Tax planning tips for 2024-2025

Plan for End-of-Financial-Year (EOFY) early

Waiting until June to think about EOFY planning can leave you scrambling. If this is you, then make a new financial year resolution to take a more proactive approach in 2025-26. Things to do:

Regularly review income and expenses: Consistently monitor your financials to identify potential tax liabilities or opportunities.
Use forecasting tools: Leverage financial forecasting tools or consult with a tax professional to plan for upcoming tax obligations and to avoid last minute surprises.
Manage cash flow: Plan your cash flow to ensure you have funds available to meet tax obligations without disrupting your business operations.

Maximise your deductions

Ensure you claim all eligible deductions, but they must be supported by detailed records and an understanding of what you can deduct.

Work-related expenses.

Claim all necessary work-related expenses, such as tools, uniforms and home office costs.

Charitable donations.

Donations to registered charities are tax-deductible. Ensure you keep receipts and verify that the charity is registered with the ATO.

Maximise Super Contributions.

From 1 July 2024, the general concessional contributions cap rose to $30,000 for all individuals regardless of age. It was previously $27,500.
Many people will also have unused contribution caps from prior years, and these can provide a good opportunity for an improved tax outcome whilst boosting your superannuation at the same time. Use your MyGov account to find out more about your contribution caps or speak to your accountant or superannuation specialist.

Review Bad Debts

Review your debtor's list to determine which won’t be recoverable. Writing off the unrecovered income as a bad debt prior to the end of a financial year will provide a tax deduction for that financial year.

Please note that the debt must be genuinely bad, and not merely doubtful. The decision to write off the debt must be documented before the end of the financial year to claim the deduction.

Instant asset write-offs.

Our tax system offers instant asset write-offs for eligible business purchases. Review the current thresholds and consider investing in assets your business needs.

The limit for instant asset write-off is $20,000 and applies on a per asset basis. For more details click here.

Under this measure, small businesses with an aggregated turnover of less than $10 million will be able to:

deduct the cost of eligible depreciating assets costing up to $20,000 that are first used or installed ready for use before 30 June 2025.
deduct the cost of additions for assets costing less than $20,000 (if an immediate deduction for an asset under the simplified depreciation rules in a prior income year where the amount is less than $20,000).

As the $20,000 threshold under the measures applies on a per asset basis, small businesses can instantly write off multiple new assets.

Income deferral and expense prepayment.

Where feasible, defer income or prepay expenses to manage your taxable income for the financial year.

Business restructuring.

Consider whether restructuring your business into a trust or company could improve tax efficiency. Consult a professional to determine if this is right for you.

By implementing these tax planning tips, you can better manage your tax obligations in 2025. Staying proactive, organised and informed will help you minimise tax liabilities and maximise savings.

AcctWeb

Tax Office puts contractors on notice over misreporting of income

The ATO's data matching programs have identified contractors that are incorrectly reporting or omitting contractor income.

Contractors omitting income remains a major compliance focus for the ATO, with recent data matching revealing that some contractors are still incorrectly reporting or omitting contractor income, the ATO said in a recent update.

“You need to report all your income, including payments made by businesses for your contracting work,” the ATO said.

The ATO reminded contractors that as part of the taxable payments reporting system (TPRS), businesses lodge a taxable payments annual report (TPAR) to report payments made to contractors that provide certain services. These services include building and construction, courier, cleaning, information technology, road freight and security, investigation or surveillance.

The ATO reminded contractors that if they provide any of these services, the businesses that contract them will report these payments to the ATO on their TPAR.

“You need to include this income on your tax return,” it said.

“Through data matching, we are seeing some contractors incorrectly reporting or omitting contractor income.”

The ATO warned contractors that where it suspects a contractor has omitted TPRS income on their tax return, they may contact them or their tax professional to request them to amend the tax return.

“[We may also] contact you or your tax professional via phone call to better understand your circumstances and potentially request you amend your tax return,” it said.

“If you don’t take action, we may conduct a review and audit of your business. Penalties and interest may apply.”

To help contractors report their income correctly, the ATO includes information reported to it about contractor payments that were paid as part of its pre-filling service and its reported transactions service in the ATO online platform.

“These records give you transparency about the data that has been provided to us about your business transactions,” the ATO said.

The ATO gave an example of Mike, a carpenter who operates his business as a sole trader.

Mike subcontracts to multiple builders and completes his tax return himself.

“As he provides building and construction services, the builders must report the payments they made to him during the 2024 income year. They must do this by lodging a TPAR with the ATO by 28 August 2024,” the Tax Office said.

“Mike does not use the pre-filled TPAR amounts for his tax return. This results in Mike not including all his contractor payments in his reported income. On review, the error was identified, and his 2024 assessment was amended to include the missing income. Mike was required to repay the tax shortfall and may be subject to penalties and interest.”

The ATO said in the following year when Mike is completing his tax return, he can review and accept the pre-filled TPAR amounts.

“These will auto fill into his tax return, making it easy to ensure he has included all his contractor payments in his income,” it said.

Miranda Brownlee
26 February 2025
accountantsdaily.com.au

ASIC pledges to continue online scam blitz

The corporate regulator has revealed online scammers will remain “squarely in the crosshairs”, with 130 investment scams shut down weekly.

New data released by ASIC highlights the agency’s commitment to protecting the Australian public from online scams, with over 10,000 investment scam websites and online advertisements having been shut down.

The latest enforcement and regulatory update showed 10,240 of the most common sites removed by the corporate regulator included 7,227 fake investment platform scams, 1,564 phishing scam hyperlinks, and 1,257 crypto investment scams.

ASIC said it had commenced court action against HSBC Australia in December, as it was alleged it had failed to adequately protect customers scammed out of millions of dollars.

The action followed reports into anti-scam practices of 15 banks outside the major four and identified “significant room for improvement.”

Sarah Court, deputy chair of ASIC, said since the regulator established its capability in 2023, it had helped shut down an average of 130 investment scam websites each week.

“Scammers are using increasingly sophisticated technology to steal money from hard-working Australians with investment scams that can look shockingly legitimate,” Court said.

“This new data demonstrates that ASIC is making Australia safer by stamping out these scams before they reach Australians. ASIC will continue to protect Australians from scams by removing them before they reach consumers and holding financial institutions accountable for their scam detection and response practices.”

ASIC also outlined in its recent report that in the last six months of 2024, investigations had been increased by 31 per cent to 109 new investigations, commenced 15 new court actions and completed 376 surveillances.

The body was also successful in the majority of its civil and criminal prosecutions, securing $46.6 million in civil penalties and 13 criminal convictions.

Joe Longo, chair of ASIC, said the outcomes that had been achieved by the regulator over the last six months highlighted that its organisational redesign and a refreshed executive team were making a positive impact.

“The changes we have made mean ASIC is able to more efficiently process intelligence, leading to earlier commencement of investigations and surveillance,” Longo said.

“We anticipate the increased number of investigations we have commenced will flow through to significant compliance, enforcement and consumer outcomes in the year ahead.”

Longo added that the 2025 enforcement priorities outlined that banks, insurance companies and superannuation trustees were on notice, as the regulator was concerned by the inconsistencies and complacency it had observed.

The report also detailed action against NAB, QBE, Cbus trustee United Super, as well as a review of bank customers on low incomes.

ASIC’s 2025 enforcement priorities will continue to reflect the increased cost of living pressures faced by consumers and aim to prevent financial harm, Longo said.

“Using our regulatory toolkit, we’ve focused on landmark cases and compliance actions that deliver financial outcomes and protect consumers and investors.”

Imogen Wilson
03 March 2025
accountantsdaily.com.au

ATO to push non-compliant businesses to monthly GST reporting

Small businesses with a history of not complying with their obligations may be moved to monthly GST reporting from the start of April, the ATO has warned.

