Client Information Update 18/06/25

18th June, 2025

As we approach the close of the 2024/25 financial year, we would like to take this opportunity to highlight a number of important obligations, updates, and areas of ATO focus relevant to your business.

This communication covers the following key areas:

• 2024/25 Financial Year-End Obligations – A summary of essential reporting and compliance requirements to be finalised by year-end, including payroll, superannuation, and contractor-related responsibilities.

• What’s New for the 2025/26 Financial Year – An overview of upcoming changes that may impact your reporting processes, employee entitlements, and payroll systems from 1 July 2025 onwards.

• Areas of ATO Scrutiny – Insight into the Australian Taxation Office’s current compliance focus, particularly around contractor reporting, superannuation guarantee compliance, and payroll accuracy.

Timely action on these matters is critical to ensure compliance, avoid penalties, and maintain the integrity of your reporting obligations.

We encourage you to review the information provided under each section carefully. Should you need clarification or assistance in meeting any of these requirements, please don’t hesitate to contact our office.

2024/25 Financial Year-End Obligations

1. Single Touch Payroll (STP) Finalisation

You must complete your STP finalisation for all employees by 14 July 2025. This is a critical step in meeting your ATO obligations and ensures that employees receive accurate income summaries in their myGov accounts to complete their tax returns.

To finalise your STP:

• Ensure all payroll data for the year is correct and up to date.

• Process your finalisation event in your payroll software.

• Submit the declaration to the ATO via your software provider.

Support Resources:

• Xero: Payroll EOFY Guide

• MYOB: End of Payroll Year Tasks

• QuickBooks: Payroll EOFY Procedures

2. Contractor Payments – Your Reporting and Super Obligations

If you engage contractors, it is essential to determine whether they fall under employee classification for superannuation and PAYG withholding purposes.

In many cases, contractors who are paid for their labour may be entitled to superannuation even if they have an ABN. Failing to meet these obligations can result in compliance action and penalties.

To help assess your responsibilities:

• Employee or independent contractor | Australian Taxation Office 

• Superannuation guarantee eligibility decision tool | Australian Taxation Office 

We recommend conducting a review of all contractors engaged during the year to determine if any superannuation or withholding tax obligations apply.

3. Taxable Payments Annual Report (TPAR)

Certain business industries are required to lodge A Taxable Payments Annual Report (TPAR), detailing contractor payments. 

The TPAR is due by 28 August 2025 and can be lodged via your accounting software or via the ATO Business Portal.

Resources for relevant industries and lodging TPAR:

• Taxable payments reporting and contractors | Australian Taxation Office 

• Run and lodge the Taxable Payments Annual Report (TPAR) – Xero Central 

• Producing the Taxable payments annual report - MYOB Business - MYOB Help Centre 

• TPAR reporting in QuickBooks Online 

If you are unsure whether your business is required to lodge a TPAR, please contact our office for clarification.

4. WorkCover Annual Remuneration Reconciliation

Employers must complete an Annual Rateable Remuneration Reconciliation with their WorkCover insurer for the 2024/25 year. This involves declaring your actual rateable remuneration and providing an estimate for the upcoming 2025/26 year.

The deadline for lodging this reconciliation is 25 October 2025.

To lodge:

• Login | WorkSafe Victoria 

5. Superannuation Guarantee Contributions – Key Payment Dates

Superannuation contributions for the quarter ending 30 June 2025 must be paid by 30 June 2025 to be tax deductible in the 2024/25 financial year. Payments made after this date will be deductible in the following year and must be paid by 28 July 2025 to meet compliance obligations.

Super Guarantee Due Dates for 2025/26:

QuarterPeriodPayment Due DateQ11 July – 30 September28 October 2025Q21 October – 31 December28 January 2026Q31 January – 31 March28 April 2026Q41 April – 30 June28 July 2026

Please ensure that super payments are processed through a compliant clearing house in advance of the due dates, allowing sufficient time for funds to reach employees’ super funds.

6. Payroll Tax Annual Reconciliation (Victoria)

Victorian employers with annual rateable remuneration exceeding $ 900,000 must lodge their Annual Payroll Tax Reconciliation with the State Revenue Office by 21 July 2025.

This reconciliation confirms your payroll tax liability for the 2024/25 year and is required even if your business has made regular monthly payments throughout the year.

