5 Changes in 2025 that the ATO Doesn't Want You to Know

Davie Mach
6 Jul 202511:53

Summary

TLDRThis video highlights five key tax changes in Australia that could significantly impact individuals and businesses. The changes include the removal of tax deductions on late or underpaid taxes, the introduction of payday super contributions in 2026, a new tax rate on super balances over $3 million, mandatory e-invoicing for small businesses, and a $1 billion boost to the ATO for increased tax enforcement. The speaker, Dave Mack, explains these changes in detail, offering advice on how to prepare and stay compliant with the ATO's new regulations.

Takeaways

  • 😀 You can no longer claim tax deductions for ATO interest charges on late or underpaid taxes. This increases your out-of-pocket costs when paying GST, income tax, or FBT late.
  • 😀 The government aims to raise $500 million by removing these tax deductions, as it encourages people to pay taxes on time and reduces reliance on the ATO as a loan provider.
  • 😀 Payday Super will be mandatory starting July 1, 2026, meaning employers must pay superannuation at the same time as wages, within 7 days of the payday.
  • 😀 If you're a business using payroll software like Xero, you're already set up for Payday Super. Otherwise, start checking if your system supports it to avoid complications.
  • 😀 There’s a new 30% tax rate on superannuation balances over $3 million. This only applies to earnings above the threshold and includes unrealized capital gains.
  • 😀 The new super tax is controversial due to its application on unrealized gains, which means you could be taxed even on assets you haven’t sold yet.
  • 😀 The super tax threshold of $3 million is not indexed to inflation, meaning its real value will decrease over time, impacting more people as the years go by.
  • 😀 E-invoicing will become mandatory for small businesses as part of the government's effort to streamline business operations and reduce tax fraud. Businesses will need to provide e-invoices if requested via the Peppol network.
  • 😀 With additional funding of $1 billion, the ATO will intensify audits and compliance efforts, targeting large businesses, tax avoidance, and the shadow economy.
  • 😀 If you're behind on your tax returns or have outstanding debts, it's better to address these issues proactively with the ATO or an accountant to avoid more severe consequences down the line.

Q & A

  • What is the first major tax change mentioned in the script?

    -The first major tax change is the removal of the ability to claim deductions for interest on late or underpaid taxes. This includes both general interest charges and shortfall interest charges from the ATO.

  • How does the removal of interest deductions affect individuals and businesses?

    -Without the deduction, individuals and businesses will have to pay the full amount of interest charges. For example, a business charged $4,000 in interest would previously pay only $3,000 after a tax deduction. Now, they will pay the full $4,000.

  • Why has the government removed these interest deductions?

    -The government aims to encourage timely and accurate tax payments, prevent businesses from relying on the ATO as a 'bank,' and lower the ATO's tax debt, which currently stands at $15 billion.

  • What is 'payday super' and when will it come into effect?

    -Payday super is a change that requires employers to pay superannuation at the same time as wages, rather than quarterly. This change will come into effect on July 1, 2026.

  • How can businesses prepare for the payday super changes?

    -Businesses should check whether their payroll software supports the payday super requirement. If not, they may need to upgrade their software, like using Zero, which can handle auto super payments.

  • What tax change has been introduced for super balances over $3 million?

    -A new 30% tax rate applies to earnings above $3 million in superannuation funds. This includes unrealized gains, such as increases in the value of assets that haven’t been sold.

  • How does the 30% tax rate on superannuation earnings work?

    -The 30% tax applies to the proportion of earnings exceeding $3 million. For example, if a person has $4 million in super and earns $400,000, the excess $100,000 will be taxed at 30% instead of the usual 15%.

  • What is the main criticism of the new tax on super balances over $3 million?

    -The main criticism is that the tax will also apply to unrealized gains, meaning individuals will have to pay taxes on assets that haven’t been sold or cashed in, leading to potential asset sales to cover the tax bill.

  • What is the e-invoicing rights initiative?

    -The e-invoicing rights initiative is a government-led program that mandates businesses to accept requests for electronic invoices through the Peppol network. This initiative aims to standardize and digitize invoicing practices.

  • How will e-invoicing affect small businesses?

    -Small businesses will be required to comply with requests for e-invoicing from trading partners. This means that if a partner requests an e-invoice via the Peppol network, the business must provide it.

  • How is the Australian Taxation Office involved with the Peppol network?

    -The ATO administers the Peppol network but does not have access to the invoices themselves. The network is a standardized framework to exchange invoices digitally, providing faster and more secure transactions.

  • What is the government's new initiative to enhance tax compliance?

    -The government has allocated $1 billion over four years to enhance tax compliance and enforcement. This includes funds for the tax avoidance task force, shadow economy compliance program, and the personal income tax compliance program.

  • What advice is given to individuals and businesses regarding overdue tax returns or debts?

    -Individuals and businesses with overdue tax returns or debts should prioritize lodging them as soon as possible. It's better to voluntarily come forward and arrange a payment plan with the ATO than to wait for an audit or penalty.

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Tax ChangesAustralia TaxesSuperannuationE-InvoicingATO UpdatesFinancial AdvicePayroll SoftwareTax ComplianceBusiness Taxes2025 ChangesTax Deductions
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