In a recent update, the ATO has said it is currently monitoring small businesses that may need to change from quarterly to monthly GST reporting to stay on track.

“If you operate a small business, from 1 April 2025, we may move you from quarterly to monthly GST reporting if you have a history of not complying with your obligations,” the ATO said.

This includes non-compliance such as missing payments, lodging a BAS late or incorrectly reporting GST.

The ATO said that any small businesses that are moved to monthly GST reporting will be notified in writing.

“The move is designed to support you to meet your obligations and to embed good business habits into your business by better aligning reporting with your reconciliation processes. This will help make reporting easier and save you time,” the Tax Office said.

The ATO noted that many small businesses had already voluntarily moved to monthly GST reporting.

“This has helped them improve their cash flow and keep their record keeping up to date,” it said.

“Generally, small businesses that report their GST monthly find that monthly reporting aligns better with other natural business processes [and that] cashflow management improves, which helps them make more informed business decisions.”

Making smaller, more management payments also helps businesses to meet their tax obligations, the ATO said.

“Monthly reporting may make it easier for you to track your finances and business performance and make more informed decisions each month,” it said.

Miranda Brownlee
26 February 2025
accountantsdaily.com.au

ATO outlines focus areas for SMSF auditor compliance in 2025

The ATO has issued guidance on what it will focus on regarding auditor compliance for 2025.

The regulator has said that in 2024 more than 32,000 new funds entered the sector – an increase of 21 per cent from 2022–23, with the SMSF population growing to over 625,000 and holding more than $1 trillion in assets.

It emphasised the critical role that SMSF auditors play in maintaining the health and integrity of the sector and the importance of understanding their obligations, including what the ATO considers the biggest risks in 2025.

As previously highlighted by the ATO, it is again heavily scrutinising market valuations and reminded approved SMSF auditors that they are responsible for verifying and retaining sufficient audit evidence to support the market value of assets.

“Where there's insufficient evidence you must consider modifying the independent auditor's report (IAR). You must also lodge an auditor contravention report (ACR) where the reporting criteria is met,” the Tax Office said.

In 2024, the ATO contacted auditors where SMSFs they audited reported unchanged values for certain assets across several income years and will continue this program in 2025, including reviewing auditors where asset values remain the same and no ACR is lodged.

This year, the ATO said it will also continue its focus on auditors who audit a large number of SMSFs. This includes auditors who regularly undertake over 1,000 audits per year or have rapidly increased their audit numbers in recent years.

It said it would visit auditors at their offices to review their audit process.

It will look closely at disqualified trustees and said auditors must confirm that the trustees of the SMSF are not acting as trustees or directors of a corporate trustee while a disqualified person.

It will be reviewing auditors where its information indicates trustees have acted while a disqualified person and no ACR has been lodged.

Additionally, the ATO will focus on high-risk auditors, having said it will use its range of data and intelligence about the SMSF auditor population to identify auditors it considers high-risk.

Those auditors it considers high risk will continue to be audited and referred to ASIC if they have not complied with their obligations.

“Auditors with low, fixed-price business models continue to be a concern for the ATO. These models inherently restrict the amount of time an auditor can spend on an audit and can lead to lower quality audits, particularly where the SMSF has more complex investments,” the Tax Office said.

Finally, the regulator said it would also be looking at auditor independence, noting that an approved SMSF auditor is required to comply with independence requirements as part of their professional obligations.

Following an increase in referrals to ASIC in the last financial year that included independence issues, the ATO will focus on auditors it considers high risk. This includes auditors:

· Conducting in-house audits.

· With reciprocal auditing arrangements.

· That have a long association with clients.

· Have a large proportion of their client base come from a single referral source.

Keeli Cambourne
27 February 2025
accountantsdaily.com.au

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Have you considered spouse contribution splitting?

Your individual total super balance as of 30 June each year impacts your ability to implement various super strategies in the following financial year.

