Big changes are here! The Australian Taxation Office (ATO) has rolled out key updates that could directly impact your business’s bottom line. New deduction rules, tougher penalties, or rising interest charges could all affect how you manage your tax obligations. Don’t get caught off guard – here’s what you need to know to stay ahead in 2025.
Changes to tax deductions
The ATO is constantly reviewing its rates for work-related expenses and depreciating assets. Some updates include:
- Instant asset write-off adjustments: For small businesses, the $20,000 instant asset write-off is extended until 30 June 2025 but subject to turnover limits.
- Car expense deductions: The cents-per-kilometre rate has been adjusted from 85 cents per km last year to 88 cents per km, and businesses should ensure their logbooks meet ATO standards.
Stricter enforcement of penalty notices
The ATO is ramping up compliance efforts, particularly for late lodgements and non-payment of tax liabilities. You should note:
- Failure-to-Lodge (FTL) penalties: The ATO has increased the penalty unit amount from 7 November 2024 onwards to $330 for overdue lodgements.
- Director Penalty Notices (DPNs): The ATO is actively looking into unpaid PAYG withholding and superannuation liabilities. Directors should act promptly if they receive a DPN.
General Interest Charge (GIC) and remission updates
The ATO has updated its General Interest Charge (GIC) rates for overdue tax debts. While GIC rates remain high, there are increased opportunities for businesses to apply for remission or negotiate payment plans.
- Stronger emphasis on payment plans: The ATO is showing flexibility for businesses impacted by cash flow issues, provided they engage early.
- GIC remissions in some cases: Small businesses demonstrating good compliance history may qualify for GIC remissions, providing they write a request to the ATO.
Superannuation Guarantee (SG) compliance crackdown
Superannuation obligations remain a key focus, with the ATO increasing audits and penalties for late payments. Key updates include:
- Higher penalties for late SG contributions: With SG’s rising to 12% on 1 July 2025, employers who fail to meet deadlines will face higher interest charges and shortfall amounts.
- Real-time data matching: The ATO is leveraging data from super funds to identify businesses that are underpaying or failing to meet obligations.
What business owners should do.
With these changes in effect, business owners should:
✔ Review deduction claims to ensure compliance with the latest rules.
✔ Lodge tax returns and BAS on time to avoid penalties.
✔ Engage with the ATO early if facing cash flow challenges.
✔ Ensure superannuation is paid on time to avoid significant penalties.
✔ Engage a qualified tax professional to ensure you are compliant.
Staying ahead of these updates will help you avoid unnecessary penalties and maximise tax efficiency. If you need tailored advice, speak to one of our trusted advisors to ensure you're fully prepared.
Jace joined the firm in 2005 and has over 20 years' experience in the taxation and business services field. By immersing himself within the industry, he has developed a deep understanding of the financial and operational issues that face businesses and, as a result, provides tailored solutions to bring the best possible outcome to his clients.
Jace takes a holistic approach, allowing him to plan for all aspects of his clients personal finances including their practice / business, investments and superannuation.
