ATO to include tax 'debts on hold' in taxpayer account balances

From August 2025, the Australian Taxation Office (ATO) is progressively including 'debts on hold' in relevant taxpayer ATO account balances.

A 'debt on hold' is an outstanding tax debt where the ATO has previously paused debt collection actions. Tax debts will generally be placed on hold where the ATO decides it is not cost effective to collect the debt at the time.

The ATO is currently required by law to offset such 'debts on hold' against any refunds or credits the taxpayer is entitled to. The difficulty with these debts is that the ATO has not traditionally recorded them on taxpayer's ATO account balances.

Taxpayers with 'debts on hold' of $100 or more will receive (or their tax agent will receive) a letter before it is added to their ATO account balance (which can be viewed in the ATO's online services or the statement of account).

Taxpayers with a 'debt on hold' of less than $100 will not receive a letter, but the debt will be included in their ATO account balance.

The ATO has advised it will remit the general interest charge (GIC) that is applied to 'debts on hold' for periods where they have not been included in account balances. This means that taxpayers have not been charged GIC for this period.

The ATO will stop remitting GIC six months from the day the taxpayer's 'debt on hold' is included in their account balance. After this, GIC will start to apply.

Bill to reduce student debt now law

Legislation has recently been enacted which delivers on the 2025-26 Federal Budget announcement to reduce student debts.

Pursuant to this legislation:

• There is a one-off 20% reduction which will be automatically applied to the following student loans that were incurred on or before 1 June 2025:
• HELP loans (eg, HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP, OS-HELP),
• VET Student loans,
• Australian Apprenticeship Support Loans,
• Student Start-up Loans,
• Student Financial Supplement Scheme;
• The minimum repayment threshold is increased from $54,435 in the 2024-25 income year to $67,000 in the 2025-26 income year (to continue to increase each year with the growth in wages); and
• A marginal repayment system is introduced where compulsory student loan repayments are calculated only on income above the new $67,000 threshold (rather than having it based on a percentage of the repayment income).

Bill for $20,000 Instant Asset Write Off introduced for year ending 30 June 2026

On 4 September 2025, the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025 (the Bill) was introduced into the House of Representatives.

The Bill proposes to extend the $20,000 instant asset write-off (IAWO) by 12 months until 30 June 2026.

The measure proposes to allow small businesses with an aggregated annual turnover of less than $10 million to immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose on or before 30 June 2026.

Without the amendments, the asset threshold would revert to the ongoing legislated threshold of $1,000 from 1 July 2025.

We will watch the progress of the Bill and confirm when it is passed into law.

Getting the CGT main residence exemption right

The ATO has the following tips for taxpayers in relation to the CGT main residence exemption.

• They should consider if they have bought or disposed of property in the past income year. If they have sold property, were they using it solely as their primary place of residence, earning income from it (rental or business), or was it vacant land?
• They should understand the applicable record keeping requirements in relation to property.
• If they have disposed of vacant land, they are not eligible for the main residence exemption, even if they had intended to build their main residence on the land.
• They are only eligible for the '6-year absence rule' if the property was their main residence before they rented it out.
• Broadly, they can only have one property as their main residence at a time - the only exception is the 6-month period when they move from one home to another.

If you need assistance considering these CGT main residence exemption issues or planning for a future disposal of your main residence, please contact our office.

Small Business Superannuation Clearing House is closing

The Small Business Superannuation Clearing House (SBSCH) will close on 1 July 2026.

The SBSCH is a free online service provided by the Australian Government through the ATO webiste (click here).

The SBSCH can be used by employers to pay superannuation for all their employees through a single payment. The SBSCH will then distribute the money to each employee's superannuation fund according to the employer's instructions.

To support small businesses to transition to alternative services prior to this time, new users will be unable to register to use the service from 1 October 2025.

Existing users are encouraged to take steps now to transition to alternative options.

These include reviewing their existing software and payroll packages (which may already include super functions), or looking at options offered by super funds, commercial dealing houses, or other payroll software or providers.

Superannuation guarantee due dates and considerations for employees and employers

On 1 July 2025 the superannuation guarantee rate increased to 12% which is the final stage of a series of previously legislated increases. Employers currently need to make superannuation guarantee (SG) contributions for their employees by 28 days after the end of each quarter (28 October, 28 January, 28 April and 28 July). There is an extra day’s allowance when these dates fall on a public holiday.

To comply with these rules the contribution must be in the employee’s superannuation fund on or before this date, unless the employer is using the ATO SBSCH.

