Practice Update – August 2025
Paid parental leave changes have now commenced
As from 1 July 2025, the amount of Paid Parental Leave available to families increased to 24 weeks, and the amount of Paid Parental Leave that parents can take off at the same time has also increased from two weeks to four weeks.
Superannuation will now also be paid on Government Paid Parental Leave from 1 July 2025, at the new super guarantee rate of 12%, paid as a contribution to their nominated superannuation fund.
Parents will also benefit from an increase in the weekly payment rate of Paid Parental Leave, increasing from $915.80 to $948.10 (in line with the increase to the National Minimum wage). This means a total increase of $775.20 over the 24-week entitlement.
ASIC warning about pushy sales tactics urging quick super switches
ASIC is warning Australians to be on 'red alert' for high-pressure sales tactics, click bait advertising and promises of unrealistic returns which encourage people to switch superannuation into risky investments.
The warning comes amid increasing concerns from ASIC that people are being enticed to invest their retirement savings in complex and risky schemes.
ASIC Deputy Chair Sarah Court said the start of a new financial year was often the trigger for people to check their super fund's performance, and urged consumers to be extra cautious.
"When it comes to sales calls about super switching, there are some big red flags people should be alert to — being asked to make a quick decision is one of the most obvious. Remember, a good deal won't vanish overnight."
She said that these calls "don't have the hallmarks of a typical scam. The caller will seemingly have your best interests at heart, and they say they want to help you find a better super product or locate lost super for free."
Consumers should always ask questions about salespeople's connections to funds, particularly in circumstances where a particular fund appears in the pitch, as there may be a commission arrangement.
"If you are unsure or are feeling pressured, just hang up."
ATO warns of common Division 7A errors
The Australian Taxation Office (ATO) reminds shareholders of private companies that understanding how Division 7A of the tax legislation applies is crucial to avoiding costly tax consequences when accessing the company's money or other benefits.
When Division 7A applies, the recipient of a payment, loan or other benefit can be deemed to have been paid an unfranked dividend that will be included in their assessable income.
While Division 7A can be complex, most errors the ATO sees that result in its application are simple in nature, including:
- shareholders not recognising that a company's money is not their money, and they cannot access it for personal use without tax consequences;
- loans being made without complying loan agreements; and
- applying the wrong benchmark interest rate when calculating Division 7A loan repayments.
These errors are often the result of common myths about Division 7A and how it works.
To support taxpayers' understanding of their tax obligations when managing private company money, the ATO has launched new content: 'Division 7A Myths debunked' on its website (see here).
This page debunks common myths about Division 7A, breaking them into topics such as 'business structure', 'record keeping', and 'payments to other entities'.
Taxpayers who need to lodge a TPAR
Taxpayers may need to lodge a Taxable payments annual report (TPAR) online by 28 August if they have paid contractors to provide any of the following services on their behalf:
- building and construction;
- cleaning;
- courier and road freight;
- information technology; or
- security, investigation or surveillance.
If the ATO is expecting a TPAR from a taxpayer who does not need to lodge one, they can complete a 'TPAR non-lodgment advice form' by 28 August.
We note that paper lodgments of TPARs will no longer be accepted by the ATO after 28 August 2025.
Taxpayers who no longer pay contractors can also use this form to tell the ATO they will not need to lodge a TPAR in the future (although if their circumstances change they may need to lodge a TPAR).
Please contact our office if you need assistance with completing and/or lodging a TPAR.
Changes to tax return amendment period for business
Businesses with an annual aggregated turnover of less than $50 million now have up to four years from the date of their tax return assessment to request amendments (increased from two years). This applies to assessments for the 2024/25 and later income years.
If businesses make a mistake on a tax return and need to request an amendment, they should lodge their requests well before the end of the amendment period to make sure the ATO can process it within the time limit.
They should keep accurate and complete records to support their amendment request.
Taxpayer's claim for travel expenses denied
In a recent decision, the Administrative Review Tribunal (ART) denied an offshore worker's claim for work-related travel expenses, although it did allow his claim for home office expenses.
During the relevant period, the taxpayer resided in Queensland with his family, while his employment as an engineer was primarily based at an offshore facility located off the coast of Western Australia.
In his tax return for the 2022 income year, the taxpayer claimed work-related expenses of over $30,000, relating to accommodation, meal and incidental expenses for stays in Perth, Darwin and Broome between rotations on the offshore facility.
The ART noted that the taxpayer's permanent work location was the offshore facility. It accordingly largely disallowed the work-related expenses on the basis that they were "either preliminary to the commencement of those (employment) duties, or occurred after employment duties had ceased, and the (taxpayer) was on leave."
The ART also did not accept the taxpayer's claim for travel-related expenses with reference to the substantiation exception, as the allowances he received were not 'travel allowances'.
However, the ART did accept the taxpayer's claim for home office expenses of $579, noting that "As an engineer, he is required to engage in continuing professional development and the Masters and other studies completed in the home office were for this purpose."
Claiming credits for foreign resident capital gains withholding
When Australian and foreign resident vendors have had an amount withheld for foreign resident capital gains withholding (FRCGW) from a property sale, they may be entitled to have it credited back. This can be done when they lodge their tax return for the year the sale contract was signed.
Australian residents may have had the amount withheld for not providing the purchaser with a vendor's clearance certificate at or before settlement. A common reason is that they did not allow sufficient time for the application to be processed and issued - this can take up to 28 days.
Foreign residents must have FRCGW withheld from the property sale, unless they have a variation notice reducing the rate to nil.
If taxpayers had an amount withheld, they must lodge a tax return to claim the credit that was withheld, even if their income was below the threshold to lodge.
They should have received a payment confirmation notice from the ATO. Otherwise, they can ask the purchaser for their copy of the payment confirmation notice.
When completing their tax return, they should:
- declare assessable income, including any capital gain or loss from the disposal of the asset;
- claim a Credit for foreign resident capital gains withholding amounts taken from the sale proceeds.
The FRCGW amount will be refunded in full if:
- there are no tax debts;
- there is no CGT payable on the sale of the property; and
- for foreign residents, there is no tax payable on any other Australian sourced income.
We note that from 1 January 2025, the FRCGW rate is 15%, which applies to the value of all property (previously the rate was 12.5%, which applied to property valued at $750,000 or more).
Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.
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