Now is the time to ensure your tax and superannuation affairs, and those of your clients, are in order. This financial year coincided with an election year, which brought about a phase of uncertainty regarding potential changes and announcements in tax policy. Practitioners need to be aware of what’s law and what’s not when advising clients.
What’s happened this year?
As the end of the 2024–25 financial year approaches, on the eve of a new financial year, it is important to be across significant legislative changes and announcements. Now is the time to ensure your tax and superannuation affairs, and those of your clients, are in order.
The ATO has updated its areas of focus for 2024–25.
Personal income tax cuts
From 1 July 2024
The revised Stage 3 tax cuts apply from 1 July 2024 onwards. These cuts:
- reduced the 19% tax rate to 16%;
- reduced the 32.5% tax rate to 30%;
- increased the threshold above which the 37% tax rate applies from $120,000 to $135,000; and
- increased the threshold above which the 45% tax rate applies from $180,000 to $190,000.
From 1 July 2026
Additional tax cuts announced as part of the Federal Budget 2025–26 take effect from 1 July 2026. Though swiftly legislated just before the 2025 Federal election, these further tax cuts will not affect tax liabilities for 2024–25.
These further cuts reduce:
- from 1 July 2026 — the 16% rate that applies for those on taxable income from $18,201 to $45,000 to 15%; and
- from 1 July 2027 — the 15% rate to 14%.
Work-related expenses
The following changes are relevant for 2024–25:
- Car expenses:
- The cents per kilometre rate for 2024–25 is 88 cents per kilometre (the ATO has annotated LI 2024/19 to reflect that this rate will remain effective for 2025–26).
- PCG 2024/2 sets out the ATO’s administrative approach for electric vehicles, which enables claims at the rate of 4.2 cents per kilometre for 2024–25. Draft update PCG 2024/2DC proposes to extend this application to plug-in hybrid electric vehicles.
- Working from home expenses:
- The fixed rate method in PCG 2023/1 has been increased from 67 cents per hour worked from home in 2023–24 to 70 cents per hour for 2024–25.
- A contemporaneous record of actual hours must be kept to use this method.
Small business instant asset write-off
The temporary increase in the small business instant asset write-off (IAWO) to $20,000 has been legislated for 2024–25. This threshold applies to businesses with an aggregated annual turnover of less than $10 million for eligible assets that are first used or installed ready for use for a taxable purpose from 1 July 2024 to 30 June 2025.
The Government has announced that it will extend the temporary $20,000 IAWO for a further 12 months to 2025–26. This is yet to be legislated.
Division 7A
Loan repayments
The Division 7A implications of loans, payments or other benefits made by private companies to shareholders and associates of those shareholders need to be considered each year. This includes:
- ensuring loans made during 2023–24 are repaid or placed on complying loan terms before the company’s 2025 tax return is lodged;
- making minimum yearly repayments (MYRs) on complying loans (made in 2022–23 or earlier) by 30 June 2025;
- applying the increased benchmark interest rateof 8.77% when making MYRs for 2024–25;
- correctly declaring dividends by 30 June 2025 that are used by a shareholder to set off their obligation to make a MYR for 2024–25;
- checking whether any company assets have been used by a shareholder or their associate;
- reviewing the treatment of any unpaid present entitlements (UPEs) a company has to the income of an associated trust;
- managing legacy sub-trust arrangements for UPEs arising before 1 July 2022 or otherwise managing those UPEs; and
- considering whether the Commissioner’s discretion may be available to disregard a deemed dividend that has already arisen.
Bendel appeal on unpaid present entitlements
Those who control corporate beneficiaries that have UPEs with an associated trust will be closely monitoring the Commissioner’s application to the High Court for special leave to appeal the Full Federal Court’s (FCAFC) decision in Commissioner of Taxation v Bendel [2025] FCAFC 15. In that case, the FCAFC dismissed the Commissioner’s appeal from the finding of the then Administrative Appeals Tribunal in Bendel and Commissioner of Taxation [2023] AATA 3074 that a UPE of a corporate beneficiary was not a loan under section 109D(3) of the Income Tax Assessment Act 1936 (ITAA 1936).
On 19 March 2025, the ATO issued an interim Decision Impact Statement (DIS), which states that the ATO will continue to apply the law in accordance with its views set out in TD 2022/11. At the time of writing, the High Court has not yet decided whether the Commissioner’s application will be granted or refused.
In the meantime, trustees need to make decisions about distributions of trust income for the 2024–25 income year. Affected taxpayers need to carefully consider the ATO’s position against the decision of the FCAFC, as well as the potential consequences of special leave being granted or refused. This should also involve a consideration of possible implications under other laws, such as section 100A and Subdivision EA of Division 7A of Part III of the ITAA 1936.
myGovID renamed to myID
The Government’s Digital ID app, myGovID, was renamed in November 2024 to myID to reduce confusion with myGov. Users’ login details and identity strength remain the same, and users do not need to set up a new myID or reconfirm their details.
Suspicious emails or SMS containing links may be a scam. The ATO recommends using the highest online security strength to access ATO online services through myGov or the ATO app.