The ATO has been applying considerable compliance resources in this space in recent years which can have an impact on both employees and employers.

Employers

To be eligible to claim a tax deduction on SG contributions the quarterly amount must be in the employee’s super account on or before the above quarterly due dates. The only exception to this is where the employer is using the ATO SBSCH. In that case a contribution is considered made provided it has been received by the SBSCH on or before the due date.

Employers using commercial clearing houses should be mindful of turnaround times. Anecdotally it seems that turnaround times for some clearing houses could be up to 14 days, so it is recommended that employers allow sufficient time before the quarterly deadlines when processing their employee SG contributions.

If these deadlines are missed (even by one day), that will trigger a superannuation guarantee charge (SGC) requirement which will result in a loss of the tax deduction and other penalties.

Employers do have the option to make SG payments more frequently than quarterly and this is something that employers will need to become used to if the proposed ‘payday’ superannuation reforms become law. This change is proposed to commence from 1 July 2026 and would require SG to be paid at the same frequency as salary or wages.

There is some discussion on the payday super proposal at this link (noting that this is not yet law). The SBSCH will close at this time so employers using this service should start to consider transitioning to a commercial clearing house, please let us know you would like assistance with this.

Employees

It is recommended that you regularly check your superannuation fund statements and reconcile employer contributions to the amounts listed on your pay slips.

Where SG contributions are not received on time (or at all!) employees are encouraged to discuss this first with their employer. Should this not result in a satisfactory conclusion, employees can consider bringing this to the attention of the ATO.

ATO Australian Financial Crimes Exchange data-matching program

The ATO will acquire relevant account and transaction data from the Australian Financial Crimes Exchange (AFCX) for the 2025 to 2027 income years, including the following:

• Client identification details (names, addresses, phone numbers, dates of birth, identity verification document details, IP addresses, etc); and
• Bank account transaction details (bank account details, transaction date and amount, IP addresses, etc).

The ATO estimates that records relating to approximately 70,000 individuals will be obtained each financial year.

The data collected under this program will be used to (among other things) safeguard taxpayer accounts from identity crime by implementing protective controls to enable pre-lodgment detection and application of treatments to victims of fraud.

PAYGW reminders for activity statement lodgments

The ATO will be sending certain employers a reminder to lodge their activity statements.

The reminder will include the amounts the ATO has on record for them, such as:

• PAYG withheld amounts reported through Single Touch Payroll; and
• Any other pre-filled amounts, including GST instalments and PAYG instalments (instalment amount option).

The ATO's reminders are intended to provide a timeframe for employers to review (and if necessary correct) the amounts the ATO has on record for them and lodge their activity statements.

If these selected employers do not lodge by the specified date, the ATO will consider the amounts it has on record are correct and complete, and it will add these amounts to the employer's account, meaning they will be due and payable.

The ATO may also finalise the employer's activity statement and consider it lodged unless the employer has any other obligations such as GST to report.

If employers do not make any changes to correct the data or lodge by the due date and the activity statement has been finalised in ATO systems, they will need to adjust these amounts by lodging a revised activity statement.

If the information is correct, they will not need to take any further action.

ATO factsheet released for denying deductions for GIC & SIC interest

The ATO has issued a detailed fact sheet (click here) which provides guidance on the practical implications of recent changes to the tax legislation that deny deductions for general interest charge (GIC) and shortfall interest charge (SIC) from 1 July 2025.

The ATO clarifies that for most taxpayers, the changes basically prevent GIC or SIC from being deductible to the extent that the interest is incurred on or after 1 July 2025. GIC and SIC incurred before this date can still be deducted.

The key issue in many cases will be confirming when the GIC or SIC amounts have been incurred, which is based on when there is a presently existing liability to pay the amount. The ATO notes that the approach is a bit different depending on what the interest charge relates to, the nature of the interest charge and the circumstances in which it arose.

For example, when it comes to unpaid income tax debts, GIC isn’t incurred until a notice of assessment is served. If the ATO amends an assessment, the due date for payment is 21 days after the amended assessment is given, and GIC would only be incurred after this due date has passed.

SIC imposed on certain tax shortfalls is normally incurred on the same day the notice of assessment is given, even though the SIC might be calculated for a past period. The fact sheet provides a range of examples as well as guidance on taxpayers with substituted accounting periods and how to deal with remission of GIC or SIC amounts.

The ATO also provides some guidance on when a taxpayer might be able to claim a deduction for interest on borrowings that are used to pay tax liabilities. This is normally only possible where the taxpayer carries on a business in their own right and the tax liability relates to that business activity.