March 2025 Round Up
With the ATO implementing new compliance measures and the upcoming budget creating even more economic uncertainty, keeping tabs on the evolving regulatory landscape is crucial for business planning. Combined with wage theft laws that now pack a serious punch and some businesses moving to monthly GST reporting – your accounting and SMSF obligations have the potential to cause potential headaches for the unprepared. This month, we impact your business operations and explain strategic approaches to navigate the changing tax environment:
1. Monthly GST Reporting Changes Read the full article
2. Tax Administration 3.0 – How It Will Reduce Your Compliance Burden Read the full article
3. Market Changes and their Affect on Your Bottom Line Read the full article
Monthly GST Reporting Changes: What Business Owners Need to Know
Starting 1st April 2025, the Australian Taxation Office (ATO) is implementing changes to GST reporting requirements for selected small businesses. Around 3,500 small businesses with a history of non-payment, late or non-lodgment, or incorrect reporting will be moved from quarterly to monthly GST reporting.
Key Details of the Change
- This change specifically targets businesses with patterns of non-payment, late lodgment, or inaccurate reporting
- The monthly reporting requirement will remain in effect for at least 12 months
- Affected businesses will receive direct notification from the ATO by the end of March
- A review process will be available for small businesses who don’t believe they have a history of poor compliance
- Information about the review process, including objection rights, will be provided by the ATO
According to ATO Deputy Commissioner Will Day, “When GST is reported monthly rather than quarterly, it reduces the risk of falling behind.” The ATO views this initiative as part of their responsibility to create a level playing field for all businesses with the focus on helping small business owners get their tax and compliance right as part of their ‘Getting it Right’ campaign.
If you receive notification about this change, or would like to know more, please contact our office immediately so we can discuss your options, including the review process.
Tax Administration 3.0: Plans for Digital Changes to Reduce Your Compliance Burden
In a move to prevent debt, reduce cost and compliance burdens and ensure businesses have certainty that they’re meeting their tax obligations correctly, The ATO is continuing to develop its “Tax Administration 3.0” initiative.
Plans to move towards a more digitised future include:
- Encouraging more frequent reporting of tax obligations
- Developing digital solutions to help identify and address errors before lodgement
- Improving the use of third-party data to support compliance
- Streamlining the tax payment experience
- Easier calculation of PAYG installment through software integration
With the ATO actively engaging with the accounting and tax profession to design the future digital tax experience, Michael Morton, Assistant Commissioner at the ATO, emphasised that this transition will be gradual, describing it as a “multi-step, multi-journey approach requiring incremental advancements and continual adaptation.”
The ATO is currently seeking ideas from small businesses and tax professionals about how digital tools could improve record-keeping practices and help navigate tax complexities. Morton encourages businesses and advisors to share thoughts with professional associations or contact the ATO directly.
Budget 2025: What You Need to Prepare For
With the 2025-26 Federal Budget brought forward to March 25th, an election will be held in either March or May 2025, but no later than May 17th, 2025. This transition period brings several important considerations for businesses.
Legislation in Limbo: What’s still uncertain
The final parliamentary sitting of 2024 saw 32 bills pushed through, including seven directly affecting businesses. However, the Small Business Asset Write-Off, which would enable businesses with an aggregated turnover of less than $10 million to immediately deduct the full cost of eligible depreciating assets costing less than $20,000, remains uncertain. Without this measure, the threshold returns to $1,000. The removal of this measure creates planning challenges for SME’s as they have no confidence about the tax treatment of investments in assets they might be looking to make, or have already made, in the current financial year.
Confirmed Changes
Foreign Resident Capital Gains Changes
From January 1, 2025, significant changes apply to property sales by foreign residents:
- Withholding rate increased from 12.5% to 15%
- Previously only applied to properties valued at $750,000+
- Now applies to the sale of all Australian land and buildings by foreign residents, regardless of value
- The reforms apply to acquisitions made on or after January 1, 2025
Superannuation Increases
- The Superannuation Guarantee rate will increase to 12% on July 1, 2025
- Superannuation will be paid on Paid Parental Leave payments from July 1, 2025
Economic Factors to Monitor
Interest Rates
At the last Reserve Bank Board meeting, RBA governor Michele Bullock recognised the easing of headline inflation from 5.4% to 2.8% over the year to September 2024, but suggested that the economy still has some way to go before inflation is sustainably within the 2% to 3% target range. Major banks have different predictions for rate cuts:
- CommBank: February 2025
- ANZ and Westpac: May 2025
- NAB: June 2025
Cost of Living and Consumer Spending
The National Accounts released in early December took economists by surprise with living standards growing by a mere 0.2% in the September quarter – the expectation was much higher. Recent economic indicators show concerning trends:
- Discretionary spending increased only 0.1%
- The personal income tax cuts that came into effect from July 1, 2024 helped households, as did energy subsidies, but the impact is still working through the system
- Australia’s economy grew 0.8% through the year – the lowest rate since the COVID-19 affected December quarter 2020
- Economic activity in the Australian economy right now is heavily dependent on government spending
- The outlook for 2025 is “slow and steady”
The ‘Trump Effect’ on Australian Business
President Trump’s administration will hold both the presidency and Congress, with potential significant impacts for Australian businesses:
Tariff Policies and Trade Relations
On social media, Trump has stated plans for substantial tariffs creating concerns for Australian businesses because:
- China is Australia’s largest two-way trading partner, accounting for 26% of our goods and services trade with the world in 2023
- A Chinese economic slowdown would impact Australia and the region generally
- An immediate impact of the idea of a trade war has been the decline of the AUD/USD, currently sitting at around 64¢
Planning for Uncertainty
With the election approaching, the next step for Australian owned SME’s is to:
- Review capital expenditure plans considering the current uncertainty around asset write-offs
- Factor in the guaranteed superannuation increases for budgeting
- Monitor potential impacts from international trade tensions on your supply chain
- Ensure wage and superannuation compliance systems are robust
- Stay informed about post-election policy changes that may affect your industry
- Call us to clarify any of the above and plan for your specific circumstances
Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. 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. This article 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. Liability limited by a scheme approved under Professional Standards Legislation.
