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How to Build Your Super to $2 Million Before Retirement

Superannuation remains the most tax-effective way to build investment wealth for retirement, even with recent and proposed changes to super rules. Once you reach pension phase, earnings inside your account are taxed at 0%, meaning every dollar you’ve saved works harder in retirement. The maximum you can currently transfer into that tax-free pension environment is $2 million, subject to indexation. At a 5% drawdown rate, that generates a tax-free income of around $100,000 per year without needing to sell any investments.

Why $2 million is the super target worth planning for

Super contribution caps mean you can’t put unlimited money in whenever you choose. Annual caps operate on a use-it-or-lose-it basis. If you miss a year, that cap is gone, unless you qualify for carry-forward rules, which allow unused concessional contributions to be carried forward for up to five years. The earlier you start, the more flexibility you have to work within those limits and build your balance tax-effectively.

Why starting early makes the biggest difference

Every dollar contributed early has more time to compound. Returns earn returns, and that effect builds quietly over decades. Waiting until the final years before retirement usually means catching up with large lump sums, which is harder to manage and less tax-effective.

What to do in your 20s, 30s, 40s, 50s and 60s to grow your super balance

In your 20s and 30s:

• Consolidate super into a single account to avoid paying fees across multiple funds
• Review your investment options and make sure they match your age and risk profile
• If employed, confirm your employer contributions are being paid correctly
• If self-employed, aim to contribute at least 12% of your income

In your 40s:

• Maximise concessional contributions, currently capped at $30,000 per year, by topping up employer contributions through salary sacrifice or personal deductible contributions
• Every extra dollar contributed now has more than 20 years to grow and reduces your taxable income today

In your 50s and 60s:

• Get clear on what your retirement lifestyle will actually cost and make super a priority
• If you’ve under-contributed in earlier years, use carry-forward concessional contributions if eligible, or non-concessional contributions of up to $120,000 per year to close the gap

The real cost of waiting: a real world example

Consider Jane. In her 30s she receives the minimum 12% super guarantee on a $90,000 salary, with salary growing at 2% per year with inflation. She chooses a growth option with an estimated average real return of 5% per year.

In her 40s she maximises concessional contributions to $30,000 per year by topping up her employer contributions.

By age 50 her balance could reach $775,000. By age 65 she could retire with $1.89 million, enough to fund a retirement income of $90,000 per year.

How to close the gap if you’ve started late

If Jane adds $15,000 per year in non-concessional contributions from age 55 to 65, she could reach $2.09 million at age 65, supporting a retirement income of $100,000 per year. That is $150,000 in additional contributions generating approximately $50,000 in extra net earnings and an additional $200,000 in super.

While $2 million may feel out of reach, with the mandated 12% Super Guarantee as a foundation and a clear strategy around contribution caps and timing, it is more achievable than most people expect.

Is your super on track for retirement?

Super rules and contribution caps change regularly and everyone’s situation is different. If you’d like to review where your super stands and what you could be doing differently, get in touch with us.

How to make sure your business uses AI ethically and responsibly

Artificial intelligence is no longer theoretical for small and medium businesses, it’s already shaping how work gets done. For us, the question wasn’t whether to engage with AI, but how to do so responsibly, ethically, and in line with our professional obligations.

As AI tools become more accessible, we wanted to make sure our team was using them in a way that was informed, appropriate, and consistent with our obligations to clients. We brought in One Step Ahead Training & Business Solutions to run a practical AI program for our team and help us develop an AI Use Policy that fits our business.

What stood out immediately was the balance. The session didn’t overpromise, oversimplify, or push tools for the sake of novelty. Instead, it focused on real workplace scenarios, how AI can assist with drafting, summarising, analysing and organising work, while being very clear about where professional judgement, confidentiality, and accountability must remain with people.

The training helped our team clearly understand:

• the difference between automation and AI
• where AI is already embedded in everyday systems
• how tools like Copilot and ChatGPT can be used safely and appropriately
• the risks of over-reliance, bias, and incorrect outputs
• what not to share with AI tools

Equally valuable was the policy work that followed. Rather than a generic template, we now have a practical AI Use Policy that aligns with our regulatory and ethical obligations, gives our team clear guidance, and provides transparency for clients. It reinforces that AI is a decision-support tool, not a replacement for professional judgement.