More information:

• SRO: Payroll Tax Annual Reconciliation

In Summary – Key Deadlines

Due DateAction Required30 June 2025Pay June quarter super to claim deduction for 2024/251 July 2025Super guarantee rate increases to 12%; 
Modern Award 3.5% wage increase applies14 July 2025Lodge Single Touch Payroll (STP) finalisation for all employees21 July 2025Lodge Annual Payroll Tax Reconciliation (Victoria)28 July 2025Final date to pay June quarter super (if not paid by 30 June)28 August 2025Lodge Taxable Payments Annual Report (TPAR)25 October 2025Lodge WorkCover Rateable Remuneration Reconciliation

What’s New for the 2025/26 Financial Year

As the new financial year approaches, you need to be aware of several important legislative changes and updates that may impact your business operations and compliance requirements. We recommend reviewing the details below and ensuring your systems and processes are updated accordingly.

1. Minimum Wage and Modern Award Increases

Effective 1 July 2025, the National Minimum Wage and Modern Award rates will increase by 3.5%. It is essential that your payroll system is updated promptly to reflect these new rates to avoid any potential compliance breaches or underpayments.

For further information, please refer to the Fair Work Commission announcement:
Fair Work – Annual Wage Review 2024-2025

2. Superannuation Guarantee (SGC) Rate Increase

From 1 July 2025, the Superannuation Guarantee rate will rise from 11.5% to 12%. While many payroll systems will update this automatically, we strongly recommend that you verify your payroll settings before processing the first pay run of the 2025/26 financial year to ensure compliance.  This is the final increase that has been set by legislation.

Additional details are available from the Australian Taxation Office:
ATO – Super Guarantee Rates

3. Payroll Tax Threshold Increase

Starting 1 July 2025, the Victorian Payroll Tax threshold will increase to $1,000,000 annually (or $83,333 monthly). Employers should ensure that payroll tax calculations, declarations, and payments reflect this new threshold.

More information can be found on the State Revenue Office website:
State Revenue Office – Payroll Tax

4. Changes to ATO Interest Charges Deductibility (GIC & SIC)

From 1 July 2025, General Interest Charges (GIC) and Shortfall Interest Charges (SIC) imposed by the ATO will no longer be tax-deductible. This change will affect how interest on unpaid or underpaid tax liabilities is treated for tax purposes and may impact your overall tax position.

Key considerations include:

• Interest is typically treated as incurred on the date the relevant assessment is issued, not when it accrues.

• If an assessment is issued before 1 July 2025, some or all of the associated interest charges may remain deductible.

• Assessments issued on or after 1 July 2025 will render the entire interest charge non-deductible, regardless of when interest accrued.

• The tax legislation provision allowing the deduction of GIC and SIC will be repealed and replaced by a new rule disallowing these deductions.

• The ATO retains discretion to remit these charges, but the tax treatment of any remitted amounts will differ based on the date incurred.

5. Updated Business Engagement Letters

Over the coming months, you will receive updated engagement letters from our office via our client management platform, Ignition. These letters will provide a clearer and more detailed description of the services we have been engaged to perform on your behalf.

We will roll these out progressively to all business clients and issue updates whenever additional services are engaged, ensuring transparency and clarity in our ongoing professional relationship.

Areas of ATO Scrutiny

The Australian Taxation Office (ATO) continues to focus on specific areas to ensure compliance and reduce tax risk. Please review the key points below to assist you in meeting your obligations and avoiding potential issues.

1. Sub-contractor Payments

The ATO is closely monitoring contractors who may not be fully reporting their income, particularly in industries covered by the Taxable Payments Reporting System (TPRS). This includes sectors such as building and construction, courier, cleaning, information technology (IT), road freight, and security, investigation, or surveillance services.

Businesses operating in these industries are required to lodge a Taxable Payments Annual Report (TPAR), detailing payments made to contractors. The ATO uses this data to cross-check contractors’ income declarations.

Unintentional underreporting can occur when contractors fail to reconcile pre-filled ATO data with their tax returns. For example, a contractor may omit income from clients who report payments through TPAR. The ATO may then issue amended assessments and, depending on circumstances, penalties.

When discrepancies arise, the ATO typically contacts the contractor or their tax advisor to encourage review and amendment of the tax return. If unresolved, the matter may escalate to a compliance review or audit, with potential interest and penalties applied.

2. Work from Home Expenses

Two methods are available to claim running expenses related to working from home:

• Actual Expense Method

• Revised Short-cut Method

For the 2024/25 income year, the revised short-cut method allows a claim of 70 cents per hour worked from home to cover energy (electricity and gas), internet, mobile and home phone expenses, and stationery/computer consumables. Additional expenses such as depreciation on equipment can be claimed separately.

