HECS/HELP debt reduction Bill introduced

On 23 July, the Labor government introduced legislation aimed at enacting its election promise to reduce student debt by 20%. The Bill proposes to:

• provide a one-off 20% reduction to Higher Education Loan Program (HELP) debts and certain other student loans that are incurred on or before 1 June 2025;
• increase the minimum repayment threshold from $54,435 in 2024–2025 to $67,000 in 2025–2026; and
• introduce a marginal repayment system where compulsory student loan repayments are calculated only on income above the new $67,000 threshold rather than having it based on a percentage of the repayment income.

This complements measures enacted in the last Parliament which cap the level of indexation of student loans to the lower amount of either the consumer price index (CPI) or the wage price index (WPI). This is designed to ensure that loans will never be indexed by more than wages growth. Accordingly, the new threshold of $67,000 will be indexed for 2026–2027 and following years, but will never be increased by a rate exceeding wages growth.

Small and medium businesses now have more time to get tax returns right

If you run a small or medium business, you know that financial accuracy’s important but sometimes mistakes can happen or information can change. Starting this year, though, you have more time to amend your return and get things right.

Before this change, small and medium businesses generally had a two-year period from the date of their tax assessment to request an amendment. If you discovered an error or omission after this two-year window, correcting it could become a more complex process.

Now, for the 2024–2025 and later income years, small and medium businesses with an annual aggregated turnover of less than $50 million will have up to four years to request amendments to their income tax returns. This gives more time to review records, reconcile figures and address any oversights – but remember, it’s not an excuse to rush your first lodgment.

For earlier income years, the two-year amendment period still applies.

Your review period starts the day after the ATO issues your notice of assessment for the relevant income year. If no notice is issued, it starts from the date you lodged your return.

Here are some common scenarios where you might need to request an amendment:

• you made a simple error when entering figures;
• you forgot to report some income or capital gains, or claim legitimate deductions;
• you incorrectly claimed deductions or credits, or failed to claim ones you were entitled to; or
• circumstances changed after lodging and affected something you’d already reported, like a revised invoice or a business event you hadn’t factored in.

Whatever the reason, it’s important to correct any errors as soon as you identify them. For example, if an amendment leads to an increased tax liability, time-based interest and penalties might apply, so prompt action’s still beneficial.

There are no ATO fees for amendment requests, but processing can take a substantial amount of time.

If you discover an error that increases the tax you owe, you may face interest charges and penalties. However, voluntary disclosure of mistakes is generally viewed more favourably than errors discovered during an audit.

If the ATO’s already notified you of an audit or review, you must tell the assigned tax officer about any errors rather than lodging an amendment request.

Remember, the extended amendment period offers greater peace of mind, but good record-keeping and a proactive approach remain your best tools for managing your tax affairs effectively.

ATO interest charges no longer tax-deductible for businesses

Effective 1 July 2025, businesses can no longer claim income tax deductions for interest charges imposed by the ATO on unpaid or underpaid tax liabilities. This change applies to general interest charge (GIC) and shortfall interest charge (SIC) amounts incurred in income years starting on or after 1 July 2025.

Previously, businesses could deduct ATO-imposed interest charges on overdue tax debts, reducing the net cost of these charges. From 1 July 2025, this deduction is no longer available, meaning any GIC or SIC incurred from this date cannot be claimed as a tax deduction, regardless of when the underlying tax debt arose.

For example, if a business incurs GIC on an unpaid income tax liability after 1 July 2025, this interest expense is not deductible in its tax return for the 2025–2026 income year or subsequent years.

This legislative change is significant for businesses that manage cash flow by deferring tax payments, as the cost of carrying tax debt will effectively increase. Without the tax deduction, the real cost of ATO interest charges rises, making it more expensive to delay tax payments.

The ATO applies GIC on unpaid tax liabilities at a rate that is reviewed quarterly and compounds daily. As of the latest update, the GIC rate is 11.17%.

The removal of tax deductibility for ATO interest charges underscores the importance of timely tax compliance. Businesses should act promptly to adjust their financial strategies, ensuring that they are not adversely affected by increased costs associated with overdue tax payments.

Protect your super from pushy sales tactics: consider the risks and don’t rush to switch

Each new financial year, many of us take a closer look at our super funds’ performance, and you’re more likely to be targeted by salespeople, cold callers or social media ads offering “free super health checks” or to “find your lost super”. These offers can be the start of a high-pressure campaign to get you to switch super funds or make investments that may be unsuitable for you.

These calls and ads don’t always look like typical scams. Callers may sound genuine, claiming they want to help you find a better deal or locate lost super for free. Sometimes they’ll even refer you to a financial adviser to make the pitch sound more legitimate. But behind the scenes, there may be commission arrangements or other incentives that put their interests ahead of yours.

