What Are the Key Tax Changes in 2025–26: What Every SME Needs to Know

Summary

The 2025–26 financial year is shaping up to be one of stability rather than change in personal tax rates.

However, SMEs should not get complacent: there are still important considerations around instant asset write-offs, ATO compliance priorities, and superannuation changes. This article explains the current rules, what has(and hasn’t) changed, and how businesses can prepare.

Tax Schedules 

The Individual Tax brackets from 1 July 2025 remain unchanged from the prior Financial Year as follows;

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SME implications:

·        Businessowners operating via companies and trusts should not expect bracket relief.

·        Tax planning will continue to rely heavily on distribution strategies, company tax rates, and super contributions.

·        Any new reform proposals are more likely to surface in the 2026 Federal Budget, so SMEs should remain agile.

Instant Asset Write-Off – What changed

The instant asset write-off has been a moving target in recent years, with thresholds and eligibility shifting almost annually.

• 2025–26 rules: $20,000 threshold for eligible small businesses.
• From 1 July 2026: Unless extended, the scheme will revert to general depreciation rules, significantly reducing upfront tax deductions.

‍SME implications:

• Businesses planning capital purchases should consider before 30 June 2026.
• After this date, assets will generally need to be depreciated over their effective life, impacting cash flow and tax planning.

Division7A Benchmark Interest Rates – A Rising Cost

Division 7Aloans remain a critical area for compliance. The benchmark interest rate, used to calculate minimum repayments on shareholder loans, has been volatile:

• 2025: 8.77%
• 2026: 8.37%

This is a significant jump compared to historic levels (as low as 4.52% in 2021).

SME implications:

• Higher interest charges increase     the cost of maintaining Division 7A loans.
• Loan agreements must be reviewed     annually to ensure repayments are correctly calculated.
• Non-compliance can lead to deemed     unfranked dividends taxed at top marginal rates.

Consideration: Review shareholder loan arrangements now. Consider repaying or refinancing to reduce exposure to higher Division 7A interest rates.

ATO Compliance & Rulings – Areas to Watch

The ATO has flagged enhanced compliance activity in 2025–26, particularly around:

• Trust distributions – continued scrutiny on Section 100A and “washing machine” arrangements.
• Professional firm profits – ensuring income is assessed in the hands of key individuals, not diverted.
• Division 7A – enforcement of loan repayment terms and benchmark interest rates.
• GST compliance – focus on property developers and mixed-use businesses.

Consideration: SMEs using trusts, intercompany or inter-entity loans, or property ventures should seek early advice to ensure documentation and compliance are watertight.

Superannuation 

• Concessional contribution caps is $30,000 in 2025–26.
• Non-concessional contributions are limited to $120,000 (or bring forward if available), offering larger     opportunities for tax-effective wealth building.
• The ATO will continue tightening rules around SMSF reporting and valuation requirements.

Consideration: Plan contribution strategies before year-end to optimise deductible contributions and retirement savings.

Practical Steps for SMEs Now

To prepare and finish strong for 2025–26:

• Map cash flow: Factor in the end of the instant asset write-off.
• Review structures: Ensure trusts, companies, and super funds are optimised for the current tax environment.
• Update compliance: Document Division 7A loans, trust minutes, and shareholder agreements well in advance.
• Engage advisers early: The lead-up to 30 June 2026 will be critical for proactive tax and superannuation planning.

Final Thoughts

The new financial year isn’t just about new tax rates – it’s about ensuring your SME is positioned to make the most of opportunities and avoid compliance pitfalls. With proactive planning around remuneration, asset purchases, and business structures, SMEs can enter 2025–26 with confidence.

At Aspira, we’re hereto help you map the impact, plan ahead, and stay compliant. If you’d like tailored advice for your business, now is the time to start the conversation.