As we approach the close of 2025, there are three important tax and compliance changes you need to know to keep your business financially sound and ATO ready heading into the new calendar year.
These updates concern:
- the small business instant asset write-off
- the new non deductibility of interest on ATO debts
- the ATO’s sharpened focus on compliance areas
Below we highlight how these may affect you and what action to consider before 30 June 2026.
INSTANT ASSET WRITE-OFF
Seize the opportunity wisely
For eligible small businesses (typically those with turnovers under $10 million), the instant asset write-off offers a significant cash flow benefit by allowing you to immediately deduct the cost of assets up to $20,000 purchased before mid 2026.
This can include:
- essential business equipment
- machinery or
- technology upgrades that help improve productivity and efficiency.
The new year is the perfect time to review your asset replacement plans and prioritise any necessary purchases before the 30 June deadline.
However, this isn’t a free pass to splurge on non essential or private use items.
The ATO will be looking closely to ensure these write-offs are genuinely business related. So, it’s wise to keep clear documentation about the purpose and use of these assets to support your claims in case of audit.
Taking advantage of this benefit can reduce your taxable income this financial year and improve your cash position.
If you’ve been putting off upgrading key equipment or digital tools, acting soon makes good financial sense.
NON-DEDUCTIBLE ATO INTEREST
Act now to avoid extra costs
Starting from 1 July 2025, any interest charged by the ATO on overdue tax liabilities – including general interest charges and shortfall interest charges – is no longer be tax deductible.
Previously, businesses could deduct these costs, softening the financial blow of late payments. That safety net has now been removed.
This change increases the effective cost of carrying ATO debts, so it’s more critical than ever to manage your tax liabilities carefully.
Paying off outstanding debts before 30 June 2026 could save you significant after tax costs. If you currently have unpaid tax or superannuation debts, now is an excellent time to review payment plans and work with our accounting team to prioritise early repayments.
The change also reinforces the importance of timely tax compliance. The ATO’s enforcement efforts have intensified, with increased audits and director liability scrutiny, especially around unpaid super and PAYG.
Ensuring your tax obligations are met promptly will reduce risk and unnecessary financial penalties.
ATO FOCUS AREAS
Where to keep your records tight
The ATO is targeting areas where small and medium businesses commonly slip up. Awareness and proactive management here can save you headaches.
- GST compliance
The ATO increasingly moves businesses with late or incorrect BAS lodgments from quarterly to monthly reporting, demanding greater accuracy and timeliness. Check your BAS closely and ensure GST records are complete and reconciliations are done regularly. - Contractor and side hustle income:
Data matching tools now make it harder to underreport earnings from contractors or gig work. If your business hires contractors, ensure all payments are correctly declared and superannuation obligations are met. - Use of business funds for personal purposes
Any personal use of business cars, boats or funds must be carefully documented and, where required, taxed appropriately. Similarly, trust distributions should be aligned with the beneficiaries who actually receive income to avoid compliance issues. - Payroll and superannuation
Underpayment of super or PAYG withholding is a red flag for the ATO. Single Touch Payroll reporting must be up to date, and super guarantee payments made on time.
By maintaining clean separation between business and personal expenses and diligent record keeping, you keep audit risk low and maintain good standing with the ATO.
WHAT YOU CAN DO NOW
Planning NOW for EOFY 2026
- Review planned capital purchases to maximise the instant asset write-off before 30 June.
- Check your outstanding ATO tax and super debts and prioritise repayment before the non-deductible interest rule starts.
- Conduct a compliance health check on your GST reporting, contractor payments and payroll to avoid surprises.
- Keep detailed records of business assets and trust distributions to demonstrate proper use and avoid disputes.
Let’s work together to keep your business ATO ready
These three key changes could significantly impact your tax position and risk exposure in 2026.
We’re here to help you navigate them confidently and turn year end compliance into strategic advantage.
Book a timely year end review with us early next year for tailored advice and to prepare your business for a smooth and compliant start to the new calendar year. After all, being proactive now means less stress and better outcomes down the track.
Wishing you a successful finish to 2025. May your business keep thriving and the ATO stay off your Christmas card list!