The overall outcome was confidence. Our team left the session informed, engaged, and reassured that AI can be used thoughtfully without compromising trust, compliance, or quality.

If you’d like straightforward advice on AI, covering the practical workplace and regulatory side without anxiety or exaggeration, we recommend reaching out to Amanda and Dominique at One Step Ahead Training & Business Solutions. You can reach them below:

Dominique Brown – dominique@onestepaheadbusiness.com.au or +61 425 236 736

Amanda Brown – amanda@onestepaheadbusiness.com.au or +61 437 044 449

How to Help Your Kids Become Money Savvy, One Age-Appropriate Step at a Time

Financial literacy is one of those life skills that rarely gets taught in the classroom, which means the responsibility often falls to parents and grandparents. But where do you start if you want to give your kids or grandkids the best chance of financial success?

The good news is that you don’t need a finance degree to do it well. You simply need to start with simple conversations and build on what your child can understand at each stage.

Here is a practical breakdown of what to focus on and when.

Primary school (ages 6 – 12): Show them what money is

Before children can learn to manage money, they need to understand what it actually is. At this age, that means making it something they can see, hold, and make decisions about.

A small, regular allowance is one of the simplest ways to show children that money is limited. It does not appear automatically, and once it is spent, it is gone. That single concept is the foundation everything else builds on.

From there, simple choices start to teach bigger ideas. Spending now or saving for something bigger introduces patience, trade-offs, and planning without any need for a lecture. The child experiences what money is by using it.

Making money visible reinforces this. Clear jars or piggy banks let children watch their savings grow, connecting the act of waiting with a visible reward. Some families separate money into jars for spending, saving, and sharing, which shows children that money serves different purposes.

Small mistakes matter here too. If a child spends their allowance too quickly and feels the regret later, that is a low-stakes lesson in what money is and what it is not. It is not unlimited, and it does not come back once it is gone. This is the first step in helping children become confident with money.

Secondary school (ages 12-18): Show them what money does

As children move into their teenage years, money stops being theoretical. This is when everyday financial systems start to affect them directly.

Opening a bank account together helps show how money is stored, accessed, and tracked. Teenagers can also begin to understand that banks are businesses — they pay interest on savings but charge much higher interest on borrowed money.

Using a debit card introduces responsibility without the risks that come with credit. Tracking balances and spending through apps helps connect decisions to outcomes.

This is also the stage where trade‑offs become more visible. Comparing needs and wants, and contributing toward higher‑cost items, reinforces the idea that spending choices have consequences.

For teenagers earning income, checking pay rates and understanding entitlements builds confidence and awareness. It also introduces the habit of reviewing information rather than assuming it is correct.

Saving at this stage is less about amounts and more about behaviour. Setting money aside as soon as it is earned helps establish the habit of prioritising saving rather than relying on what is left over.

School leavers (ages 18+): Show them what money can become

When young adults enter full‑time work or further study, their financial decisions begin to have longer‑term effects.

Understanding superannuation early gives young adults context for how long‑term saving works. Even small contributions benefit from time and compound growth, making early awareness more valuable than large contributions later.

Exposure to investing should be cautious and grounded. Digital investing platforms make access easier, but the underlying principles still matter. Higher potential returns come with higher risk, and diversification reduces the impact of individual losses.

At this stage, the focus is not on picking investments but on understanding how markets behave and why spreading risk matters.

What this means in practice

Teaching children about money is rarely about one big lesson. It is about repeated, ordinary decisions and conversations that shape how money is viewed and used over time.

Simple, consistent approaches — allowances, saving habits, understanding pay, and early exposure to long‑term concepts like super, investments, and compounding interest — tend to have more impact than complex strategies introduced later.

For parents and grandparents, the key is not knowing everything, but setting up real life examples where knowledge is gained through safe and age-appropriate experiences. 

AI generated legal material under scrutiny in ATO tax disputes

The Administrative Review Tribunal has delivered a sharp rebuke to a self-represented taxpayer for citing non-existent cases, misrepresenting established legal authorities, and relying on irrelevant precedents in a dispute with the Australian Taxation Office (ATO).

