

Clarke said family trust elections were another important area for private groups and their advisors to review.

“The clock is ticking – if your private group has family trust elections, now is the time to self-review, pay and put in your request for remission of general interest charge,” she said.

“Up until 31 December 2026, we'll look favourably on GIC remission requests in these circumstances and may remit up to 80 per cent.”

She also reminded private groups about the 45-day holding rule for franking credits.

“Even if a trust is making a distribution referable to a distribution with franking credits attached to a beneficiary who has made an FTE, the beneficiary may not be eligible for franking tax offsets they receive from it,” she said.

“You need to check if the holding period rule applies.”

Clarke also advised private groups that incorrect labels on the form to make, vary or revoke an election will not automatically render the form invalid.

“We have heard that some people may be concerned about this, but as is the case with all approved forms, we take a sensible and practical approach,” she said.

“However, changing your mind down the track on who you think should have been the specified individual (when you're no longer eligible to vary your FTE), does not fall into that scenario.”

02 March 2026
Miranda Brownlee
accountantsdaily.com.au

Strategies for Effective Debt Recovery for Small Businesses

When invoices for goods and services go unpaid, it can significantly impact your business’s profitability and cash flow.

Whether due to unforeseen circumstances, unemployment or dissatisfaction with service, clients may fall behind on payments, posing challenges to revenue collection. To mitigate these risks, you can establish proactive measures for managing payments and recovering debt. This entails having clear steps in place from the moment of invoicing and comprehensively understanding the follow-up process for outstanding payments. This article will explore effective strategies for your small business to proactively manage debt recovery and safeguard financial stability.

Initial Information

Obtaining initial information and performing background checks on customers before conducting business with them is crucial. This helps prevent bad debts and protects your business interests. The table below outlines key information and research you should undertake.

Research Area	Explanation
ASIC search	Completing an ASIC search on the ASIC register can help you determine whether the company is in liquidation or deregistered. This can help you gauge the company’s financial stability and legitimacy.
Credit Reports	Obtain business and personal credit reports to gain insight into the creditworthiness of your potential customers. These reports can provide valuable information about their credit history, payment behaviour, and financial health.
Information sheet for clients	Provide clients with an information sheet to gather essential details that can help you assess their creditworthiness and facilitate debt recovery if necessary. These details include their entity name and ABN/ACN, postal and email address, mobile number, full name and alternative contracts in case of communication issues.

Terms and Agreements

Clear payment terms in contracts and agreements are essential for your small business. These terms should include payment deadlines, proportionate late fees, and what happens if payment is late. It is important to regularly check contract terms to know when payments are due and to monitor payments closely. One way you can do this is by diarising when payments are about to be overdue to ensure you do not miss any payments.

Ensure you get everything in writing and signed to avoid misunderstandings. For example, you may provide your client with terms and conditions that you require to be signed. Importantly, you should receive a signed copy before commencing or providing any goods or services.

Taking these precautions can help to ensure you get paid on time and handle any payment issues effectively.

Invoicing

As a small business owner, you can try and ensure smooth financial transactions and minimise debt risks by employing invoicing strategies. Some key strategies include:

Depending on your terms and conditions, you may be able to ensure customers settle their invoices before goods or services are delivered or performed. This can prompt customers to pay on time.
Simplifying payment options for customers’ convenience and clarity.
Sending out invoices to customers prompts them to encourage payments. Implementing this can encourage customers not to forget a payment.
Encouraging timely payments by offering extra incentives to customers for instant or early payments. By securing payments sooner, you can improve your cash flow and reduce the need for debt recovery strategies.

Communication and Documentation

Maintaining effective communication and documentation is crucial for debt recovery when managing customers’ overdue payments. Below are relevant steps for communicating with customers successfully.

Steps for Effective Communication

Initiate discussion: Start with a friendly reminder, either via phone or email, to prompt action from the customer. Importantly, this reminds them of the outstanding payment and may resolve the issue promptly. In addition, document all communication for future reference and consider sending a follow-up email after any phone calls.
Send an overdue reminder: If the friendly reminder does not result in payment, this will reiterate the urgency of the situation. You can also reference previous attempts to collect payment. This step reinforces the importance of timely payment and signals escalating consequences if ignored.
Provide a final notice: If the issue persists despite reminders, send a final notice emphasising the seriousness of the matter and the consequences of continued non-payment. Clearly outline the steps you have taken to resolve the issue and remind them of the terms and conditions of your agreement.
Consider a formal letter of demand: This formal communication underscores your commitment to resolving the matter, but you should first seek advice from a debt recovery professional. By employing these strategies, you can effectively manage overdue payments and minimise the impact on cash flow.