Here are some warning signs that a caller or an advertiser might not have your best interests at heart:

• Cold calls and unsolicited contact: If someone you don’t know contacts you about your super, they may have bought your contact information or obtained it by more questionable means.
• Pressure to act quickly: Remember super decisions are significant and should never be rushed.
• “Free” super health checks or lost super services: These offers are often a hook to draw you in. You can find your own lost super for free directly through the ATO.
• Promises of high or unrealistic returns: If an offer sounds too good to be true, it almost always is.
• Claims your fund is underperforming: Sales agents may exaggerate issues with your current fund to make you want to switch. Always verify negative claims directly with your super fund if you have concerns.
• Limited direct contact with a financial adviser: The caller might act as an intermediary, transferring you to an adviser only briefly. If you’re not having direct, in-depth conversations, they may not be acting in your best interests.
• Involvement of unlicensed people: Ensure anyone discussing your super is properly licensed and qualified to provide advice.

Remember, if a deal sounds too good to be true, it probably is. Promoters often play on your fears, hopes and your politeness to rush you into a decision.

How to protect yourself

• If someone you don’t know contacts you about your super, just hang up – don’t feel guilty or pressured to engage or explain.
• Don’t share personal or financial information with callers or on online forms unless you initiated the contact and are sure who you’re dealing with.
• Report suspicious calls to your super fund and ASIC. If you think your information has been compromised, let your current super fund know so they can help protect your account.
• Contact your super fund directly or seek guidance from a licensed, independent financial adviser before making any changes.
• You can always find lost super for free through the ATO; there’s no need to pay anyone to do it for you.

Your super is too important to risk. Take your time, ask questions and don’t rush into any decisions.

Will your super be affected when the $3 million balance tax hits?

Since February 2023, the Australian government has been planning to introduce a new tax of 15% on a portion of “earnings” relating to total superannuation balances over $3 million. The idea was to inject some equity in a system with generous tax concessions weighted in favour of the wealthy. The tax change was proposed to kick in on 1 July 2025.

Debate over issues concerning the non-indexed $3 million threshold and the taxation of unrealised capital gains then put the proposal on ice. The Bill containing the change is expected to be reintroduced now that Parliament has resumed. The Bill proposes to insert a new Division 296 into the Income Tax Assessment Act 1997, which is why you might hear the change called the “Division 296 tax”.

What will apply and when?

Currently, your entire super balance earnings in accumulation are taxed at 15%.

If your “total superannuation balance” (TSB – meaning all of your super, in all accounts, in accumulation and in pension phase) is under $3 million, the new additional tax would not apply.

The Division 296 measure would apply another 15% tax on a portion of estimated “earnings” relating to your TSB that’s over $3 million. This tax would be charged to you personally, rather than to the super fund. The “earnings” calculation is quite complicated, and doesn’t
reflect the actual earnings in your fund (which is why we’re using quotation marks for “earnings”).

For example, if you start the year with a $3 million property in your super fund, and it’s worth $3.5 million by the end of the year, a portion of the $500,000 unrealised capital gain would be taxed to you personally. If this was the only asset in all of your super, and you made no contributions or withdrawals during the year, and received no actual investment earnings, the Division 296 tax calculation could look something like this:

TSB minus $3 million threshold: $3,500,000 – $3,000,000 = $500,000

Percentage of TSB that the excess represents: $500,000 / $3,500,000 = 14.29%

Proportional calculation to get Division 296 taxable earnings: $500,000 × 14.29% = $71,450

Division 296 tax payable: $71,450 × 15% = $10,717.50

So, $71,450 in earnings would be taxed at the additional 15%, for an additional tax liability of $10,717.50.

Further, if your property didn’t earn any real income in your fund, then you’d need to be able to fund the tax payment from an alternative source if you didn’t want to sell the property. The calculation of “earnings” is complex and adds back any withdrawals and subtracts any contributions, to ensure people don’t make last-minute withdrawals specifically to reduce their “earnings”.

This is a very simplified example – transactions like receiving insurance payouts, withdrawing amounts under the First Home Super Saver Scheme and other factors could affect your “earnings” and therefore the calculated tax amount.

How do you pay?

The ATO will advise about your liability for 2025–2026 year during the following year. You’ll be able to pay out of pocket or directly from your super fund. If you have more than one fund, you can nominate from which fund you’d prefer to pay.

Before the new policy’s set in stone, if you think you may be affected it would be wise to seek advice before making any hasty decisions.

Get it right this tax time: don’t lodge your return too early

It might seem like a good idea to lodge your tax return as soon as the financial year ends – with costs of living rising you might be hoping for a refund, or you might just want to tick it off your to-do list for another 12 months. But the ATO has warned that early July lodgers are twice as likely to make mistakes on their returns, and recommends that tax returns be submitted later in July.

In 2024, over 140,000 people who lodged in the first two weeks of July had to lodge amendments, or had the ATO investigate and amend their returns to fix inaccuracies like income that hadn’t been declared properly.

Lodging towards the end of July allows time for information from employers, banks, health funds and government agencies to be automatically pre-filled in your tax return if you lodge your own return via myTax or use a registered tax agent. While some pre-filled data’s available from 1 July, most usually finalised by the end of the month. The ATO notes that early lodgers often make mistakes like not including interest from banks, dividend income, government agency income and health insurance details.

