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2025 tax offsets

Top 2025 Tax Offsets You Might Be Missing in Australia

What You’ll Learn: 6 Tax Offsets That Could Save You Thousands

Tax offsets reduce your tax bill dollar-for-dollar. Here are the key offsets Australian taxpayers often miss in 2024-25:

  1. Small Business Income Tax Offset: Up to $1,000 (sole traders)
  2. Seniors and Pensioners Tax Offset (SAPTO): Up to $2,230 (pension recipients)
  3. Private Health Insurance Offset: 8%-33% of premiums (refundable)
  4. Zone Tax Offset: $57-$1,173 (remote area residents)
  5. Invalid/Carer Offset: Variable (supporting disabled family members)

Plus coming in 2025-26: Potential $1,200 cost-of-living offset and automatic $1,000 work deduction.

With EOFY upon us (as of June 30), it’s crunch time to ensure you’re not leaving money on the table. After helping thousands of Australians maximise their tax returns, we’ve seen how often people miss out on legitimate tax offsets simply because they don’t know they exist.

Unlike tax deductions that reduce your taxable income, tax offsets directly reduce the tax you owe, dollar for dollar. That makes them incredibly powerful, especially when you qualify for multiple offsets!

Let’s explore the tax offsets available right now, plus what’s coming in 2025-26 that could change your tax strategy.

1. Small Business Income Tax Offset: The Forgotten $1,000

Running your own business means juggling countless responsibilities, and it’s easy to overlook opportunities that put money back in your pocket. This offset is specifically designed for hardworking sole traders, freelancers, and contractors — people who’ve taken the leap into business ownership and deserve recognition for contributing to Australia’s economy.

Maximum benefit: $1,000 per year

Who qualifies: Sole traders and some individuals with net small business income

Calculation: 16% of your net small business income (capped at $1,000)

This is one of the most overlooked offsets, especially valuable for sole traders, freelancers, and contractors. The small business income tax offset applies to individuals who operate as sole traders or receive income from small business partnerships or trusts. 

Who benefits:

  • Sole traders with business income
  • Partners in small business partnerships
  • Beneficiaries of small business trusts
  • Freelancers and contractors operating as individuals

Example: If your net small business income is $6,250 or more, you get the full $1,000 offset (16% x $6,250). Even with $3,000 in business income, you’d get a $480 offset.

Important note: Your business must qualify as a small business entity (generally under $5 million annual turnover). 

2. Seniors and Pensioners Tax Offset (SAPTO): Major Relief for Retirees

After decades of hard work, you shouldn’t have to stress about tax bills eating into your pension. The government recognises this with SAPTO, which can dramatically reduce or even eliminate your tax liability entirely. Many eligible seniors don’t realise they’re missing out on this significant relief that’s designed specifically for people in their situation.

Maximum benefit: $2,230 for singles, $1,602 for couples (each)

Who qualifies: Recipients of eligible Australian Government pensions/allowances

Application required: None – calculated automatically if eligible

SAPTO can eliminate or significantly reduce tax for eligible seniors. The ATO’s SAPTO guidelines show this offset applies to various government payments. 

Eligible payments include:

  • Age Pension
  • Disability Support Pension
  • Carer Payment
  • Veterans’ pensions and allowances 

Income thresholds for 2024-25:

  • Singles: Full offset if rebate income is under $34,919, phases out at $52,759
  • Couples: Full offset if rebate income is under $30,994 each, phases out at $43,810

Spouse transfer benefit: Unused SAPTO amounts can automatically transfer between eligible spouses.

Example: John, 68, receives Age Pension with $25,000 rebate income. He gets the full $2,230 SAPTO, potentially eliminating his tax liability entirely. 

3. Private Health Insurance Offset: The Refundable Opportunity 

Paying for private health insurance already feels like a big expense, but here’s some good news — the government helps offset those costs through a rebate that can put real money back in your pocket. What makes this particularly attractive is that it’s one of the few tax benefits you can receive even if you don’t owe any tax.

Maximum benefit: Up to 32.812% of premium costs

Who qualifies: Private health insurance holders meeting income thresholds

Special feature: Refundable — you can get money back even with no tax liability

This is one of the few refundable offsets, meaning you can receive money even if you don’t owe tax (you can take it as a reduced premium throughout the year or a refundable offset when you lodge your tax return). The private health insurance rebate varies by age and income.

Income thresholds for 2024-25:

  • Singles: Up to $97,000 (rebate 8.202%-32.812%)
  • Families: Up to $194,000 (plus ~$1,500 per dependent child)

For more info see this ATO page explaining the income thresholds. 

Two claiming methods:

  1.  Premium reduction: Insurer reduces your premiums during the year, OR
  2. Tax return: Claim full rebate when lodging

Pro tip: If you chose premium reduction but earned less than expected, you might get additional money back at tax time.

4. Zone Tax Offset: Remote Area Recognition 

Living in remote Australia comes with unique challenges and costs that city dwellers simply don’t face. The government acknowledges this through the zone tax offset, providing some financial recognition for the extra expenses and isolation that come with living in regional and remote areas.

Maximum benefit: $57 (Zone B) to $1,173 (Special Areas)

Who qualifies: Residents of designated remote areas for 183+ days

Important change: FIFO workers no longer eligible unless residence is also zoned

The zone tax offset recognises the additional costs of living in remote Australia.

Zone types and amounts:

  • Zone A: $338 base amount
  • Zone B: $57 base amount
  • Special Areas: $1,173 base amount (plus potential dependent amounts)

Key requirement: Your usual place of residence (not just work location) must be in the designated zone for at least 183 days.

Check eligibility: Use the ATO’s Australian zone list to verify your location.

5. Invalid and Invalid Carer Offset: Support for Caregivers

Caring for a family member with a disability is both emotionally and financially demanding. This offset provides some financial recognition for the vital role carers play, acknowledging that supporting a loved one often comes with significant personal and financial sacrifices.

Benefit amount: Variable (use ATO calculator)

Who qualifies: Supporting invalid/carer (16+) receiving government payments

Income limit: Adjusted taxable income under $117,194 (2024-25)

This lesser-known offset supports people caring for family members with disabilities. The invalid and invalid carer offset has specific eligibility criteria.

Eligible relationships:

  • Spouse who is invalid or cares for invalid
  • Parent (or spouse’s parent) who is invalid/carer
  • Child, brother, sister (16+) who is invalid

Required government payments: Disability Support Pension, Carer Payment/Allowance, Invalidity Service Pension.

What’s Coming in 2025-26: New Opportunities

Tax policy is constantly evolving, and there are some exciting changes on the horizon that could put even more money back in your pocket. While some of these are still proposals rather than locked-in law, it’s worth understanding what might be coming so you can plan ahead and make the most of these potential opportunities.

Automatic $1,000 Work Deduction (2026-27)

From July 2026, every working Australian may get an automatic $1,000 deduction for work expenses — no receipts required. You can still claim more with proper documentation.

Additional Tax Cuts 

  • July 2026: Bottom tax rate drops from 16% to 15%
  • July 2027: Further reduction to 14%

These changes continue the trend toward lower taxes for middle and lower-income earners.

Action Checklist Before June 30, 2025

With EOFY now here, there are still moves you can make to maximise your tax position. Some opportunities have hard deadlines, while others are worth reviewing with a tax professional who can spot combinations and strategies you might miss on your own.

Immediate actions:

  • Review private health insurance rebate method
  • Confirm small business status if you’re a sole trader
  • Check zone classification for remote area offsets

For tax professionals to review:

  • SAPTO eligibility if you’re a senior/pensioner
  • Invalid/carer offset if supporting family members
  • Combining multiple offsets for maximum benefit
  • 2025-26 planning for proposed changes

Why Professional Help Matters

Tax offsets involve complex eligibility rules, income thresholds, and timing requirements. The interaction between different offsets and changing tax laws means help from a professional tax accountant can identify opportunities you might miss!

At ITP, we specialise in maximising tax outcomes for Australians across all income levels and situations. Our experienced tax professionals understand how to:

  • Identify all available offsets for your specific circumstances
  • Optimise timing of contributions and claims
  • Navigate complex eligibility rules for specialised offsets
  • Plan for future changes in 2025-26 and beyond

This expertise is particularly valuable if you have multiple income sources, complex family situations, operate a small business, or live in remote areas.

Don’t leave money on the table. Book a consultation with ITP to ensure you’re claiming every offset available, or explore our comprehensive tax return services to maximise your tax outcome this season.

For small business owners, our small business tax services can help you navigate both business deductions and personal offsets for optimal tax planning.

Frequently Asked Questions About 2025 Tax Offsets

What’s the difference between tax offsets and deductions?

Tax deductions reduce your taxable income, while offsets directly reduce your tax bill dollar-for-dollar, making offsets generally more valuable.

Can I claim multiple offsets?

Yes, you can claim all offsets you’re eligible for. They work together to reduce your total tax liability.

Are offsets refundable?

Most offsets are non-refundable (can only reduce tax to $0). However, the private health insurance offset is refundable.

How do I know if I live in a remote zone?

Check the ATO’s zone list tool using your postcode.

Is there a low income tax offset for 2025?

Not anymore, unfortunately. According to the ATO, the: “LMITO [is] not available [from the] 2022–23 income year onwards Low and middle income tax offset (LMITO) ended on 30 June 2022. This means it doesn’t apply for the 2022–23 income year. Your tax return outcome may be different this income year. You may have a lower refund (less than when LMITO was available) or you may receive a tax bill. See Why your tax return outcome may change in 2023.”

This means that for every year since the 2021-22 financial year, you’ve not been able to claim the low and middle income tax offset.

Disclaimer: This article provides general information only and is not intended to replace professional tax advice for your specific situation. Tax policies and laws change regularly, and individual circumstances vary significantly. The information contained in this article is based on current tax laws and ATO guidance as at June 2025, but tax legislation and interpretations can change. Before making any financial decisions or claiming tax offsets, you should consult with a qualified tax professional who can assess your individual circumstances and provide advice tailored to your specific situation. ITP Tax Professionals disclaim any liability for decisions made based solely on the general information provided in this article.

Ato Hit List 2025

ATO Hit List 2025: Top Audit Targets This EOFY & How to Stay Compliant

Quick Summary: ATO’s 2025 Audit Priorities

The ATO has increased audit activity with nearly $1 billion in additional funding. Here are the top targets for 2024-25:

  1. Rental Property Claims (High Risk – 90% error rate detected)
  2. Work-From-Home Deductions (High Risk – $8.7 billion tax gap)
  3. Cryptocurrency Transactions (Medium Risk – 500K-1M affected)
  4. Gig Economy Income (Medium Risk – Uber, Airbnb, Airtasker)
  5. Small Business Expenses (Medium Risk – Business/personal mixing)

Bottom line: The ATO’s data matching technology now tracks over 350 sources. If you’ve earned it, they likely know about it.

The tax landscape has fundamentally shifted this year. With nearly $1 billion in fresh compliance funding and sophisticated data matching technology, the ATO is watching everything. As tax professionals who’ve helped thousands of Australians navigate ATO reviews, we’ve seen how the game has changed, and know its potential to wreak havoc on unsuspecting taxpayers!

The ATO’s algorithms now cross-reference information from over 350 sources, from your morning Uber ride to weekend Airbnb earnings. But here’s the thing — if you’re doing the right thing, this increased scrutiny actually works in your favour through faster processing and larger legitimate refunds.

What Really Triggers an ATO Audit in 2025?

The ATO’s audit selection is a calculated, data-driven process. Think of it as a digital detective that never sleeps, constantly comparing what you’ve reported against what banks, employers, and platforms are telling them about you. 

The system automatically flags returns where reported income doesn’t match third-party data, deductions significantly exceed industry averages, or lifestyle seems inconsistent with declared earnings. Previous compliance issues also put you on their radar for future years.

1. Rental Property Claims: The 90% Problem

Risk Level: HIGH

Here’s a statistic that should make every property investor pay attention: recent ATO audits found errors in 90% of rental property returns they reviewed. According to ATO Assistant Commissioner Tim Loh, rental property claims have become their number one compliance priority.

The most common traps involve interest deduction errors — claiming family home loan interest as rental expenses, or incorrectly apportioning between personal and investment portions. Then there’s the eternal confusion between repairs and improvements. The ATO is cracking down on people claiming capital improvements as immediate repairs.

Holiday homes and Airbnb properties receive particular scrutiny. The ATO wants clear evidence that your property was genuinely available for rent during claimed periods, not being used for family getaways while claiming rental expenses.

The ATO has dramatically expanded data collection from 17 major mortgage lenders covering 2021-22 to 2025-26, property management software affecting 1.6 million taxpayers, and short-term rental platforms.

To audit-proof your claims: Keep loan statements showing investment vs personal splits, maintain all expense receipts, and crucially, keep evidence your property was genuinely available for rent — online listings, advertising records, vacancy reports.

2. Work-From-Home Deductions: The $8.7 Billion Gap

Risk Level: HIGH

Work-related expenses contribute a staggering $8.7 billion to Australia’s individual tax gap, and home office claims have become the ATO’s second major target.

The rules got tougher for 2024-25. While the ATO bumped up the rate from 67 cents to 70 cents per hour, they now want you to track every single hour you work from home throughout the year — no more guestimates or keeping a diary for just a few weeks. It’s quite a change from the pandemic days when you could claim 80 cents per hour with the temporary shortcut method (March 2020 to June 2022) and barely had to keep any records at all.

The 70 cents rate covers electricity, gas, phone, internet, stationery, and computer consumables, but you cannot claim separate deductions for these covered items if using this method of claiming. The actual expenses method may be a better option if your work related phone, internet and stationery expenses are substantial. You also can’t claim rent, mortgage interest, council rates, or insurance unless running a business from home.

Documentation is non-negotiable: Think daily timesheets, employment contracts supporting work-from-home arrangements, utility bill comparisons, and separate equipment purchase receipts.

