Tax tips, policy updates, and a look at the local and global economy

Please note from 1st July 2025 All ATO Interest Including Shortfall Interest & General Interest Charges are no longer tax deductible.

As tax time draws near, we know your newsfeeds—and inboxes—are buzzing with headlines that impact individuals, business owners, and investors alike. At [Your Firm Name], we aim to cut through the noise, helping you understand what’s important and how it may affect you. In this edition, we break down key budget measures, the Labour government’s priorities, tax-time reminders, and broader economic trends. If there’s a topic you'd like us to explore in future editions, let us know!

Labour’s Victory: What It Means for You

With Labour securing a majority in the House of Representatives, several policy measures are now in motion. Here's what you need to know:

For Individuals

Personal Income Tax Cuts: The 2025–26 Federal Budget includes income tax cuts from 1 July 2026, with another round from 1 July 2027.

• The tax rate on income from $18,201–$45,000 will reduce from 16% to 15% (2026–27) and then to 14% (2027–28).

• Maximum savings are $268 in 2026–27 and $536 from 2027–28.

• Legislation passed on 26 March 2025.

$1,000 Instant Work-Related Deduction: A simplified tax deduction of $1,000 is available for workers earning labour income.

• If your actual deductions are greater than $1,000, you can still claim them the traditional way.

• Those earning only business or investment income won’t be eligible for this shortcut.

• Additional non-work-related deductions can still be claimed.

Energy Rebates Extended: From 1 July 2025, eligible households and small businesses will automatically receive a further $150 rebate on energy bills, paid quarterly through to the end of the year.

Cheaper Home Batteries: Households can access a 30% discount on installed battery costs (approx. $4,000 savings) from 1 July 2025. This is an expansion of the Small-scale Renewable Energy Scheme.

5% Deposit Scheme for First Home Buyers: A significant expansion of the Home Guarantee Scheme:

• Open to all first home buyers (no income caps or place limits).

• Allows purchases with a 5% deposit without needing Lenders Mortgage Insurance.

• Must be Australian citizens or permanent residents, and owner-occupiers.

Superannuation

The proposed Division 296 tax—which would apply a 30% rate on earnings for super balances over $3 million—was not passed before Parliament dissolved. Future negotiations may see it reintroduced, potentially with stricter limits and new borrowing restrictions on super funds.

Small Business

Instant Asset Write-Off Extended

• $20,000 threshold extended through to 30 June 2026.

• Available for eligible assets first used or installed ready for use by that date.

National Small Business Strategy Released: Open for consultation, this strategy focuses on reducing administrative friction between state, federal, and local government systems.

Energy Industry

Green Aluminium Production Credit: A $2 billion initiative supporting aluminium smelters to transition to renewable energy:

• Smelters can negotiate 10-year emissions-linked credits per tonne of “green aluminium” produced.

• Designed to reduce Scope 2 emissions (indirect emissions from purchased electricity), which make up 85% of the sector’s emissions.

From Air Fryers to Swimwear: ATO Targets Questionable Deductions

As tax season ramps up, the ATO is cracking down on dubious claims. Some examples that didn’t make the cut:

• A mechanic trying to deduct an air fryer, microwave, TV, and gaming console.

• A truck driver claiming swimwear purchased during a hot delivery route.

• A fashion manager seeking over $10,000 in luxury clothing deductions.

Lesson: If in doubt, leave it out—or ask us first.

Tax-Time Priorities: ATO Watch List for 2025

Work-Related Expenses Claims must be directly connected to income-earning activities and backed by receipts. Even if an item seems work-related, private use usually makes it ineligible.

Working From Home Deductions: Two methods are available:

• Fixed rate method: 70c/hour, with actual hours worked recorded (estimates not allowed).

• Actual cost method: Claims for actual expenses with detailed records. Note: You can’t mix and match—no claiming mobile expenses separately if using the fixed rate method.

Multiple Income Sources: Side hustles, gig economy work, or freelance income must be declared. Each stream may have unique deduction rules.

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