The year drew to a close with the long-delayed legislation to provide HELP debt relief finally being passed by Parliament.

If you had an outstanding HELP debt balance on 1 June 2023, you can now look forward to receiving a cash refund or a credit to your HELP debt.

For more information, please visit https://www.education.gov.au/helpestimator/faqs-help-indexation-credit.

With the holidays approaching, some tax strategies for the new year may be worth considering.

Here are my top 10 tax tips for 2025:

• • 1. Be a compliant taxpayer

    The ATO is now regularly issuing sizeable late lodgement penalties.

    As important as completing your next body of paintings, film project or manuscript may be, you do not want to be returning a portion of your hard-won earnings to the ATO for failing to lodge your income tax return or activity statement on time.

    Please contact us for an extension of time to lodge if you are needing more time to compile your documents or reconcile your bookkeeping software. And remember that although perfection may be your goal with presenting your information to us, under the self-assessment system, you should prioritise lodgement to avoid penalties because you have a further two years to correct any errors with tax returns and four years with activity statements.

    • 2. Plan your tax position throughout the year

      Each year, I have found clients who booked in early to have their returns prepared to receive an early tax refund, astonished to learn they in fact owe the ATO.

      There are a number of reasons this has may happen. People are generally unaware that untaxed income will be assessed and taxed when a return is prepared, regardless of the nature of that income. Interest on savings being a good example.

      Your second job, for which you did not complete a TFN declaration asking not to receive the tax-free threshold, being another common occurrence.

      To avoid an unpleasant July surprise, ask us to assess your tax position before the end of the financial year, preferably in April or May when most of your financial information will be known for your upcoming tax return.

      • 3. Take an interest in your tax affairs

        As hard working and dedicated as we are to helping you achieve the best tax outcome, at the end of the day you have to take responsibility for your tax affairs.

        If you use bookkeeping software, make sure you know how to use it for your business.

        If you employ staff, make sure you understand the Fair Work rules for their conditions.

        • 4. ATO interest charges will no longer be tax deductible

          If you are a taxpayer, being someone who is either running a business or has investment income, the ATO expects that you will set aside reserves to pay your tax liabilities as they fall due.

          Next year, interest on tax debts will cease to be deductible, which is a major policy change to force taxpayers to finance their ATO liabilities themselves.

          ATO payment plans should therefore be seen as a last resort when this policy becomes law on 1 July 2025.

          • 5. Superannuation contributions

            Superannuation contributions act as both an important component of your current tax and future retirement planning.

            If you have a super balance of less than $500,000, there are very generous rules to allow you to contribute at more than the allowable concessional cap of $30,000. This is important to know if you are likely to be paying tax on your business or investment income.

            And because of the time value of money, the earlier you contribute to your super, the more you should have in your fund when you retire.

            • 6. Do not rely on website information

              The Australian taxation system is complex.

              There was an attempt at simplifying it thirty years ago, which only resulting in two statutes being created – the 1936 and 1997 Income Tax Assessment Acts – and because of the common law nature of Australian jurisprudence, case law is constantly evolving.

              For this reason, you cannot rely on information you discover on websites, including the ATO Community site, to resolve your taxation queries.

              This is particularly important when determining matters such as whether or not you have a liability to pay superannuation to contractors and directors or whether or not you have to pay fringe benefits tax or interest on director loans.

              • 7. Pros and cons of declaring your spouse

                You have an obligation to declare your spouse on your tax return, but for many people the notion of having a spouse only crystallises after there is a formal wedding.

                The big advantage of declaring your spouse prior to marriage is that you can rely on their invoices to claim tax deductions, and vice-versa.

                The big disadvantage is that combining your spouse’s income with your income may tip you over the thresholds for medicare levy surcharge and the private health insurance rebate reduction.

                • 8. Cryptocurrency and charities

                  Many clients have holdings of cryptocurrency that may become taxable if exchanged with other coins or cashed out.

                  With some charities now accepting cryptocurrency as donations, you may offset such a tax liability and at the same time streamline your administration.

                  • 9. Know how to claim car expenses

                    Understanding car expenses may be the difference between receiving a tax refund and paying the ATO as well as taking far less time to compile your paperwork for your return to be prepared.

                    There are two main methods of claiming car expenses: actual cost method and the cents per km method. The actual cost method generally results in a higher claim, but it requires a valid logbook to be maintained. Therefore, if you buy a car less than three months before the end of June, you will not be able to claim this way. You will be restricted to the cents per km method.

                    Remember also that vans and utes are considered commercial vehicles and do not require a log book to claim actual expenses.

                    • 10. Optimise your income averaging

                      Eligibility for the artist averaging scheme is determined by the nature of the activity that produces your assessable income.

                      There may be several income-producing activities in a financial year, some of which will be eligible for the scheme and some that will or may not be eligible.

                      To maximise your refund, you should plan to make deductions that are non-creative in nature to offset income that is also non-creative. This will result in your creative income being as close as possible to your total taxable income.

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Artwork image:

Jo Darvall
First Sight-Wadawurrung (2024)
Oil on canvas
120cm by 110cm

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