Take your time to properly prepare for lodging your returns while you wait for the relevant information to pre-fill, by:

• checking contact and bank details are correct, as updating these after lodging a return can cause delays;
• gathering all necessary records, including receipts, diaries and private health insurance details; and
• reviewing the ATO’s occupation guides to make sure you claim what you’re entitled to.

You should also check that your income statement from your employer/s (covering your year-to-date salary and wages, PAYG withholding tax and employer super contributions) has been marked “tax ready”.

Once it’s available, check that all the pre-filled information is complete and correct. Note that you can’t delete or remove pre-filled government benefit data for Allowance or Pension payments (eg Jobseeker, Age Pension, Disability Support Pension). If you find errors in that information, contact the information provider so they can send corrections to the ATO.

Whether you lodge early in July or wait until later to ensure that you have all of your pre-filled data, the ATO understands that mistakes can sometimes happen. If you realise you’ve made a mistake after lodging your tax return, you can fix errors or omissions once the initial lodgement has been processed by going through the ATO online amendment process (accessible through myGov) or by speaking with your registered tax agent.

Regulations have changed for buy now pay later services

If you’re one of the millions of Australians who use buy now pay later (BNPL) services, important changes are now in effect that will give you stronger consumer protections. Here’s what you need to know about the new law and regulations that apply from 10 June 2025.

BNPL services are now being regulated more like traditional credit products such as credit cards. Previously, BNPL services weren’t regulated under the National Consumer Credit Act, leaving a gap in consumer protection. But now, all BNPL providers need to hold an Australian credit licence and comply with consumer protection requirements.

This means your BNPL provider needs to:

• hold a credit licence (or have applied for one by 10 June 2025);
• be a member of the Australian Financial Complaints Authority (AFCA);
• follow responsible lending practices; and
• meet other consumer protection requirements.

These changes are designed to protect you while maintaining the benefits of BNPL services.

The new framework recognises that BNPL services are generally lower-risk than traditional credit products. Most BNPL arrangements will be regulated as “low cost credit contracts”, with modified requirements that balance consumer protection with the unique features of BNPL services.

Providers must meet responsible lending obligations when agreeing to a BNPL contract or credit limit increase for you, which generally includes seeking and verifying certain information about your financial situation and assessing whether their offering’s unsuitable based on that information. You can ask to see the assessment your provider makes about your credit contract or limit increase; they must provide you with a free, written copy on request.

You can verify if your BNPL provider is properly licensed using the Australian Securities and Investments Commission’s (ASIC’s) Professional Registers Search.

While BNPL services offer convenient payment options and support thousands of local jobs, these new regulations are designed to help prevent debt spirals and ensure you have proper protections when using these popular payment methods.

When someone dies: the tax to-do list

If someone close to you dies and you’re the one responsible for taking over their tax affairs, there are a number of steps you need to take to advise the ATO of their passing.

This starts with establishing your identity with the ATO as the deceased’s representative, and formally notifying the ATO of the death, with a death certificate of the deceased or a grant of probate or letters of administration.

To have full authority to manage the tax issues of someone who has died, you’ll need to be their authorised legal personal representative (LPR). A person’s LPR is usually the executor named in their will, or if no executor has been named, a court-appointed administrator (this can be the person’s next of kin).

To be recognised as an LPR for tax purposes, you’ll need a supreme court (in your state) to recognise that the deceased’s will is legal, allowing you as the executor to represent the deceased’s estate and distribute their assets according to the will.

Where there’s no will, a grant of letters of administration are issued to the person (this is often the next of kin) to manage the estate, and they are appointed as the administrator of the estate.

You will need to be aware of whether the deceased person carried on a business and, if they did, you’ll need to seek specialised legal or tax advice.

You also may need to lodge the deceased’s final tax return, known as the “date of death” tax return, and check if any other years’ tax returns are outstanding and arrange payment for those, with help from the ATO to access the deceased’s person’s tax information.

If the estate of the deceased receives any income from assets such as rental property or shares, and/or is due to claim any tax refund or franking credits that are owed, the estate is treated as a trust for tax purposes, and you will need to lodge a trust tax return.

You need to ensure that all tax liabilities have been paid, that credits owing to the deceased person and their estate have been received, and that all tax registrations (such as ABNs and registration for GST) have been cancelled.

After all of these requirements are met, you will then be able to distribute the assets of the estate to the beneficiaries following probate.

It’s important to be aware that finalising the administration of an estate can take six to 12 months, or sometimes longer.

Accrued leave: take a holiday or take the payment?

If retirement is on the horizon and you have a large amount of accrued leave, you may well be contemplating whether to take a big holiday now, or just take the lump sum payment when you retire. There are some tax, super and possibly social security implications you should consider.

Superannuation

You receive superannuation guarantee contributions from your employer on the pay you receive while you’re on holidays. However, no super guarantee is payable on payments of lump sum leave entitlements upon your retirement. You could increase your retirement savings by a nice little bonus by taking those holidays before you retire!

Taking a holiday now could also extend the time you can contribute to super.