3. Cryptocurrency: Digital Assets Under Watch

Risk Level: MEDIUM-HIGH

The ATO’s crypto assets data matching program quietly collects comprehensive exchange data back to 2014-15. They know about your Bitcoin purchases, Ethereum trades, and even forgotten joke coins.

The biggest mistake is treating all crypto activity as capital gains when some should be classified as income. Mining, staking rewards, crypto trading businesses, or receiving crypto payments are income, not capital gains.

Many people don’t realise crypto-to-crypto trades are taxable events. Trading Bitcoin for Ethereum is a disposal of Bitcoin for capital gains purposes, even without converting to Australian dollars.

Essential records: Exchange histories, wallet addresses, transaction IDs, purchase/sale dates with AUD amounts, transaction purposes, and mining pool records with electricity costs.

4. Gig Economy Income: Side Hustle Spotlight

Risk Level: MEDIUM

The ATO now receives data from sharing economy platforms including Uber, Airbnb, Airtasker, and 50+ others, making it virtually impossible to hide gig earnings.

All platform income must be reported — Uber rides, Airbnb bookings, Airtasker tasks, freelance work. What surprises many is the GST obligation: driving for hire requires GST registration regardless of income level.

Legitimate deductions include: Vehicle expenses, work-related phone/internet costs, equipment, and platform fees.

5. Small Business: Personal-Professional Blur

Risk Level: MEDIUM

Small businesses mixing personal and business expenses remains a common error that’s easy for ATO algorithms to detect. Red flags include personal expenses claimed as business deductions and round-number claims without documentation.

The solution: Separate bank accounts and credit cards, contemporaneous record-keeping, and regular business activity statement reconciliation.

Your Compliance Action Plan

Before lodging your 2025 return, declare all income from every source — the ATO’s data matching means they likely know about income you think is hidden. Keep detailed records for every deduction with original receipts, bank statements, and supporting documentation.

For work-from-home claims, maintain daily timesheets throughout the year. For rentals, keep evidence properties were genuinely available. For crypto, track every transaction with AUD conversions.

Avoid red flags: don’t use round numbers without documentation, don’t estimate when records are required, and never mix personal and business expenses without clear separation.

When Professional Help Becomes Essential

Professional help with your taxes becomes really important with multiple income sources,and for rental properties, cryptocurrency investments, sole trader operations, previous ATO correspondence, or significant deductions. The cost of professional advice is almost always less than audit penalties and stress, so don’t risk doing things yourself and flagging an ATO audit. 

At ITP, we’ve seen how proper preparation transforms potential audit risks into compliance confidence. Our systematic approach to record-keeping means our clients rarely face compliance issues.

The Reality Check: Compliance as Competitive Advantage

The ATO’s message for 2025 is clear: they have unprecedented technology, substantial funding, and determination to identify non-compliant taxpayers. With data matching covering everything from bank accounts to crypto wallets, flying under the radar has ended. 

However, as we mentioned at the start, this benefits honest taxpayers through faster processing and larger legitimate refunds. The ATO’s sophisticated systems catch the non-compliant, not punish the compliant.

Treat compliance as competitive advantage rather than burden. Accurate reporting with proper documentation protects you from audit risk and often reveals missed legitimate deductions. Good record-keeping saves time, reduces stress, and provides clear financial evidence.

The bottom line: compliance is no longer optional, but doesn’t have to be complicated. With proper systems, professional guidance, and commitment to accuracy, you can navigate the new landscape with confidence.

Find your local ITP office today and book in for an audit-safe tax return with maximum benefits. 

FAQs: Your Tax Audit Questions Answered

What are the ATO’s main audit targets for 2025?

The five primary targets are rental property claims with their 90% error rate, work-from-home deductions contributing to the $8.7 billion tax gap, cryptocurrency transactions, gig economy income, and small business expense mixing.

How does ATO data matching work?

The ATO collects information from over 350 sources including banks, employers, and platforms, then uses algorithms to identify discrepancies requiring investigation.

What should I do if I’ve made a mistake?

Contact a registered tax agent immediately for voluntary disclosure options. The ATO treats voluntary disclosures more favourably than discovered errors.

How long should I keep tax records?

Five years from lodgement date, in most cases. For capital gains assets like property and crypto, keep records until five years after disposal.

Disclaimer: This provides general information only and should not replace professional tax advice. Tax requirements change regularly and individual circumstances vary. Consult a qualified tax professional for tailored advice.

Work Travel Expenses 2025 Tax Return: Complete ATO Guide

What You’ll Learn:

  • What qualifies as deductible work travel versus regular commuting in 2025
  • The 5 main categories of claimable expenses: transport, accommodation, meals, communication, and other costs
  • When travel diaries are mandatory and what information you must record
  • Current ATO reasonable allowance rates for meals and incidentals (2024-25)
  • Common travel expense mistakes that cost you money or trigger ATO attention
  • Practical compliance checklist to maximise claims while staying ATO-compliant

The rules around work travel expenses have evolved in a big way since 2021 (goodbye, Covid era), and with the ATO’s increased scrutiny on deduction claims, getting this right has never been more important. Work-related travel expenses you can claim in 2025 include transport, accommodation, meals, and incidentals — but only when traveling away from your regular workplace for genuine business purposes.

As tax professionals who’ve helped thousands of Australians maximise their legitimate deductions, we’ve seen how proper understanding of travel expense rules can save you hundreds or even thousands of dollars. With work-related deductions contributing significantly to Australia’s tax gap, the ATO is paying closer attention to travel claims than ever before.

What Qualifies as Deductible Work Travel in 2025?

The fundamental principle hasn’t changed: you can claim work travel expenses when you’re required to travel away from your regular workplace for work purposes. Your regular workplace is where you normally perform your work duties — your employer’s office, a regular client site, or even your home if you’re a remote worker.

“Many clients assume they can claim travel to conferences or training events, even when the primary purpose includes significant personal benefit,” explains senior ITP tax advisor Sarah Chen. “This is one of the most common mistakes we see during our tax return preparation consultations

Examples of qualifying work travel:

  • Traveling interstate for business meetings
  • Visiting clients away from your regular workplace
  • Work-related conferences or training (where work activities are primary)
  • Site inspections away from your usual work location

What doesn’t qualify:

  • Regular commuting between home and usual workplace
  • Travel where the main purpose is personal
  • Travel to your regular workplace from an unusual starting point

Pro Tax Tip: If you work from multiple locations regularly, none may qualify as travel expenses — the ATO considers these “regular workplaces.”

The 5 Main Categories of Claimable Travel Expenses

1. Transport Costs

All reasonable transport expenses are deductible when traveling for work: flights, trains, buses, taxis, and car expenses. For car travel, use either the cents per kilometre method (88 cents per km for 2024-25 and 2025-26) or the logbook method.

2. Accommodation

Hotel stays, serviced apartments, and short-term accommodation directly related to work travel are fully deductible. If you extend your stay for personal reasons, only the work-related portion qualifies.

3. Meals and Incidentals

Claim meal expenses when traveling overnight for work, typically using the ATO’s reasonable allowance rates updated annually. 

4. Communication Costs

Work-related phone calls, internet access, and data usage while traveling are deductible. Keep records separating work from personal use.

