June 2026 Round Up
With 1 July just around the corner, this month we focus on the changes coming into play. We look at whether your business has the cash reserves to meet Payday Super from day one, and what to do if you need a buffer in place before the deadline. We also cover the ATO’s finalised ruling on holiday home deductions, which is now locked in ahead of tax time. And if you missed our note on the new anti-money laundering rules also starting 1 July, we have included a reminder with a link to the full article.
1. Payday Super Starts 1 July. Do You Have the Cash Reserves to Meet it? Read the full article
2. The ATO’s Holiday Home Ruling: What the Finalised Rules Mean for Your Deductions Read the full article
Payday Super Starts 1 July. Do You Have the Cash Reserves to Meet It?
From 1 July 2026, employers must pay super at the same time as wages. For many businesses, the shift from quarterly super payments to pay-cycle super payments is not just a payroll change. It is a cash flow change, and new research suggests a significant number of small and medium businesses are not ready for it.
Why Payday Super changes your cash flow, not just your payroll
Under the current system, super is paid quarterly, giving businesses time to accumulate funds between payments. From 1 July 2026, super must be paid on each payday and received by the employee’s super fund within 7 business days. If you pay wages weekly, super becomes a weekly outgoing. If you pay fortnightly, super goes out fortnightly. The rhythm of your super obligations now matches the rhythm of your payroll, which means the cash needs to be there each time.
What the data shows about SME cash reserves heading into 1 July
Research from Prospa and YouGov found that nearly 4 in 10 small and medium businesses reported being unprepared for Payday Super, despite it being weeks away. Average cash reserves across SMEs sit at approximately 2.6 months of expenses. About 1 in 7 SMEs have no reserves at all. The proportion of SMEs confident they could remain cash flow positive over the next 12 months has also dropped, from 70% in February to 60% more recently.
What happens if super is paid late under the new rules
The penalties for missing the 7 business day deadline are significant. The super guarantee charge will apply, including daily compounding interest, an administrative uplift charge, and additional penalties of up to 200% of the super guarantee charge if an assessed amount is not paid within 28 days. Unlike the current system where employers self-assess, under Payday Super the ATO assesses the charge directly. Getting the timing wrong is not a minor administrative issue.
How to work out whether your business has enough cash to cover each pay cycle
The starting point is understanding your current payroll cycle and what super will look like on that frequency from 1 July. If you pay weekly, map out what a weekly super obligation looks like against your typical cash position at that point in the cycle. If there are weeks where cash is tight before revenue comes in, that is where the risk sits. The ATO’s Cash Flow Kit has tools and resources to help you model this.
If your reserves are not there yet, do you need an overdraft or line of credit?
For businesses that identify a timing gap between when wages go out and when revenue comes in, having a financial buffer in place before 1 July is worth considering. The ATO has noted that flexible options such as business overdrafts can help manage cash flow across pay cycles during the transition to Payday Super. If you do not currently have a business overdraft or line of credit in place and your cash flow modelling suggests you may need one, now is the time to organise it, not after 1 July when the obligation is already running.
If you would like help reviewing your cash flow position ahead of Payday Super, get in touch with us.
The ATO’s Holiday Home Ruling: What the Finalised Rules Mean for Your Deductions
Earlier this year, the ATO released draft guidance on potential changes to holiday home deductions and how it would assess claims. That guidance has now been finalised. Taxation Ruling TR 2026/1 and Practical Compliance Guideline PCG 2026/3 took effect on 20 May 2026, and the rules are now locked in ahead of tax time.
What changed when the draft ruling was finalised on 20 May 2026
The finalised ruling confirms the ATO’s new approach to holiday home deductions and closes off some of the uncertainty that existed under the draft. One important clarification is that the ATO will not review expenses incurred before 1 July 2026, taking a concessional approach consistent with other taxation changes commencing in the new financial year. However, this concession does not extend to serious transgressions such as fraud or evasion.
How the ATO defines a leisure facility under the finalised TR 2026/1
Under TR 2026/1, a property is a leisure facility if it is land, a building, or part of a building or other structure that is used or held for use for holidays or recreation. A property does not need to be in a traditional holiday location to fall under this definition. Urban apartments can also be classified as leisure facilities if the way they are used aligns with that definition. Owners need to honestly assess and report how their property is actually used.
What you can and cannot claim once a property is classified as a leisure facility
A property identified as a leisure facility is not eligible for deductions such as mortgage interest, council rates, land tax, maintenance or asset depreciation. Critically, apportionment is not available even if the property is rented or hired to third parties for part of the year. This is a significant tightening of the rules compared to what many owners have previously assumed.
The only expenses that can be claimed are those directly relevant to generating rental income, including advertising costs, platform commissions and cleaning costs for guest stays.
How PCG 2026/3 ranks holiday home deduction risk
PCG 2026/3 introduced a tiered risk framework to help owners categorise their property use and compliance. No single factor is determinative, but the framework ranges from low risk to higher risk:
- Low risk: limited personal use during peak periods and high occupancy throughout the rest of the year
- Higher risk: sustained personal use during peak periods, limited attempts to rent the property or unreasonable restrictions placed on guests
What the finalised ruling means if your holiday home is held in a family trust
The guidance is primarily directed at individual owners, but the ATO’s current definition of a leisure facility may also apply to properties held in a family trust if the property is used for recreation by the trust’s beneficiaries or controllers. A specific anti-avoidance rule applies where a trust charges family members a below-market rate for the purpose of avoiding the rules. If your holiday home is held in a trust structure, it is worth reviewing how the property is used and what is being charged.
How the ATO is treating expenses incurred before 1 July 2026
The ATO has confirmed it will not review deductions claimed on holiday home expenses incurred before 1 July 2026, taking a concessional approach in line with other changes commencing at the start of the new financial year. This applies to genuine cases. The concession does not cover fraud or evasion.
If you own a holiday home that is also rented out and want to make sure your deductions are correctly claimed under the finalised rules, get in touch with us.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation.