As we approach the new financial year on July 1st, it’s important to stay updated on the latest changes that could impact your dental practice.
This year brings several updates from the Australian Taxation Office (ATO) and adjustments to payroll and employee conditions.
Here’s a summary to help you plan and prepare. For specific advice, please consult your bookkeeper or accountant.
ATO’S Firmer Approach
The ATO Commissioner has announced stricter measures to recover debts from businesses with late lodgements, unpaid taxes, and unpaid superannuation.
The recent budget has allocated extra funding to the ATO to enforce compliance more rigorously.
What to Expect:
- Increased reminders via SMS, myID, letter and phone
- Tougher stance on granting interest and penalty remissions
- For persistent non-compliance, that ATO may:
- Issue more Director Penalty Notices for companies
- Disclose debt to credit reporting agencies
- Move GST reporting from Quarterly to Monthly
Impact:
- Efficiently managed practices might find the increased reminders annoying, especially if they arrive before a lodgement or payment is due.
- Ignoring ATO warnings could lead to quicker enforcement actions.
Recommended Actions:
- Ensure you have efficient procedures in place for managing lodgements.
- Authorize your bookkeeper or accountant to respond to any ATO queries on your behalf.
ATO Interest no longer tax-deductible
Starting July 1st, interest charged by the ATO on late payments of BAS or income tax, as well as on payment plans, will no longer be tax-deductible. This change is expected to proceed despite the legislation not yet being passed at the time of writing.
Interest on other types of business credit and loans will remain tax-deductible.
Impact:
- Delaying ATO payments will become more expensive.
- ATO interest will effectively become a non-deductible penalty
Recommended Actions:
- Ensure you meet ATO deadlines with the help of your bookkeeper.
- Review and consider paying off tax debts, including payment plans, before July 1st.
- If full payment isn’t possible, explore cheaper financing options
Superannuation Increase
Superannuation Contribution Guarantee (SCG) will increase from 11.5% this year, to 12% from 1 July 2025. This is the last scheduled percentage increase for superannuation.
Remember, the increase in Superannuation is based on date paid, not the pay period and irrespective of when the pay was earned.
Example: If a pay period crosses June and July, use the new 12% rate for the whole pay if the payment is processed on or after July 1st .
Superannuation Before-Tax Contributions Tax cap unchanged
The annual superannuation contributions cap (the maximum of before-tax contributions allowed before being subject to extra tax) remains at $30,000 and will not change from the 2025 financial year.
Award Increases
Award increases are usually set from 1st July each year.
New wage rates apply from the first full pay period after the increase.
Example: For 1 July increases, a pay period from June 22nd to July 7th will use the old rate, while the period from July 8th to July 21st will use the new, higher rate.
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Example: A pay period runs from Sunday 22nd June to Saturday 7th July and will be paid on Monday 9th July. Employees’ Hourly Rate: Use the old rate for all hours paid because only part of this payrun is for the new year Superannuation: Use new rate of 12% as the payment date is after 30 June
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Recommended Actions:
- Pay all backpay and penalty claims by June 30th to minimize costs.
- No need to split pay runs between old and new rates for superannuation and wages
Superannuation on Paid Parental Leave
From July 1st, 2025, eligible parents with babies born or adopted on or after this date will receive an additional 12% superannuation payment from the government. This will be paid directly to their superannuation fund after the financial year ends.
Recommended Actions:
- No action required from employers.
- Inform employees that this payment will be made directly by the government to their superannuation fund.
We hope this helps you stay on top of the upcoming changes. Reach out to your bookkeeper or accountant if you need any further assistance.
Author
Joanne Crumpton
Principal Consultant – ECJ Online