5. Other Work-Related Expenses

Parking fees, tolls, laundry for extended trips, and expenses directly related to work travel qualify.

Travel Diary Requirements: When and How

A travel diary becomes mandatory when you’re travelling for 6 or more nights consecutively for work purposes. However, we recommend maintaining travel records for all work trips.

What to Record

Your travel diary must include:

  • Dates and times of departure and return
  • Places visited and accommodation details
  • Business activities undertaken each day
  • People met for business purposes
  • Expenses incurred with supporting receipts
  • Duration of business vs personal activities (if mixed purpose)

The ATO accepts digital travel diaries. Smartphone apps can make record-keeping easier with photos of receipts, GPS data, and calendar integration.

Case Study: Mark, a regional sales manager traveling throughout Queensland, maintained a comprehensive digital travel diary and claimed $8,400 in legitimate travel expenses. When the ATO requested documentation during a routine review, his detailed records resolved the matter quickly without adjustments. Make your life easier when it comes to tax time, and keep a travel diary like Mark does. 

The 2024-25 Reasonable Allowance Rates 

The ATO’s reasonable allowance rates determine how much you can claim for meals without detailed receipts. (That means yes, you can order the steak, but maybe not the bottle of wine or the cocktails by the pool.)

It’s important to note that these depend on your salary, too. Here’s an example of the reasonable rates for employees earning an annual salary of $143,650 or under: 

High-cost locations (major cities, tourist destinations):

Breakfast: $33.90 | Lunch: $38.10 | Dinner: $64.95 | Incidentals: $21.80

Earn more? Your allowance is higher. Not eating in a high-cost, city location? Your entitlements may vary. Take a look at this document to be sure of what you can reasonably claim, depending on your circumstances. If your expenses exceed these rates, you need receipts and can only claim actual amounts spent (up to but not above the reasonable limits).

5 Common Work Travel Mistakes That Cost You Money

Tax rules are complex, we know. We want to help you avoid those. Here are some of the most common mistakes we see: 

1. Conference and Training Misconceptions

Not all conference travel is automatically deductible. The ATO examines whether the primary purpose is work-related skill development or personal interest.

2. Mixing Business and Personal Travel

When extending work trips for personal reasons, only the work-related portion is deductible. You must apportion expenses fairly with detailed records. 

3. Claiming Regular Commuting

Travel from home to your regular workplace is never deductible, regardless of distance or cost.

4. Inadequate Documentation

“We see clients lose significant deductions simply because they can’t provide adequate documentation,” notes ITP senior accountant David Williams. “The ATO’s data matching means they often know about your travel, but without proper records, you can’t claim the expenses.”

5. Family Travel Complications

Adding family members creates complications. You can only claim additional costs incurred for work purposes alone.

Special Situations & Advanced Scenarios

There are a handful of situations where the rules are slightly different. Here are some examples: 

Multiple Workplace Locations: If your job requires regular work at multiple locations, travel between them during work hours is generally deductible.

Home-Based Workers: If you normally work from home but occasionally travel to your employer’s office, this may be deductible as travel away from your regular workplace.

International Travel: International business travel follows similar principles but with additional complexity around currency conversion. 

Company Cars: Generally, you can’t claim expenses for travel in company-provided vehicles, but exceptions exist for additional costs like parking.

Your 2025 Work Travel Compliance Checklist

Still confused? We’ve got your back. Here is a checklist of all the steps you should take to ensure you’re claiming the right amounts, not overspending, and keeping the kinds of records you’ll need before your tax appointment with us: 

Before Travel

  • Confirm trip is primarily for work purposes
  • Set up digital expense tracking tools
  • Understand employer travel policies 

During Travel

  • Record daily activities in travel diary
  • Keep all receipts (digital photos acceptable)
  • Note business vs personal time for mixed trips
  • Track car kilometers if driving

After Travel

  • Organise receipts and match to diary entries
  • Calculate expenses using current allowance rates
  • Store records securely for 5+ years
  • Book in your ITP appointment before tax time arrives

EOFY Preparation

  • Compile annual travel expense summary
  • Review for missed claims or documentation gaps
  • Prepare supporting documentation for tax agent

When Professional Help Becomes Essential

Complex travel situations benefit significantly from professional advice. Modern work arrangements, international travel, and mixed business-personal trips can create scenarios where the wrong approach costs you money or creates compliance risks.

At ITP, our experienced tax professionals understand work travel deduction nuances and can help maximise your legitimate claims while maintaining ATO compliance and ensuring you don’t get caught up in an ATO audit scare. We’ve been helping Australians for over 50 years, and our travel expense expertise saves you both time and money.

Our comprehensive tax services include detailed travel expense reviews, and you can book a consultation at any of our office locations across Australia.

Maximising Your 2025 Travel Deductions

Work travel expenses remain valuable deduction categories, but the ATO’s increased scrutiny makes proper documentation and compliance totally crucial. The key is understanding what qualifies, maintaining excellent records, and claiming only legitimate expenses with proper substantiation.

The ATO’s data matching capabilities mean they often know about your travel through credit card and banking records (yep, you read that right). This makes proper documentation your best protection and ensures you can claim every entitled dollar.

Staying organised with travel expenses throughout the 2024-25 financial year will make tax time smoother and potentially more profitable. Good record-keeping systems and professional advice when needed typically pay for themselves through additional deductions you didn’t even know about, as well as avoided compliance issues.

FAQs: Your Work Travel Expense Questions Answered

Can I claim accommodation if I travel for work in Australia?

Yes, accommodation costs are fully deductible when you’re required to stay overnight away from home for work purposes, including hotels, motels, and serviced apartments.

What is considered a regular place of work by the ATO?

Your regular place of work is where you normally perform employment duties — your employer’s office, regular client sites, or home office if you’re remote.

Do I need a travel diary to claim work travel expenses in 2025?

A formal travel diary is mandatory for trips lasting 6+ consecutive nights. However, maintain travel records for all work trips to protect during ATO reviews.

Can I claim meals when traveling for work conferences?

Yes, meal expenses during work-related conference travel where you are away from home overnight are deductible using ATO reasonable allowance rates, unless conference registration includes meals. 

What happens if I extend a work trip for personal reasons?

You can only claim the work-related portion. If extending doesn’t increase accommodation costs, accommodation remains fully deductible, but additional personal expenses aren’t claimable.

How do I calculate car expenses for work travel?

Use either cents per kilometer (88 cents for 2024-25, up to 5,000 km) or the logbook method for higher claims requiring detailed usage records.

Disclaimer: This article provides general information about work travel expense deductions and should not be considered personal tax advice. Tax laws are complex and change regularly, and individual circumstances vary significantly. Always consult with a qualified tax professional who can assess your specific situation. ITP Tax Professionals disclaims any liability for decisions made based solely on the general information provided in this article.

