ATO Compliance Updates for Business and Individuals

As the end of financial year approaches, the Australian Taxation Office (ATO) has released several important updates and reminders relevant to individuals, small business owners, and ride-sourcing service providers. This month’s key developments include clarification on deduction rules, compliance obligations, asset write-off measures, and superannuation preservation age. Below is a summary of the most critical points.

ATO Denies “Wild” Work-Related Deduction Claims

The ATO has highlighted a number of unreasonable tax deduction claims submitted by individuals attempting to categorise personal purchases as work-related expenses. Examples include:

• A mechanic who tried to claim an air fryer, microwave, two vacuum cleaners, a television, and gaming equipment as work-related tools
• A truck driver who claimed swimwear expenses used during rest stops
• A fashion industry manager who attempted to deduct over $10,000 in luxury-brand clothing and accessories

All of these claims were rejected, as they relate to personal use rather than genuine work-related expenses. The ATO reiterates that taxpayers must ensure any claim is directly tied to income generation, and must retain supporting records.

$20,000 Instant Asset Write-Off for 2024/25

Small businesses with an aggregated annual turnover of less than $10 million and using the simplified depreciation rules are eligible to immediately deduct the full cost of qualifying business assets valued under $20,000. Key points include:

• Applies to assets first used or installed between 1 July 2024 and 30 June 2025
• Available for both new and second-hand assets
• Improvement costs to previously deducted assets (within the same threshold and timeframe) are also deductible
• The $20,000 limit applies per asset, allowing businesses to claim multiple deductions if each asset is below the threshold

This measure is intended to boost small business cash flow and simplify capital expenditure reporting. Businesses must ensure they retain evidence of purchase and allocate deductions only to the business-use portion of the asset.

GST Obligations for Ride-Sourcing and Transport Providers

The ATO reminds all providers of taxi, limousine, and ride-sourcing services (such as Uber or DiDi) that GST registration is mandatory, regardless of their turnover. Operators in this sector must:

• Register for GST, obtain an ABN, and report all ride-related income
• Charge GST on all fares and lodge BAS statements as required
• Include this income in their annual tax return
• Amend previous returns if past income has not been correctly reported

Non-compliance may result in penalties and general interest charges.

Key Reminders for New Business Owners

The ATO has released a “top 7” checklist for those establishing a business:

1. Use digital tools and keep accurate records
2. Register for an ABN and business name as required
3. Only claim tax deductions for business-related expenses (with proper records)
4. Choose a business structure that matches operational and compliance needs
5. Understand employer responsibilities, including superannuation and STP reporting
6. Lodge and pay taxes on time, and consider PAYG instalments
7. Maintain compliance to avoid penalties and build financial resilience

Superannuation Preservation Age: No Change

In response to a rise in misinformation online, the ATO has clarified that the superannuation preservation age remains unchanged. For individuals born on or after 1 July 1964, the earliest age at which they can access super is still 60.

The ATO urges the public to verify any changes with trusted official sources and to consult qualified professionals before acting on online information.

Partial Tax Debt Relief for Serious Hardship

In a recent decision by the Administrative Review Tribunal (ART), a taxpayer with over $528,000 in accumulated tax debt was granted partial relief on the grounds of serious financial hardship. The debt had arisen largely from assessable income protection payments received following a workplace injury. Despite a poor compliance history, the taxpayer’s financial circumstances, health condition, and lack of repayment capacity were sufficient grounds to reduce the liability to $250,000.

This case highlights the importance of seeking timely professional support in managing unresolved tax liabilities.

Ref: ATO website

Please contact Wiselink Accountants if you require further information