ATO to include tax ‘debts on hold’ in taxpayer account balances

From August 2025, the ATO is progressively including ‘debts on hold’ in relevant taxpayer ATO account balances.
Editor: A ‘debt on hold’ is an outstanding tax debt where the ATO has previously paused debt collection actions. Tax debts will generally be placed on hold where the ATO decides it is not cost effective to collect the debt at the time.
The ATO is currently required by law to offset such ‘debts on hold’ against any refunds or credits the taxpayer is entitled to. The difficulty with these debts is that the ATO has not traditionally recorded them on taxpayer’s ATO account balances.
Taxpayers with ‘debts on hold’ of $100 or more will receive (or their tax agent will receive) a letter before it is added to their ATO account balance (which can be viewed in the ATO’s online services or the statement of account).
Taxpayers with a ‘debt on hold’ of less than $100 will not receive a letter, but the debt will be included in their ATO account balance
The ATO has advised it will remit the general interest charge (‘GIC’) that is applied to ‘debts on hold’ for periods where they have not been included in account balances. This means that taxpayers have not been charged GIC for this period.
The ATO will stop remitting GIC six months from the day the taxpayer’s ‘debt on hold’ is included in their account balance. After this, GIC will start to apply.

Bill to reduce student debt now law

Legislation has recently been enacted which delivers on the 2025/26 Federal Budget announcement to reduce student debts.

Pursuant to this legislation:

• there is a one-off 20% reduction to Higher Education Loan Program debts and other student loans that were incurred on or before 1 June 2025;
• the minimum repayment threshold is increased from $54,435 in the 2024/25 income year to $67,000 in the 2025/26 income year (to continue to increase each year with the growth in wages); and
• a marginal repayment system is introduced where compulsory student loan repayments are calculated only on income above the new $67,000 threshold (rather than having it based on a percentage of the repayment income).

Getting the main residence exemption right

The ATO has the following tips for taxpayers in relation to the CGT main residence exemption.

• They should consider if they have bought or disposed of property in the past income year. If they have sold property, were they using it solely as their primary place of residence, earning income from it (rental or business), or was it vacant land?
•  They should understand the applicable record keeping requirements in relation to property.
•  If they have disposed of vacant land, they are not eligible for the main residence exemption, even if they had intended to build their main residence on the land.
•  They are only eligible for the ‘6-year absence rule’ if the property was their main residence before they rented it out.
•  Broadly, they can only have one property as their main residence at a time – the only exception is the 6-month period when they move from one home to another.
  Editor: If you need assistance with the above or with completing your tax return, please contact our office.

Small Business Superannuation Clearing House is closing

The Small Business Superannuation Clearing House (‘SBSCH’) will close on 1 July 2026.

Editor: The SBSCH is a free online service provided by the Australian Government through the ATO.
The SBSCH can be used by employers to pay superannuation for all their employees through a single payment. The SBSCH will then distribute the money to each employee’s superannuation fund according to the employer’s instructions.
To support small businesses to transition to alternative services prior to this time, new users will be unable to register to use the service from 1 October 2025.
Existing users are encouraged to take steps now to transition to alternative options.
These include reviewing their existing software and payroll packages (which may already include super functions), or looking at options offered by super funds, commercial dealing houses, or other payroll software or providers.

ATO AFCX data-matching program

The ATO will acquire relevant account and transaction data from the Australian Financial Crimes Exchange (‘AFCX’) for the 2025 to 2027 income years, including the following:

•  Client identification details (names, addresses, phone numbers, dates of birth, identity verification document details, IP addresses, etc); and
•  Bank account transaction details (bank account details, transaction date and amount, IP addresses, etc). The ATO estimates that records relating to approximately 70,000 individuals will be obtained each financial year. The data collected under this program will be used to (among other things) safeguard taxpayer accounts from identity crime by implementing protective controls to enable pre-lodgment detection and application of treatments to victims of fraud.

PAYGW reminders for activity statement lodgments

The ATO will be sending certain employers a reminder to lodge their activity statements.
The reminder will include the amounts the ATO has on record for them, such as:

• PAYG withheld amounts reported through Single Touch Payroll; and
• any other pre-filled amounts, including GST instalments and PAYG instalments (instalment amount option).

The ATO’s reminders are intended to provide a timeframe for employers to review (and if necessary correct) the amounts the ATO has on record for them and lodge their activity statements.
If these selected employers do not lodge by the specified date, the ATO will consider the amounts it has on record are correct and complete, and it will add these amounts to the employer’s account, meaning they will be due and payable.
The ATO may also finalise the employer’s activity statement and consider it lodged unless the employer has any other obligations such as GST to report.
If employers do not make any changes to correct the data or lodge by the due date and the activity statement has been finalised in ATO systems, they will need to adjust these amounts by lodging a revised activity statement.
If the information is correct, they will not need to take any further action.