Tax Deadlines Australia 2025: Key Dates for Your Tax Return

What You’ll Learn:

  • Critical lodgement deadlines for individuals, businesses, and companies in 2025
  • PAYG instalment due dates and penalty rates for late payments
  • BAS lodgement requirements and GST registration thresholds
  • Extension options available through registered tax agents
  • Penalty amounts and interest charges for missing key deadlines
  • Strategic timing opportunities to optimise cash flow around tax obligations

Tax time is officially here, and if you’re like most Australians, you’re probably wondering exactly when your tax return is due and what happens if you miss the deadline. The good news is that understanding Australia’s tax deadlines for 2025 is really straightforward once you know the key dates.

In 2025, most Australians must lodge their tax return by 31 October. Extensions may apply if you use a registered tax agent, potentially giving you until May 2026. However, there are several other important deadlines throughout the year that could affect your tax obligations, especially if you’re running a business.

As tax professionals who’ve helped thousands of Australians navigate these deadlines over our 50+ years in practice, we know that staying ahead of the dates not only helps you avoid penalties but often results in faster processing and earlier refunds! Let’s break down everything you need to know about Australia’s tax deadlines for 2025.

Tax Deadlines Australia 2025: Key Dates at a Glance

Here are the critical dates every Australian taxpayer should have marked in their calendar:

EventDeadline
First day to lodge tax return: 1 July 2025     
Self-lodged return deadline:  31 October 2025 
Tax agent deadline (if eligible): Up to 15 May 2026
Q1 BAS (Jul–Sep 2024):       28 October 2025 
Q2 BAS (Oct–Dec 2024): 28 February 2026
Q3 BAS (Jan–Mar 2025): 28 April 2026   
Q4 BAS (Apr–Jun 2025): 28 July 2026

The most important date for most people is 31 October 2025 — that’s when your individual tax return must be lodged if you’re doing it yourself. Miss this date, and you’ll face penalties that can quickly add up.$330 for 28 days late up to a maximum of $1,620 after 140 days late. 

When Is Your 2025 Tax Return Due?

The standard deadline for lodging your 2024-25 tax return is 31 October 2025 if you’re preparing and lodging it yourself. This date applies whether you’re lodging online through myTax, using commercial tax software, or submitting a paper return.

However, many people don’t realise they have options — if you use a registered tax agent to prepare your return, you automatically qualify for an extension. Depending on your specific circumstances and the agent’s lodgement program, this extension can push your deadline out to anywhere from March to May 2026.

“Most clients are surprised to learn they can get an automatic extension just by using a registered tax agent,” explains senior ITP tax advisor Michelle Roberts. “It’s not just about the extra time — agents often identify deductions and opportunities that more than pay for their fees.”

The extension isn’t just a nice-to-have either. It provides valuable breathing room to gather all your documentation, ensures you don’t miss any deductions, and often results in more accurate returns. At ITP, our clients with agent lodgement deadlines rarely face the stress and rush that comes with the October deadline.

If you’re considering using a tax agent for the first time, don’t wait until September to make that decision. The best agents get booked up quickly, especially as we approach the busy season. Find your nearest office and book a consultation with ITP early to secure your spot and take advantage of the extended deadline.

BAS Lodgement Dates for 2024-25

If you’re running a business, you’ll also need to keep track of your Business Activity Statement (BAS) deadlines. These quarterly reports are due throughout the year and have strict deadlines that don’t offer the same flexibility as individual tax returns. 

The BAS lodgement dates for the 2024-25 financial year are:

Quarterly BAS deadlines:

  • Q1 (July–September 2024): Due 28 October 2025
  • Q2 (October–December 2024): Due 28 February 2026
  • Q3 (January–March 2025): Due 28 April 2026
  • Q4 (April–June 2025): Due 28 July 2026

These dates are non-negotiable and apply when you lodge yourself. If you use an agent they can get an additional 28 days extension except in the case of the Q2 date which is already extended because of the Christmas break. Unlike individual tax returns, there’s no automatic extension available for BAS lodgements, making it crucial to stay on top of these deadlines throughout the year.

If you’re registered for monthly BAS (typically because your annual turnover exceeds $20 million), your deadlines are the 21st of the month following each month. The stakes are higher with monthly reporting, so most businesses in this category work with professional accountants to ensure compliance.

What Happens If You Lodge Late in 2025?

Missing tax deadlines isn’t just inconvenient — it can be expensive. The ATO takes late lodgements seriously, and the penalties can add up quickly.

For individual tax returns lodged after the 31 October deadline, you’ll face a failure-to-lodge penalty of $330 for every 28-day period you’re late, capped at a maximum of $1,650 (five penalty units). Here’s how that looks in practice:

Real penalty examples:

  • Lodge 1 month late: $330 penalty
  •  Lodge 2 months late: $660 penalty
  • Lodge 3 months late: $990 penalty
  • Lodge 5+ months late: $1,650 penalty (maximum)

But the financial penalties are just the beginning. Late lodgement can trigger a cascade of other problems that make the situation worse. The ATO may issue you with a default assessment based on limited information, which is often much higher than what you actually owe. You’ll also lose access to certain payment options and arrangements, and in serious cases, the ATO can pursue garnishee orders against your bank accounts or employer.

The good news is that these penalties are entirely avoidable. Lodge your return on time, or better yet, use a registered tax agent to automatically qualify for an extension. The cost of professional tax preparation is almost always less than the potential penalties, not to mention the stress and complications that come with late lodgement.

If you’re already behind on previous years’ returns, don’t ignore the problem — it won’t go away. The ATO has extensive data matching capabilities and will eventually catch up with non-lodgers. Contact a qualified tax professional to discuss your options and get back on track.

Why Lodge Early? Benefits of Beating the Rush

While you have until 31 October to lodge your return (or later with an agent), there are compelling reasons to get your tax affairs sorted early in the season.

The ATO typically finishes uploading pre-filled information from employers, banks, and health funds by mid to late July. Once this data is available, lodging late July and August often means faster processing times and quicker refunds. During the end of season (late September and October), processing times can stretch a little longer, while early lodgers often see their refunds within days.

Note: If you have managed investment funds you should wait until the annual tax statements are issued which is generally in September each year.

Early lodgement also gives you time to address any issues that arise. If the ATO has questions about your return or needs additional documentation, dealing with these requests in July or August is much easier than trying to resolve them during the October rush when everyone is scrambling to meet deadlines.

There’s also a practical benefit to early preparation: you’re less likely to make mistakes when you’re not rushing. Taking time to gather all your documents, review your deductions carefully, and ensure everything is accurate can result in larger refunds and fewer compliance issues down the track. 

However, don’t rush to lodge on 1 July. Wait until the ATO has finished pre-filling your information to avoid discrepancies and the need to amend your return later. Mid to late July is typically the sweet spot for early lodgers.

