Category: Tax Return

Trustees wind up their SMSF for many reasons: the balance has fallen to the point where fees outweigh the benefits, the members have separated, the remaining member no longer wants the responsibility, or a member has died. Whatever the reason, closing a fund is a process, not a single form, and steps done out of order can leave money stranded or tax unpaid. This guide sets out how to wind up an SMSF, following the ATO’s steps.

Step 1: check the trust deed and agree in writing

The deed may set specific requirements for winding up and for how benefits can be paid, including whether assets can be transferred to members instead of sold. All trustees should agree to wind up the fund at a trustee meeting, record the decision in minutes, and sign. Keep a written exit plan with the fund’s records.

Step 2: sell or transfer the assets

Allow enough time to sell assets at a fair price, especially property or unlisted investments. Document each disposal: how and when it was sold, its valuation, the buyer, the date and the amount. Assets can only be transferred to a member in their own name if the member has met a condition of release and the deed permits it. Sales of fund assets can create capital gains tax in the final year.

Step 3: stop any pensions and report them

Pensions must be ended before the fund is wound up, and the commutations reported on a transfer balance account report as soon as possible. Make sure the minimum pension for the final year has been paid, or the fund may lose its tax exemption for that year.

Step 4: pay expenses and tax

Pay final invoices, asset sale costs and any tax owing, including PAYG instalments, PAYG withholding, CGT and GST. The ATO will not close the fund while there is any balance, credit or debit, on its accounts. Leave enough money in the fund to cover the final audit, accounting and the supervisory levy.

Step 5: pay out or roll over member benefits

Work out each member’s entitlement. Members who have met a condition of release, such as retirement after preservation age or reaching 65, can be paid in cash. Everyone else must have their benefits rolled over to another complying fund through SuperStream. Any refund the fund receives later that members cannot access must also be rolled over before the fund’s ABN is cancelled.

Step 6: final audit and final annual return

• Make sure every year has been audited by an approved SMSF auditor, including the final year
• Lodge any outstanding annual returns
• On the final return, answer that the fund was wound up during the year, give the wind-up date and confirm all lodgment and payment obligations are met
• Include the supervisory levy adjustment for wound-up funds

You do not need to write to the ATO separately. Lodging the final return tells the ATO the fund has been wound up. Once it is processed, the ATO confirms in writing that the ABN has been cancelled. A wound-up fund cannot be reactivated.

Step 7: tell everyone and close the bank account last

• Tell employers who were paying contributions into the fund, so they redirect them
• Tell your tax agent, auditor and adviser
• If the corporate trustee existed only for the fund, it can be deregistered with ASIC
• Close the bank account last, after final refunds, rollovers and the ATO’s confirmation. Closing it early can stop refunds being paid

Common mistakes

• Rolling out all the money before the final audit and accounting fees are paid
• Paying cash to a member who has not met a condition of release
• Forgetting the final year’s minimum pension
• Closing the bank account before the final refund arrives
• Not telling an employer, so contributions keep arriving in a fund that is closing

Frequently asked questions

How long does it take to wind up an SMSF?

Usually a few months, depending mostly on how long it takes to sell assets and finalise the last audit and return.

Is there a minimum balance below which I should close my SMSF?

There is no legal minimum. The question is whether the fixed costs of accounting, audit and the levy are reasonable compared with the balance and the benefits you get from managing it yourself.

What happens when a member of a two-member fund dies?

The surviving member must restructure the trustees within six months, often by moving to a corporate trustee, or wind up the fund. Death benefits are paid according to any binding nomination, the deed and the law.

Winding up an SMSF in Melbourne

Kennedy Tax & Business Services handles the final accounts, transfer balance reporting and final annual return for funds being wound up, and arranges the final independent audit. See our SMSF accounting service and SMSF audit checklist, or contact us.

This article is general information only and does not take into account your circumstances. Based on ATO guidance on winding up an SMSF current at October 2026. Speak to a registered tax agent or licensed financial adviser before acting.

Every SMSF must be audited every year by an independent approved SMSF auditor before its annual return can be lodged. The audit is not a formality: the auditor checks both the fund’s financial statements and whether the trustees have complied with superannuation law, and must report certain breaches to the ATO. Funds that hand over a complete file get a faster audit and fewer queries. This SMSF audit checklist sets out what auditors look for and what trustees should have ready.

The two parts of an SMSF audit

• Financial audit: are the financial statements and member statements accurate, are the assets owned by the fund, and are they valued at market value?
• Compliance audit: did the trustees follow the Superannuation Industry (Supervision) Act and Regulations during the year?

The auditor must be registered with ASIC as an approved SMSF auditor and must be independent: they cannot audit a fund whose accounts their own firm prepared. Trustees must appoint the auditor at least 45 days before the annual return is due.

