Important Tax Update: New Legislation

The Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2025 has recently passed through both houses of Parliament, introducing key changes that we want to bring to your attention.

Key Changes in the Legislation

Removal of Tax Deductions for ATO Interest Charges:

• The Income Tax Assessment Act 1997 has been amended to disallow deductions for general interest charges and shortfall interest charges.

• This change applies to assessments for financial years starting on or after July 1, 2025.

  
  

What This Means For You:

• If the ATO charges you interest on any late payment or payment arrangements, you can no longer claim a tax deduction for this amount

Extended ATO Notification Period for Refunds:

• Amendments to the Taxation Administration Act 1953 extend the timeframe within which the ATO can notify taxpayers about decisions to retain refunds related to business activity statements (BAS). 

• Specifically, if your refund is related to a BAS credit, they now have 30 days to let you know that they are holding your refund.

• This measure aims to enhance compliance oversight and applies to refunds arising on or after the commencement date.

  
  

What This Means For You:

• It may take longer for BAS refunds to be issued to you, or they may be offset against other ATO debts that arise during this 30 day period

$20,000 Instant Asset Write-Off Extension:

• The $20,000 instant asset write-off for small businesses has been extended until June 30, 2025, under amendments to the Income Tax (Transitional Provisions) Act 1997.

  
  

What This Means For You:

• If your business turnover is <$10M, any single asset costing <$20K will be immediately deductible to your business, so long as it is installed and ready for use by 30 June 2025

• From 1 July 2025, this threshold reduces to $1K

Luxury Car Tax Adjustments:

• The fuel consumption threshold for a car to qualify as fuel-efficient under the A New Tax System (Luxury Car Tax) Act 1999 has been tightened to 3.5 litres per 100 kilometres.

• The luxury car tax threshold for the 2024–25 financial year is set at $80,567, with annual indexation adjustments to follow.

• These changes apply to supplies and importations of cars on or after July 1, 2025.

Important Updates on Personal Income Tax Thresholds

The following tax cuts, as proposed in the March 2025 budget, have now passed through parliament:

Thresholds ($)	Rates in 2024–25 and 2025–26 (%)	Rates in 2026–27 (%)	Rates in 2027–28 (%)
0 – 18,200	Tax free	Tax free	Tax free
18,201 – 45,000	16	15	14
45,001 – 135,000	30	30	30
135,001 – 190,000	37	37	37
>190,000	45	45	45

$3M Super Division 296 Tax Lapsed

The proposed $3M Super Division 296 tax has officially lapsed, following the election announcement this morning.

This tax was intended to impose an additional 15% tax on superannuation earnings, including unrealised earnings,  for individuals with a total superannuation balance exceeding $3M, beginning 1 July 2025.

This development is excellent news for clients with high superannuation balances, as you will continue to benefit from the current concessional tax treatment on superannuation earnings.

Implications and Next Steps

These legislative changes may have implications for your investment strategies, business operations and tax planning.

We encourage you to consider reviewing your current tax and cash flow strategies, and tweak your business practices to either avoid, or to take advantage of, the above changes.

As always please reach out to your Client Manager if you have any questions on how these changes impact you directly.