May 2025 Tax & Business Update
- Adrian De Vito - CPA
- May 15, 2025
- 3 min read
Insights from your accounting team
As we approach 30 June, the ATO has ramped up its focus on trust distributions, succession planning, deductions, and compliance activities—especially for small businesses and SMSFs. Here’s a round-up of what business owners, trustees, and taxpayers should keep in mind this EOFY.
Key ATO Focus Areas
Trust Distributions & Succession Planning
Trustees must make valid distribution resolutions before 30 June. The ATO urges careful review of trust deeds, particularly income definitions, family trust elections (FTEs), and interposed entity elections (IEEs). Incorrect distributions may attract penalties such as the Family Trust Distribution Tax (FTDT) at 47%.
Succession planning is also under scrutiny—especially restructures and asset disposals. Be mindful of CGT events, Division 7A implications, and compliance when using family trusts or SMSFs as part of a succession plan.
Small Business & Employer Updates
$20,000 Instant Asset Write-Off
Businesses with turnover under $10M can immediately deduct eligible assets costing less than $20,000 (ex GST) between 1 July 2024 and 30 June 2025. The threshold applies per asset.
Employer Obligations: Are You Covered?
Employers must:
Withhold PAYG from wages
Pay super at 11.5% (increasing to 12% from 1 July 2025)
Report via Single Touch Payroll (STP)
Keep payroll and super records for at least 5 years
Foreign Exchange Rates Published
New ATO exchange rates are available for entities with foreign currency income or assets. Be sure to use the correct rates for the 2025 income year.
Compliance & Deductions
‘Wild’ Deduction Claims Denied
Recent ATO audits reveal failed deduction claims for luxury clothing, air fryers, and swimwear. To claim working from home expenses, keep detailed records and ensure claims align with ATO guidelines—especially when using the fixed (70c/hour) or actual cost methods.
GST Focus & Fraud Enforcement
Under “Operation Protego,” the ATO is cracking down on GST fraud. Businesses must register and correctly report GST, especially ride-sourcing and transport providers. Large businesses may also need to lodge a supplementary annual GST return following assurance reviews.
Key Checklists & Lodgments
EOFY Checklist for Trustees
Review trust deed income definitions
Identify valid beneficiaries
Ensure timely resolutions by 30 June
Avoid FTDT by checking FTE and IEE status
Keep accurate records—trustees can be personally liable
SMSF PAYG Instalment Variations
The 2025–26 PAYG instalments include a 4% GDP uplift. Trustees can vary instalments if they anticipate lower earnings.
SAR Due Dates for SMSFs
If your SMSF was registered before 2024 and uses a tax agent, the 2024 SAR was due 15 May. Overdue lodgments risk loss of concessional tax treatment.
ATO Guidance, Case Law & What We’ve Learned
Key Rulings & Updates
Financial advice fees: ATO outlines acceptable apportionment method (PCG 2025/1).
Electric vehicle charging: Plug-in hybrid vehicles included from 1 July 2024.
Shaw case: Substantiation not always required if claiming below reasonable limits.
Recent Cases
Subdivision not a business: A farmer’s land sales ruled as capital gains, not income.
Retired partner still taxed: Deferred WIP income taxed under partnership rules.
COVID-era claims allowed: Employee successfully claimed home office and car expenses due to split roles.
Other Notables
Closing or Selling a Business: Maintain contracts, valuations, CGT calculations, and meeting minutes to ensure smooth governance.
Parental Leave Super: From 1 July 2025, the government will contribute super on Paid Parental Leave.
New Business Owners: Use digital tools, choose the right structure, and lodge obligations on time to avoid penalties.
NFPs: Must lodge a self-review return annually to confirm tax-exempt status.
Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone.
If expert assistance is required, Contact the team @ Clear Accounting Solutions to run you through your options
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