Documents to provide

• Signed financial statements, member statements and the draft annual return
• Trust deed and any amendments, and the signed trustee declaration for any new trustee
• Trustee minutes for the year, including investment decisions, pension commencements and contribution acceptances
• The current investment strategy, signed and reviewed during the year
• Bank statements for the full year, and broker, managed fund and term deposit statements showing holdings at 30 June
• Market valuations of property, unlisted investments and collectables, with how they were determined
• Rental statements, leases and property expense invoices
• Loan documents for any limited recourse borrowing arrangement, and evidence of repayments
• Contribution records, including notices of intent to claim a deduction and the fund’s acknowledgements
• Pension documents, minimum payment calculations and actuarial certificate where required
• Transfer balance account reports lodged during the year

The compliance areas auditors focus on

Area	What the auditor checks
Sole purpose test	The fund is maintained only to provide retirement benefits, with no current-day benefit to members or relatives
Separation of assets	Fund assets are held in the fund’s name, separate from members’ personal and business assets
Loans and financial assistance	No loans or financial assistance to members or relatives
Related party acquisitions	Assets were not acquired from related parties unless an exception applies, such as listed shares or business real property at market value
In-house assets	Investments in or loans to related parties, and leases to related parties, are within 5% of fund assets
Arm’s length	Purchases, sales, rent and loans are on commercial terms
Contributions and benefits	Contributions were accepted within the rules, and benefits were only paid when a condition of release was met
Pensions	Minimum pension payments were made in cash by 30 June
Borrowing	Any borrowing is a compliant LRBA. From 10 August 2026, new LRBAs over real property are limited to business real property

What happens when the auditor finds a problem

The auditor issues an audit report and, where needed, a management letter to the trustees. Breaches that meet the ATO’s reporting criteria must be reported on an auditor contravention report. Depending on the breach, the ATO can require rectification, issue an education direction or administrative penalties, disqualify trustees or, in serious cases, make the fund non-complying. Trustees who identify and fix a problem before the audit, and explain it in the minutes, are in a far better position than trustees whose breach is found by the auditor.

How to get a quicker, cleaner audit

• Review the investment strategy and sign it each year, not just at set-up
• Get valuations of property and unlisted assets at 30 June every year
• Minute every significant decision as it happens
• Never pay personal or business expenses from the fund’s account, even temporarily
• Send the complete file at once, rather than in pieces

Frequently asked questions

Can my accountant also audit my fund?

No. The auditor must be independent of the firm that prepares the accounts.

When does the audit have to be finished?

Before the annual return is lodged, so the auditor has time to complete it within the return due date. The ATO expects the auditor to be appointed at least 45 days before that date.

Is the audit fee deductible?

Yes. It is a deductible expense of the fund.

Independent SMSF audits in Melbourne

Kennedy Tax & Business Services provides independent SMSF audits for funds administered by other accountants and administrators, and SMSF accounting for funds that need an accountant, with an independent auditor arranged. Read our guides to the SMSF annual return and minimum pensions, or contact us.

This article is general information only and does not take into account your circumstances. Speak to a registered tax agent or approved SMSF auditor before acting.

Property has long been the reason many people start an SMSF. The rules changed significantly in 2026: from 10 August 2026, an SMSF can no longer borrow to buy residential investment property. Buying property in an SMSF is still possible, but the strategy now depends on what kind of property it is and whether the fund can pay cash. This guide explains the current rules for SMSF property investment and what the change means for funds that already have a loan.

What changed in 2026

Schedule 5 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 amended the superannuation borrowing rules. From 10 August 2026, an SMSF can use a limited recourse borrowing arrangement (LRBA) to acquire real property only if the property is business real property: broadly, land and buildings used wholly and exclusively in one or more businesses. Zoning, the type of loan or the fact that a property earns rent does not by itself make it business real property.

• Existing LRBAs entered into before 10 August 2026 are grandfathered. The property does not need to become business real property
• Refinancing a pre-10 August LRBA is not affected, although a refinance that adds new borrowing or changes the arrangement materially needs advice first
• Binding contracts exchanged before 10 August 2026 can still proceed with an LRBA even if settlement happened afterwards
• Buying residential property with cash is still allowed, subject to the usual rules below

Rules that apply to all SMSF property

• Sole purpose test: the property must be held only to provide retirement benefits for members. Members and their relatives cannot live in it, holiday in it or rent it, even at market rent, if it is residential
• No residential property from related parties: the fund cannot buy a residential property from a member or related party
• Business real property is different: the fund can buy business real property from a member or related party at market value, and lease it to a related business at market rent under a written lease. This is the classic structure of a business owner’s SMSF owning the business premises
• Investment strategy: a single property can be a large share of the fund. The strategy must address diversification and liquidity, including how the fund will pay pensions, expenses and any loan repayments
• Arm’s length dealings: rent, purchase price and any related party loan terms must be on commercial terms. Non-arm’s length income is taxed at 45%

How an LRBA works for business real property

Where borrowing is still permitted, the property is held in a separate holding (bare) trust until the loan is repaid, and the lender’s recourse is limited to that property. The loan can fund the purchase and repairs or maintenance, but not improvements that change the asset’s character, such as building a second dwelling. If a member or related party lends to the fund, the terms must meet the ATO’s safe harbour terms or otherwise be shown to be arm’s length, or the income becomes non-arm’s length income.