Your Tax Deadline Action Plan

Getting organised now will save you stress later and ensure you don’t miss any deadlines or opportunities. Here’s your action checklist for the 2025 tax season:

Before 31 October 2025:

  • Decide whether to self-lodge or use a tax agent
  • If using an agent, book your appointment early
  • Gather all tax documents (Income statements, bank interest, crypto tax statements)
  • Organise work-related expense receipts and documentation
  • Review last year’s return for potential missed deductions
  • Lodge your return or confirm agent lodgement timeline

For Business Owners:

  • Mark all quarterly BAS deadlines in your calendar
  • Set up systems for tracking GST throughout the year
  • Consider monthly bookkeeping to avoid quarterly rushes
  • Review whether you need to register for monthly BAS

If You’re Behind:

  •  Contact a tax professional immediately to discuss catch-up options
  • Gather documentation for outstanding years (aim to lodge multiple years in one go to reduce the chance of late penalties
  • Consider voluntary disclosure if you’ve missed income
  • Set up systems to stay current going forward

The most important step you can take right now is making a decision about how you’ll handle your 2025 tax return. If you’re considering professional help — even if you’ve waited until the last minute — don’t stress, we can help. Find your nearest office, or if you can’t make it in to see an ITP agent in person, get in touch and we’ll help you out via email or over the phone. 

At ITP, we’ve been helping Australians navigate tax deadlines and maximise their returns for over 50 years. Our experienced team understands the complexities of modern tax obligations and can help ensure you meet all deadlines while claiming every deduction you’re entitled to.

Don’t let tax deadlines control your year — take control of them instead. The few minutes you invest in planning now can save you hundreds of dollars in penalties and potentially thousands in missed deductions and opportunities.

FAQs: Your 2025 Tax Deadline Questions Answered

When is tax due in Australia in 2025?

Individual tax returns for the 2024-25 financial year are due by 31 October 2025 if you’re lodging yourself. If you use a registered tax agent, you automatically qualify for an extension if all other years have been lodged. That can push your deadline to as late as 15 May 2026, depending on your circumstances. 

What happens if I lodge my tax return late in 2025? 

Late lodgement triggers penalties of $330 for every 28-day period you’re late, capped at $1,650. You may also face default assessments, lose access to payment arrangements, and in serious cases, face garnishee orders on your accounts.

When can I lodge my 2025 tax return?

The ATO’s tax return lodgement system opens on 1 July 2025. However, it’s often worth waiting until mid to late July when the ATO has finished uploading pre-filled information from employers, banks, and other third parties to ensure accuracy.

Do I get an extension if I use a tax agent?

Yes, using a registered tax agent automatically qualifies you for an extension. The exact deadline depends on the agent’s lodgement program, but extensions typically run from March to May 2026, giving you an extra 5-7 months.

What are the BAS deadlines for 2025?

Quarterly BAS deadlines are: Q1 (28 October 2025), Q2 (28 February 2026), Q3 (28 April 2026), and Q4 (28 July 2026). These deadlines apply regardless of whether you use an agent and don’t offer automatic extensions.Disclaimer: This article provides general information about Australian tax deadlines and should not be considered personal tax advice. Tax obligations vary based on individual circumstances, and deadlines may change. Always refer to the latest ATO guidance and consult with a qualified tax professional for advice specific to your situation. ITP Tax Professionals disclaims any liability for decisions made based solely on the general information provided in this article.

Company Tax Rates Australia 2025: Complete Guide

What You’ll Learn:

  • The two company tax rates for 2025: 25% vs 30% and which applies to your business
  • Base rate entity eligibility requirements including the $50 million turnover and 80% passive income tests
  • How franking credits work with different tax rates and strategic timing considerations
  • Critical payment deadlines and PAYG instalment requirements to avoid penalties
  • Common mistakes that trigger unexpected 30% tax bills and how to avoid them
  • Tax planning strategies to optimise your company’s tax position for 2025

Getting hit with surprise tax bills or confused about what rate your company should pay? You’re not alone. Australia’s company tax system offers two main rates for 2025: 25% for eligible small businesses and 30% for everyone else – but determining which applies to your company involves more than just checking your revenue.

The stakes are high: choosing the wrong rate or missing eligibility requirements can cost thousands in overpaid taxes or penalties. This guide cuts through the complexity to help you understand exactly what your company owes, when it’s due, and how to optimise your tax position for 2025.

Whether you’re running a growing startup wondering about the $50 million threshold or managing an established company navigating recent legislative changes, we’ll walk you through everything you need to know about Australian company tax rates in language that actually makes sense.

Understanding the Two-Tier Company Tax System

Australia operates a two-tier company tax system designed to support smaller businesses while ensuring larger companies contribute their fair share. The system isn’t just about company size, it’s about meeting specific criteria that determine your eligibility for the lower rate.

The 25% base rate entity tax rate applies to companies that qualify as “base rate entities” by meeting both a turnover test and a passive income test. Most small to medium businesses will qualify, but the rules have nuances that catch many business owners off guard.

The 30% standard company tax rate applies to all other companies, including larger businesses, those with high passive income, and companies that don’t meet the base rate entity criteria. This rate has remained stable for several years and continues through 2025.

The key insight many business owners miss: eligibility is determined annually based on your company’s specific circumstances for each income year. You might qualify for 25% one year but not the next, depending on how your business evolves.

Base Rate Entity Eligibility: The $50 Million Question

To qualify for the 25% company tax rate in 2025, your company must meet two strict criteria that work together to identify genuine small-to-medium businesses.

The turnover test requires your company’s aggregated turnover to be less than $50 million for the 2024-25 income year. This sounds straightforward, but “aggregated turnover” includes income from all related entities, not just your individual company. If you operate multiple businesses or have complex corporate structures, you’ll need to combine turnover across all connected entities.

The passive income test – often overlooked but equally important – requires that 80% or less of your company’s assessable income consists of “base rate entity passive income” (BREPI). This rule prevents investment companies and passive income generators from accessing the small business rate intended for active trading businesses.

Base rate entity passive income includes dividends (except those where you hold 10% or more voting power), interest income, rent and royalties, net capital gains, and trust distributions traceable to passive income. The 80% threshold means if more than 80% of your income comes from these passive sources, you’ll pay the 30% rate regardless of your turnover.

Here’s a practical example: Coffee Masters Pty Ltd has $8 million annual turnover from their café chain (qualifying under the turnover test) but also receives $3 million in rental income from investment properties. Their total assessable income is $11 million, with $3 million (27%) being passive income. Since passive income is less than 80%, they qualify for the 25% rate.

Recent Changes Affecting Your 2025 Tax Position

Global Anti-Base Erosion (GloBE) rules have introduced big changes for larger companies, with the Income Inclusion Rule effective from 2024-25 and the Undertaxed Profits Rule starting 2025-26. These rules impose a 15% domestic minimum tax on Australian operations of multinational groups with consolidated revenue exceeding €750 million.

Foreign resident CGT changes effective from July 2025 strengthen the exemption regime and increase withholding tax rates from 12.5% to 15%, with the previous $750,000 threshold removed entirely. Australian companies with foreign shareholders or international operations need to review their structures accordingly.

The instant asset write-off threshold remains at $20,000 for businesses with turnover under $10 million, extended until 30 June 2025 (and promised to continue into 2025-26). This provides continued opportunities for eligible companies to immediately deduct business asset purchases rather than depreciate them over time.

These changes reflect the government’s focus on ensuring larger companies and multinational operations pay appropriate tax while maintaining support for genuine small-to-medium Australian businesses through the base rate entity system.