To use the revised short-cut method, you must keep a detailed record of all hours worked from home. The ATO requires accurate diaries and does not accept estimates or short sample periods. For example, if you typically work from home on Mondays but attend an external meeting part of a day, your records should reflect the partial absence.

Supporting documentation (invoices, bills, credit card statements) must be retained for all claimed expenses. If costs are shared within a household, each contributor can claim their share.

3. Home-Based Businesses

If you run a business from home, you may be eligible to claim occupancy expenses, such as interest on a home loan or rent. However, simply working from home does not automatically entitle you to these deductions.

Be aware that claiming occupancy expenses may affect capital gains tax outcomes on the sale of your home, potentially reducing eligibility for a full main residence exemption.

4. Sharing Economy Income Reporting

Income earned from sharing economy platforms—such as Airbnb, Stayz, Uber, and similar—is required to be declared in your tax return.

Since 1 July 2023, platforms facilitating ride-sourcing, taxi travel, and short-term accommodation (under 90 days) have been mandated to report transaction data to the ATO. Other sharing economy platforms began reporting from 1 July 2024.

The combination of platform reporting and the ATO’s data-matching capabilities means undeclared income will likely trigger a “please explain” request from the ATO.

5. GST Reporting Requirements

The ATO is focusing on small businesses with a history of GST non-compliance, including late or missed payments, BAS lodgements, and incorrect reporting.

From 1 April 2025, affected businesses will be required to switch to monthly GST reporting for a minimum of 12 months. A review process is available for those who believe they do not have a compliance history warranting this change.

The ATO also encourages all small businesses to consider voluntary monthly GST reporting, which can improve cash flow management through smaller, more regular payments aligned with business cycles.

6. Rental Properties

Rental property owners remain a key ATO focus, with recent reviews indicating widespread errors in tax return claims. Common issues include:

• Repairs vs Capital Improvements: Repairs and maintenance are generally deductible immediately, while capital improvements are depreciated over time. Repairs must relate to wear and tear from renting and not initial purchase defects.

• Interest Deductions: Only interest on loans related to the rental property is deductible. Portions of loans used for personal expenses must be apportioned accordingly. The ATO matches financial institution data to identify over-claims.

• Co-owned Properties: Income and expenses must be claimed based on legal ownership shares, regardless of who pays the costs.

• Timing of Claims: Expenses can only be claimed for periods the property was genuinely available for rent. Personal use periods (e.g., holidays) are excluded from claims.

7. Cryptocurrency

With increasing Australian investment in cryptocurrencies like Bitcoin, the ATO is intensifying its compliance focus in this area.

Profits from cryptocurrency transactions may be subject to capital gains tax or treated as business income if trading is frequent or business-like.

The ATO collaborates with cryptocurrency designated service providers (DSPs) to receive bulk transaction data, aiding in identifying undeclared income. It is estimated that between 500,000 and one million Australians hold crypto assets.

Other Important Updates

1. Team Update

We are pleased to welcome Kerri back from maternity leave! She has resumed her role, working both in-office and remotely on Wednesdays and Thursdays. Kerri is reconnecting with clients and will be available for individual tax appointments from the third week of July. We look forward to her continued valuable contributions.

2. Invoice Payment Options

We now offer multiple convenient payment options for settling your invoice. These can be accessed via the secure payment link provided on your invoice:

• Electronic Funds Transfer (EFT)

• Credit Card (Visa/MasterCard) – 1.5% surcharge applies

• QuickFee Payment Plans – Flexible payment terms of up to 12 months

3. ATO Communications

The ATO has made frequent changes to its communication channels and preferences, which can override previous settings unpredictably.

• Individuals/Sole Traders: Important correspondence (Notices of Assessment, PAYG Notices, Payment Reminders) may be received via your myGov account.

• Companies/Trusts/Partnerships: Correspondence may be received via the ATO Business Portal.

Notifications may come by email, SMS, or push alerts, but you must log in to your ATO account to view the full messages. We recommend regular monitoring to avoid missing critical updates.

4. Audit Insurance

Further to previous correspondence, we will soon offer audit insurance through Accounting Insurance. This optional service covers professional fees associated with audits or reviews by the ATO and/or other government agencies.

Further details and an invitation to participate will be sent shortly. We encourage you to consider this option.