Paying for property: cash and timing

Without borrowing, the fund must have enough money to pay the full price, stamp duty and costs, and still keep a cash buffer. Members can build that balance through contributions within the caps, rollovers from other funds, and in some cases by combining balances of several members. See the 2026-27 contribution caps.

Tax on SMSF property

• Rent is taxed at 15% in accumulation phase and can be exempt to the extent the fund supports retirement phase pensions
• Capital gains on property held more than 12 months receive a one-third discount in accumulation phase
• Expenses such as interest, rates, insurance and depreciation are deductible to the fund
• A property must be valued at market value each year for the financial statements, which the auditor will check

Frequently asked questions

Can my SMSF still buy a house or apartment?

Yes, with cash, and only as an investment rented to unrelated tenants at market rent. It cannot borrow to do so after 10 August 2026.

Can my SMSF buy my business premises?

Yes, if it is business real property, bought at market value and leased to the business on commercial terms. Borrowing to do so is still permitted.

We have an existing residential LRBA. Do we have to sell?

No. Arrangements entered into before 10 August 2026 are grandfathered and can be refinanced.

SMSF property advice in Melbourne’s west

Kennedy Tax & Business Services prepares SMSF accounts, valuation records and annual returns for property-owning funds, and we audit SMSFs administered elsewhere. See our SMSF accounting, SMSF audit and SMSF set-up guide, or contact us.

This article is general information only and does not take into account your circumstances. It is not financial product advice. Whether a property is business real property depends on its actual use. Speak to a registered tax agent and a licensed financial adviser before acting.

If your business pays contractors to clean, deliver, build, secure or fix IT systems, there is a good chance you have to lodge a taxable payments annual report (TPAR) every August. The ATO uses these reports to match what businesses pay contractors with what those contractors declare, and it follows up on businesses that should lodge but do not. This guide explains who must lodge, what goes in the report and how to make it painless.

Which businesses must lodge

The TPAR applies to businesses that provide any of these services and pay contractors to provide them on their behalf:

• Building and construction
• Cleaning
• Courier and road freight
• Information technology
• Security, investigation or surveillance

For cleaning, courier and road freight, IT and security, you generally need to lodge if payments you received for providing that service make up 10% or more of your business income for the year and you paid contractors to provide it. Courier and road freight are combined for the test. Businesses in their first year use projected income. Building and construction businesses have their own tests, and most that pay subcontractors need to lodge. Government entities also report payments to contractors.

When it is due

The TPAR covers the financial year to 30 June and is due by 28 August. There is no separate tax agent extension for it. If you find you do not need to lodge for a year, you can tell the ATO by lodging a TPAR not required notice, which stops follow-up letters.

What you report for each contractor

• ABN, if known
• Name and address
• Gross amount paid for the year, including GST, in whole dollars
• Total GST included in those payments

You report payments for the relevant services only. Payments for materials alone, such as buying timber or cleaning products from a supplier, are not reported. Where an invoice combines labour and materials, the whole payment is generally reported.

How to make it easy

• Tag contractors in your accounting software. Xero, MYOB and QuickBooks can flag a contact as a TPAR contractor and produce the report automatically
• Collect ABN and address details at onboarding, not in August
• Check ABNs on the ABN Lookup. If a contractor does not quote an ABN, you must withhold tax at the top rate from payments, which is reported separately
• Reconcile to your BAS. Contractor payments in the TPAR should line up with what you have claimed as expenses and GST credits

What the ATO does with it

The ATO compares TPAR data with contractors’ own tax returns and BAS. Contractors who under-declare income are picked up, and businesses that report contractor payments that look like wages can be reviewed for super guarantee, PAYG withholding and sham contracting. Failure to lodge penalties can also apply to businesses that do not lodge on time.

Contractors or employees?

A TPAR is also a useful annual check on whether your contractors are really contractors. A worker paid by the hour, who must do the work personally and is directed how to do it, may be an employee or at least owed super guarantee. With payday super from 1 July 2026, getting this wrong is more expensive than ever. See our payday super guide.

Frequently asked questions

Do I report payments to companies?

Yes. TPAR covers payments to contractors operating as sole traders, partnerships, companies and trusts.

Do I report wages to employees?

No. Employee wages are reported through Single Touch Payroll.

I lodged a TPAR last year but no longer use contractors. What do I do?

Lodge a TPAR not required notice so the ATO knows you do not need to lodge for that year.

TPAR and BAS support in Melbourne’s west

Kennedy Tax & Business Services prepares TPARs, BAS and bookkeeping for cleaning, courier, construction, security and IT businesses across Footscray, Williams Landing and Melbourne’s west. See our BAS lodgement and bookkeeping services, or contact us.

This article is general information only and does not take into account your circumstances. Based on ATO guidance current at October 2026. Speak to a registered tax agent before acting.

