Key Tax and Business Changes Coming into Effect from 1 July 2025

As the new financial year approaches, businesses and individuals in Australia need to be aware of several important tax and regulatory changes taking effect from 1 July 2025. These updates, announced in the 2024-25 Federal Budget, include adjustments to tax rates, superannuation, compliance requirements, and business incentives.

Here’s a breakdown of the key changes you should prepare for:

1. Stage 3 Tax Cuts Take Full Effect

   The Stage 3 tax cuts, legislated in 2019, will be fully implemented from 1 July 2025, altering income tax brackets and rates:

   
   

   1. Taxable income up to $45,000: 19% tax rate (no change)

   2. $45,001 – $135,000: 30% tax rate (down from 32.5%)

   3. $135,001 – $190,000: 37% tax rate (new bracket)

   4. Above $190,000: 45% tax rate (no change, but threshold increased)

   
   

   These changes mean lower taxes for middle-income earners, with those earning between $50,000 and $135,000 benefiting the most.

   
   

2. Increase in Superannuation Guarantee (SG) Rate

   The Superannuation Guarantee (SG) rate will rise from 11% to 11.5% from 1 July 2025, as part of the legislated increase to 12% by 2025. Employers must ensure payroll systems are updated to reflect this change.

   
   

3. Small Business Instant Asset Write-Off Extended

   The temporary full expensing (instant asset write-off) scheme has been extended for another year, allowing small businesses (with turnover under $10 million) to immediately deduct the full cost of eligible assets (up to $20,000 per item) in the year they are installed and ready for use.

   
   

   This measure is designed to support cash flow and investment in productivity-enhancing assets.

   
   

4. Single Touch Payroll (STP) Phase 2 Expands Reporting

   Single Touch Payroll (STP) Phase 2 reporting requirements will now include additional details for:

   1. Salary-sacrificed amounts

   2. Employment termination payments

   3. More detailed income breakdowns

   
   

   Businesses must ensure their payroll software is updated to comply with these changes.

   
   

5. Changes to PAYG & GST Compliance

   The ATO is increasing its focus on GST compliance, particularly for businesses in high-risk sectors (e.g., construction, retail, hospitality). Key changes include:

   1. Stricter reporting for businesses with discrepancies in BAS lodgements

   2. Expansion of real-time GST reporting for large businesses

   
   

   Additionally, PAYG instalment calculations may be adjusted based on updated ATO benchmarks.

   
   

6. Digital Currency Tax Treatment Clarified

   From 1 July 2025, the government will implement clearer tax guidelines for cryptocurrency and digital asset transactions, including:

   1. Capital Gains Tax (CGT) treatment for DeFi (Decentralised Finance) transactions

   2. Reporting requirements for crypto exchanges under OECD standards

   
   

   Businesses and investors dealing in crypto assets should review their record-keeping practices.

   
   

7. Increased Minimum Wage & Award Adjustments

   The Fair Work Commission’s annual wage review will take effect from 1 July 2025, with an expected 3.5% to 4% increase in the National Minimum Wage (currently $23.23/hour).

   
   

   Employers should review their payroll systems to ensure compliance with updated award rates.

   
   

8. Changes to Fringe Benefits Tax (FBT) for EVs

   The FBT exemption for electric vehicles (EVs) will continue, but with updated eligibility criteria, including:

   1. Plug-in hybrid vehicles (PHEVs) must meet stricter emission standards

   2. EVs must be priced below the luxury car tax threshold ($89,332 in 2025)

   
   

   Businesses providing EVs as part of salary packaging should verify compliance.

   
   

9. New Anti-Avoidance Rules for Multinationals

   The Multinational Tax Integrity Package introduces stricter anti-avoidance measures, including:

   1. 5% global minimum tax for large multinationals (OECD Pillar 2 rules)

   2. Limits on debt-related deductions for multinational entities

   
   

10. Expanded Reporting for Trusts

    Trustees will face enhanced reporting requirements, including:

    1. Additional beneficiary details

    2. More detailed distributions reporting

Final Thoughts: Preparing for 1 July 2025

With significant tax, superannuation, and compliance changes coming into effect, businesses and individuals should:

✅ Review payroll systems for SG increases and wage adjustments

✅ Update accounting software for STP Phase 2 and asset write-offs

✅ Consult a tax advisor for complex changes (e.g., trust reporting, crypto taxes)

Staying informed and proactive will help ensure a smooth transition into the new financial year.

Need help navigating these changes? Contact us or visit the ATO website at https://www.ato.gov.au for official guidance.