Our February 2026 newsletter highlights some key tax changes and developments that may affect you or your business.
New Law
Small business instant asset write-off
The Bill extending the $20,000 threshold for the instant asset write-off until 30 June next year (which we mentioned in the November 2025 TaxWise) is now law.
This means that an eligible small business can deduct in the current income year (2025-26) the full cost of an eligible depreciating asset purchased after 30 June last year if:
- It costs less than $20,000; and
- Is first used, or installed ready for use, before 1 July this year.
An eligible small business may also be able to claim an outright deduction for expenditure on existing depreciating assets that is less than $20,000.
Your business is an eligible small business if its annual aggregated turnover is less than $10 million AND it uses the simplified depreciating rules.
If the cost of a depreciating asset is $20,000 or more, the asset must be placed into the small business pool.
Proposed changes
A Bill introduced into Parliament towards the end of November last year proposes to:
- Streamline the choice of fund process during employee onboarding. The amendments provide greater flexibility for when an employer, or their agent, may request details of an employee’s stapled superannuation fund from the ATO, so the employer, or their agent, can provide those details to the employee during onboarding to inform the employee’s choice of fund; and
- Increase the maximum amount of WET producer rebate claimable by eligible wine producers, or a group of associated wine producers, from $350,000 to $400,000 per financial year, from 1 July 2026.
What is the ATO saying?
GST credits
If your business is registered for GST, it can claim GST credits for the GST included in the price of goods and services it buys.
If something is bought for both business and private use, the GST credit needs to be apportioned so only the business use is claimed. For example, if you buy a car for ride-sourcing, you work out the percentage you use it for business purposes and only claim a GST credit on that amount.
You may be able to use annual private apportionment to account for the private portion of business purchases. This means the full GST credits are claimed in the relevant monthly or quarterly business activity statement (BAS), and then a single adjustment is made at the end of the year.
Remember GST credits cannot be claimed for purchases:
- Incurred before your business registered for GST;
- Where your business does not have a tax invoice;
- That were cancelled or reversed; or
- That do not have GST in the price (such as bank fees).
GST credits expire if not claimed within the 4-year time limit
GST credits will expire if not claimed within the 4-year credit time limit. This is generally 4 years from the due date of the original BAS in which your business could have claimed them. (A 4-year expiry period also applies to fuel tax credits.)
Lodging an amendment request or voluntary disclosure doesn’t preserve credit entitlements. The ATO needs to process your business’ amendment and include it in its assessment within the 4-year credit time limit, otherwise the credits expire.
Once credits expire, the ATO has no discretion or ability to amend an assessment to include those credits.
Your business needs to:
- Keep accurate records to support the claims – penalties may apply if your business claims credits it is not entitled to;
- Actively manage the risks of expiry of credits if you identify a mistake by considering the available options;
- Expect additional scrutiny if it seeks to change long-standing positions to uplift GST recovery, for instance where an apportionment methodology is changed for periods to increase the rates claimed – this will likely take the ATO longer to review and it may need further information, so that should be factored into your business’ timeframes.
Available options
If your business is under current compliance or assurance activity, you should discuss the options available to preserve credit entitlements with the ATO case team as early as possible. It takes time to consider these requests and the ATO may require supporting evidence.
If credits are near expiry, instead of writing to request an amendment, you should consider:
- Claiming the credits in your business’ next BAS that’s still within the 4-year credit time limit – these amounts may be subject to future review;
- Requesting the amendment by lodging a revised BAS for the tax period to which the credits are attributable. Revised BAS requests are generally processed faster than amendment requests in other forms;
- Lodging a valid objection against the assessment for the period to which the GST credits are attributable before the end of the 4-year credit time limit. This should be a last resort and is only appropriate in certain circumstances.
Differences between the 4-year credit time limit and the period of review
The 4-year credit time limit is different to the period of review. The period of review is the period the ATO can amend an assessment, generally 4 years from when the relevant BAS is lodged. The ATO can, however, extend the period of review by agreement.
The 4-year credit time limit for GST credits (and fuel tax credits) applies more strictly. If credits have expired, the ATO is unable to amend assessments to include these credits, even if the period of review is still open. This means there may be situations where the ATO amends for overpaid or underpaid GST or overclaimed credits, but additional credits can’t be included in an amended assessment. So, it’s important to make sure any credit entitlements are claimed within the 4-year credit time limit.
Electric vehicles and FBT
Your business does not pay fringe benefits tax (FBT) if it provides private use of an electric car that meets all the following conditions:
- The car is a zero or low emissions vehicle;
- The first time the car is both held and used is on or after 1 July 2022;
- The car is used by a current employee or their associate (such as a family member);
- Luxury car tax (LCT) has never been payable on the importation or sale of the car – if your business purchases an electric car second hand, you need to determine if it was subject to LCT at any time in the past.
Benefits provided under a salary packaging arrangement are included in the exemption.
If your business is not eligible for the exemption, for example the car doesn’t meet the conditions of a zero or low emissions vehicle, it may need to pay FBT for the private use of the car.
Zero or low emissions vehicle
A vehicle is a zero or low emissions vehicle if it satisfies both of these conditions:
- It is a battery electric vehicle, hydrogen fuel cell electric vehicle or plug-in hybrid electric vehicle. This doesn’t include hybrid vehicles that are only fuelled by liquid petrol;
- It is a car designed to carry a load of less than one tonne and fewer than 9 passengers (including the driver).