A discretionary family trust is one of the most common ways small businesses and investors in Melbourne’s west hold assets and run a business. Its big advantage is flexibility: each year the trustee decides which family members receive the income. That flexibility comes with strict timing and paperwork rules, and the ATO has been reviewing trust distributions closely. This guide explains how family trust distributions work, the 30 June deadline, and the mistakes that turn a tax-effective structure into a tax bill at the top rate.

How a trust is taxed

A trust is not usually taxed itself. It lodges its own tax return, and each beneficiary who is “presently entitled” to a share of the trust’s income pays tax on their share of the trust’s taxable income in their own return. Where no beneficiary is presently entitled, the trustee is generally taxed on that income at the highest marginal rate plus the Medicare levy.

The 30 June resolution

Beneficiaries become presently entitled when the trustee validly resolves to distribute income to them. The ATO’s guidance for trustees is clear: resolutions must be made by 30 June of the income year, in the way the trust deed requires. A resolution made in August when the accounts are finished is too late. If no valid resolution is made, the deed’s default beneficiaries may be entitled, or the trustee may be assessed at the top rate.

A good resolution:

• Is made by the right trustee (the directors of a corporate trustee, or all individual trustees) on or before 30 June
• Follows the deed’s definition of income, which may differ from accounting profit or taxable income
• Names beneficiaries who are actually eligible under the deed
• States amounts or percentages clearly, and streams capital gains and franked dividends separately if the deed allows and you want to
• Is documented and signed, and kept with the trust records

Check who can actually receive income

Distributions to someone who is not a beneficiary under the deed are not valid. Where the trust has made a family trust election, distributions outside the family group of the nominated test individual trigger family trust distribution tax at the top rate. Check the deed and any election before choosing beneficiaries, particularly for in-laws, companies and other trusts.

Section 100A: distributions that are not really received

A common past practice was to distribute income to an adult child or relative on a low tax rate, while the money was actually used by the parents. Section 100A can apply where a beneficiary is made entitled to income under an arrangement where someone else gets the benefit of it, and the arrangement is not an ordinary family or commercial dealing. If it applies, the trustee is taxed at the top rate. Since its 2022 guidance, the ATO has been actively reviewing these arrangements. The safest position is that the beneficiary who is taxed on the income actually receives and benefits from it.

Distributions to companies

Many family groups distribute to a “bucket company” to cap tax at the company rate. If the trust does not pay the money to the company, the unpaid amount can be treated as a loan from the company under Division 7A, with interest and minimum repayments required. See our Division 7A guide.

TFNs and record keeping

• Closely held trusts must report beneficiaries’ TFNs to the ATO, and withhold tax at the top rate from distributions to beneficiaries who have not provided one
• Keep written evidence for every expense: the ATO notes bank statements alone are not enough
• Keep records of losses from the year they arise until the review period ends for the year they are used
• Trustees and beneficiaries must meet the holding period rules to claim franking credits on dividends

From 1 July 2027: capital gains in trusts

The 50% CGT discount that trusts pass to individual beneficiaries is being replaced by cost base indexation for gains accruing from 1 July 2027, with a 30% minimum tax on real gains. Trusts holding property or shares should plan for valuations at that date. See our small business CGT guide for detail.

Frequently asked questions

When is the trust tax return due?

It depends on the trust’s size and lodgment history. Most small family trusts lodged through a tax agent fall under the agent’s lodgment program, but trusts with overdue returns can be due as early as 31 October. Your agent will confirm the date.

Can I change a distribution after 30 June?

Generally no. A valid resolution made by 30 June fixes the entitlement. That is why year-end planning, with estimated figures, needs to happen in June.

Can a trust distribute a loss?

No. Losses stay in the trust and can only be used against future trust income if the trust loss rules are passed.

Trust accounting in Melbourne’s west

Kennedy Tax & Business Services prepares trust accounts, resolutions and tax returns, and reviews distributions for section 100A and Division 7A risks. See our tax planning and structuring service or contact us before 30 June.

This article is general information only and does not take into account your circumstances. Trust tax law depends heavily on the terms of the trust deed. Speak to a registered tax agent before acting.

For many business owners, the sale of the business or the building it trades from is the biggest tax event of their life. The small business CGT concessions can reduce the tax on that gain substantially, sometimes to nil, and they have survived the 2026 tax reforms intact. What has changed is the general 50% CGT discount, which is being replaced for gains accruing from 1 July 2027. This guide explains the four concessions, who qualifies, and what the new rules mean for timing a sale.

The basic conditions

Before any of the four concessions apply, the capital gain must come from a CGT event on an asset, and you must pass at least one of these tests:

• Small business entity: aggregated turnover of less than $2 million (the CGT concessions use $2 million, not the $10 million threshold used for other small business concessions), or
• Maximum net asset value test: net assets of you and your connected entities and affiliates of no more than $6 million, excluding your home and super, or
• The asset is used in a business carried on by your affiliate or connected entity that qualifies

The asset must also pass the active asset test: it was used, or held ready for use, in carrying on a business. If you owned it for 15 years or less, it must have been active for at least half the ownership period; if more than 15 years, for at least 7.5 years. Rental property is generally not an active asset, even if leased to a business, unless leased to a connected entity or affiliate that uses it in its business. For shares or trust interests, further tests apply, including having a significant individual with at least a 20% interest.