This may include ability to make non-concessional contributions when your TSB is over $1.9 million, utilising carry-forward provisions for large concessional contributions when your TSB is below $500,000 or claiming tax deductions for personal contributions at ages 67–74 when your TSB is below $300,000.

The asset test for Age Pension only includes superannuation for individuals of pension age. If there's a significant age difference between spouses, directing more super to the younger spouse could potentially maximise Age Pension entitlement at retirement.

Spouse contribution splitting allows you to transfer up to 85% of your annual concessional contributions to your spouse's super account, subject to some key points:

Eligible contributions include superannuation guarantee, salary sacrifice and tax-deductible personal contributions.
Only contributions from the previous financial year may be split.
The receiving spouse must be aged under 65, or 60–64 and not retired.
The split is considered a rollover and doesn't affect the receiving spouse's contribution caps.

You must also check if see if your fund offers spouse contribution splitting, as it's not mandatory for all funds. This can be an effective tool in superannuation equalisation between spouses. Consider your unique circumstances and seek professional advice to ensure this approach aligns with your long-term financial goals.

Acctweb

Exploring compassionate early release of super

Even though superannuation is designed for retirement, there are limited circumstance where you can access super early on compassionate grounds.

The ATO oversees applications for the compassionate release of superannuation. Specific situations that may qualify include:

preventing foreclosure or forced sale of your home;
medical treatment for you or your dependants;
medical transport for you or your dependants;
modifying your home or vehicle to accommodate special needs arising from severe disability;
palliative care for terminal illness; and
death, funeral or burial expenses for your dependants.

Generally, applications need to be for unpaid expenses and must be a single lump sum, not exceeding what’s reasonably required.

Before applying to the ATO, it’s crucial to contact your super fund. The fund can confirm if it will be able to release funds and advise on withholding obligations, fees and explain potential impacts on your insurance.

Remember, accessing your super early should be a last resort. It’s your future financial security at stake. However, when faced with genuine hardship, it’s reassuring to know that this option exists to help through difficult times.

Acctweb

Government to push ahead with GIC deduction changes

A proposed measure to deny deductions for the general interest charge has received the green light from a Senate Committee.

The Senate Economics Legislation Committee has recommended that a bill containing amendments to deny income tax deductions for general interest charge (GIC) and shortfall interest charge (SIC) amounts incurred by taxpayers be passed by Parliament.

Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024 was referred to the Senate Economics Legislation Committee for inquiry and report in late November, with the committee handing down its report yesterday.

In its report, the Committee said the current arrangements where taxpayers can deduct the GIC and SIC were too generous and “undermine the deterrent purpose of these charges”.

“Removing the ability to deduct these charges would ensure that interest on overdue tax liabilities remains an effective deterrent and will promote accurate self-assessment and timely payment of tax liabilities,” the Committee said.

The Committee said denying these deductions would encourage taxpayers to accurately self-assess and to make prompt payments of their tax liabilities when they fall due.

“The committee notes that the ATO’s debt book has grown substantially in recent years, with collectable debt increasing by 99 per cent between 2018-19 and 2023- 24 to reach $52.8 billion,” it said.

“A large portion of this debt reflects amounts businesses are required to collect and remit to the ATO. Stakeholders have generally agreed the need to address this growth.”

The Committee rejected proposals made by professional accounting bodies and The Tax Institute during the inquiry, such as reducing GIC and SIC rates or removing deductibility on only GIC, as they would “dilute the measure's effectiveness”.

“The committee also acknowledges concerns raised by participants about the potential impact on small businesses and individuals facing cash flow challenges,” it said.

“The committee however notes that the Commissioner of Taxation will retain a discretion to remit, or partially remit, GIC and SIC where, for example, taxpayers are affected by a natural disaster, sudden illness, or financial hardship.

“The committee considers this discretion to be an appropriate safeguard that complements the measure, especially in the current uncertain economic environment, and trusts this discretion will be effectively utilised by the Commissioner where appropriate.”