The criticism arose from a decision handed down on 12 January, involving Alexander Smith, who challenged whether his French Bulldog breeding operation qualified as an enterprise for GST purposes under the A New Tax System (Goods and Services Tax) Act 1999.

Non-existent and incorrect case citations

One of the tribunal’s most serious findings was that several cases cited by Smith could not be found in any recognised law report or legal database.

Justice Dunne highlighted Smith’s reliance on Re Jowett v Commissioner of Taxation [2011] AATA 433, which Smith claimed supported his argument.

In reality:

• The citation referred to a completely different case

• That case said nothing about reconstructed records

• Justice Dunne stated that the cited case did not exist at all, describing it as a complete “hallucination”

Misapplied and irrelevant legal authorities

Even where legitimate authorities were cited, the tribunal found that Smith’s references were:

• Misapplied

• Misunderstood

• Entirely irrelevant to the arguments advanced

Smith also relied on two immigration law cases. Justice Dunne noted that these cases:

• Did not stand for the propositions asserted

• Were irrelevant to the issues before the tribunal

In his closing submissions, Smith attempted to rely on Land Tax v Jowett [1930] HCA 51. Justice Dunne rejected this reliance, stating that:

• The case had nothing to do with the argument being made

• It was entirely irrelevant to the matter at hand

Justice Dunne further suggested the case was cited “presumably on the basis the word ‘Jowett’ is in the title”, similar to the earlier fictitious citation.

Tribunal comments on AI-generated legal material

Justice Dunne observed a pattern of errors consistent with the uncritical use of AI-generated legal material and issued a clear warning about reliance on artificial intelligence as a research tool.

He emphasised that when AI is used:

• Each case identified must be located on a public legal database, such as AustLII

• Each case must be properly read

• The authority must genuinely support the proposition for which it is cited

Justice Dunne warned that failing to do so wastes the tribunal’s time and scarce resources, particularly where the tribunal must search for cases that do not exist or review cases that have no relevance.

He noted that this problem arises “whether artificial intelligence was used or not.”

Outcome of the case

While the tribunal ultimately accepted key aspects of Smith’s position, the poor quality of his legal authorities:

• Undermined his credibility

• Led to the rejection of large portions of his input tax credit claims

• Resulted in the upholding of findings of recklessness

Personal Services Income (PSI): What the ATO’s latest guidance means for contractors, consultants and service businesses

The ATO has clarified how it will treat income earned through personal skills, releasing updated guidance explaining how it will approach situations where income is earned mainly from an individual’s own skills or expertise and how it will decide whether this type of income should be taxed to the individual or the entity they operate through.

Operating through a company or trust doesn’t automatically allow income splitting or profit retention

Many contractors and professionals use companies, trusts or partnerships to manage their business income. Some have assumed that once they pass certain tests or qualify as a business, they can safely split income with family members or retain profits within the entity.
The ATO is making it clear that this has never been guaranteed.
If the income is mainly a reward for one person’s labour or expertise, the ATO may still treat that income as theirs personally, regardless of the structure being used.

What this type of income usually looks like

The ATO refers to this as personal services income (PSI), income that is mainly paid for an individual’s labour, expertise or personal effort.
It commonly includes consulting fees, contracting work or advisory roles where the individual is clearly the main source of value.

The ATO provides further explanation here.

Why the PSI rules exist

These rules were introduced to prevent people from directing their labour-based income to other entities or family members purely to reduce tax.

The principles are straightforward:

• Income earned through personal effort should generally be taxed to the person who performed the work
• Deductions should be similar to what an employee could claim
• Income splitting should not create an unfair advantage

Do the PSI rules apply to you?

If you receive PSI, the next step is to work out whether the PSI rules actually apply to that income. If you can show that you operate a genuine business, not simply an individual providing labour through a structure, the PSI rules may not apply. This is known as being a personal services business (PSB).

