Tax Changes in Victoria and Australia: What You Need to Know for 2026
As we approach the 2026 financial year, several significant tax changes are set to impact individuals and businesses across Australia, with specific adjustments in Victoria. Here's a simplified overview to help you understand what's changing and how it might affect you.
1. Increase in Superannuation Guarantee Rate
From 1 July 2025, the Superannuation Guarantee (SG) rate will increase from 11.5% to 12%. This means employers will need to contribute 12% of an employee's ordinary time earnings to their superannuation fund, enhancing retirement savings for Australian workers.
2. Medicare Levy Low-Income Thresholds
From 1 July 2025, the Medicare levy low-income thresholds will increase by 4.7% for singles, families, seniors, and pensioners. This adjustment aims to exempt over one million low-income Australians from paying the Medicare levy or to reduce their levy rate, providing additional cost-of-living relief .
3. Changes Affecting Non-Residents
Non-residents for tax purposes will not benefit from the upcoming personal income tax cuts. They will continue to be taxed at a flat rate of 30% on the first dollar of Australian income up to $135,000, with higher rates beyond that. Additionally, non-residents are not eligible for the tax-free threshold or offsets, and the foreign resident capital gains withholding tax rate is set to increase from 12.5% to 15%, with the $750,000 threshold removed .
4. Superannuation Tax Reform: Division 296
A new tax measure, known as Division 296, is proposed to apply a 30% tax on earnings from superannuation accounts exceeding $3 million, including unrealised gains. This measure is intended to target high-balance accounts and is set to commence on 1 July 2025, pending legislative approval.
5. Increased ATO Compliance Measures
The Australian Taxation Office (ATO) will receive nearly $1 billion in additional funding to enhance tax compliance efforts, including:
Tax Avoidance Taskforce: $717.8 million over four years from 1 July 2025 to expand the Taskforce, focusing on multinationals and large corporate entities.
Shadow Economy Compliance Program: $155.5 million over four years from 1 July 2025 to reduce tax evasion in the shadow economy.
Personal Income Tax Compliance Program: $75.7 million over four years from 1 July 2025 to address non-compliance in personal income tax.
🦘 Victoria-Specific Tax Changes
1. Payroll Tax Threshold Increase
Effective 1 July 2025, the payroll tax-free threshold in Victoria will increase from $900,000 to $1 million for annual returns. This change is expected to benefit approximately 6,000 businesses, eliminating their payroll tax liability, and provide savings of up to $14,550 per year for eligible businesses.
2. Payroll Tax Exemption for Bulk-Billing GPs
Starting 1 July 2025, eligible general practice medical businesses in Victoria that offer bulk billing services will be exempt from payroll tax on payments to contracted GPs. This exemption aims to support bulk-billing practices and reduce their operational costs.
3. Emergency Services and Volunteers Fund (ESVF) – Effective 1 July 2025
The Fire Services Property Levy (FSPL) will be replaced by the Emergency Services and Volunteers Fund (ESVF). This new levy will fund a broader range of emergency services, including Triple Zero Victoria and Forest Fire Management Victoria.
Residential Properties: The variable rate will increase from 8.7 to 17.3 cents per $1,000 of the property's capital improved value (CIV).
Commercial Properties: The rate will rise from 66.4 to 133 cents per $1,000 CIV.
Industrial Properties: The rate will increase from 81.1 to 133 cents per $1,000 CIV.
Primary Production Land: The rate will jump from 28.7 to 83 cents per $1,000 CIV.
These changes represent increases ranging from approximately 64% to 190%, depending on the property type. The fixed component of the levy will also see a modest rise. For instance, the fixed amount for residential properties will increase from $132 to $136.
These upcoming changes underscore the importance of proactive tax planning. Individuals and businesses should consult with their accountants or financial advisors to understand the implications of these reforms and to optimize their financial strategies accordingly.
Please note: The information provided is based on current legislation and announcements as of June 2025. For personalised advice, consult a qualified tax professional.