Motorcycles and scooters are not cars for FBT purposes and don’t qualify for the exemption, even if they are electric.
Plug-in hybrid electric vehicles – 1 April 2025 onwards
From 1 April 2025, a plug-in hybrid electric vehicle will not be considered a zero or low emissions vehicle for FBT purposes. However, the exemption may still apply if the relevant car was made available before that date.
“Held and used” the electric car
The practical effect of this requirement is that the electric car must be used for the first time on or after 1 July 2022 – even if it was held before this date.
An electric car is “held” when it is:
- Owned (includes cars acquired under hire-purchase arrangements);
- Leased (or let on hire); or;
- Otherwise made available by another entity.
An electric car is considered “used” when it is used or available for use by any entity or person.
Associated car expenses
The following car expenses are exempt from FBT if they are provided for an eligible electric car:
- Registration;
- Insurance;
- Repairs or maintenance;
- Fuel, including the cost of electricity to charge electric cars.
The FBT on any items that aren’t exempt car expenses may be reduced if the expenditure would have been deductible to the employee if they incurred it themselves. This is called the “otherwise deductible rule”.
Home charging station
A home charging station is not a car expense associated with providing a car fringe benefit for electric cars. However, it may be a property fringe benefit or an expense payment fringe benefit.
Cost of electricity to charge electric cars
It can be difficult to work out the cost of electricity when an employee charges an electric car at home. The ATO therefore allows an employer to use the shortcut electric vehicle (EV) home charging rate in certain circumstances.
For zero or low emission cars, the EV home charging rate is 4.20 cents per kilometre. If the EV home charging rate is used, commercial charging station costs cannot be included unless you can accurately determine the percentage of the car’s total charge based on the type of charging location. Make sure you keep the necessary records to substantiate how you determined the cost of electricity used to charge the electric car.
If the car is a plug-in hybrid electric vehicle (PHEV) and runs on a combination of electricity and petrol, the ATO provides a simplified method for calculating electricity costs when the car is charged at an employee’s or individual’s home. Otherwise, to work out the cost of the electricity used to charge an exempt PHEV, you need to calculate the actual electricity expenses.
Make sure you keep the necessary records to substantiate how you determined the cost of fuel including electricity used to charge and run the PHEV.
Reportable fringe benefits
Although the private use of an eligible electric car, including the associated expenses, is exempt from FBT, it is still a reportable fringe benefit.
This means, you will need to work out:
- The notional taxable value of the benefits associated with the private use of the exempt electric car;
- Whether the benefit amount needs to be reported.
Stock for private use
Business proprietors in certain industries are likely to use trading stock for private purposes. This has tax consequences. To assist taxpayers in the relevant industries – those that have as trading stock a range of small items or ingredients, usually of low value, are not suited to inventory systems and have a high turnover of items, often for cash – the ATO publishes annual standard values (excluding GST) that it will accept as estimates of the value of goods taken from trading stock for private use. The industries are: bakery, butcher, caterer, delicatessen, fruiterer/greengrocer, mixed business (e.g. milk bar, general store and convenience store), restaurant/cafe and takeaway food shop.
The ATO has published the standard values for 2025-26 – see the table below. The ATO recognises that greater or lesser values may be appropriate in particular cases. Taxpayers may be able to justify a lower value for goods taken from stock than that shown in the table. In that case, the lower amount should be used. Where the value of goods ex-stock would be significantly greater, the actual amount should be used.
| Type of business | Amount (excluding GST) for adult or child over 16 years old | Amount (excluding GST) for child 4 to 16 years old |
| Bakery | $1,620 | $810 |
| Butcher | $1,070 | $535 |
| Restaurant or café (licensed) | $5,460 | $2,210 |
| Restaurant or café (unlicensed) | $4,420 | $2,210 |
| Caterer | $4,650 | $2,325 |
| Delicatessen | $4,420 | $2,210 |
| Fruiterer or greengrocer | $1,140 | $570 |
| Takeaway food shop | $4,680 | $2,340 |
| Mixed business (includes milk bar, general store and convenience store) | $5,640 | $2,820 |
Small Business Superannuation Clearing House is closing
The Small Business Superannuation Clearing House (SBSCH) will be closed permanently from 1 July 2026 as part of the Payday Super reforms. It is not accepting new registrants.
If your business is an existing registered user, it can continue using the SBSCH until 11:59 pm AEST on 30 June 2026. After this time, it will no longer be available and can’t be used to make payments or download records.
If your business is an existing registered user of the SBSCH, you need to:
- Choose an alternative payment method;
- Switch to the new method as soon as possible, before 1 July 2026;
- Download your business’ super records from the SBSCH before 1 July 2026.
Alternative payment methods
Your business’ existing payroll software may already include super functions you can use to pay employees’ super guarantee (SG). Alternatively, you can look for payroll software and service providers in the ATO’s SuperStream Product register.
Some large super funds may also have online payment services your business can use, or you could use a commercial Clearing House. You send a single electronic payment to the clearing house with all your employees’ super contribution data, and the clearing house does the rest.
Published 23 February, 2026