You can demonstrate this by meeting one of the following four tests:

1. Results Test: You’re paid to produce a specific result, supply your own tools/equipment, and fix any defects. PRATT Partners | Chartered Accountants 
2. Unrelated Clients Test: You earn PSI from multiple unrelated clients. Australian Taxation Office 
3. Employment Test: You hire others or apprentices to do part of the work (for example, at least 20% of the principal work is completed by others). Small Business Tax Toolkit 
4. Business Premises Test: You have a business location separate from your home that is used mainly for earning the PSI. Australian Taxation Office 

The 80% rule also matters: if 80% or more of your PSI comes from one client (including associates), these tests generally cannot be used without an ATO determination.

How to tell whether your arrangements might attract ATO attention

As part of its latest guidance, the ATO has included examples to show the kinds of arrangements it sees as lower-risk or more likely to be reviewed. The focus is on whether income is being reported in a way that reflects who is actually doing the work.

Arrangements are generally considered lower-risk when the individual performing the services is paid in a way that makes commercial sense, for example, paying yourself a market-based amount before leaving any profits in the company or trust.

They become higher-risk when income is being directed away from the person who performed the work, such as splitting income with family members or retaining significant profits in an entity when the individual is still doing all of the work personally. These are the types of situations the ATO has indicated it may look at more closely.

Understanding this helps business owners decide whether their current structure is appropriate or whether adjustments may be worth considering before the 30 June 2027 transition period ends.

What this means for businesses using companies, trusts or partnerships

If your income is primarily driven by your personal expertise and it flows through an entity, this is a timely moment to check whether your structure still reflects how your business operates day-to-day. The ATO will consider:

– how you pay yourself
– how profits are retained
– whether income is being diverted away from the individual doing the work
– whether the structure serves a commercial purpose beyond tax timing

The ATO won’t review low-risk arrangements where businesses adjust by 30 June 2027

A useful point in the ATO’s latest guidance is its commitment not to use compliance resources to pursue higher-risk arrangements where taxpayers have made a genuine effort to move into a lower-risk position by 30 June 2027. For many businesses, this creates a practical window to review their structure, understand how income is being attributed, and make any adjustments needed to ensure the arrangement better reflects how the work is actually performed.

The key takeaway 

The underlying rules have not changed. What has changed is the clarity of the ATO’s expectations. For anyone earning income based on personal expertise, this guidance is a reminder to review your structure, ensure income is attributed correctly, and make any necessary adjustments well before the 2027 deadline

Payday Superannuation: What you Need to Do Before July 2026 

On 2 May 2023 the Australian Government announced that from 1 July 2026, employers will be required to pay their employees’ superannuation guarantee (SG) at the same time as their salary and wages.

On 9 October 2025, the Government introduced the Treasury Laws Amendment (Payday Superannuation) Bill 2025 and the Superannuation Guarantee Charge Amendment Bill 2025External Link.

This measure is now law.

Changes in the introduced bills and earlier government announcements include:

