Tax agent in Geelong’s guide to the 2025–26 tax return changes

If you are preparing a 2025–26 income tax return, understanding the latest tax changes is essential. A tax agent in Geelong can help individuals and sole traders understand current tax rules, identify eligible deductions and meet Australian Taxation Office (ATO) requirements. As tax legislation and compliance activities continue to evolve, professional tax advice can help taxpayers lodge accurate returns, maximise legitimate claims and avoid costly mistakes.

For Geelong sole traders and individuals, the 2025–26 tax return season brings several important considerations. While many taxpayers are aware of recent tax cuts, there are also ongoing ATO focus areas, changes in reporting obligations and tax planning opportunities that may affect your return. Understanding these developments before lodging an income tax return can help you achieve a better outcome and reduce the risk of costly errors.

What has changed for the 2025–26 tax return?

The 2025–26 financial year largely continues the tax settings introduced through the revised Stage 3 tax cuts from 1 July 2024. However, taxpayers should not assume that tax time will be simpler.

The ATO continues to invest heavily in data matching technology, deduction reviews and compliance programs. At the same time, taxpayers are navigating investment income, cryptocurrency transactions, rental properties and increasingly complex financial arrangements.

For many Geelong taxpayers, understanding these areas can be just as important as understanding tax rates.

Current income tax rates for 2025–26

The resident tax rates that apply to the 2025–26 financial year are:

• Income up to $18,200: No tax payable.
• Income between $18,201 and $45,000: Tax payable is 16% of the amount over $18,200.
• Income between $45,001 and $135,000: Tax payable is $4,288 plus 30% of the amount over $45,000.
• Income between $135,001 and $190,000: Tax payable is $31,288 plus 37% of the amount over $135,000.
• Income over $190,000: Tax payable is $51,638 plus 45% of the amount over $190,000.

These rates apply to Australian residents and exclude the Medicare levy.

Understanding the upcoming tax cuts

One of the most talked-about tax announcements in recent years has been the introduction of additional personal income tax cuts.

The Federal Government has legislated further reductions to the lowest marginal tax rate:

• The 16% tax rate will reduce to 15% from 1 July 2026.
• The 15% tax rate will reduce to 14% from 1 July 2027.

It is important to understand that these future tax cuts do not affect the 2025–26 tax return currently being prepared. Instead, they will apply to income earned after their respective commencement dates.

While these changes may improve future after-tax income, taxpayers should continue focusing on legitimate deductions, tax planning opportunities and compliance obligations for the current financial year.

Work-related expenses remain under scrutiny

Every year, the ATO identifies incorrect deduction claims as a significant compliance concern.

To claim a deduction, taxpayers must generally satisfy three requirements:

• The expense must be directly related to earning income.
• The expense must not be private in nature.
• Records must be available to support the claim.

Common deduction errors include:

• Overclaiming vehicle expenses
• Claiming private travel
• Incorrect home office calculations
• Claiming expenses without receipts
• Claiming costs that have been reimbursed by an employer

For sole traders, maintaining accurate records throughout the year remains one of the most effective ways to support deduction claims and streamline the tax return process.

ATO data matching is becoming more sophisticated

Many taxpayers underestimate the amount of information available to the ATO.

The ATO receives information from:

• Employers
• Banks and financial institutions
• Share registries
• Cryptocurrency exchanges
• Government agencies
• Digital platforms
• Investment providers

This information is increasingly used to compare reported income against third-party records.

As a result, taxpayers should ensure they accurately report all sources of income, including:

• Sole trader income
• Contract income
• Investment income
• Interest earnings
• Rental income
• Cryptocurrency transactions
• Platform economy income

A registered tax agent in Geelong can help identify reporting requirements and reduce the risk of errors or omissions.

Sole traders should review personal services income rules

Many sole traders generate income primarily from their own skills, knowledge or labour. In these situations, personal services income, known as PSI, may apply.

The PSI rules can affect:

• Available deductions
• Business structure arrangements
• Income allocation strategies
• Tax reporting obligations

Understanding whether PSI applies is important because it can affect how income is treated for tax purposes.

For contractors and consultants operating throughout Geelong, obtaining professional tax advice before lodging a return can help ensure compliance with these requirements.

Capital gains tax considerations

Capital gains tax continues to be an area where many taxpayers require professional guidance.

Capital gains tax events commonly arise when taxpayers:

• Sell investment properties
• Dispose of shares
• Sell business assets
• Trade cryptocurrency
• Restructure investments

Many taxpayers are surprised to learn that a capital gain may arise even if proceeds are reinvested elsewhere.

Depending on the circumstances, various concessions, exemptions and discounts may apply. However, eligibility requirements can be complex.

Seeking capital gains tax advice before lodging a return can help ensure gains are calculated correctly and available concessions are considered.

Why tax planning matters before lodging your return

Many taxpayers view tax planning as something only high-income earners need. In reality, effective tax planning can benefit individuals, investors and sole traders across a wide range of income levels.

Tax planning may help:

• Identify deductible expenses
• Manage capital gains tax outcomes
• Review investment structures
• Prepare for future tax liabilities
• Improve cash flow management

The earlier tax planning occurs, the more opportunities may be available.

Working with a tax agent in Geelong throughout the year can often deliver better outcomes than seeking assistance only at tax time.

Prepare for tax time with a tax agent in Geelong

The 2025–26 tax return season includes important considerations for individuals and sole traders across Geelong. Understanding current tax rates, future tax cuts, deduction requirements, ATO compliance activities and capital gains tax obligations can help you avoid mistakes and improve your tax position.

Working with an experienced tax agent in Geelong can provide clarity, confidence and professional guidance throughout the process. Whether you need assistance with an income tax return, tax planning strategies or capital gains tax advice, the team at CD&G Accountants can help.

To discuss your tax situation or prepare for the upcoming tax return season, contact the team.