Personalised Debt Recovery Process

Developing a clear debt recovery process does not have to be complicated, but it can be essential for safeguarding your cash flow. Depending on your internal systems, you could automate initial reminders to customers. However, you can manually monitor payment dates and conduct internal reminders yourself. Regardless, creating a checklist with defined steps and timelines can encourage and ensure you have a structured approach to debt collection.

Consider assigning a dedicated debt collector to oversee past due accounts. This individual can take ownership of the entire debt recovery process, ensuring accountability and preventing any accounts from slipping through the cracks. Having one person responsible for debt collection streamlines communication and facilitates consistent follow-up, increasing the likelihood of successful debt recovery.

Key Takeaways

Debt recovery for unpaid invoices can strain profitability and cash flow. Implementing proactive debt recovery strategies is essential for small businesses. Proactive accounting practices can help you manage payments, reducing the need for reactive debt recovery efforts. Ensuring you have clear steps for invoicing and following up on overdue payments are crucial for successful debt recovery.

Madison Cali
January 27 2026
legalvision.com.au

ATO issues new guidance on penalties for non-compliance with STP

The Tax Office has published a draft law administration practice statement outlining its approach to penalties for failing to meet reporting obligations for single touch payroll.

The ATO has published Practice Statement Law Administration PS LA 2026/D2, which explains how ATO staff should administer penalties when an entity fails to accurately and on time comply with its single touch payroll reporting obligations.

PS LA 2026/D2 also includes information on how ATO staff should administer penalty remission where appropriate.

The draft practice statement sets out a five-step process for ATO staff to follow when raising penalties against an entity for failing to comply with its STP reporting obligations.

The first step explains how ATO staff determine the type of penalty applicable to the entity's circumstances.

PS LA 2026/D2 outlined two types of conduct that can make an entity liable to an administrative penalty. These include failing to lodge STP reporting or lodging STP reporting but failing to do so in the approved form.

An entity is also liable to an administrative penalty if they make a statement in its STP reporting that is false or misleading in a material particular.

The ATO stated that if an entity makes several false or misleading statements in the same document, the entity is liable to a penalty for each statement.

“For example, an entity that makes a false or misleading statement relating to each of their 10 employees has made 10 statements and will be liable to 10 administrative penalties,” it said.

For step two, ATO staff are required to consider whether the law protects the entity from penalties given the entity's circumstances.

“An entity will not be liable to a false or misleading statement penalty where they and their agent took reasonable care in connection with making the statement,” the practice statement said.

When assessing an entity's behaviour in making a statement, the ATO said staff must consider the actions and behaviours at the time the statement was made. It noted that Miscellaneous Taxation Ruling MT 2008/1 provides guidelines for determining whether an entity took reasonable care.

“The 'reasonable care test' requires an entity to make a reasonable and genuine attempt to comply with obligations imposed under legislative requirements. This means considering actions leading up to the making of the statement,” the practice statement said.

“Making a genuine attempt means that the entity was actively engaged with the tax and superannuation systems and actively attempting to comply with their reporting obligations. When considering if a genuine attempt has been made, we compare the entity's attempt with that of other entities in similar circumstances.”

The draft practice statement said there were a range of factors that were relevant for assessing reasonable care.

Where there is an inadvertent mistake, the ATO said staff should examine whether reasonable enquiries were made, including whether the entity conducted an enquiry commensurate with the risk of the decision and its resources, or whether the entity simply assumed the statement was correct.

It also said ATO staff should look at:

Whether the entity was aware, or should have been aware, of the correct treatment of the law or of the facts.
Whether any factors prevented the entity from seeking advice, understanding the requirements of the tax law or reporting correctly, and
Whether the entity's level of knowledge, understanding of the tax and superannuation systems or circumstances impacted their compliance.

The practice statement also noted that an entity is not liable for a false or misleading statement penalty if it corrects a false or misleading statement made in the course of its STP reporting within a prescribed period.

PS LA 2026/D2 also sets out how the safe harbour exception applies for entities where an agent has failed to take reasonable care:

“In relation to penalties for failing to lodge in the approved form by the due date, the safe harbour applies where all of the following apply:

The entity provided all relevant information to the registered agent to enable the document to be lodged on time (noting that the onus is on the entity to prove that they met this requirement).
The registered agent does not lodge the document on time, and
The failure to lodge on time was not due to either
- Intentional disregard of a taxation law by the registered agent, or
- Recklessness by the registered agent as to the operation of a taxation law.”

“Entities that engage the services of third-party payroll service providers are not protected from penalties by the safe harbours for the actions of the payroll service provider unless the third-party payroll service provider is also a registered tax or BAS agent,” it said.

Steps three and four require ATO staff to determine the extent and amount of the penalty and consider penalty remission. Appendix C sets out a detailed four-step remission process that staff must follow.

Step five outlines what should be included in the written notice of the penalty.

The PS LA 2026/D2 is open for consultation until Friday, 24 April.

In a public statement, the ATO said STP and superannuation member account reporting were critical to the administration of the tax and super systems, and relied on by millions of individuals to manage their tax and super affairs.

“It's essential that this reporting is accurate and lodged on time,” it said.

“The draft practice statements will assist ATO staff when applying penalties for STP or superannuation member account reporting that is inaccurate or late.”

19 March 2026
Miranda Brownlee
accountantsdaily.com.au

Payday Super: 6 Things Small Businesses Need to Know

From 1 July 2026, a major change is coming for employers: Payday Super.

Instead of paying super quarterly, you’ll need to pay it with each payroll, and contributions have to reach employees’ funds within 7 business days.

The amount doesn’t change — but timing, systems, and risk do.

1. Cash Flow Will Tighten

Quarterly buffers disappear. Instead of holding super for months, you’ll pay it every pay cycle. This could significantly reduce working capital, so determine the impact now.

2. Payroll Systems Must Be Ready

Moving from 4 to as many as 52 payments per year means automation is essential. Manual processes won’t cope — check your system is compliant and test it early.

3. The ATO Clearing House Is Closing

The Small Business Super Clearing House ends 30 June 2026. Businesses need a new solution that can handle frequent, real-time payments. Also, after 11:59 pm AEST on 30 June 2026, users of the ATO’s Small Business Superannuation Clearing House (SBSCH) will no longer be able to log in, submit instructions or view any records. Businesses need to download their records now as they may need them in future to respond to audits or employee queries.

4. Penalties Increase

Late payments are assessed per payday, not quarterly. Even small delays (including bank processing times) can trigger penalties.

5. Super Calculation Is Changing

Super will be based on qualifying earnings (QE), a broader measure than current rules. Some businesses may end up paying slightly more. For most employees on simple pay arrangements, there will be no difference. But if you have staff on salary sacrifice, variable pay, or earnings near the maximum contribution base, it’s worth reviewing.

6. Directors Face Greater Risk

Missed payments can affect Safe Harbour protection and trigger faster ATO action, increasing personal risk for directors.

What to Do Now

Prepare early to avoid disruption:

Model your cash flow under the new system
Confirm your payroll software is ready
If necessary, transition off the ATO clearing house
Review employee pay structures

Businesses that act now will transition smoothly. Those that don’t risk cash flow pressure, system issues, and penalties.

Inflation continues to keep SME owners up at night, survey finds

Inflation remains a top worry for SME owners, a recent survey by Banjo Loans has found.

According to the most recent Banjo Loans SME Compass Report, 38 per cent of SMEs reported that inflation was the top issue keeping them up at night, while 46 per cent reported it was their largest barrier to growth.

“SMEs are balancing growth ambitions with survival strategies. Inflation is the dominant pressure, while cash flow concerns are intensifying, forcing businesses to prioritise viability over expansion,” the report read.

“And while inflation is clearly the dominant pressure shaping SME behaviour, cash flow pressures are intensifying for many. Many SMEs are prioritising viability and survival over growth.”

The report found that SMEs were cutting costs and hiking their prices in response to inflationary pressures. Over the past 12 months, 43 per cent reduced expenses while nearly half had raised prices for the first time since 2022.

Small business owners don’t expect the pressure to let up any time soon, with 67 per cent expecting inflation to continue limiting business growth over the next 12 months.

Cash flow pressures were also hampering growth, Banjo Loans found. Almost half (45 per cent) of businesses said they had delayed growth opportunities over the past year due to cash flow concerns.

Confidence had also softened heading into 2026, with 86 per cent of SMEs expecting to meet revenue targets, down from 89 per cent. Banjo Loans also found that businesses were more sensitive to interest rates, with 59 per cent of SMEs saying they would make business changes if rates moved.

The survey also identified signs of a ‘two-speed’ SME economy, with retail operators struggling more while communications, media and telecommunications businesses reported stronger cash stability and confidence.