The four concessions

Concession	Effect	Key conditions
15-year exemption	The whole gain is disregarded	Asset continuously owned for 15 years, and you are 55 or older and retiring, or permanently incapacitated
50% active asset reduction	Gain reduced by 50%	Basic conditions met; applies after the general CGT discount
Retirement exemption	Up to $500,000 lifetime limit disregarded	If under 55, the exempt amount must be contributed to super
Rollover	Gain deferred	Buy a replacement active asset or spend on an existing one, from one year before to two years after the sale

The concessions can be combined. A typical sale by an individual who does not qualify for the 15-year exemption applies the 50% CGT discount, then the 50% active asset reduction, then the retirement exemption or rollover to the remaining gain. On a gain of $800,000, the discount and active asset reduction together bring the gain to $200,000, which the retirement exemption can then reduce to nil. Amounts contributed to super under the 15-year and retirement exemptions count against the lifetime CGT cap ($1,935,000 for 2026-27), not the non-concessional cap.

What changes from 1 July 2027

The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 replaces the 50% CGT discount for individuals, trusts and partnerships with cost base indexation for gains accruing from 1 July 2027, together with a 30% minimum tax on real capital gains for assets held at least 12 months. Gains accrued up to 1 July 2027 keep the 50% discount, using a market valuation at that date. The Government has said the four small business CGT concessions remain in place, and is consulting on how indexation will apply to small and start-up businesses with a low or nil cost base, which will be dealt with in later legislation.

In practical terms:

• Owners planning to sell in the next few years should get a market valuation of the business and its premises at 1 July 2027, because it will separate the gain that keeps the 50% discount from the gain taxed under the new rules
• The 15-year exemption and retirement exemption become relatively more valuable, because they remove gain entirely rather than discount it
• Companies were never entitled to the 50% discount, so their position changes less, but the concessions still matter when owners sell shares
• Rules for the low cost base consultation are not yet law. Do not assume how goodwill built from nil will be treated after 2027

Common mistakes

• Assuming a property leased to an unrelated tenant is an active asset
• Forgetting to include connected entities and affiliates in the $6 million test
• Missing the retirement exemption election, which must be documented, or failing to contribute to super in time when under 55
• Not planning which entity holds the business and premises well before a sale
• Selling a business without a valuation of goodwill, leaving the gain open to challenge

Frequently asked questions

Can the concessions apply to the sale of shares in my company?

Yes, if extra conditions are met, including the company passing the 80% active asset test and you being a significant individual or CGT concession stakeholder.

Do I have to retire to use the retirement exemption?

No. Despite the name, there is no requirement to retire. If you are under 55, the amount must go into super.

Should I sell before 1 July 2027?

Not necessarily. Gains accrued before that date keep the 50% discount either way. The right timing depends on the business, valuations and your other plans, so get advice before signing a contract.

Business sale tax advice in Melbourne’s west

Kennedy Tax & Business Services advises business owners on structuring and timing a sale, applying the small business CGT concessions and contributing proceeds to super. See our capital gains tax advice, contribution caps guide and SMSF accounting, or contact us.

This article is general information only and does not take into account your circumstances. Parts of the 2027 CGT changes depend on regulations and further legislation not yet made. Speak to a registered tax agent before acting.

Victorian NDIS providers carry a payroll obligation that many interstate templates and new business guides miss: the portable long service leave scheme. If you employ disability support workers in Victoria, you must register with the Portable Long Service Authority, report your workers’ hours every quarter and pay a levy on their wages. This guide explains who is covered, what it costs and how to stay compliant.

What the scheme does

Traditional long service leave rewards years with one employer. Community services workers often move between providers, so they rarely reached the qualifying period. Victoria’s portable scheme lets workers build up long service benefits based on their total service in the sector, regardless of how many employers they work for. Employers fund the scheme through a levy, and the Authority pays the benefit directly to the worker when they claim.

Who is covered

• The scheme covers three sectors: community services, contract cleaning and security
• Community services employers have been required to register since 1 July 2019, and providers of NDIS-funded supports and children’s services since 1 January 2020
• Employees covered by the relevant awards must be included, which for most NDIS providers means everyone paid under the SCHADS Award, including administration and finance staff covered by that award
• Self managed NDIS participants who directly employ their own workers register as employers too
• Sole traders cannot register themselves in the community services scheme

What it costs

Sector	Levy
Community services (including NDIS providers)	1.65% of each worker’s ordinary pay
Contract cleaning	1.80%
Security	1.80%

For a provider with $1 million a year of ordinary pay for covered workers, that is $16,500 a year. It needs to be built into your pricing and cash flow alongside super, WorkCover and payroll tax. Unlike super, the levy is not paid to the worker’s fund; it is paid to the Authority.

Quarterly returns

Registered employers lodge a return each quarter, in October, January, April and July, reporting each covered worker and the hours and ordinary pay for the quarter, and pay the levy invoiced on that return. The hours you report are what the worker’s entitlement is built from, so errors directly affect your staff.