The Tax Institute and professional bodies previously warned that proposed measures could have significant consequences for businesses and the wider economy.

“Increased financial pressure may force businesses to divert resources from critical operations such as payroll or purchasing inventory, putting their long-term viability at risk,” The Tax Institute said in its submission to the inquiry.

CPA Australia said denying GIC and SIC deductions was an excessive measure given the ATO’s firm approach to debt recovery efforts.

“With interest rates as high as they are, this will disproportionately affect businesses with cash issues, particularly sole traders on the highest marginal tax rate,” said CPA Australia tax lead Jenny Wong.

“You have to question if this really is about repaying outstanding tax debt, or just a penalty on taxpayers struggling to do the right thing and meet their obligations. The impact on existing tax debt is very concerning.”

Miranda Brownlee
31 January 2025
accountantsdaily.com.au

Vehicle association calls for stricter definitions with luxury car tax changes

The fuel-efficient definition for the higher luxury car tax threshold should be limited to zero-emission cars only, the Australian Electric Vehicle Association has said.

Motor vehicle industry groups have weighed in on the government’s proposed changes to the luxury car tax (LCT) which will tighten the definition of a fuel-efficient vehicle and align the indexation rates for luxury car tax thresholds.

If passed, Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024 will update the definition of a fuel-efficient car by reducing the maximum fuel consumption for a car to be considered fuel-efficient for the LCT to 3.5 litres per 100 kilometres from the current 7 litres per 100 kilometres.

This means the higher threshold that applies to fuel-efficiency luxury cars will apply to fewer types of cars in relation to the LCT.

The bill was referred to the Senate Economics Legislation Committee at the end of November, with the committee due to report this week.

In a recent submission, the Australian Electric Vehicle Association has urged the government to make the fuel-efficient car threshold more stringent by limiting it to zero-emissions vehicles only.

“This would make the legislation consistent with other Commonwealth tax legislation such as the FBT exemption, which is only available to zero emissions vehicles after April 1, 2025,” the association said.

The association noted that many plug-in hybrid vehicle models on the market will meet the 3.5L/100km rating criterion but will not achieve the expected emissions abatement in operation.

“Numerous studies in Europe, including a 2024 report by the European Environment Agency, found that the actual emissions from a large sample of PHEVs were, on average, 3.5 times higher than their type approval values,” it said.

The submission also noted that the Climate Change Authority’s Sector Pathways Review finds that Australia will likely need to fully decarbonise the passenger vehicle fleet by 2050 to meet the 2050 net zero target.

“Given that many cars remain on the road for 20 years or more, it is important that incentives encourage the purchase today of zero emissions vehicles over hybrids,” the submission said.

The Federal Chamber of Automotive Industries (FCAI) on the other hand has called for the LCT to be abolished entirely, labelling it an “obsolete tax”.

“The luxury car tax served a historic purpose, having originally been created as a means of protecting Australia’s local vehicle manufacturing industry,” it said.

“Given manufacturing in Australia ceased in 2017, the luxury car tax and its purpose has become redundant and should be scrapped.”

The FCAI said it is inefficient and inequitable to manipulate a tax that was formulated for a purpose that is now redundant so that it artificially addresses another issue.

“Consistent with its longstanding position, the FCAI recommends that the luxury car tax be abolished in a staged process over a five-year period to mitigate any unintended consequences,” it said.

In the event that the government does proceed with the changes for luxury car tax, the FCAI said there should be a transitional period where the maximum fuel consumption for vehicles defined as fuel efficient for the purposes of the LCT is gradually reduced over a three-year period.

The association said the All Groups CPI should be used as the method of indexation for both fuel-efficient and all other luxury vehicles.

The government must also implement transition arrangements to protect consumers who may purchase a vehicle subject to LCT prior to 1 July 2025 in instances where the vehicle is not supplied/imported prior to that date, it added.

Miranda Brownlee
03 February 2025
accountantsdaily.com.au