In retail, 83 per cent identified inflation as a key barrier to growth, while 66 per cent said economic uncertainty was holding them back.

Banjo Loans also found that many SMEs were financially vulnerable, with half of Australian SMEs at risk of running out of cash within six months if new revenue stopped today. While 69 per cent could survive at least three months without income, only 19 per cent could operate for more than a year.

“Across Australia, SMEs continue to grow and hit revenue targets, but cash reserves remain tight and uncertainty is high,” Guy Callaghan, chief executive of Banjo Loans, said.

“The Compass data shows that SMEs are resilient but cautious and need to carefully manage finances as they navigate business in 2026.”

25 March 2026
Emma Partis
accountantsdaily.com.au

Most Reliable Car Brands in 2026

Check out which car brands are the most likely to stay on the road and not cost you a fortune to fix.

Calculate your costs to start a business

The following outlines what you should consider when looking at the costs involved in starting your own business.

Start-up costs are the one-off expenses required to set up your business. Different businesses will have different start-up costs, but they often include things like:

premises (purchase, fit out and connecting utilities)
materials and equipment
licencing and registration fees
logo design and website development

Step through this process to get an idea of how much it will cost to start your business.

Separate start-up costs from other costs

Break down all the costs from your business plan into:

one-off costs – establishment costs such as licence fees and insurance
equipment outlay – all necessary equipment to be used in the business over the next few years (for example,
assets such as equipment, tools)
working capital –the funds you'll need to cover your running costs during the initial set-up stage of your business (until you start to turn a profit)

The following lists are some of the most common start-up costs for many businesses. Whether they apply to you will depend on the nature of your business.

Keep in mind that some costs, such as insurance, can recur on a regular basis even if they're considered 'one-off'.

Click here to open a Guide to Business Start-Up Costs

Common start-up costs

Setting up your premises

Common costs relating to your business premises are:

site design and architectural plan
basic premises modifications – electrical, lighting, painting, security system, ventilation system
fit-out, kitchen installation, bathroom construction and plumbing (gas and water)

Compliance needs

There are many licences that can come with starting a business, including:

business name registration fees
vehicle registration fees
licences – for example, a liquor licence or council permits for business signage and footpath trading
Food Handling Certificate, Responsible Service of Alcohol (RSA) Certificate
insurance – for example, public liability, contents, and WorkCover

Marketing expenses

It's important to factor some marketing into your plans so you can get customers to your business. Some things to consider are:

graphic design for logos and signage
opening marketing, including advertising
setting up an online presence (website design, web hosting fees, SSL certificate and registering a domain name)

Staff costs

Often businesses will need to employ staff from the beginning. If you need staff, you should consider:

recruitment costs including jobs ads and agency fees
wages and salaries
long service leave entitlements
equipment (phone, computer, printer)
uniforms

Professional service fees

You might need to employ professional services when setting up your business. Some fees to consider are:

legal fees
accounting – bookkeeper or accountant
financial adviser
banking costs or loan fees
internet and phone installation

Factor in your running costs

It's normal for new businesses to take time to make a profit. You can make this period less stressful by factoring a period of your running costs into your start-up.

Running costs can include:

wages
rent or lease
utilities
mobile phone and landline bills
internet access
buying stock
shipping and delivery charges

The 'Detailed profit' sheet here lists some common running costs.

Business Victoria

Are you ready for Payday superannuation?

From the first payday on or after 1 July 2026, employer are required to meet new super obligation.

Contributions will be considered “on time only” if the fund receives them within seven business days of the wage payment (an extended timeframe of 20 business days applies for some specific situations).

When errors occur, the updated super guarantee charge rules will generally apply more quickly for each error.

Also, those still using the ATO Small Business Superannuation Clearing House will also need to choose and implement an alternative arrangement before that service closes altogether on 1 July 2026.

Employers will need to start reviewing your wage and super payment/processing technology and processes in anticipation.

Employees should start seeing super contributions credited to their accounts after each pay rather than quarterly, but will need to ensure their super fund details are up to date, particular if starting a new job.

Acctweb

Support for rebuilding after natural disasters

If you have lost your home, property or business to a natural disaster, the Federal/State and territory Government can provide support where natural disasters have been declared.

Visit the National Emergency Management Agency website for links to state or territory disaster recovery websites. Disaster assistance payments may be available in officially declared disaster events.

The Australian Government Disaster Recovery Payment (AGDRP) is a one-off non-means tested payment of $1,000 per eligible adult and $400 per child, while the Disaster Recovery Allowance (DRA) provides short-term income support for up to 13 weeks to eligible individuals.