Foreign resident capital gains withholding changes
Effective from 1 January 2025, enabling legislation:
- increased the foreign resident capital gains withholding rate from 12.5% to 15%; and
- removed the $750,000 threshold below which withholding does not apply for transactions involving taxable Australian real property and certain indirect Australian real property interests.
Trust distributions
Trusts or other entities that have made a family trust election (FTE) or interposed entity election (IEE) should review their elections and ‘family group’ composition to ensure no unexpected family trust distribution tax (FTDT) liabilities arise. Distributions outside the ‘family group’ (defined by reference to the individual specified in the FTE) can trigger FTDT at the rate of 47%.
The Commissioner has no discretion in applying FTDT, which has an unlimited amendment period.
Also, if purported distributions to beneficiaries are not made by effective trustee resolutions, they may not have the intended effect under trust law or tax law.
Superannuation
Employer contributions
Employers can deduct contributions in 2024–25 only if the payment is ‘made’ by 30 June 2025 (this means the contribution must be received by the employee’s superannuation fund by that date). The ATO’s free Small Business Superannuation Clearing House (SBSCH) allows eligible employers to meet their SG obligations when the payment is received by the SBSCH (this concession does not apply to commercial clearing houses).
Personal contributions
Individuals seeking to claim a deduction for a personal contribution in 2024–25 need to:
- provide their fund trustee with a notice of intent to claim a deduction before the earlier of the day on which they lodge their 2025 return or 30 June 2026;
- receive a written acknowledgment of the receipt of the notice from the trustee;
- consider a range of circumstances that can invalidate a notice.
Contributions caps
The concessional contributions (CC) cap for 2024–25 is $30,000. An individual can carry forward any unused CC cap amounts from 2019–20 to 2023–24 to increase their 2024–25 CC cap where their total superannuation balance (TSB) is less than $500,000 on 30 June 2024.
The non-concessional contributions (NCC) cap for 2024–25 is $120,000. An individual who exceeds their NCC cap in 2024–25 is eligible to automatically apply the ‘bring-forward’ rule (up to $360,000) but only where they are under 75 years throughout the whole of 2024–25. The ability to make an NCC in 2024–25 is also subject to the individual’s TSB on 30 June 2024.
Reporting requirements for not-for-profit organisations
Reporting requirements for non-charitable NFPs with an active ABN mean they must submit an annual self-review return (SRR) to assess their eligibility for income tax exemption. The SRR for 2024–25 must be lodged by 31 October 2025 and can be submitted through Online services for business or by a registered tax agent.
An NFP that does not meet the eligibility criteria for income tax exemption will be considered taxable and will not be required to lodge the SRR. Instead, it will need to lodge an income tax return or notify the ATO if a return is not necessary.
Charitable NFPs with an ABN are tax-exempt only if they register as a charity with the Australian Charities and Not-for-profits Commission and receive formal endorsement from the ATO.
What’s changing from 1 July 2025?
Superannuation guarantee rate
The SG rate of 11.5% in 2024–25 increases to 12% for 2025–26. This increase applies to the ordinary time earnings of salaries and wages paid from 1 July 2025, irrespective of when the work was done or the pay period to which the payment relates.
Non-deductibility of GIC and SIC
General interest charges (GIC) and shortfall interest charges (SIC) will no longer be deductible from 1 July 2025. Charges that are incurred in income years starting on or after 1 July 2025 will not be deductible, irrespective of whether the tax liability to which the interest charges relate arose before or after 1 July 2025.
TASA changes
From 1 July 2025, small practices (100 or fewer employees) will be required to comply with eight new Code of Professional Conduct (Code) obligations under the Tax Agent Services (Code of Professional Conduct) Determination 2024 (Code Determination). Large practices (more than 100 employees) have been required to comply with these new Code obligations since 1 January 2025.
Registered tax practitioners must comply with eight additional Code obligations, including taking required action when false or misleading statements are made, keeping proper client records, maintaining quality management systems and keeping clients informed.
A range of resources from the Tax Practitioners Board is available to support practitioners and help them understand their new obligations. It is important for practitioners to review and update their processes, procedures, and practices to ensure they are compliant with the new Code obligations before 1 July 2025.
Luxury car tax change
The definition of a fuel-efficient car has been changed with effect from 1 July 2025 by reducing the maximum fuel consumption for a car to be considered fuel-efficient for luxury car tax purposes from (currently) 7 litres per 100 kilometres to 3.5 litres per 100 kilometres.
Proposed Division 296 tax
The Government proposes to introduce a new tax from 1 July 2025 that would mean individuals with a TSB of more than $3 million at the end of the 2025–26 financial year would be subject to a 15% tax on earnings attributable to that part of their balance that exceeds $3 million. While there are concerns that the $3 million threshold is not proposed to be indexed, of greatest concern is the proposed taxation of unrealised gains under the measure.
The enabling legislation that proposes to insert new Division 296 into the Income Tax Assessment Act 1997 (ITAA 1997) remains before the Senate and will lapse immediately before the commencement of the 48th Parliament. However, it is expected that a new bill giving effect to this measure will be introduced into the Parliament.
