With the Australian tax landscape constantly evolving, staying informed is crucial, not only for your own compliance, but to give your clients the most effective advice possible for their personal financial situation.
In this article, we highlight some of the key updates you need to know about this tax year, and the potential impact they could have on your accounting practice, and your interactions with your clients.
As with all our articles, it provides a general overview of the key Australian Tax Office (ATO) changes for the 2024-25 financial year, but it is not intended to be taken as professional advice.
Key ATO changes for the 2024-25 financial year
Tweaks to individual income tax
From 1 July 2024, the tax cuts reduced from 19% tax rate to 16% for all 13.6 million Australian taxpayers. This was a top priority from the Australian Government in the Federal Budget last year, with the aim of delivering cost-of-living relief to Australians under pressure.
While these adjustments might seem minor on an individual basis, they can collectively impact a significant portion of your client base.
Your practice needs to be prepared to update payroll calculations, advise on tax planning strategies, and answer client queries about these changes.
Foreign resident capital gains withholding
Foreign resident capital gains withholding (or FRCGW for short) applies to property sellers disposing of taxable real property. The increased withholding rate and removal of the threshold for foreign resident capital gains withholding will likely require adjustments to your processes, especially if you deal with clients who have international investments.
Ensure your team understands the implications of these changes and can advise affected clients appropriately.
Extension of the instant asset write-off
The extension of the $20,000 instant asset write-off to 30 June 2025 is good news for small businesses. The scheme allows small businesses to immediately deduct full costs of eligible assets costing than $20,000 which were purchased during the 2024-25 income years.
Communicating this opportunity proactively with your firm’s small business clients will help them determine if they qualify for the instant asset write-off and how they can best utilise this incentive for their business.
On the whole, the instant asset write-off also presents an opportunity to provide sound advice around business asset management and tax depreciation strategies.
Updates to fuel tax credits
Changes to fuel tax credits, particularly for heavy vehicles that consume liquid or gaseous fuels, and this necessitates a careful review for business clients operating in the transport and logistics sectors.
Your practice should be ready to assist these clients in understanding the revised rates, their eligibility, and what they can claim in their business activity statement (BAS).
The ATO website has a helpful fuel tax credit calculator, which is a helpful tool for clients to work out what they're eligible to claim.
Tax integrity measures for multinational businesses
While primarily affecting larger corporations, the focus on multinational tax integrity, including strengthening the thin capitalisation rules, which apply to most multinational businesses operating in Australia who have at least $2 million in debt deductions.
This measure, which is now passed into law, applies to income years which commence on or after 1 July 2023, underscoring the ATO's commitment to compliance.
Even if your practice doesn't directly deal with multinational businesses, it's important to be aware of these new developments that affect Australia’s broader tax environment.
What do recent ATO changes mean for your practice?
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The correct tax software and staff training: Ensure your practice has the best possible tax and compliance software will be essential come tax time. It’s always vital to ensure your accountants engage in continuous learning to ensure they understand the implications of these ATO updates and can accurately apply them in their client work.
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Tax planning opportunities: These changes often create new tax planning opportunities for your clients. Be prepared to advise them on strategies to minimise their tax liabilities while remaining compliant.
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Enhancing your focus on compliance: The ATO's focus on strengthening tax compliance means that accounting practices must also be diligent in their own compliance and ensure they are adhering to all regulations.
How Access Evo will help accounting practices to keep up with compliance changes
Access Evo is the biggest technology investment in our history, and it is coming very soon to our accounting products. It is a technology platform that will become a part of every Access product, producing a unique AI driven software experience for all of our customers.
One of its core features is Copilot, an AI assistant that helps you find better answers and put them to use, without the wait. Querying the ATO to surface the latest ATO compliance changes can be done in an instant.
Navigating ATO compliance changes
The easiest way to navigate these compliance changes in your accounting practice is to do everything you can to keep yourself informed.
Subscribe to ATO updates and attend any relevant webinars and conferences that may help you to keep up with the changes while also helping you use your CPD points for the year.
By staying ahead of the curve, your practice can provide valuable service to your clients and maintain a competitive edge.