May Update | RBA Increase, Super Tax Changes & Making the Most of the Final EOFY Window
RBA Rate Increase
The Reserve Bank has today announced a further 0.25% increase to the cash rate, bringing it to 4.35% — the third rise in 2026. For households with home loans, the cumulative impact is now being felt in a way that earlier increases were not.
Higher rates continue to offer improved returns on cash and defensive assets, while adding further pressure on borrowers. For property investors specifically, rising rates can quietly shift a positively geared property into negative territory — worth being across as we head into the new financial year.
Message from the Team
The end of the financial year is now just weeks away — and for many people, May is the month that determines how well-positioned they’ll be heading into July.
The window to act is still open, but it’s closing. Trust distribution resolutions, super contribution decisions, debt structure reviews, income protection — these aren’t things to leave until the final week.
The theme this month is structure. Not just what you have, but
whether it’s set up to work as efficiently as possible before 30 June closes the window.
As always, those who act early are better placed. If anything in this edition prompts a question, please don’t hesitate to reach out.
Market Update Feature Insight: Good Debt vs Bad Debt — Is Your Borrowing Working as Hard as It Should?
Not all debt is created equal. But high-income earners are often the ones who blur the line most — not through carelessness, but simply because no one has looked at the full picture recently.
Bad debt costs you money and produces no return. Good debt is productive — it works while you sleep, either generating income, building an asset, or reducing your tax.
A common pattern we see: someone carries a large investment loan — which is tax-deductible and attached to a productive asset — while also holding a mortgage with an offset account they aren’t maximising. Or they are paying down their home loan aggressively while carrying personal debt at a higher rate. Or they have taken on borrowings inside a trust structure without considering how those liabilities sit within their broader position.
The question worth asking isn’t just “how much debt do I have?” It’s “is the structure of my debt working as hard as it could be?”
In a higher-rate environment, this matters more than ever. The gap between efficient and inefficient borrowing has widened — and for high-income earners, the tax dimension makes that difference even more pronounced. Interest on debt attached to income-producing assets is generally deductible. Interest on personal debt is not. If your borrowings aren’t structured to reflect that distinction clearly, you may be paying more tax than you need to.
A few questions worth sitting with before 30 June:
• Is your offset account being used to its full potential?
• Are your deductible and non-deductible debts clearly separated?
• Have your borrowings been reviewed since rates started rising?
• Is the mix of fixed and variable exposure still appropriate?
None of these require dramatic change. But they do reward a clear-eyed look — and EOFY is a natural moment to do it.
Feature Insight
Three EOFY Moves Worth Making Before 30 June
With 30 June fast approaching, there are a handful of actions that are particularly valuable for high-income earners right now. None are complicated — but all have a hard deadline.
1. Trust distributions — the resolution that must happen by 30 June
If you operate through a family trust, this is one of the most time-sensitive tasks of the financial year.
By law, trustee resolution minutes must be prepared, finalised, and signed prior to 30 June to be valid for that financial year. If this does not occur, the trustee may be taxed on the income at the top marginal rate of up to 47% and the intended tax outcome is lost.
The resolution documents how trust income is distributed across beneficiaries — typically a spouse, adult children, or a corporate beneficiary — each taxed at a lower rate than the primary income earner. Every dollar shifted from the 47% bracket to a lower-income
beneficiary’s bracket can save more than 30 cents in tax.
This doesn’t happen automatically. It requires a written,
signed resolution before midnight on 30 June. If you’re not certain your accountant has this in hand, it’s worth confirming now.
2. Prepaying deductible expenses
For individuals on the top marginal rate, bringing deductible expenses forward into this financial year means claiming the deduction at 47% rather than deferring it.
Under the ATO’s prepayment rules, expenses of 12 months or less that end before 30 June of the following year can generally be claimed immediately. Common examples include income protection
insurance premiums, investment loan interest, professional subscriptions and memberships, and ongoing advisory fees.
Prepaying 12 months of income protection insurance before 30 June, for example, means you claim the full deduction in 2025–26 rather than spreading it across two years.
One important note: the payment needs to clear before 30 June, not just be initiated. Allow enough time for processing.
3. Reviewing income protection before EOFY
Your income is your most significant asset. Yet income protection policies are among the most commonly set-and-forgotten arrangements we see.