Paid parental leave changes have now commenced

As from 1 July 2025, the amount of Paid Parental Leave available to families increased to 24 weeks, and the amount of Paid Parental Leave that parents can take off at the same time has also increased from two weeks to four weeks.

Superannuation will now also be paid on Government Paid Parental Leave from 1 July 2025, at the new super guarantee rate of 12%, paid as a contribution to their nominated superannuation fund.

Parents will also benefit from an increase in the weekly payment rate of Paid Parental Leave, increasing from $915.80 to $948.10 (in line with the increase to the National Minimum wage). This means a total increase of $775.20 over the 24-week entitlement.

ASIC warning about pushy sales tactics urging quick super switches

ASIC is warning Australians to be on ‘red alert’ for high-pressure sales tactics, click bait advertising and promises of unrealistic returns which encourage people to switch superannuation into risky investments.

The warning comes amid increasing concerns from ASIC that people are being enticed to invest their retirement savings in complex and risky schemes.

ASIC Deputy Chair Sarah Court said the start of a new financial year was often the trigger for people to check their super fund’s performance, and urged consumers to be extra cautious.

“When it comes to sales calls about super switching, there are some big red flags people should be alert to — being asked to make a quick decision is one of the most obvious. Remember, a good deal won’t vanish overnight.”

She said that these calls “don’t have the hallmarks of a typical scam. The caller will seemingly have your best interests at heart, and they say they want to help you find a better super product or locate lost super for free.”

Consumers should always ask questions about salespeople’s connections to funds, particularly in circumstances where a particular fund appears in the pitch, as there may be a commission arrangement.

“If you are unsure or are feeling pressured, just hang up.”

ATO warns of common Division 7A errors

The ATO reminds shareholders of private companies that understanding how Division 7A of the tax legislation applies is crucial to avoiding costly tax consequences when accessing the company’s money or other benefits.

When Division 7A applies, the recipient of a payment, loan or other benefit can be deemed to have been paid an unfranked dividend that will be included in their assessable income.

While Division 7A can be complex, most errors the ATO sees that result in its application are simple in nature, including:

• shareholders not recognising that a company’s money is not their money, and they cannot access it for personal use without tax consequences;
• loans being made without complying loan agreements; and
• applying the wrong benchmark interest rate when calculating Division 7A loan repayments.

These errors are often the result of common myths about Division 7A and how it works.

To support taxpayers’ understanding of their tax obligations when managing private company money, the ATO has launched new content: ‘Division 7A Myths debunked‘ on its website.

This page debunks common myths about Division 7A, breaking them into topics such as ‘business structure’, ‘record keeping’, and ‘payments to other entities’.

Taxpayers who need to lodge a TPAR

Taxpayers may need to lodge a Taxable payments annual report (‘TPAR’) online by 28 August if they have paid contractors to provide any of the following services on their behalf:

• building and construction;
• cleaning;
• courier and road freight;
• information technology; or
• security, investigation or surveillance.

If the ATO is expecting a TPAR from a taxpayer who does not need to lodge one, they can complete a ‘TPAR non-lodgment advice form‘ by 28 August.

Taxpayers who no longer pay contractors can also use this form to tell the ATO they will not need to lodge a TPAR in the future (although if their circumstances change they may need to lodge a TPAR).

Editor: Please contact our office if you need assistance with completing and/or lodging a TPAR.

Note that paper lodgments of TPARs will no longer be accepted after 28 August 2025.

Changes to tax return amendment period for business

Businesses with an annual aggregated turnover of less than $50 million now have up to four years from the date of their tax return assessment to request amendments (increased from two years). This applies to assessments for the 2024/25 and later income years.

If businesses make a mistake on a tax return and need to request an amendment, they should lodge their requests well before the end of the amendment period to make sure the ATO can process it within the time limit.

They should keep accurate and complete records to support their amendment request.

Taxpayer’s claim for travel expenses denied

In a recent decision, the Administrative Review Tribunal (‘ART’) denied an offshore worker’s claim for work-related travel expenses, although it did allow his claim for home office expenses.

During the relevant period, the taxpayer resided in Queensland with his family, while his employment as an engineer was primarily based at an offshore facility located off the coast of Western Australia.

In his tax return for the 2022 income year, the taxpayer claimed work-related expenses of over $30,000, relating to accommodation, meal and incidental expenses for stays in Perth, Darwin and Broome between rotations on the offshore facility.

The ART noted that the taxpayer’s permanent work location was the offshore facility. It accordingly largely disallowed the work-related expenses on the basis that they were “either preliminary to the commencement of those (employment) duties, or occurred after employment duties had ceased, and the (taxpayer) was on leave.”

The ART also did not accept the taxpayer’s claim for travel-related expenses with reference to the substantiation exception, as the allowances he received were not ‘travel allowances’.

However, the ART did accept the taxpayer’s claim for home office expenses of $579, noting that “As an engineer, he is required to engage in continuing professional development and the Masters and other studies completed in the home office were for this purpose.”