Important Changes for Individuals and Businesses

As we approach the 2025–26 tax season, Serendib Accountants is committed to keeping clients informed and prepared. Recent legislative and compliance changes introduced by the ATO and highlighted by CPA Australia impact individual taxpayers, small businesses, and superannuation funds.

1. Updated Individual Income Tax Rates (Effective 1 July 2024)

The stage 3 tax cuts have been revised, resulting in new tax thresholds:
• $0 – $18,200: 0%
• $18,201 – $45,000: 16%
• $45,001 – $135,000: 30%
• $135,001 – $190,000: 37%
• $190,001 and over: 45%

These changes aim to provide more equitable tax relief and will affect most working Australians.

2. Work-from-Home Deductions Simplified

From 1 July 2024, the fixed-rate method for working from home claims is set at 70 cents per hour. To claim this, clients must:
– Keep a daily log of hours worked from home.
– Ensure records of related costs (utilities, internet, phone) are retained.

This replaces older shortcut methods used during COVID.

3. Interest on ATO Debts No Longer Deductible

Starting 1 July 2025, interest charged by the ATO on outstanding tax debts will not be tax-deductible. This change increases the cost of deferring tax payments, especially for small businesses and high-income individuals.

4. ATO Focus on Rental Properties

The ATO has flagged incorrect rental deductions as a key audit focus for 2026. We urge all property owners to:
– Accurately apportion expenses between personal and rental use.
– Maintain clear records for every deduction claimed.

5. Superannuation Tax on High Balances

From 1 July 2025, a new 15% tax will apply to super fund earnings on balances over $3 million, affecting high-net-worth individuals. Consider reviewing your superannuation strategy.

6. PHEVs and fringe benefits tax

  • Since 1 April 2025, plug-in hybrid electric vehicles are not treated as zero or low emissions vehicles under the FBT exemption rules.
  • If a business continues providing PHEVs to employees, family members or associates for personal use, FBT obligations may arise for the 2025-26 FBT year.
  • Businesses may continue to be eligible for the electric car exemption where all exemption requirements are met.
  • ATO guidance now includes an optional shortcut method for working out home-charging electricity costs for eligible PHEVs. Businesses can use the shortcut method if the eligibility requirements are met, or calculate actual electricity costs instead.

Let us help you navigate these updates with confidence.

Contact Serendib Accountants today at (03) 9574 1100 to schedule your 2026 tax consultation.