If you’re aged 67 to 75 and are looking to contribute one last chunk of money to super after you retire, be aware of the “work test” that applies to claim a tax deduction for those super contributions. If you haven’t worked for 40 hours in a 30-day consecutive period in the financial year when you make the contribution, you don’t meet the work test that is required to claim a tax deduction for your personal super contributions.

However, there’s a once-off exception for people with less than $300,000 in super, which allows them to use the “work test exemption”. You can still claim tax deductions for your personal super contributions if you worked for 40 hours in a 30-day consecutive period in the financial year before the financial year of your contribution. This is designed for newly retired people to extend their eligibility for one more year.

By taking your holidays now (instead of taking your accrued leave as a lump sum payment), and clocking up 40 work hours in a month in the next financial year, you may be able to extend the time you have to contribute to super.

A lump sum payment of accrued leave is taxed in the year you receive it. When deferring retirement into a new financial year by taking leave, you may increase the cap for concessional tax treatment of employment termination payments like golden handshakes.

Additionally, you may have a lower marginal tax bracket in the new financial year, if you don’t have other taxable income after retiring.

If you’re looking to claim the Age Pension when you retire, a lump sum received on retirement won’t count towards the Centrelink income test, but it will be an assessable asset, depending on how you invest it. So taking that accrued leave as a lump sum could push some people over the assets limit to receive the Age Pension.

On the other hand, your pay while on holidays won’t be counted in determining whether you qualify for Age Pension after you retire.

In summary, taking leave can provide more super contributions, tax flexibility and additional leave accrual, while taking the entitlement as a lump sum at retirement may allow earlier access to social security and, in some cases, favourable tax treatment.

Speaking with your tax adviser about your personal situation, well in advance of retirement, can pay off in so many ways.

What happens when SMSF trustees breach super laws?

Setting up your own self managed super fund (SMSF) can have its benefits, but it also comes with significant obligations.

These include appointing trust members, trustees and a registered super fund auditor; valuing assets each year; paying levies and taxes; ensuring audits are conducted and minimum payments are made annually; and making lawful investments.

There’s a lot to keep on top of. If you’re a trustee and fail to comply with certain requirements under the super laws, your auditor will report the breach to the ATO within 28 days. This type of breach is known as a contravention.

Once you become aware of your contravention, you’re required to correct it as soon as possible, with the help of your auditor or your SMSF adviser if needed.

If the contravention continues to be unrectified, you can use the ATO’s “SMSF voluntary disclosure service”, and the regulator will take this into account in their final deliberations. Voluntary disclosure is a formal process involving completion of a detailed form and providing supporting documentation.

As the penalties can be quite serious, you may decide to try to mitigate the outcome by initiating an undertaking to remedy the contravention. You’ll need to document a timeframe and a breakdown of your proposed remedial action, and include strategies to ensure the contravention doesn’t recur.

There is a range of penalties the ATO can apply to a contravention depending on its severity, including:

• issuing a trustee or a director of a corporate trustee with a direction to rectify – this can lead to disqualification and/or the removal of the fund’s complying status;
• applying administrative penalties – fines of thousands of dollars can be imposed on trustees, which can’t be paid from the fund;
• where a trustee illegally accesses their super, including this accessed amount in their assessable income;
• issuing the SMSF with a notice of non-compliance, with severe tax consequences;
• disqualifying an individual from acting as a trustee or director of a corporate trustee, preventing them from becoming a trustee again;
• freezing the SMSF’s assets; and
• imposing civil and criminal penalties through the courts.

Winding up your SMSF in the event of a contravention will not stop the ATO’s compliance action.

When the ATO considers your SMSF contravention and the applicable penalties, it will take into account whether you intended to breach the law, how you communicated the contravention to the ATO and if you tried to repair it.

If it’s likely you have contravened a super law in your SMSF, the first step is to seek professional advice to ensure you keep your integrity as a trustee and the integrity of your fund intact.

Tax and your child’s money: what parents need to know

As a parent or guardian, it’s essential to understand how tax applies to your child’s money. If your child has a savings account or receives other income, you need to know how to help them manage their finances and meet their tax obligations.

Tax can apply to money your child receives, such as bank account interest or dividends from shares.

For tax purposes, a “minor” is an individual under 18 years of age at 30 June of the income year. Special tax rules for minors apply until they no longer meet this definition.

• Special tax rates for minors: For 2024–2025, for income of Australian resident minors:
• $0 to $416: no tax;
• $417 to $1,307: 66% of the amount over $416; and
• over $1,307: 45% of the total income.
• “Excepted income” and “excepted persons”: If your child’s income is excepted income, or they’re an excepted person, they’re taxed at the same rates as an adult. This means they can usually take advantage of the $18,200 tax-free threshold. Excepted income includes amounts like employment earnings and taxable pensions from Centrelink; excepted persons include children who work full-time, or have certain disabilities.
• Bank account interest: There are specific thresholds for children under 16, until the end of the calendar year they turn 16:
• Interest under $120 per year: Financial institutions generally won’t withhold tax.
• Interest between $120 and $420 per year: If the bank has the child’s date of birth or Tax File Number (TFN), tax usually won’t be withheld, and a tax return isn’t needed for this income alone.
• Interest of $420 or more per year: If a TFN is provided, tax won’t be withheld. Otherwise, the bank will withhold tax at 47%. For children aged 16 or 17 earning $120 or more in interest, providing their TFN prevents tax withholding.

