July 2025

As we start a new financial year, here’s a roundup of the key tax and compliance updates from the ATO that may impact you or your business:

Don’t Lodge Your Tax Return Too Early

Although it may be tempting to lodge your return as soon as the financial year ends, doing so can often lead to errors or the need for amendments. Many employers, banks and government agencies do not finalise their reporting until mid-to-late July.

The ATO reported that more than one in five early lodgers in July 2024 had to amend their returns due to missing or incorrect data - mostly from employers who had not finalised their Single Touch Payroll reporting. It’s best to wait until your income statement is marked “tax ready” to avoid delays or follow-up paperwork.

Super Guarantee Rate Increased

From 1 July 2025, the Superannuation Guarantee (SG) rate increased from 11.5% to 12%. Employers must ensure their payroll systems reflect the new rate.

ATO Interest Charges No Longer Deductible

From 1 July 2025, interest charges imposed by the ATO - such as the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) - are no longer tax-deductible for individuals and businesses.

Amendment Period Extended

Small businesses with an aggregated turnover of less than $50 million now have four years (previously two) to amend their income tax returns. This applies from the 2025 income year onwards.

$20,000 Instant Asset Write-Off Extended

The $20,000 instant asset write-off has been extended to 30 June 2025. Eligible small businesses can continue to immediately deduct assets costing less than $20,000 that are first used or installed ready for use by that date.

No Changes to PAYG Tax Tables

There are no changes to the PAYG withholding tax tables for the 2025–26 financial year. Employers can continue to use the existing withholding rates.

Bonus 20% Deduction for Employee Training

Small businesses can claim an additional 20% deduction for eligible external training provided to employees by registered training providers. This incentive aims to support workforce development while reducing tax liability.

Energy Efficiency Investment Incentive

Small and medium businesses may be eligible for a 20% bonus deduction for investing in assets or upgrades that improve energy efficiency. This applies to eligible expenditures incurred by 30 June 2025.

Future Individual Tax Rate Cuts

Although not effective this year, the following personal income tax cuts have been legislated:

• From 1 July 2026, the 16% tax rate will reduce to 15%

• From 1 July 2027, it will reduce further to 14%

  
  

ATO Compliance Focus on Small Business

The ATO has announced a renewed focus on compliance areas such as:

• Superannuation contributions

• GST reporting

• Record keeping

Small businesses are encouraged to review their internal systems to ensure compliance and avoid penalties.

If you have any questions about these changes or would like assistance applying them to your circumstances, feel free to get in touch.