A few questions worth asking: Does your benefit amount still reflect your current income? Is your waiting period appropriate for your cash reserves? Are you holding a policy through super and
personally — and potentially doubling up? Have any significant changes in your health or work arrangements occurred since the policy was set up?
Reviewing cover before EOFY is also timely because premiums paid before 30 June are deductible — so a policy upgrade or consolidation this month carries an immediate tax benefit as well as a structural one.
The Lakeside Lens: Two Super Tax Changes You Need to Know Before 1 July
With the new financial year just weeks away, two changes to how superannuation is taxed are either already affecting you or about to. Both are worth knowing now rather than later.
Division 293 — The super tax that arrives after you think you’re done.
Most people know that super contributions are taxed at 15% inside the fund. Fewer know about the additional 15% that can apply on top — quietly assessed by the ATO months after your return has been lodged.
Division 293 is an additional 15% tax on concessional super contributions for individuals whose combined income and concessional contributions exceed $250,000 in a financial year.
Concessional contributions include your employer’s 12% super guarantee, any salary sacrifice, and personal contributions claimed as a tax deduction.
The common trap: your taxable income alone doesn’t tell the full story. Your taxable wages can sit under $250,000, while the Division 293 combined total does not — because salary sacrificed amounts are still added back into the test. A strong year — a bonus,
a capital gain, a property sale — can tip you over the threshold unexpectedly.
Even after Division 293, contributions taxed at 30% are generally more favourable than top marginal rates approaching 47% — so super remains a worthwhile strategy. The point is to plan for it rather than be surprised by a bill months after the fact.
This is exactly the kind of detail that benefits from your accountant and financial adviser working in sync. If you’d like your position reviewed before 30 June, Lakeside’s accounting team can look at this as part of your EOFY planning — get in touch to arrange a
time.
Division 296 — The new super tax that starts 1 July
From 1 July 2026, a brand new tax takes effect on superannuation balances above $3 million. Legislation passed in March 2026 and imposes additional tax on investment growth in super balances above that threshold, starting with the 2026–27 financial year.
An additional 15% tax applies to superannuation earnings on balances exceeding $3 million, on top of the existing 15% — effectively raising the rate on earnings for that portion to 30%. For balances above $10 million, the rate rises to 40% on that portion.
Importantly, the tax only applies to earnings attributable to the amount above the threshold — not your entire balance. If your balance is only slightly above $3 million, only a small share of your earnings will be subject to the higher rate.
A few things worth knowing: your total superannuation balance is counted across all accounts — accumulation and pension phase combined. Even if part of your balance is in a tax-free retirement phase, it still counts toward the $3 million threshold. The tax is also assessed to you personally — not to your fund, though you can elect to pay it from your super balance via a release authority.
For SMSF members, there is a time-sensitive decision to consider. Funds can elect a one-time CGT cost base reset on assets held at 30 June 2026, locking in past growth so it won’t be counted under the new regime. This election is irreversible and applies to all assets in the fund — it requires careful modelling before any decision is made.
The first ATO assessments arrive in 2027–28, but the structural decisions that affect your exposure are being made right now. If your balance is above $3 million or approaching it, a conversation before 1 July is time well spent.
The Cost of Doing Nothing
Most financial mistakes aren’t dramatic. They don’t involve bad investments or poor decisions. They’re quieter than that.
They look like a super fund that hasn’t been reviewed in three years. A Income Protection policy that no longer reflects your income. An investment portfolio that’s drifted from its original allocation without anyone noticing. A tax strategy that made sense a few years ago and hasn’t been looked at since.
Financial inertia is one of the most expensive things we see — not because any single delay is catastrophic, but because the cumulative cost of doing nothing compounds just as reliably as a good investment does, only in the wrong direction.
The irony is that the people most at risk of financial drift are often the busiest — those whose professional lives demand so much focus that their personal financial structure gets the leftovers.
The end of the financial year is a natural prompt to pause. Not to overhaul everything — just to ask one simple question: is everything still working the way it should be?
Book Your Pre-30 June Review
We are now in the final weeks before 30 June and availability for pre-EOFY planning meetings is limited. We recommend securing a time with our team in the coming weeks.
Whether it’s your debt structure, trust distributions, super position, income protection, or simply making sure nothing has been overlooked — we are here to help you head into the new financial year with clarity and confidence.
Please don’t hesitate to reach out. We’d love to hear from you.
Warm regards,
The Lakeside Financial Team