As of 27 March 2025, a number of previously announced tax changes that may impact the cash flow of individuals and businesses have now been legislated. Understanding these changes will assist you with your personal and business planning.

Changes to deductions for ATO Interest Charges

From 1 July 2025, taxpayers will no longer be eligible to claim deductions for Australian Taxation Office (ATO) interest charges. These include any general interest charges (GIC) or shortfall interest charges (SIC). With the ATO interest being non-deductible, any interest that is later remitted will not be assessable.

This change in law should be considered immediately by taxpayers that currently have debts with the ATO. Further, taxpayers considering payment plans now or in the future should be considering the cash flow impact of the generally higher ATO interest rates and the impact of the interest being non-deductible.

Instant Asset Write-Off Threshold

Small businesses now have clarity on the 2024–25 Federal Budget announcement with regards to the extension of the instant asset write-off threshold of $20,000 until 30 June 2025. This measure has now been enacted. Although, from 1 July 2025, the threshold will revert to $1,000 (unless further changes are announced). The decrease in the threshold from 1 July 2025 should be considered by businesses together with the impact to future taxes and cash flow planning.

Broadly, under this provision, small businesses with an aggregated annual turnover of less than $10 million can immediately deduct the full cost of eligible depreciating assets priced below $20,000 that are first used or installed between 1 July 2024 and 30 June 2025. The $20,000 threshold applies per asset, allowing small businesses to generally claim deductions for multiple assets.

For assets costing $20,000 or more, small businesses can still allocate the costs to the small business simplified depreciation pool, with depreciation rates of 15% in the first year and 30% in subsequent years. Additionally, any pool balances below $20,000 at the end of the 2024-25 income year can be written off in full.

Contact Pilot

If you would like to find out more about any of the above updates, please contact your Pilot advisor on 07 3023 1300.