October 2026 E News
Welcome to our fifth edition as Elevare Accountants, Chartered Accountants | Business Advisors.
October proved to be an eventful month across both domestic tax compliance and global markets. In this edition, we take a close look at the key drivers moving economies and portfolios—from shifting political dynamics around the upcoming US midterms and Brazil’s historic post-election sell-off, to the latest ripples in the AI tech sector and its emerging impact on the ASX.
On the tax side, we’ve pulled together the practical issues business owners and investors need to keep across right now. We run through the Federal Government’s incoming Capital Gains Tax changes, key areas the ATO is targeting with company cars and FBT, and where the tax office draws the line between a hobby and a business for side hustles. We’ve also set out the key November lodgment and payment deadlines to help keep your compliance on track.
The “biggest little show in the biggest little town” is back next weekend, running from Friday 6 November to Sunday 8 November 2026 at the Mullumbimby Showground. As proud sponsors, the team at Elevare Accountants is thrilled to back this cherished tradition celebrating our region’s local growers, makers, and performers—featuring everything from showjumping and woodchopping to live music, pavilion exhibits, and family entertainment.
Entry is completely free on Friday. Weekend passes (Saturday and Sunday) can be bought online in advance via 123 Tix or purchased directly at the gate. We hope to see you there!
The Elevare Accountants Team
Overview
October was a month of surprises. This month we focus on some of the political events that occurred and upcoming as well as some insight into the AI sell off in the US.
US midterms: a reason to stay the course, not change it
US voters go to the polls on 3 November (the morning of 4 November for us) for the midterm elections, with every House seat and about a third of the Senate up for grabs.
What history tells us. Midterm years have tended to be among the weakest for US shares, and much of that softness arrives in the months before the vote, when nobody knows the result. Once the outcome is clear, shares have often recovered. Since 1950, the S&P 500 (an index of 500 large US companies) has gained about 16.6% on average over the 12 months after a midterm election, and every one of the 19 post-midterm periods was positive, ranging from 3.0% to 33.6%. This year has not followed the script so far: US shares climbed to record highs after a dip in March, before the October wobble covered later in this update.
What the betting markets expect. Prediction markets, where people back political outcomes with real money, give the Democrats about a 90% chance of winning the House and roughly 60% to 65% of winning the Senate as well. Control of both chambers is called a "sweep".
Why the mix matters. Markets tend to like a split Congress because it means fewer surprises. One major bank found US shares averaged around 21% over the two years after a gridlock result, versus around 18% under single-party control, going back to 1950. A Democratic sweep is where views differ. One prominent strategist warns US shares could fall more than 10%, mainly on the risk of tougher scrutiny of the big technology and AI companies that have driven recent gains. Others are less worried: the president keeps control over tariffs, tax cuts already passed would be hard to reverse, and any impact is likely to show up by sector rather than across the whole market.
The bigger drivers. Most strategists see other forces as more important over the next few months. US inflation rose to 3.7% in September, the Federal Reserve lifted rates to 3.75%–4.00% last month, and oil has pushed above US$110 a barrel on the Middle East conflict. Cost of living is front of mind for American voters too: US consumer sentiment fell to 46.3 in early October, with the current conditions gauge at a record low. Options traders, who bet on how far markets will move, expect a move of less than 1% in the days after the vote.
Brazil: Lula's surprise win triggers a historic one-day sell-off
Brazil's president Luiz Inácio Lula da Silva won a fourth term in the 25 October run-off, and Brazilian shares and the currency fell sharply the next day. The Ibovespa, Brazil's main share index, closed down about 13.7% on 26 October after falling as much as 17% during the session. The real lost more than 8% against the US dollar, its biggest one-day fall since 1999, according to reports.
Why markets were so shocked. The sell-off was less about Lula himself than about expectations being reversed. After the first round, foreign investors bought Brazilian shares and the real on the bet that a Bolsonaro government would tighten spending and allow lower interest rates. The Ibovespa closed above 205,000 on the Friday before the run-off. A Citi survey of 73 fund managers had found 80% expected a fall of more than 5% if Lula won, yet the result still caught most of the market by surprise. For overseas investors the weaker real compounded the loss: in US dollar terms the index fell about 21% on the day.
What happens next. Investors want to see a credible plan to slow the growth in Brazil's government debt without cutting social programs. The key early signal will be who Lula appoints as finance minister, expected in the coming weeks. JPMorgan has moved its view on the real and Brazilian government bonds from overweight to neutral, and another research house, BCA, has cut its rating on Brazilian shares. Moody's rates Brazil's government debt one notch below investment grade (Ba1) with a stable outlook, but warns that a lack of a credible fiscal plan could put that outlook at risk. There is also political noise to watch: voting was extended by two hours on the day, a decision that may draw legal action from the Bolsonaro camp.