Does my child need a tax file number?

There’s no minimum age to apply for a TFN, and it can be useful for children to have one.

If you need to lodge a tax return on your child’s behalf, or they need to lodge their own (eg to claim a refund of withheld tax or because their income requires it), they will need a TFN.

Financial institutions and share registries may withhold tax at the highest marginal rate (currently 47%) from interest or unfranked dividends if a TFN isn’t provided. If money and its earnings are genuinely your child’s, you should quote your child’s TFN. If you’re holding money as a trustee for your child without a formal trust, you’d quote your TFN. If there’s a formal trust, use the trust’s TFN.

Do I include the money in my tax return, or lodge a return for my child?

This depends on who the ATO considers the owner of the income. If you (the parent or guardian) provide the funds, control how they’re used and spend the earnings, that income is generally considered yours and should be declared on your tax return.

Your child may need a separate tax return if:

• the income’s genuinely theirs and tax has been withheld (eg from bank interest or dividends because no TFN was provided), and you want to claim a refund;
• for share income specifically, if your child owns the shares and their dividend income (plus any other income that needs to be declared) is more than $416 for the year, a tax return must be lodged on their behalf. Even if it’s $416 or less, a return can be lodged to claim refunds of tax withheld or franking credits; and
• generally, if their total “non-excepted income” (income subject to the higher minor tax rates) exceeds $416, a return is needed.

Managing your child’s financial beginnings and helping them learn to handle their money is an important process. Understanding these tax aspects can help ensure everything’s set up for them correctly.

Working out your WFH expenses this tax time

To be eligible to claim working from home (WFH) expenses, you need to be genuinely working from home to fulfil your employment duties, not just checking emails or taking occasional calls. You must also incur additional running expenses because of your WFH arrangement. These additional costs can typically include energy expenses for heating, cooling and lighting, home and mobile internet or data, phone expenses, and stationery or office supplies.

When it comes to calculating your deductions, you can choose the “fixed rate method” or the “actual cost method”. For both methods, you’ll need records that accurately track your WFH hours. You can keep a diary or timesheets covering a representative four-week period showing your usual work pattern, or you can maintain a record of your entire year’s WFH hours. You’ll also need documentation showing you’ve incurred additional expenses, such as receipts and bills, and be able to demonstrate the proportion that relates to work.

The fixed rate method simplifies your calculations by applying a set rate for each hour you work from home. For the 2024–2025 income year, this rate is 70 cents per hour. To calculate your deduction, simply multiply your total WFH hours by 70 cents. Remember, if you choose this method, you can’t claim additional separate deductions for expenses already covered under the fixed rate method, such as stationery supplies.

The actual cost method requires you to keep detailed records of all additional costs incurred while working from home. You’ll need to track your WFH hours and maintain comprehensive records for all your WFH expenses.

It’s important to understand what you can’t claim when working from home. This includes items your employer might provide at the office, such as tea or coffee or other general household items. You also can’t make a claim for employer-provided laptops or mobile phones, or expenses which your employer has reimbursed.

You can make separate claims for expenses not covered by either of the above methods, such as work-related technology and office furniture like chairs, desks, computers and bookshelves, as well as repairs or maintenance on these items.

If you use depreciating assets for both work and personal purposes that cost more than $300, you’ll need to calculate the work-related proportion and only claim that percentage as a deduction for the decline in value over the effective life of the item. For items costing $300 or less, such as keyboards or computer mice, you can claim an immediate deduction in the year of purchase rather than depreciating them over time.

For a work-related expense to be deductible, it must directly relate to earning your income.

The ATO has shared some recent eyebrow-raising work-related expense claims that were rejected: a mechanic tried to claim an air fryer, a microwave, two vacuum cleaners, a TV, and gaming equipment; and, even more ambitiously, a fashion industry manager claimed over $10,000 in luxury clothing and accessories in order to be “well presented” at work and events, dinners and functions.

Instant asset write-off extended to 30 June 2025

Announced as part of the 2024–2025 Budget, and now legislated, the $20,000 instant asset write-off limit has been extended for a further 12 months until 30 June 2025 to continue to provide support for small businesses.

The instant asset write-off enables eligible businesses to claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use. The write-off can be used for new and second-hand assets, and for multiple assets if the cost of each individual asset is less than the relevant limit.

To claim the instant asset write-off, a small business must use the simplified depreciation rules, and the write-off cannot be used for assets excluded from those rules. Eligibility criteria, the year in which you may use the instant asset write-off to claim an immediate deduction for an asset, and the threshold limits, have changed over time, and depend on:

• your aggregated turnover (the annual turnover of your business and that of any business entities that are your affiliates or connected with you);
• the date you purchased the asset;
• when it was first used or installed ready for use; and
• the cost of the asset being less than the limit.

