May 2025 Newsletter
Contents:
- Bendel and UPEs – taxpayer wins the battle but the war continues
- SMEs brace for ‘cash flow crunch’ ahead of tax and super changes
- Indirect climate reporting requirements to affect small businesses: ASIC
- ATO to increase fixed rate for WFH expenses to 70¢
- Numberless cards and Click to Pay system on the way: Mastercard
- What is a stand down in the workplace?
- Announcements
Bendel and UPEs – taxpayer wins the battle but the war continues
On 19 February 2025, the Full Federal Court, in FCT v Bendel [2025] FCAFC 15 (Bendel), held that an unpaid present entitlement (UPE) with a corporate beneficiary is not a loan under subsection 109D(3) of Division 7A of the Income Tax Assessment Act 1936 (ITAA 1936). The Commissioner has now applied for special leave to appeal the decision to the High Court.
SMEs brace for ‘cash flow crunch’ ahead of tax and super changes
The removal of the ability to claim deductions for ATO interest charges and an increase in the Super Guarantee on 1 July will place further pressure on cash flow, SME lenders have warned.
An increase in the superannuation guarantee rate along with the removal of the ability to claim deductions for the general interest charge (GIC) and shortfall interest charge (SIC) from 1 July 2025 will force businesses to review their finance strategies, finance providers Earlypay and ScotPac have cautioned.
Indirect climate reporting requirements to affect small businesses: ASIC
ASIC has reminded small businesses that any large businesses they engage with may need to obtain emissions-related information from them to fulfil their scope 3 emissions reporting obligations.
Incoming mandatory climate disclosure rules require large businesses to account for scope 3 emissions produced within their value chains. This includes emissions from small suppliers that they engage with, both upstream and downstream in their supply chains.
ATO to increase fixed rate for WFH expenses to 70¢
The ATO has updated Practical Compliance Guideline 2023/1 to increase the work-from-home fixed rate to 70¢ per hour. The new rate will apply for the 2024–25 financial year.
The fixed-rate method allows taxpayers to claim a fixed rate for each hour they work from home during the relevant income year.
The rate includes running expenses incurred for home and mobile internet or data expenses, mobile and home phone usage expenses, electricity and gas for heating, cooling, and lighting, and stationery and computer consumables.
What is a stand down in the workplace?
A stand down occurs when an employer temporarily directs an employee to stop working due to circumstances outside of the employer’s control.
Notably, this is not the only option available for businesses. Alongside a stand down, employers can agree to let employees access leave entitlements or simply pay employees if that is something the business can accommodate.
Announcements:
This month we congratulate Hayley on achieving her 5 year work anniversary!|
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Important ATO Dates
| Lodgement Program | Date |
| Fringe benefits tax (FBT) return – Final date for lodgment and payment (if required) | 21/05/2025 |
| April monthly activity statements | 21/05/2025 |
| 2024 Income Tax Return (via a Tax Agent – if not required earlier) | 15/05/2025 |
Other News
Changes to Interest Charge Deductions and BAS Refund Notifications
Parliament has passed amendments that will significantly impact taxpayers regarding interest charges and refund notifications. Here’s a summary of the key changes: No More Deductions for GIC and SIC:- Starting 1 July 2025, taxpayers will be unable to claim deductions for General Interest Charge (GIC) and Shortfall Interest Charge (SIC).
- This change aims to incentivize timely and accurate self-assessment of tax liabilities.
- The Commissioner retains the discretion to remit interest charges in fair and reasonable circumstances.
- The Australian Taxation Office (ATO) now has 30 days (previously 14 days) to notify taxpayers of decisions to retain refund amounts from Business Activity Statements (BAS) for verification.
- This extension strengthens the ATO’s ability to combat fraud during high-risk periods.
- It is important to note that ATO interest rates are high, currently around 11%.
- Without the ability to claim a tax deduction, the effective cost of these charges will increase significantly. For example, for a taxpayer with a 32% tax rate, the effective cost would increase to approximately 16%.
- Therefore, taxpayers are advised to explore alternative financing options, such as bank loans, if possible, to manage tax liabilities.
- Plan ahead to ensure timely payment of tax liabilities to avoid incurring GIC and SIC.
- Be aware of the extended notification period for BAS refunds and cooperate with the ATO’s verification processes.
- Seek financial advice regarding alternative financing options.
Superannuation Changes
The general transfer balance cap (TBC) is set to increase on 1 July 2025. This important cap, which limits the amount of superannuation that can be transferred into retirement phase income streams, will rise by $100,000, moving from the current $1.9 million to $2 million.
This indexation also means an increase to the defined benefit income cap (DBIC), which will reach $125,000 for the 2025–26 income year (up from $118,750).
What does this mean for you?
If you haven’t yet reached or exceeded your personal TBC, you may be entitled to an increase in your cap. This increase will be a proportion of the $100,000 and will be based on any unused cap space you currently have. For individuals commencing a pension for the first time on or after 1 July 2025, their personal TBC will be $2 million.
To find out your individual transfer balance cap, you can easily check ATO online services through your myGov account.
Important Contribution Cap Updates for 2025-26:
It’s also important to note the contribution caps for the upcoming financial year:
- Concessional Contributions Cap: $30,000
- Non-Concessional Contributions Cap: $120,000
These changes to the transfer balance cap and contribution caps offer new opportunities and considerations for your superannuation planning. We encourage you to review your situation and consider how these updates may impact your retirement strategy. If you have any questions or would like to discuss your specific circumstances, speak with your financial adviser.
Important GST Reporting Change for Some Small Businesses
Small businesses, please take note! The Australian Taxation Office (ATO) is implementing a change to GST reporting for some businesses to help improve compliance.
Effective 1 April 2025, approximately 3,500 small businesses with a history of non-payment, late or non-lodgment, or incorrect GST reporting will be moved from quarterly to monthly GST reporting.
The ATO will directly contact affected businesses and their tax professionals to inform them of this change. This move to a monthly cycle aims to help these businesses better manage their GST obligations, address past issues in a more structured way, and foster good business habits.
This change in reporting cycle will remain in place for a minimum of 12 months as part of the ATO’s ‘Getting it right’ campaign. If you have any concerns about your GST reporting obligations, please contact the ATO or our office.