| DEDUCTION FOR ATO INTEREST TO CEASE From 1/7/2025, tax deductions for interest on late payments and shortfalls due to amendments will no longer be deductible. Any interest charged to 30/6/25 will still be deductible. The current ATO interest rate is 11.17%. With the loss of the interest deduction, clients may wish to seek cheaper financing arrangements if available, such as drawing down on mortgage facilities. INSTANT ASSET WRITE OFF As part of the recent budget announcements, the instant asset write off for small businesses has been extended to 30/6/25. Labor has pledged to extend the write off until 30/6/26, so hopefully legislation will be passed in due course. Note the cap applies to business with a turnover of under $10m and assets must be installed and ready for use by 30/6/2026, assuming the period is extended. SGC AUDITS With more robust reporting systems, the ATO is capturing far more data on superannuation contributions, and we are seeing increased activity on SGC audits. The law is inflexible and at present there is little room for negotiation with the ATO on SGC matters. Compliance can be an expensive exercise with both compliance and penalty costs, including contributions being disallowed as a deduction where they are deemed late. Audit adjustments are being made for payments late for as little as one day. Allowances are not made for clearing house delays, so if you pay on the due date of the 28th of the month, it is almost certain your payment will be late. We recommend clients pay SGC a few days early to ensure compliance and avoid the costs associated with SGC reviews. ATO TARGETED FOCUS AREA ATO recently updated the key risk areas that its review would focus on for Private Wealth groups. Such areas include division 7A compliance, capital vs revenue classification on real property disposal, GST compliance on property and construction, and succession planning. DIVISION 296 TAX ON SUPERANNUATION BALANCES OVER $3M With Labor winning the election, this is firmly back on the agenda. It is expected Labor will refuse the Greens amendment to lower it to $2m, but it is predicted to be introduced in similar form to the initial proposal. IF you require us to review the potential impact and see if there are any available strategies, please contact our office. |
| Important: Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Client Alert is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. |