Franking credits: Making the most of the two-tier system

The franking credit system adds another layer of complexity to company tax rates, but understanding it can significantly benefit your shareholders. Franking rates for 2025 are based on your company’s tax rate: 25% for base rate entities and 30% for companies paying the standard rate.

Here’s the crucial detail most business owners miss: franking rates are determined by your previous year’s tax status, not your current year. If your company was a base rate entity in 2023-24, you’ll frank dividends at 25% during 2024-25, even if your current year circumstances change.

Maximum franking benefits occur when you fully frank dividends and your shareholders can utilise the credits effectively. Australian resident shareholders can claim franking credits as tax offsets, potentially receiving refunds if their marginal tax rate is lower than the company tax rate.

For strategic planning, consider timing dividend payments around your base rate entity status changes. If you expect to lose base rate entity status next year, paying fully franked dividends while still qualifying for 25% franking can provide better outcomes for shareholders.

The 45-day holding period rule requires shareholders to hold shares for at least 45 days around the ex-dividend date to claim franking credits, with a $5,000 annual threshold before these integrity rules apply. Understanding these requirements helps ensure your dividend strategy delivers intended benefits.

Payment obligations and critical deadlines

Company tax returns for 2024-25 must be lodged by 15 January 2026, with extensions available until 15 May 2026 if you use a registered tax agent. Missing these deadlines triggers penalties of $330 per 28-day period, up to $1,650 for smaller entities.

PAYG installments represent your most frequent tax obligation, with quarterly payments due 28 days after each quarter end. September quarter installments are due 28 October, December quarter by 28 February, March quarter by 28 May, and June quarter by 28 August.

Companies with business income over $20 million must pay their monthly PAYG installments by the 21st of each following month. The ATO automatically enters companies into the PAYG instalment system if instalment income reaches $2 million or tax payable exceeds $1,000.

Shortfall interest applies when your PAYG installments fall short of 85% of your actual tax liability. This interest compounds daily until paid, making accurate installment calculations crucial for cash flow management. You can vary your instalments during the year if your circumstances change significantly.

Business Activity Statements (BAS) are due quarterly (28 days after quarter end) or monthly (21 days after month end for businesses with GST turnover over $20 million). These often coincide with PAYG installments, creating significant cash flow events for many businesses.

Tax planning strategies that actually work

Base rate entity optimisation requires careful monitoring of both turnover and passive income throughout the year. If you’re approaching the $50 million threshold, consider timing large sales or spreading income across financial years. For passive income management, restructure investment holdings or delay capital gains realisation to stay under the 80% threshold.

Franking strategy becomes critical when your base rate entity status might change. If you expect to move from 25% to 30% tax rate next year, consider declaring dividends in the current year while franking rates are lower. On the other hand, if you’re moving from 30% to 25%, delay dividend payments until after the transition.

PAYG installment management offers a few strategic options. Choose between paying a fixed instalment amount or using the instalment rate method depending on your cash flow patterns. If business income drops significantly, vary your installments downward to improve cash flow – but ensure you’ll still meet the 85% threshold to avoid interest charges.

Asset purchase timing around the $20,000 instant write-off threshold can provide immediate tax benefits for eligible companies. Purchase and install qualifying assets before 30 June 2025 to maximise the current year’s deductions.

Corporate structure reviews become essential as your business grows. If you’re approaching the $50 million threshold, consider whether splitting operations across multiple entities might maintain base rate entity status, but remember that related entity rules mean this strategy has limits.

Common mistakes and how to avoid them

Misunderstanding aggregated turnover catches out many growing businesses. Don’t just look at your individual company’s revenue – include all related entities, overseas operations, and connected businesses. The ATO’s interpretation of “control” for related entity purposes is broader than many business owners expect.

Ignoring the passive income test leads to unexpected 30% tax bills. Even small amounts of rental income, interest, or capital gains can push you over the 80% threshold if your trading income drops. Monitor this ratio throughout the year, especially during quieter trading periods.

Incorrect franking calculations occur when business owners don’t realise franking rates lag behind current year tax rates by one year. Plan dividend payments with this timing difference in mind, and maintain adequate franking account balances to avoid over-franking penalties.

Inadequate PAYG installments result in interest charges that compound daily. The 85% safe harbor rule isn’t just a guideline – it’s the threshold between cash flow management and expensive interest charges. When in doubt, vary your installments upward rather than risk shortfall interest.

Poor record keeping creates problems during ATO reviews. Document the basis for your base rate entity eligibility claims, maintain franking account records, and keep detailed transaction records for passive income calculations. The ATO’s data matching capabilities mean discrepancies will likely be detected.

Your next steps for 2025 compliance

Before 30 June 2025 (or before submitting your tax return), review your projected turnover and passive income to confirm your expected tax rate for the year. This determines your PAYG instalment requirements and helps optimise timing for major transactions or dividend payments.

Consider professional advice if your company operates near the $50 million threshold, has complex passive income streams, or is part of a multi-entity structure. The potential tax savings from proper base rate entity qualification typically far exceed professional fees.

Set up compliance systems to track aggregated turnover and passive income ratios monthly rather than discovering issues at year-end. Use accounting software that properly categorises income types and maintains franking account records automatically.

Plan major transactions carefully around your base rate entity status, considering both immediate tax implications and future year effects on eligibility and franking rates.

Ready to ensure your company pays the right tax rate and maximises available concessions? Book a consultation with an ITP business tax specialist who can review your specific circumstances and develop a strategy tailored to your business needs.

Need immediate assistance? Call 1800 367 487 to speak with a qualified tax accountant who understands the complexities of Australian company tax rates and can guide you through the compliance requirements for 2025.

Frequently Asked Questions About the Company Tax Rate for 2025

Can my company qualify for the 25% rate if we have investment properties? 

Yes, but rental income counts as passive income under the base rate entity test. If rental income plus other passive income sources exceed 80% of your total assessable income, you’ll pay the 30% rate regardless of turnover. Many property investment companies find themselves caught by this rule.

What happens if my turnover crosses $50 million mid-year? 

Base rate entity eligibility is determined by your full-year aggregated turnover. If you cross $50 million at any point during the income year, you won’t qualify for the 25% rate for that entire year. Consider timing large sales or contracts to manage this threshold.

How do franking credits work when my tax rate changes between years? 

Franking rates are based on your previous year’s tax rate, not your current year. If you were a base rate entity in 2023-24, you’ll frank 2024-25 dividends at 25% even if you no longer qualify for base rate entity status in the current year.

Do I need to pay PAYG installments if this is my first year in business? 

New companies typically aren’t required to pay PAYG installments in their first year unless they choose to enter the system voluntarily. However, if you acquire an existing business or expect significant tax liability, voluntary entry can help with cash flow management.

Can I claim the instant asset write-off if my turnover is close to $10 million? 

The instant asset write-off threshold is based on your turnover in the previous income year. If your 2023-24 turnover was under $10 million, you can claim the write-off for 2024-25 purchases, even if current year turnover exceeds the threshold.

What’s the penalty for getting my company tax rate wrong? 

If you underpay tax due to incorrectly claiming the 25% rate, you’ll face the tax shortfall plus penalty tax and interest charges. Penalties depend on whether the ATO considers the error careless (25% penalty) or deliberate (75% penalty). Accurate record-keeping and professional advice minimise these risks.