What it means for portfolios. Brazil is a small part of most diversified portfolios, so this is mainly a story for emerging markets and specialist funds. It is a useful reminder that markets price what they expect, and the surprise, not the outcome, does the damage. Moves of this size are rare, and we would not read them as a signal for broader markets.
The Nasdaq sell-off: higher rates, AI debt and doubts about the payback
The Nasdaq Composite closed on 29 October about 5% below its record close of 27,599.89 on 6 October, in a sell-off led by chipmakers and the companies spending heavily on artificial intelligence (AI). It is not a market-wide rout and the index is still up for the year, but it is a sharp reminder of how much of the recent gain rests on one theme.
Higher-for-longer interest rates. US annual inflation rose to 3.7% in September, above the 3.6% expected, and US producer prices jumped 1.3% in the month. The US 10-year bond yield briefly spiked to 5.32% after the data, close to its highest level since 2002. The Fed lifted rates in September, its first hike since 2023, and while it paused on 28 October, two members wanted another rise. Higher yields reduce what investors will pay today for profits expected years from now, which hits fast-growing technology companies hardest.
The AI build-out is increasingly funded with debt. Companies delayed more than US$5 billion of US and European bond and loan sales in October, the most this year. When borrowing costs rise, the most indebted corners of the AI boom suffer first. CNN reported that data-centre company CoreWeave lost a quarter of its value in a single week, with one analyst calling it the "subprime tranche of the AI trade".
Doubts about the payback on AI spending. Investors have shifted from rewarding companies for spending on AI to asking what they earn from it. Meta and Tesla did not settle those concerns on 22 October. On 29 October Alphabet had its worst day since listing in 2004, after weaker sales and a quarter in which its spending outran its cash. Microsoft, whose AI spending is showing up in revenue, was far steadier.
Competition from China. Early in the sell-off, memory chipmakers fell after China's CXMT announced progress on advanced memory chips, raising the risk of tougher competition. CNN reported the main chip stock index was down roughly 20% from its June peak.
Oil and the Middle East. Brent crude rose above US$110 a barrel for the first time since May on attacks on shipping around the Strait of Hormuz. Dearer fuel feeds inflation, which keeps yields and rate expectations higher.
Is this a bubble bursting?
It is too early to say, and we would be wary of anyone who claims to know. The damage has so far been concentrated: at one point the Nasdaq-100 was about 6.5% below its high, short of the 10% usually called a correction, while a chip stock fund was down about 15% (as at 16 October). Many other stocks have held up, and money has rotated into banks, defensives and healthcare, with health stocks reaching a record on 29 October.
Closer to home
The AI theme has reached the ASX. Data-centre developer Firmus pulled its IPO, which was originally pricing the company at about $43.7 billion, and AirTrunk delayed its Singapore REIT float. NextDC fell 41.7% in one session to an eight-year low after power-supply problems at its Melbourne site.
The bottom line
Elections and sell-offs create plenty of noise, but over time share markets have been driven far more by earnings, interest rates and the health of the economy than by which party is in power or which theme is in favour. All three stories this month share a thread: markets reacted most to what they had not priced in, whether a surprise election result in Brazil, hotter inflation, or weaker returns on AI spending.
The markets performance up to October:
On 26 June 2026, Federal Parliament passed the first tranche of legislation on capital gains tax reforms.
The ATO has published new web guidance (click the link below) and will continue to develop and consult on additional products and tools in stages, as further legislation is developed and enacted.
CGT changes
From 1 July 2027, the CGT changes will:
replace the 50% CGT discount for resident individuals trusts and partnerships with cost base indexation on gains that accrue on or after 1 July 2027
introduce a minimum 30% tax for individuals on certain net capital gains which accrue on or after 1 July 2027
subject those with pre-CGT assets to CGT for gains accruing on or after 1 July 2027.
Some exemptions will apply.
Understanding the market valuation requirements
Under the new rules:
Taxpayers may need to determine what the market value of their CGT asset was immediately before 1 July 2027 when calculating their capital gain or loss. This doesn't require you to have a valuation in place on this date, and you shouldn't obtain one before this date, as a valuation can't be forward-looking.
Taxpayers may have the choice to determine the value of their CGT asset using an alternative method, known as the apportionment method. The Government is currently developing this method and we will provide further guidance once it has been enacted.
Taxpayers holding CGT assets before 1 July 2027 may have these assets treated as having been disposed of immediately before 1 July 2027 and re-acquired on 1 July 2027. They will then need to calculate their capital gains and losses for each period as though they are separate ownership periods.
To calculate the capital gains or losses for each period, taxpayers may need to work out what the market value of the asset was immediately before 1 July 2027. This is because the market value will be used as the capital proceeds for the deemed disposal of the asset and as the first element of cost base to calculate the gain accrued after 1 July 2027.
Any capital gain or loss relating to the deemed disposal of the asset immediately before 1 July 2027 is deferred and only needs to be reported when the asset is disposed of, or another CGT event occurs.