To be able to take advantage of the $20,000 threshold for the 2024–2025 income year as a small business you will need to: have an aggregated turnover of less than $10 million; apply the simplified depreciation rules; and acquire the asset and first use it, or install it ready for use, between 1 July 2024 and 30 June 2025. The $20,000 limit applies on a per asset basis, so you can instantly write off multiple assets.

Assets valued at over $20,000 can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each year after that. Additionally, pool balances under $20,000 at the end of the 2024–2025 income year can be written off.

The simplified depreciation rules apply to most depreciating assets, including items like office furniture or equipment; computers; tractors or tools. However, the instant asset write-off doesn’t apply to certain depreciating assets, including assets leased out for more than 50% of the time on a depreciating asset lease; horticultural plants, including grapevines; software allocated to a software development pool; assets used in your research and development (R&D) activities; and capital works, including buildings and structural improvements.

Playing music in your business? Get your licensing sorted

Music can be a powerful tool in creating the right atmosphere for your business. However, it’s important to understand that most music is legally protected by copyright, meaning businesses need permission or a licence to play it in public settings.

When music is played in public spaces like businesses, it’s considered a public performance, which requires permission from the copyright owners. This is different from playing music at home, where no licence is needed. Failing to comply with this requirement can lead to legal action and potentially hefty fines. In fact, in 2018, a Melbourne bar owner was ordered to pay nearly $200,000 in damages for playing music without the proper licence.

Getting a music licence can be straightforward. The most efficient option is to obtain a licence through a music rights organisation such as OneMusic, which is a joint initiative of APRA AMCOS (the Australian Performing Rights Association and Australasian Mechanical Copyright Society) and PPCA (the Phonographic Performance Company of Australia).

OneMusic can provide a single licence covering the majority of commercially available music. A public performance music licence is the most common when playing music for customers or staff in businesses like shops, bars, cafes, gyms and salons.

The cost of a music licence varies based on your business type, size and how you use the music. Licences can start as low as $100 per year for small businesses, like a retail store under 50 square metres playing radio or TV. Larger businesses or those using streaming services may pay more.

Some small businesses may qualify for a complimentary licence as long as they employ fewer than 20 people; play music only through one radio or TV device, or via employee headphones; and, importantly, don’t play music for customers or the general public.

Music licence fees, like other business expenses, can generally be claimed as a tax deduction as long they are directly related to earning your assessable income.

By obtaining a licence, you ensure that music creators are compensated for their work. Licence fees collected by OneMusic are distributed to the rights holders, supporting songwriters, composers, and performers.

To ensure compliance, review the type of music you play and the source. If you use music from a background music supplier, check if they cover your OneMusic licence fees. If not, or if you use music from other sources, you’ll need to obtain a licence directly. Also, if your business has multiple locations, each one must be licensed.

ATO warns about misinformation on super changes circulating online

Are you worried about rumours claiming your super preservation age will change from 1 June 2025? Take a deep breath – the ATO has confirmed these claims are false.

The ATO has recently issued a warning about misleading information regarding supposed changes to superannuation preservation and withdrawal rules. Some of the misleading claims currently spreading online include:

• that the preservation age will increase from 60 years to 70 years by 2030;
• that lump-sum withdrawals will be capped at 50% of a person’s balance;
• that there will be new “phased withdrawal limits” for people in pension phase;
• that a “deferred access bonus” of 3% per year up to age 75 will be introduced; and
• that early access to super will face tighter eligibility criteria and capped withdrawals.

None of these claims are true. No such changes have been proposed by the Australian Government or Treasury, and none are in legislation.

Your super access rights

It’s important to understand when you can legally access your super, which is:

• when you reach preservation age and retire;
• when you turn 65, regardless of whether you’re still working; and
• if you’re between 60 and 65 and haven’t retired, you can start a transition to retirement income stream (TRIS), which allows you to receive a regular income from your superannuation.

For anyone born on or after 1 July 1964 their preservation age is 60. People born before this date will have a lower preservation age.

To satisfy the “retired” condition, you must have reached preservation age and ended a position of gainful employment. If your employment ended after you reached your preservation age, there are no further requirements. However, if your employment ended before reaching your preservation age, the trustee of your fund must be reasonably satisfied that you don’t intend to work for 10 or more hours each week.

Protecting yourself from misinformation

The ATO has observed websites attempting to harvest personal information such as Tax File Numbers, identity details and myGov login credentials under the guise of providing “super advice”.

To protect yourself:

• Always verify information through trusted sources like the ATO, ASIC’s MoneySmart or your super fund.
• Consult a registered tax professional or licensed financial adviser for personalised guidance.
• Be wary of “free expert” tax advice from unverified sources.
• Think twice before acting on information from social media or non-official websites.
• Check if tax professionals are registered with the Tax Practitioners Board before engaging their services.

What this means for your retirement planning

If you’re approaching retirement, you can rest assured that the established rules for accessing your super remain unchanged. You still have options for how to receive your benefits, including:

• taking a super lump sum;
• starting a super income stream; or
• using a combination of both approaches.