Disclaimer: This article provides general information about Australian company tax rates and should not be considered personal tax advice. Tax laws are complex and individual circumstances vary significantly, so you should always consult with a qualified tax professional for advice tailored to your specific situation. ITP Accounting Professionals disclaims any liability for decisions made based solely on this general information.

Business owner

$20,000 Instant Asset Write-Off Ends 30 June 2025 — Or Does It?

What’s Happening with the $20,000 Instant Asset Write-Off? 

If you’re a small business owner, you’ve probably heard about the $20,000 instant asset write-off. It’s been one of the most popular tax breaks for small businesses since it was introduced, letting you immediately deduct the full cost of equipment, tools, and other assets instead of depreciating them over years.

But the current rules are (or were) set to expire on June 30, 2025. And while there’s been political talk about extending it, the reality is more complicated than the headlines suggest.

After helping thousands of small businesses navigate these write-offs over the years, we know how much they matter for your cash flow and tax planning. Let’s break down what’s actually happening, what you need to know, and what you should do before the deadline hits.

What Exactly Is the $20,000 Instant Asset Write-Off?

The instant asset write-off is pretty straightforward. If your business has an aggregated turnover under $10 million, you can immediately deduct the full cost of eligible assets that cost less than $20,000 each. Instead of claiming depreciation over several years, you get the entire deduction in the year you buy and use the asset.

Here’s how it works:

  • Who qualifies: Small businesses with turnover under $10 million
  • What counts: New or second-hand depreciating assets under $20,000 each
  • When it applies: Assets first used or installed ready for use between July 1, 2024, and June 30, 2025
  • Per-asset basis: You can write off multiple assets as long as each one costs under $20,000

Real-world example: If you buy a $15,000 piece of equipment and a $8,000 computer system in the same year, you can immediately deduct the full $23,000 instead of spreading it over multiple years.

The benefits are clear:  better cash flow, simpler bookkeeping, and immediate tax relief when you’re investing in your business. It’s designed to encourage small businesses to buy the equipment they need without worrying about complex depreciation schedules. It also encourages investment and a stronger economy, or ‘jobs and growth’, in other words.

The Political Promise vs. Reality Check

This is where things get interesting. During the 2025 federal election campaign, both major parties made big promises about the instant asset write-off:

Labor’s commitment: The Albanese government promised to extend the $20,000 write-off for another year if re-elected.

Coalition’s counter-offer: The opposition pledged to make the write-off permanent with a higher $30,000 threshold, arguing that certainty is what small businesses really need.

Sounds great, right? Here’s the catch:  While Labor won the election and technically legislated an extension, the 2025 federal budget didn’t actually allocate funding beyond June 2025 for the scheme. That’s created a gap between the political promises and the budget reality.

What this means in practice: The legislation exists for an extension, but without budget funding, the future remains uncertain.

What We Know for Certain (And What We Don’t)

Definitely happening:

  • The current $20,000 instant asset write-off expires on June 30, 2025
  • You can still claim it for eligible assets purchased and used before that date
  • The extension legislation exists but lacks budget funding

Still uncertain:

  • Whether the government will find budget funding for the promised extension
  • How long any extension might last. Current promise is 30 June 2026
  • Whether the threshold might change (from $20,000 to $30,000 or back to lower amounts)

Our professional perspective: After decades of watching tax policy changes, we’ve learned that political promises don’t always translate to immediate action. Budget constraints, changing priorities, and Senate negotiations can all affect what actually happens.

The reality is that even well-intentioned policies can be delayed or modified when budget time comes around. That’s not criticism of any particular government, it’s just how the system works.

Smart Strategies for the Uncertainty Around the $20,000 Instant Asset Write-Off

Given the unclear future of the instant asset write-off, here’s what we’re advising our small business clients:

If You Need Equipment Now

Act before June 30, 2025: If you’ve been planning equipment purchases, don’t wait. The current write-off is guaranteed until the deadline, but nothing beyond that is certain.

Focus on genuine business needs: Don’t buy equipment just for the tax break. Make sure any purchases align with your actual business requirements and cash flow capacity.

Consider timing: If you’re planning a major purchase, getting it done and “first used” before June 30 ensures you get the write-off under current rules.

If You’re Planning for the Future

Prepare for different scenarios: Budget for equipment purchases assuming the write-off might not be available. If it gets extended, that’s a bonus. If it doesn’t, you’re prepared.

Track the political process: Keep an eye on budget announcements and Senate negotiations. The extension could still happen, but it might come with different terms or timing. You can also keep up to date with the ITP blog, where we share regular updates about tax, to help keep you informed about what’s important.

Consider alternative depreciation strategies: If the instant write-off disappears, you’ll need to plan for traditional depreciation methods. This affects cash flow planning and timing of purchases.

Documentation and Compliance

Keep detailed records: For any assets you’re claiming under the current write-off, maintain thorough documentation showing purchase date, first use date, and business purpose.

Understand the “first use” requirement: The asset must be first used or installed ready for use before June 30, 2025. Simply purchasing before the deadline isn’t enough if you don’t start using it.

Consider professional advice: With the uncertainty around future rules, professional guidance can help you optimise your equipment purchasing strategy.

The Bigger Picture for Small Business

The instant asset write-off debate reflects broader challenges in small business tax policy. Small businesses need certainty to plan investments, but governments face budget constraints and changing economic priorities.

Why extensions keep happening: The write-off has been extended multiple times because it’s popular with small businesses and relatively easy to implement. But each extension creates more uncertainty about long-term planning.

The permanency argument: The Coalition’s push for a permanent write-off addresses the certainty issue, but permanent tax breaks are harder to fund and adjust when economic conditions change.

What small businesses really want: Based on our conversations with clients, most would prefer a lower permanent threshold over a higher temporary one. Knowing you can always write off equipment under $20,000, for example, is more valuable for planning than not knowing if you’ll be able to write off anything next year.

Your Next Steps

Before June 30, 2025:

  • Review your equipment needs and planned purchases
  • Ensure any assets you buy are “first used” before the deadline
  • Keep thorough documentation for any write-off claims
  • Consider your cash flow capacity for larger purchases

Looking ahead:

  • Stay informed about budget announcements and policy developments
  • Plan equipment purchases assuming the write-off might not continue
  • Consider how different scenarios would affect your business planning

Get professional advice: Tax policy uncertainty is exactly why professional guidance matters. We can help you navigate the current rules, plan for different scenarios, and ensure you’re maximising available benefits while managing business risks.

The instant asset write-off has been a valuable tool for small businesses, and there’s still time to use it under current rules. While the future remains uncertain, smart planning can help you make the most of available opportunities while preparing for whatever comes next.

For specific advice on how the instant asset write-off applies to your business situation, or help planning your equipment purchases before the deadline, book a consultation with your nearest ITP tax professional.

Disclaimer: This article is for information only and doesn’t constitute financial or tax advice. Tax laws are complex and every business situation is different. For personalised guidance, speak with a qualified tax professional who can analyse your specific circumstances.

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