As the 2025 financial year draws to a close, tax planning has become increasingly complex due to the timing of the upcoming Federal Election. The election’s outcome will significantly influence whether proposed legislative measures move forward or remain on the shelf, creating a period of uncertainty for individuals and businesses alike. What are the tax implications of the upcoming federal election.
While many proposed changes remain in limbo, there are still several confirmed updates and key areas that demand your attention now. To help you navigate this period of transition and prepare for the year-end, we’ve broken down the tax measures that are already in place, those that are still under review, and the actions you should consider taking now.
Confirmed Tax Measures
- Instant Asset Write-Off Extended
The instant asset write-off has been extended to 30 June 2025 for eligible small businesses (turnover < $10 million). Assets costing less than $20,000 can be immediately deducted in the year they’re first used or installed, including both new and second-hand items.
Action: Plan major asset purchases before 30 June to maximise deductions and improve cash flow.
- Interest Charges No Longer Deductible
From 1 July 2025, General Interest Charges (GIC) and Shortfall Interest Charges (SIC) imposed by the ATO will no longer be tax-deductible. With GIC rates currently at 11.17% p.a., overdue tax debts are set to become more costly.
Action: Address outstanding ATO debts now and consider setting up a payment plan to avoid these non-deductible charges.
- Personal Income Tax Cuts
Parliament passed individual tax rate reductions set to commence from 1 July 2026 and 1 July 2027. The rate for income between $18,201 and $45,000 will reduce to 15%, then 14% respectively.
Action: No immediate action is needed, but keep an eye on changes if the Coalition introduces earlier relief through alternative policies like a fuel excise cut.
Proposed (Unpassed) Tax Measures
- Superannuation Tax on Balances Over $3 Million
Division 296 proposes an additional 15% tax on earnings attributable to the portion of super balances exceeding $3 million, starting 1 July 2025. This includes unrealised capital gains.
Action: Hold off on additional contributions or withdrawals if your super balance is near or above $3 million until post-election clarity.
- Payday Superannuation
Draft legislation would require employers to pay Super Guarantee contributions within 7 days of wage payments from 1 July 2026, replacing the current quarterly schedule.
Action: Evaluate your payroll systems and cash flow strategies to prepare for more frequent super payments. Also, plan for the SG rate increase to 12% from 1 July 2025.
- Alternative Tax Cuts and Fuel Excise Relief
While the current government plans to cut personal tax rates from 2026, the Coalition has proposed halving the fuel excise for a year instead, to provide more immediate cost-of-living relief.
Action: Monitor policy developments closely—fuel-based businesses, in particular, may see operational cost changes if excise relief is implemented.
- Trusts and UPEs under the Microscope
The ATO is intensifying its audit activity around trusts, particularly distribution resolutions and Division 7A issues. The Bendel case has created legal ambiguity over Unpaid Present Entitlements (UPEs), which the ATO is contesting in the High Court.
Action: Defer decisions on 30 June 2025 trust distributions until more legal clarity is available. Consider working closely with advisors to ensure compliance and flexibility amid ATO scrutiny.
What’s Next?
To support your planning efforts, we’ll be releasing a detailed year-end tax guide and checklist shortly after the Federal Election results are in. This will include updated insights based on the election outcome and any legislative developments.
Conclusion
Tax planning for the end of FY2025 is unfolding in a uniquely fluid environment. With confirmed measures to act on now and several significant proposals awaiting political clarity, it’s essential to stay proactive and flexible. Whether you’re a business owner managing super obligations or an individual navigating potential changes to your personal tax or superannuation, informed planning today can help safeguard your financial future tomorrow.
Stay tuned for our comprehensive year-end guide and, in the meantime, connect with your tax advisor to position yourself—and your business—for success no matter what the election brings.
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