• Timing of contributions to superannuation. From the start of the measure, employers will be required to pay their employees’ SG at the same time as their salary and wages. They will be liable for the superannuation guarantee charge (SGC) unless contributions are received by their employees’ superannuation fund within the required timeframe, generally 7 business days after payday.
• Payday is the date that an employer makes a qualifying earnings (QE) payment to an employee.
• Contributions will generally need to arrive in employees’ superannuation funds within 7 business days of payments of QE. QE is a new concept which includes:
  • ordinary time earnings (OTE)
  • salary sacrifice superannuation contributions
  • other amounts which are currently included in an employee’s salary or wages for SG
• An extended timeframe to pay contributions will apply in certain circumstances, for example when an employer is contributing to a superannuation fund for the first time for an employee (including new employees), when payments of QE are made to an employee outside their regular pay cycle and where exceptional circumstances have impacted the ability of multiple employers on large scale to pay superannuation contributions.
• Updated superannuation guarantee charge. Where employers fail to pay contributions in full and on time, they are liable for SGC. The SGC will be updated and consist of
  • Individual final SG shortfall: any contributions that remain unpaid when the SGC is assessed. The shortfall calculation will be based on QE, creating consistency with the calculation of SG contributions. Late contributions paid by an employer before they are assessed for the SGC will reduce the individual final SG shortfall.
  • Notional earnings: an interest component to compensate employees for lost superannuation fund earnings when their contributions have not been received in full and on time.
  • Administrative uplift: an additional charge levied to reflect the cost of enforcement and encourage employers to make voluntary disclosures to the ATO.
  • Choice loading: A choice loading will apply where an employer does not comply with the choice of fund rules.
• Once SGC is assessed, additional interest and penalties may apply if the SGC liability is not paid in full.
  • General interest charge (GIC): GIC will accrue on the entire SGC amount rather than just the total of the individual SG shortfall amounts.
  • Late payment penalty: If SGC remains unpaid 28 days after it is assessed, the ATO will be required to issue an employer a notice to pay. If the employer does not pay the SGC included in a notice to pay within a further 28-day period set out in the notice, they will be liable to a late payment penalty.
• The SGC will be tax-deductible, ensuring the income tax consequences for paying employees’ superannuation are consistent.
• The late payment offset will no longer apply to amounts contributed after 1 July 2026.
• SBSCH decommission. The Small Business Superannuation Clearing House (SBSCH) will be retired from 1 July 2026 and closed to new users from 1 October 2025. The improvement in payroll software solutions over recent years provides employers with cost-effective and higher quality options for paying superannuation contributions more timely and accurately. We will engage with small businesses ahead of time to guide them in transitioning to a commercial alternative that is fit-for-purpose for Payday Superannuation.
• Fund allocation and SuperStream updates. The deadline for superannuation funds to allocate or return contributions that cannot be allocated will be reduced to 3 business days, down from 20. The SuperStream data and payment standards will be revised to allow faster payments via the New Payments Platform and improve error messaging to ensure employers and intermediaries can quickly address errors.
• STP updates. Employers will be required to report in Single Touch Payroll (STP) both the QE and the superannuation liability for an employee, ensuring the SG can be correctly identified.

The ATO has released a draft practical compliance guideline (PCG) 2025/D5 Payday Super – first year ATO compliance approach, in relation to its compliance approach for the 2026–27 year.

The move to payday super will help employees track their super contributions more easily and protect their retirement savings. For employers, it will mean a shift in process, and potentially in cashflow, so early preparation is key.

If you’d like to understand how these changes could affect your business or need help updating your payroll systems, we can assist.

Unlock the Benefits of Downsizer Super Contributions

If you’re nearing retirement and looking for ways to boost your superannuation savings, downsizer super contributions might be the perfect solution.

These allow eligible Australians aged 55 and over to contribute proceeds from selling their home into their superannuation fund.

In the 2024–2025 financial year alone, 15,800 individuals took advantage of this strategy, contributing a total of $4.165 billion to their superannuation funds.

What It Is

A downsizer contribution allows an eligible individual to contribute an amount equal to all or part of the sale proceeds (up to $300,000 each) from the sale of their home into their superannuation fund. The contribution must not exceed the sale proceeds of the home.

Why It’s Attractive

• Not restricted by contribution caps or total super balance.

• No work test or upper age limit.

• Can be made even after age 75 — one of the few ways to contribute large amounts to super later in life.

Combining with Other Strategies

Someone under age 75 can potentially combine up to $690,000 in contributions in a single year, if eligible and timed correctly:

• $300,000 downsizer contribution.

• Up to $360,000 of personal after-tax contributions under the bring-forward rule.

• Up to $30,000 of personal deductible contributions.

Eligibility

To make a downsizer contribution, you must:

• Be 55 years or older at the time of contribution.

• Have owned the home for 10 years or more (ownership can be by you or your spouse).

• Sell a home in Australia that is not a caravan, houseboat or mobile home.

• Ensure the sale is exempt or partially exempt from CGT under the main residence exemption.

• Make the contribution within 90 days of receiving the sale proceeds (usually settlement date).

• Not have made a downsizer contribution previously from another home.

• Provide your super fund with the Downsizer contribution into super form (NAT 75073) before or at the time of making the contribution.

Important Deadlines

Failure to submit the form on time may result in your fund rejecting the contribution or treating it as a standard non-concessional contribution — which could have adverse tax implications.

The 90-day deadline from settlement is strict. If more time is needed (for example, delays in purchasing a new home), you must apply to the ATO for an extension. Extensions are granted only in limited circumstances, such as settlement delays due to council approvals.