What workers receive

After 7 years of recognised service in the sector, a community services worker can claim their portable long service benefit. The entitlement accrues at 1 week for every 60 weeks of recorded work. The Authority pays it based on the worker’s ordinary pay at the time they claim. Workers can check their balance through the Authority’s worker portal.

Interaction with enterprise agreements

If an enterprise agreement or contract gives better long service leave than the scheme, the employer still participates in the scheme and covers the difference. At seven years the worker chooses between the portable benefit and the agreement’s entitlement, and if they forgo the portable benefit, the employer can seek reimbursement from the Authority for the duplicated period.

Common mistakes

• Not registering at all, often because the business started after 2020 and nobody mentioned it
• Reporting only direct support staff and leaving out other employees covered by the award
• Missing casual workers, who are covered
• Reporting total pay, including overtime and allowances, instead of ordinary pay
• Leaving the levy out of pricing, so it erodes margin on every hour delivered

Frequently asked questions

Are contractors covered?

The scheme is built around employees. If your “contractors” are in substance employees, they are likely to be covered, along with super, award and WorkCover obligations.

Is the levy tax deductible?

Yes. It is a business expense of the employer.

We are an NDIS provider in NSW too. Is it the same?

No. Each state runs its own scheme with different rules and rates. This guide covers Victoria only.

NDIS payroll support in Melbourne’s west

Kennedy Tax & Business Services runs payroll for NDIS providers, including SCHADS award costing, payday super, WorkCover and portable long service leave returns. See our payroll management and NDIS financial services, read how to start an NDIS business, or contact us.

This article is general information only and does not take into account your circumstances. Levy rates and rules are set by the Victorian Portable Long Service Authority and can change; confirm current requirements with the Authority on 1800 517 158.

Melbourne’s west has one of the fastest growing NDIS markets in the country, and many experienced support workers eventually want to build their own provider business. The care side is usually the easy part for them. The business side, from structure and registration to award wages, payday super and portable long service leave, is where new providers get into trouble. This guide walks through how to start an NDIS business in Victoria, step by step.

Step 1: decide whether you need to register

Not every NDIS provider has to be registered with the NDIS Quality and Safeguards Commission. Unregistered providers can deliver most supports to self managed and plan managed participants, and must still follow the NDIS Code of Conduct. Registration is required to:

• Deliver supports to agency managed participants
• Provide specialist disability accommodation, behaviour support plans or regulated restrictive practices
• Provide supported independent living (SIL) or operate an NDIS digital platform. Both became mandatory registration services from 1 July 2026, under new registration classes for platforms and assistance with SIL

The Commission has signalled that other higher risk supports may move to mandatory registration later. Even where it is optional, registration widens your market and is often expected by support coordinators.

Step 2: choose a business structure

Structure	Suits	Watch out for
Sole trader	One worker starting out, low set-up cost	No asset protection; all profit taxed at personal rates
Company	Providers employing staff or seeking registration and growth	ASIC fees, separate tax return, director duties, Division 7A on money taken out
Company with a family trust	Established providers wanting flexibility in distributing profit	More complex accounts, trustee resolutions by 30 June

Most registered providers we work with operate through a company. Choosing the structure before registration avoids re-registering later.

Step 3: tax registrations

• ABN for the business, and a TFN for a company or trust
• GST once GST turnover reaches $75,000. Qualifying NDIS supports are GST-free but still count towards turnover. Registering lets you claim GST credits on vehicles, equipment and rent. See our NDIS GST guide
• PAYG withholding before you pay your first employee
• WorkCover with WorkSafe Victoria once you employ staff, and payroll tax with the State Revenue Office if Victorian wages exceed the threshold

Step 4: registration with the NDIS Commission

If you register, you apply through the Commission’s online portal, nominate the registration groups you will deliver, and the Commission assesses the suitability of the business and its key personnel. You then engage an approved quality auditor. Lower risk supports go through a verification audit, a mostly desktop review of policies, qualifications and insurance. Higher risk supports, including SIL, go through a certification audit against the NDIS Practice Standards, which includes site visits and participant interviews. Registered providers also take on incident reporting, complaints management and worker screening obligations.

Step 5: people and payroll

• Most support workers are covered by the SCHADS Award (Social, Community, Home Care and Disability Services Industry Award), which sets minimum rates, minimum shift engagements, broken shift rules and allowances
• Treating workers as contractors when they are really employees exposes the business to back pay, super and penalties. Even genuine contractors paid mainly for their labour are owed super
• Payday super applies from 1 July 2026: super must reach each worker’s fund within 7 business days of payday. See our payday super guide
• Victorian NDIS providers must register for portable long service leave and pay a quarterly levy. See our portable long service leave guide
• Every worker in a risk assessed role needs an NDIS Worker Screening Check before starting with a registered provider

Step 6: pricing, claiming and cash flow

The NDIA publishes the NDIS Pricing Arrangements and Price Limits, usually updated each 1 July, which cap what can be charged for each support item. Registered providers claim agency managed supports through the NDIS provider portal; plan and self managed participants are invoiced directly. Claims are paid in arrears while wages and super go out every pay run, so build a cash buffer of at least one or two months of payroll before you take on staff.