Remember that the tax implications of withdrawing your super depend on factors including your age, the amount withdrawn, and whether you receive benefits as an income stream or lump sum.

While it’s important to stay informed about genuine superannuation developments, be vigilant about the sources you trust. This misinformation often appears legitimate and targets people at a vulnerable time when they’re making major financial decisions. Articles and emails may look professional and authoritative, but they’re designed to spread fear and confusion.

ASIC warns of scammers impersonating Bunnings with fake investment bonds

If you’ve spotted what looks like an amazing investment opportunity from Bunnings recently, beware! The Australian Securities and Investments Commission (ASIC) has issued an urgent warning about scammers impersonating the retailer to promote fake “sustainability investment bonds”. These scammers claim that the investments will have suspiciously high returns (up to 9%) and are protected by the government, but this is entirely false.

The scam targets people through fake websites and direct spam emails, posing as a responsible entity or broker. The website features Bunnings branding and hyperlinks that direct back to the retailer’s genuine webpage. However, Bunnings does not offer bonds or any other investment products. Legitimate bonds are traded through licensed financial institutions, not retailers.

To avoid falling victim to scams like this one, remember the three key steps: stop, check and protect:

• Stop and think before acting.
• Check if the investment is legitimate and if the person or entity offering it is licensed or authorised to do so.
• Protect yourself by acting quickly if something feels wrong: contact your bank to stop any transactions and report any suspicious activity to Scamwatch.

Broadly speaking, bonds are generally considered a safer investment compared to stocks, offering regular interest payments. They are issued by governments or corporations, and when held to maturity, they return the face value of the bond.

If you’re interested in investing in bonds, visit the Moneysmart website to learn more about the different types, including government bonds and corporate bonds. You can also check the investor alert list there to see if the company or entity offering the investment is legitimate.

To report a scam or find more information about scams, visit the National Anti-Scam Centre’s Scamwatch website at www.scamwatch.gov.au.

Claiming tax deductions for vacant land

Hoping to claim tax deductions on your vacant land? You need to meet a number of strict conditions to claim for costs such as interest payments on relevant loans, land taxes, council rates and maintenance costs.

So, what is vacant land? To satisfy the ATO, there are two basic tests:

• the land doesn’t contain a substantial and permanent structure; or
• if it does, then the structure needs to be a residence that was constructed or substantially renovated while the owner held the land, but that residence either can’t lawfully be occupied, or hasn’t yet been rented or made available for rent.

Examples of a substantial and permanent structure include a homestead on a farm, a commercial garage, fencing, a silo or a woolshed. Conversely, a residential garage or shed, pipes and powerlines, residential landscaping or a letterbox are not seen as substantial and permanent structures.

A big shift in the tax approach to vacant land came with new rules introduced on 1 July 2019. These rules deny tax deductions claimed for costs incurred while owning vacant land, except in quite specific cases. Before the change of rules, owners of vacant land could claim a deduction for the costs of holding the land, if it were held for income-producing purposes or for carrying on a business to produce income.

There are three situations that will allow you to claim deductions on vacant land. You will be able to claim if:

• you are a particular type of entity (eg a corporate tax entity, a superannuation plan or a managed investment trust);
• the land is used in business or leased to another entity for their business – but in this case the land must not contain an existing residence or one under construction; or
• the land is used by you, an affiliated entity or your spouse in the business of primary production, as long as there’s no residence in existence or being constructed on the land.

If your land is considered vacant land but these particular situations don’t apply, then you will not have the opportunity to claim any deductions.

Importantly, the ATO recognises that exceptional circumstances outside your control may occur (eg a natural disaster or major building fire) resulting in the loss of the structure on your land, or that structure being disregarded. Under those circumstances, an exemption may apply, allowing deductions for holding costs of vacant land to be claimed for a limited period.

Made a mistake charging GST? Don’t panic

As a small business owner, you know how important it is to get your GST right. If you’ve realised you’ve incorrectly charged GST on a sale, don’t panic – there are steps you can take to rectify the situation.

First, let’s look at how this might have occurred:

• You treated something that’s not actually a sale as a taxable sale.
• You treated a GST-free or input taxed sale as a taxable sale.
• You miscalculated your GST liability, resulting in a higher amount reported on your business activity statement (BAS).

So what happens now? The key factor is whether you’ve passed on the excess GST to your customer.

In most cases, if you’ve charged GST and issued a tax invoice, it’s considered to have been passed on to the customer. In this situation, the excess GST is treated as correctly payable under the law, and the ATO cannot refund it to you directly.

Your options are to:

• Reimburse your customer: If you choose to reimburse the customer for the excess GST, you can make a decreasing adjustment on your next BAS to recover the amount. Your customer, if GST-registered, will need to make a corresponding increasing adjustment.
• Request a discretionary refund: In limited circumstances, you can apply to the ATO for a discretionary refund of excess GST that hasn’t been reimbursed to the customer. However, this is only granted in very specific situations where it wouldn’t result in a “windfall gain” for your business.