Contact your insurance company as soon as you can, ideally within 24 hours. Most insurers have emergency hotlines and may offer emergency cash advances within days or temporary accommodation funds if your home is uninhabitable.

Major Australian banks have hardship teams that can pause loan repayments, waive fees or temporarily extend credit. Don’t wait until you’ve missed a payment – early communication protects your credit rating and opens doors to assistance.

Also, for those looking to donate to disaster relief funds, only make donations for disaster relief to reputable charities as scammers often impersonate well-known charities through door-knocking or cold-calling and create fake websites and social media pages to deceive you in the wake of a disaster. You can verify a charity’s registration on the Australian Charities and Not-for-profits Commission website, and report suspected scams to Scamwatch.

Acctweb

When to Update Your Business Trading Terms

Trading terms are the contract that outlines how you do business. They provide an overview of the rights and obligations of you and your customers.

Your trading terms should include details on the goods or services you provide, customer payment obligations, and how you manage risk, liability and potential disputes.

Your business faces risk if you use outdated trading terms. Knowing when to update these terms is important so that you can stay compliant and operate effectively. This article explains the signs that your trading terms need updating, the legal risks of non-compliance, key elements of modern terms, and the importance of professional review.

Signs Your Trading Terms Need Updating

You should regularly review your trading terms as a crucial business practice. If you experience recurring issues or your business has evolved, it is time for an update.

Update your trading terms when you:

introduce new products or services;
expand to sell overseas;
change your payment processes or delivery methods; and
modify your business operations in any significant way.

If you have not updated your terms for several years, they likely do not reflect current laws or your business operations. Terms that were compliant years ago may no longer be suitable.

If customers repeatedly misunderstand provisions in your terms, this clearly shows your terms are ambiguous or no longer fit for purpose.

Legal Risks of Outdated Terms

Using outdated terms exposes your business to risks:

Unfair Contract Terms: A significant risk is non-compliance with the Unfair Contract Terms (UCT) regime under the Australian Consumer Law (ACL). This came into effect on 9 November 2023. The law considers a term unfair if it: causes a significant imbalance in rights, is not necessary to protect legitimate interests or would cause detriment if enforced. An example of a UCT is a term that allows only one party to unilaterally end the contract. A term deemed as a UCT may be unenforceable and void.
Consumer Guarantees: If your business sells to consumers (rather than other businesses), outdated terms may contain clauses that attempt to limit consumer rights under the ACL. For example, a clause stating ‘no refunds or returns under any circumstances’ is illegal. It denies consumers their right to a remedy when a product is faulty. Such clauses are void. Relying on them can expose your business to legal action from consumers and the ACCC, which regularly audits Australian businesses for non-compliance.
Unprotected Intellectual Property (IP): If your business has developed new branding, software, or other valuable IP, your old terms may not provide adequate protection. They might fail to specify ownership of IP created during service delivery. This leaves your proprietary information vulnerable to misuse or infringement.

Key Elements in Trading Terms

You should ensure your trading terms cover several key elements:

Payment Terms: Your terms must specify the price of your goods or services, accepted payment methods, payment due dates and any interest applied to late payments.
Parties’ Obligations: The terms should accurately describe the goods or services you provide. They must also outline the obligations of both your business and the customer, including delivery terms, who holds the risk for loss or damage during transit, and any warranties you provide.
Intellectual Property and Confidentiality: Your terms should clearly state who owns any intellectual property created and should obligate both parties to keep confidential information private.
Dispute Resolution: This outlines a clear process for handling disagreements between the parties. This typically involves requiring parties to attempt negotiation or mediation before resorting to costly court proceedings.
Limitation of Liability: Your terms should clearly define the extent of your business’ liability if something goes wrong. This includes specifying any caps on liability amounts and excluding liability for certain types of loss (such as indirect or consequential losses). However, you must ensure these limitations comply with the UCT regime and cannot exclude liability that Australian law requires you to accept, such as liability for breaching consumer guarantees.
Termination: This clause establishes how and when either party can end the contract, including required notice periods and consequences of termination, such as final payment of outstanding invoices and return of any materials

Key Takeaways

Successfully managing your business requires a proactive approach to your trading terms. Regularly review and update your terms to reflect changes in your business and the law. Ensure your contracts comply with the Unfair Contract Terms regime to avoid significant financial penalties. By investing in professionally drafted and reviewed trading terms, you can build trust with your customers and protect your business’ legal and financial interests.

Danielle Henry
12 February 2026
legalvision.com.au