Step 7: bookkeeping that matches the NDIS

Set up your accounting software so income is tracked by participant and funding type, wages are coded to the right award and support item, and GST-free and taxable sales are separated. This makes your BAS, your audit and your pricing decisions far easier.

Frequently asked questions

How long does NDIS registration take?

Usually several months from application to approval, depending on the registration groups and how quickly the audit can be scheduled.

Can I start unregistered and register later?

Yes, for supports that do not require registration. You cannot provide SIL or run a platform without registration.

Do I need an accountant who knows NDIS?

It helps. GST-free conditions, SCHADS award costs, portable long service leave and payday super all interact, and errors compound quickly once you have staff.

Setting up an NDIS business in Melbourne’s west

Kennedy Tax & Business Services helps new NDIS providers choose a structure, register for tax, set up bookkeeping and payroll, and stay on top of BAS. See our NDIS financial services and business structure set-up, or contact us.

This article is general information only and does not take into account your circumstances. NDIS registration requirements are set by the NDIS Quality and Safeguards Commission and can change; check the Commission’s website before applying. Speak to a registered tax agent before acting.

Thousands of support workers in Melbourne now work for themselves, either directly with self managed and plan managed participants or as contractors to NDIS providers and online platforms. Working on an ABN gives you control over your rates and hours, but it also moves tax, super and insurance from your employer’s desk to yours. This guide explains how tax for independent NDIS support workers works and how to set yourself up properly from day one.

Employee or contractor?

Having an ABN does not make you a contractor. Whether you are an employee or an independent contractor depends on the real working relationship: who controls how and when you work, whether you can delegate the work to someone else, whether you are paid for hours or for a result, and whether you supply your own tools, vehicle and insurance. A worker who is told when to start, which participants to see and how to do the job, and who is paid by the hour, may legally be an employee even if they invoice with an ABN.

This matters to providers as much as workers. The ATO treats a contractor who is paid mainly for their own labour, must do the work personally, and is paid for their time rather than a result as an employee for super guarantee purposes. Having an ABN does not change that. A provider engaging support workers this way must pay super for them, and since 1 July 2026 that super has to reach the worker’s fund within 7 business days of payday.

Setting up as an independent support worker

• ABN: apply through the Australian Business Register. Most support workers operate as sole traders.
• NDIS Worker Screening Check: required for workers in risk assessed roles with registered providers, and expected by most participants and platforms.
• NDIS Code of Conduct: applies to all workers and providers, registered or not.
• Insurance: public liability and professional indemnity cover. As a contractor you are generally not covered by an employer’s WorkCover, so consider income protection.
• Business bank account: keep participant payments and business expenses separate from personal spending.
• Service agreements: a written agreement with each participant or provider covering supports, rates, cancellations and the participant’s plan.

GST for support workers

You must register for GST once your turnover reaches $75,000 a year. What happens next depends on who you invoice:

• Directly to a self managed or plan managed participant: your supports can be GST-free if the participant has a plan in effect, the support is in the plan, it is covered by the NDIS GST-free determination, and you have a written agreement. See our guide to GST-free NDIS supplies.
• To an NDIS provider who engages you as a subcontractor: your supply is to the provider, not the participant, so it is not GST-free. If you are registered for GST you charge the provider GST, and they claim it back.

Income tax: nobody is withholding it for you

As a sole trader, no tax is taken out of your payments. You pay tax on your profit (income less business expenses) in your individual tax return, at your normal marginal rates. A practical habit is to transfer 25 to 30 per cent of each payment into a separate savings account for tax. Once you have a tax bill after your first return, the ATO will usually place you in PAYG instalments so you pay quarterly through the year instead of in one lump sum.

Deductions you can usually claim

• Car expenses for travel between participants, and to shops or appointments while providing support. Trips from home to your first participant and back from the last are usually private travel unless your home is your base of operations
• Use the cents per kilometre method (up to 5,000 business kilometres) or keep a logbook for at least 12 weeks
• Insurance premiums, worker screening and first aid certificates, and training directly related to your current work
• Phone and internet, for the business portion
• Personal protective equipment and consumables you pay for
• Software for rostering, invoicing and progress notes
• Accounting and tax agent fees

Keep receipts and a diary or logbook. Platforms report contractor payments to the ATO, so your declared income needs to match.

Super is your responsibility

Sole traders do not have to pay themselves super, but most support workers have no other retirement savings growing while they are self employed. You can make personal contributions to your fund and claim a tax deduction, provided you lodge a notice of intent with the fund and receive its acknowledgement before you lodge your return. Concessional contributions are capped at $32,500 for 2026-27, including any super a provider pays for you. See our guide to contribution caps.

Frequently asked questions

Do I need to be a registered NDIS provider to work independently?

No. You can provide most supports to self managed and plan managed participants without registration, but you must follow the NDIS Code of Conduct. Agency managed participants can only use registered providers.

