The tax rate for the $18,201-$45,000 tax bracket will reduce from its current rate of 16%, to 15% from 1 July 2026, then to 14% from 2027-2028. The saving from the tax cut represents a maximum of $268 in the year 2026-2027 and $536 from the 2027-2028 year.
ENERGY REBATE EXTENDED
The 2025-2026 federal budget extended energy rebates. From 1 July 2025, households and small businesses will be eligible for a further $150 energy rebate until the end of the 2025 calendar year. The rebates will automatically apply to electricity bills in quarterly instalments.
GIG ECONOMY INCOME
It’s essential that any income (including money, appearance fees, and ‘gifts’) earned from platforms such as Airbnb, Stayz, Uber, YouTube, etc., is declared in your tax return.
The tax rules consider that you have earned the income “as soon as it is applied or dealt with in any way on your behalf or as you direct”. If you are a content creator for example, this is when your account is credited, not when you direct the money to be paid to your personal or business account. Squirreling it away from the ATO in your platform account won’t protect you from paying tax on it.
Since 1 July 2023, the platforms delivering ride-sourcing, taxi travel, and short-term accommodation (under 90 days), have been required to report transactions made through their platform to the ATO under the sharing economy reporting regime so expect the ATO to utilise data matching activities to identify unreported income.
Other sharing economy platforms have been required to start reporting from 1 July 2024. If you have income you have not declared, do it now before the ATO discover it and apply penalties and interest.
DIVISION 296 SUPER TAX
Division 296 super tax is a Federal Government proposal to impose an extra 15% tax on some superannuation earnings for individuals if their total superannuation balance (TSB) is over $3 million as at 30 June of the relevant income year.
This measure is not yet law and must still pass both Houses of Parliament. At the time of publication, the start date had not been confirmed, although the Government was originally hoping that the measure would apply from 1 July 2025, with the first tax bills to be sent out sometime after 30 June 2026.
While we are waiting to see whether the measure will become law, let’s assume for the moment that the Government passes legislation which is consistent with the Government’s announcements to date. If so:
- If your TSB is over $3 million at 30 June, a portion of your annual superannuation earnings above that threshold will be taxed at an additional 15%.
- The tax is assessed to you personally and can be paid from your super or your own funds.
- Superannuation earnings for this purpose reflect the increase in your net super balance for the year, adjusted for certain contributions (e.g., inheritance via death benefit pension) and withdrawals.
- Some exclusions apply: children on super pensions, structured settlements (personal injury), and the deceased.
It is important to remember that your TSB is the aggregate of all Australian superannuation interests (including balances with APRA funds, SMSFs and defined benefit schemes) held at the end of the income year.
If the start date is 1 July 2025, then the first test date will be 30 June 2026. An individual’s TSB at this date, and each following 30 June, will determine whether they will have a Division 296 tax liability for that income year. Only where the individual has a TSB on 30 June in excess of $3 million will they have a Division 296 tax liability for that income year.
WORKING FROM HOME DEDUCTIONS
There are 2 ways you can calculate your deduction for additional expenses you incur by working from home - the fixed rate method or the actual cost method.
To claim a working from home deduction, you must be working from home to fulfil your employment duties (not carrying out minimal tasks), and you must have records to prove you incurred additional expenses due to working from home.
Using the fixed rate method allows you to claim 70 cents (2024–2025 tax year) per work hour for every hour you work from home and covers your additional running expenses that are often difficult to apportion, like internet, phone usage, electricity and stationery. You can’t then claim these items separately elsewhere in your tax return.
To claim using the actual cost method, you must have records of all the expenses you claim, and the work-related use of your expenses to back up your deduction.
INCREASE TO LUXURY CAR TAX THRESHOLD FOR 2025–2026
From 1 July 2025, the luxury car tax threshold will remain at $91,387 for fuel-efficient vehicles and $80,567 for all other vehicles. The car limit threshold will also remain at $69,674.
The definition of a fuel-efficient vehicle will also change, affecting vehicles with a fuel consumption rate between 3.5 and 7 litres per 100km, but the previous definition will apply in certain situations.
BUSINESS
THE FINAL SUPER GUARANTEE (SG) RATE INCREASE IS COMING ON 1 JULY 2025
The SG rate will increase from 11.5% to 12% on 1 July 2025. The 12% rate will need to be applied for all salary and wages paid to eligible workers on and after 1 July 2025. This is even if some, or all, of the pay period it relates to is before 1 July 2025.
From 1 July 2025 and onwards, the minimum SG rate will remain at 12%.
As an employer, it's compulsory to pay your eligible employees super guarantee (SG) at a minimum of 4 times a year (quarterly super payment due dates are 28 October, 28 January, 28 April and 28 July). If you don't pay the required SG amount in full, on time and to the right super fund by the quarterly due date, you must pay the super guarantee charge and lodge a super guarantee charge statement (SGC) with the ATO. If you don’t lodge the SGC statement with the ATO within one calendar month after the SG due date, you may face penalties up to 200% of the SGC. The missed or late super payments are no longer tax deductible.
A clearing house distributes super contributions to your employees' funds on your behalf. SG payments made to a commercial clearing house before the SG due date may not reach the super fund until after the due date.
Your employee's super contribution is only considered 'paid' on the date it's received by the super fund. Not the date it's received by the clearing house. It's important that you leave enough time for your SG payments to reach the super fund and allow for their processing timeframes.
However, if you use ATO’s Small Business Superannuation Clearing House, payments may be considered 'paid' on the date they're received. Check the processing timeframes required by your clearing house to ensure your payments will be processed before the payment due dates.
LUMP SUM E REPORTING CHANGES
The way you treat and report back payments is changing. From 1 July 2025, the $1,200 threshold for Lump Sum E will be removed. Currently, if a back payment accrued more than 12 months ago and exceeds $1,200, you need to report this as Lump Sum E in your Single touch payroll (STP) reporting.
From 1 July 2025, the $1,200 threshold will be removed. This is because the law around lump sum payments has changed. It means that you should report all back payments which accrued more than 12 months ago as Lump Sum E in your STP reporting, regardless of the amount.
To work out how much to withhold on a back payment, you should continue to refer to the tax table for back payments, commissions, bonuses and similar payments. This tax table will be updated to reflect the change in June 2025.
$20,000 INSTANT ASSET WRITE-OFF FOR 2024–2025
The instant asset write-off limit is $20,000 for the 2024-2025 income year.
If your business has an aggregated annual turnover of less than $10 million and uses the simplified depreciation rules, you may be able to use the instant asset write-off to immediately deduct the business part of the cost of eligible assets:
The full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose between 1 July 2024 and 30 June 2025. New and second-hand assets can qualify, although some exclusions and limits apply.
If you claimed an immediate deduction for an asset’s cost under the simplified depreciation rules in an earlier income year, you can also immediately deduct the first improvement cost for that asset if it is incurred between 1 July 2024 and 30 June 2025 and less than $20,000.
The $20,000 limit applies on a per-asset basis, so you can instantly write off multiple assets if the cost of each asset is less than the limit. The usual rules for claiming deductions still apply. You can only claim the business part of the expense, and you must have records to prove it.