If you have clear evidence that you didn’t pass on the excess GST to your customer (which is rare), you can treat this as a GST error. You have two options: to correct it on a later BAS, or to revise the earlier BAS where the error was made.

Correcting GST errors on a later BAS is often simpler than revising an earlier period. However, this option’s only available if the later BAS is lodged within the review period for the earlier period when the error was made. For most small businesses (GST turnover under $20 million), you can correct debit errors up to $12,500 within 18 months of the due date of the original BAS. Remember too that you can’t correct an error to claim additional GST credits if the four-year time limit for claiming those credits has expired.

If you’re ever in doubt about your GST obligations or how to handle a specific situation, it’s best to consult a qualified tax professional or contact the ATO directly for guidance.

Making smart super investment choices

Choosing the right investment option for your superannuation is important for your retirement savings. It’s essential to understand the different types of investment options and their associated risks to ensure you choose the one that’s right for you.

Super funds typically offer a range of premixed investment options that usually have different asset allocations:

• Growth: These options primarily invest in shares or property and aim for high returns over the long term. They come with higher probability of short-term losses, so they’re generally suited to people with a longer investment horizon.
• Balanced: With about 70% in shares and property, balanced options strive for moderate returns with less risk than growth options. They offer a middle ground for investors who seek growth but prefer less volatility.
• Conservative: Investing primarily in fixed interest and cash, these options focus on preserving capital with lower returns.
• Cash: With 100% investment in cash or equivalent, these options offer stability and capital preservation, suitable for very risk-averse individuals or those close to accessing their funds.
• Ethical: These investments exclude companies that don’t meet certain ethical standards and vary in market risk, allowing you to align your investments with your personal values.

Some super funds offer single asset class investments (eg Australian shares or international shares) and you can choose what percentage you invest in each asset class yourself. Some “platform” style funds also let you pick direct investments. This can include investing in individual shares, exchange-traded funds (ETFs) or term deposits. Direct investing like this is not restricted to just self-managed superannuation funds.

Many super funds also offer lifecycle investment options, which automatically reduce your exposure to higher-risk growth assets as you age. These can be a good choice if you want to take a hands-off approach to your investments.

It’s important to consider your risk profile – essentially, your comfort level with potential investment losses in pursuit of returns. Here are some considerations:

• Risk tolerance: Determine how much market risk you’re willing to take. Are you comfortable with the possibility of short-term losses for higher long-term gains, or do you prefer stability?
• Investment horizon: The amount of time before you access your super can influence your risk tolerance. Longer horizons may allow for more aggressive investments, while shorter ones might necessitate a conservative approach.
• Standard market risk measure: Super funds provide a standardised risk rating that predicts how often an investment might deliver a negative return over 20 years. This measure helps compare the risk levels of different investment options.

Overall, choosing the right investment option for your super requires careful consideration of your individual circumstances and goals. Resources such as ASIC’s Moneysmart website can help you make an informed decision, and many super funds offer free guidance. It’s also a good idea to consider getting professional advice, for example from a financial adviser.

General transfer balance cap increases to $2.0 million

The December 2024 Consumer Price Index (CPI) number has been released, confirming that the superannuation general transfer balance cap will increase by $100,000 to $2.0 million for the 2025–2026 income year.

The transfer balance cap was introduced in 2017, and is a lifetime limit on the amount of superannuation that you can transfer into one or more retirement phase income streams. Earnings on superannuation in the retirement phase are currently tax-free and income or withdrawals after age 60 are also generally tax-free. The cap was introduced to more equitably distribute superannuation tax concessions and ensure that the superannuation system is sustainable over the long term.

Unlike other superannuation caps, such as contribution caps, the general transfer balance cap is not indexed in line with Average Weekly Ordinary Time Earnings (AWOTE), but is annually adjusted based on CPI in $100,00 increments.

The cap was $1.6 million from 2017 to 2021; $1.7 million from 2021 to 2023; $1.9 million from 2023 to 2024 and will be $2.0 million from 2025–2026.

A personal transfer balance cap applies to you as an individual when you start a retirement phase income stream for the first time. Your personal transfer balance cap will equal the general transfer balance cap at that point in time. So, if you start your retirement phase income stream on or after 1 July 2025, your personal transfer balance cap will be set at $2.0 million.

If you started an income stream before 1 July 2025, depending on the date, you would have a personal transfer balance cap of between $1.6 million and $1.9 million. If you didn’t use the full amount of your personal transfer balance cap at the time, a proportional increase may potentially apply to your personal transfer balance cap on 1 July 2025.

If you exceed your personal transfer balance cap, the excess must be withdrawn from the income stream and taken in cash or transferred back into your superannuation account, and an excess transfer balance tax would need to be paid. The ATO will generally notify you and send you an excess transfer balance determination to let you know you’ve exceeded your personal transfer balance cap.

Using ATO online services via your MyGov account can help you keep track of your personal transfer balance cap and your transfer balance account (including any excess over your cap), recording all the debits and credits that make up your balance.