Should I set up a company?

Not usually at the start. A company adds ASIC fees, a separate tax return and Division 7A rules. It can make sense once profit is consistently high or you employ other workers.

When is my tax return due?

31 October if you lodge yourself, or later if you use a registered tax agent. See our sole trader tax return guide.

Tax help for support workers in Melbourne’s west

Kennedy Tax & Business Services prepares tax returns and BAS for independent support workers and NDIS providers across Footscray, Williams Landing and Melbourne’s west. See our NDIS financial services or contact us to book an appointment.

This article is general information only and does not take into account your circumstances. Speak to a registered tax agent before acting.

Most NDIS providers know their supports are “GST-free”, but far fewer know exactly why, and that is where problems start. A support is only GST-free if four conditions are met for that participant, that support and that period. Miss one and the supply is taxable, which can mean GST owing on income you never charged GST on. This guide explains the NDIS GST-free rules, the written agreement that holds it all together, and the traps we see most often in provider books.

The four conditions for a GST-free NDIS supply

Under the GST law, a supply to an NDIS participant is GST-free only if all of these are true:

• The participant has an NDIS plan in effect. The plan must be approved by the NDIA. It stops being effective when it is replaced or the person leaves the scheme.
• The support is reasonable and necessary and in the plan. It must be one of the supports listed in the statement of supports in the participant’s plan.
• There is a written agreement. The agreement must identify the participant and state that the supply is one or more of the reasonable and necessary supports in their plan.
• The support is covered by the NDIS Determination. The Minister’s GST-free NDIS supports determination lists the kinds of supports that qualify. The current determination applies to supplies made from 1 July 2021 to 30 June 2027.

Supplies beyond the time or quantity set out in the plan are not GST-free, even if the other conditions are met.

What the written agreement needs

The written agreement is the condition providers most often get wrong. It does not have to be a single signed contract. The ATO accepts a combination of documents, such as a service agreement, emails, letters, invoices or electronic records, as long as together they show a binding obligation to provide the support and that the support is in the participant’s plan. The agreement can be made with the participant, their plan manager, the NDIA or another person acting for them, such as a guardian.

In practice a good service agreement should name the participant and their NDIS number, list the supports by line item, refer to the plan dates, and be renewed whenever the plan is renewed.

Which supports are covered

The NDIS Determination works in two parts. Some supports qualify on their own, including specialist disability accommodation, assistance with household tasks, interpreting and translation, early childhood early intervention and plan management. Others, including assistance with personal activities, behaviour and therapeutic supports and home modifications, qualify only if they are also covered by one of the other GST-free health and care determinations. Most core supports delivered by support worker businesses fall within the determination, but it is worth checking any unusual line items.

Plan managed and self managed participants

• Plan managed: the supply is still made to the participant. The plan manager pays you from the participant’s funds and can sign the written agreement on the participant’s behalf. Plan management services themselves can be GST-free.
• Self managed: the participant can give you a letter identifying themselves and the plan support, and your written confirmation back can complete the written agreement.
• Agency managed: only registered providers can deliver to agency managed participants. The same four conditions apply.

Subcontractors are not GST-free

If you use contractors to deliver supports, your supply to the participant can be GST-free, but the contractor’s supply to you is not. A contractor who is registered for GST must charge you GST, and you claim it back as a GST credit on your BAS. This is a common source of confusion between providers and the independent support workers they engage.

Do NDIS providers need to register for GST?

You must register once your GST turnover reaches $75,000. GST-free supplies count towards GST turnover, so an NDIS business that only makes GST-free supplies can still be required to register. Once registered, you charge no GST on qualifying supports but can claim GST credits on business purchases such as vehicles, equipment, rent and software, which often means a refund on each BAS.

Common mistakes

• Service agreements that do not mention the participant’s plan or were not renewed when the plan changed
• Continuing to deliver after the plan ended or after the budget for a line item was exhausted
• Treating every sale as GST-free, including consumables, training or services to other providers
• Not claiming GST credits on purchases because “we are GST-free”
• Not keeping the agreements: the ATO can ask for them for five years

Frequently asked questions

Do I charge GST to a plan manager?

No, if the four conditions are met. The supply is to the participant, and the plan manager is paying on their behalf.

Is a signed service agreement enough?

Usually, if it identifies the participant and states the supports are reasonable and necessary supports in their plan. An agreement that only lists rates and hours, without referring to the plan, may not be.

What happens if a supply was not GST-free?

GST is payable on it, generally one-eleventh of the amount received if you did not add GST to the price. Correcting this early through your BAS is far cheaper than an ATO review.

NDIS accounting in Melbourne’s west

Kennedy Tax & Business Services prepares BAS, bookkeeping and tax returns for NDIS providers across Footscray, Williams Landing and Melbourne’s west, including reviewing service agreements and GST coding. See our NDIS financial services or contact us to book an appointment.

This article is general information only and does not take into account your circumstances. Based on ATO guidance on GST and the NDIS current at October 2026. Speak to a registered tax agent before acting.