Source and credit: ATO.gov.au
The ATO has observed a large proportion of employers that provide work cars for their employees are not fully meeting their fringe benefits tax (FBT) obligations. Based on the common errors the ATO sees employers make, here are their 3 key tips.
Ensure you:
Correctly classify vehicles for FBT purposes.
Understand what is considered as private use.
Are keeping complete and accurate records.
FBT generally applies when employees (or their families or associates) use work cars privately, or the cars are available for their private use. Even where a third-party provider manages your fleet, you remain responsible for meeting FBT obligations.
To help you identify compliance risks early and reduce the risk of unexpected liabilities, you should review the following tips.
Are you providing a 'car' fringe benefit?
For FBT purposes, a 'car' is defined as:
a motor vehicle (except a motorcycle or similar vehicle) designed to carry a load of less than 1 tonne and fewer than 9 passengers
Examples include
most sedans, hatchbacks, SUVs, convertibles, people movers, 4-wheel drives or station wagons
some vehicles designed to carry goods with a carrying capacity of less than one tonne (such as panel vans, vans, 4-wheel drives and utes, including dual cabs)
If you provide a car, then you need to understand how your employees use it and keep complete and accurate records.
Is the car being used privately?
FBT generally applies when employees use a work car privately, or the car is made available for private use. Private use may arise if your employees use the work car for travel or activities not related to their employment, such as:
school pick-ups or drop-offs (even if it's on the way to or from work)
running personal errands
transporting family or friends
garaging the car at or near their home (even if the car is not being used or is being garaged for security reasons)
weekend recreational trips.
Are you keeping the right records?
If you provide work cars, it's essential you keep complete and accurate records. This applies even if the cars aren't used for private purposes, you don't have an FBT liability, or you're not required to lodge an FBT return. If your work cars are used fully for work purposes, your records need to prove that.
Your records must:
support the calculation method you use
show how you calculated the taxable value of the car fringe benefit.
If you use the:
operating cost method, maintain records such as logbooks and odometer readings
statutory formula method keep records such as purchase records, invoices, receipts and lease documents.
We often see instances where employers have missing or incomplete logbooks.
Maintaining the right documentation can help you demonstrate compliance with your FBT obligations and support accurate FBT reporting.
Source and credit: ATO.gov.au
Whether you're creating content, selling products through online marketplaces or earning income through social media platforms, it's important to understand when a hobby or side activity becomes a business for tax purposes.
Business, side hustle or hobby – why does it matter?
Understanding whether your content creation activities amount to carrying on a business is important because it affects your tax obligations. Your content creation activities may be:
a business
an income-producing activity that does not amount to carrying on a business, or
a hobby or recreational pursuit.
If you're carrying on a business as a content creator, you must:
declare business income, including non-cash income
keep appropriate records
claim only eligible deductions and expenses, and
meet other tax and reporting requirements.
If you're not carrying on a business, amounts you receive from creating content may still be assessable.
This commonly occurs where you are undertaking a side hustle. A side hustle is an activity that you carry out in addition to your primary job or business to earn additional income. Depending on the particular facts and circumstances, your side hustle may amount to carrying on a business or be an income-producing activity that does not amount to carrying on a business.
It's important to remember that 'not carrying on a business' does not automatically mean amounts you receive are tax-free. Even where your content creation activity is not a business, amounts you receive may still be assessable income and need to be declared in your tax return.
The main exceptions are where the activity is a genuine hobby or recreational pursuit.
A hobby is an activity that is undertaken primarily for personal enjoyment, recreation or leisure rather than to make a profit. While a person may occasionally receive amounts from a hobby, those receipts are generally incidental to the pursuit of the hobby rather than the reason for undertaking it. For example, a person may occasionally receive a small prize, gift or other benefit connected with their hobby without the activity taking on a commercial character.
Amounts received from a hobby are generally not assessable income and associated expenses are not tax deductible.
Source and credit: ATO.gov.au
Starting a Small Business
Date: Thursday 5 November 2026
12:00 - 1:00 pm AEDT
Location: Online Cost: Free
Event organiser: ATO
Are you thinking of starting a small business? Maybe you have a hobby or side hustle that’s becoming a business? This course will help you understand the difference between a hobby and a business, the most common business structures and the registrations you may need to run a small business.
Review the free course on starting small business and come along to the masterclass with any questions you have.
Click the link below to register your interest.
Source and credit: Business.gov.au
11 November
Activity statements
Quarter 1 (July to September) activity statements lodged electronically – final date for lodgment and paymentrefer to the two week lodgment concession for information on your eligibility for this later due date.
21 November
Activity statements
Lodge and pay October monthly activity statements.Income taxPayment due date if you lodge your own tax return.
30 November
Global and domestic minimum tax
The Combined global and domestic minimum tax return and the GloBE Information Return are due
30 November 2026 for fiscal years ending on 31 May 2025.
Source and credit: ATO.gov.au
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