4 August 2025 to 8 August 2025
Weekly Bulletin Contents
TAX
Monday 4 August 2025
Productivity Commission: Proposed corporate tax reform
The Productivity Commission has released an interim report in relation to creating a more dynamic and resilient economy. It made the following recommendations for reforms to corporate tax and regulatory practice, as follows:
Corporate tax reform
- Lower Australia’s headline company tax rate to 20% – to increase investment by increasing retained earnings, attracting foreign capital into Australia, and boosting the after-tax return companies receive on their investments. The company tax rate for Australia’s largest companies, with turnover above $1bn, would remain at 30%.
- Introduce a net cashflow tax of 5% – to be applied to company profits. It would allow companies to deduct the full capital expenditure costs from their profits in the year they are incurred. Consequently, the net cashflow tax would encourage capital expenditure, thereby helping to produce a more dynamic and resilient economy. It would be expected to create an increased tax burden for companies earning over $1bn.
Regulating for business dynamism
- Set a clear agenda for regulatory reform – the Government should adopt a whole-of-government statement that commits to new principles and processes to drive regulation that supports economic dynamism. It should identify immediate concrete reductions in regulatory burden, and it should set out quantitative targets for government to achieve.
- Bolster high-level scrutiny of regulations – the Government should scrutinise regulation to ensure that its impact on growth and dynamism is more fully considered by, among other things, strengthening Cabinet’s scrutiny of regulatory proposals; appointing an independent statutory commissioner to oversee the Office of Impact Analysis; making greater use of external sectoral reviews to reduce cumulative regulatory burdens; and enhancing the expectations placed on public servants to make them accountable for delivering growth and innovation through regulatory systems.
Comments are due by 15 September 2025.
Consultation on options to apply a special levy re CSLR scheme
The Assistant Treasurer has advised that submissions are being sought on all statutory options available to him to deal with the problem that estimated claim costs made under the Compensation Scheme of Last Resort (CSLR) scheme in 2025-26 (some $67.3m) exceeded the $20m limit on levies that can be applied to fund the claims. He said that this has triggered the option available to him as the responsible Minister under the CSLR legislation to raise a special levy to pay for the excess costs. He said feedback is sought on a broad range of options to inform his decision – and that stakeholder feedback on this matter will also inform ongoing consideration into the CSLR as part of the CSLR Post-implementation Review.
ATO’s tax time support available for the community
The ATO has advised that it is encouraging taxpayers to take advantage of the range of support services available to the community during tax time. The ATO has encouraged the community to reach out for help and assistance in managing their tax affairs if needed.
Tuesday 5 August 2025
ATO will include tax debts on hold in taxpayers’ account balances
The ATO has advised that from August 2025 it is progressively including debts placed on hold in account balances. (A debt on hold is a tax debt the ATO has paused taking actions to collect.) The ATO also said that if you have clients with debts on hold of $100 or more, you or your client will receive a letter before it’s added to their account balance. Clients with a tax debt on hold of less than $100 will not receive a letter, but the debt will be included in their account balance. The ATO said you can view the details of their debt on hold in ATO Online Services for Agents or their statement of account so you and your client can keep track of their tax debt.
The ATO also said it remits the GIC that is applied to debts on hold when they are not included in account balances. This means taxpayers have not been charged GIC for this period. However, the ATO will stop remitting GIC 6 months from the day your client’s debt on hold is included in their account balance – and that after this, GIC will start to apply.
Note: The ATO also said that it is currently not including debts placed on hold before 1 January 2017 that may be impacted by the proposed law change into account balances.
Exchange rates for July 2025
The ATO has released the average foreign exchange rates for July 2025 for selected countries ($1A equivalent) as follows: Canadian dollar – 0.8952; Chinese renminbi – 4.6933; European euro – 0.5598; Hong Kong dollar – 5.1368; Indian rupee – 56.3483; Japanese yen – 96.0748; Malaysian ringgit – 2.7720; New Zealand dollar – 1.0902; Singapore dollar – 0.8380; South Korean won – 900.9643; Thai baht – 21.2343; UK pound sterling – 0.4843; United States dollar -0.6544.
NSW: Coal benefication rates change from 1 July 2025
NSW State Revenue has advised of an annual increase in the “coal beneficiation” rates for each of the 3 financial years commencing 1 July 2024. From 1 July 2025 the rates of beneficiation increase to: coal subjected to a full cycle of washing – $3.71 per tonne; coal subjected to wet jigging – $2.12 per tonne; and coal crushed and screened, but not subjected to a washing process – $0.53 per tonne. NSW Revenue also said that the Royalty Online Service will be updated with the new rates.
Wednesday 6 August 2025
ATO: DGR status for community sheds
The ATO has issued a reminder that a “community shed” must be run in a specific way to be eligible for deductible gift recipient (DGR) endorsement under the community shed category. The ATO said it is seeing some organisations apply for DGR endorsement as a community shed when they are not eligible. The ATO said to be eligible for DGR endorsement, a community shed must meet all the following criteria: have an active ABN; be located in Australia; be registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC); have the characteristics of a community shed; and have a DGR winding up and revocation clause.
ATO: Trustee voluntary payments
The ATO has advised that you can make trustee voluntary payments (TPV) if you believe it is in the best interest of an individual. The ATO says TVPs are payments made for a member, former member or non-member spouse where the trustee reasonably believes paying the amount to us would be in the best interest of the person (but it excludes amounts that another provision of the Superannuation (Unclaimed Money and Lost Members) Act 1999) requires you to pay). The ATO also said that you need to consider a range of factors when considering whether transferring an amount to us would be in the person’s best interests.
Thursday 7 August 2025
Draft PCG: Low-risk payments relating to software
The ATO has released PCG 2025/D4 Low-risk payments relating to software – ATO compliance approach. It provides practical guidance relating to our view set out in Draft Taxation Ruling TR 2024/D1 Income tax: royalties – character of payments in respect of software and intellectual property rights. Finalisation of TR 2024/D1 has been deferred pending the decision from the High Court in PepsiCo. By publishing this Guideline, the ATO intends to provide clarity on arrangements that will not attract our attention, thereby providing confidence to in-scope businesses as well as avoiding unnecessary compliance costs for these businesses. Comments are due by 17 September 2025.
GST Analytical Tool Guide
The ATO has released a GST Analytical Tool Guide. It is to assist in using the GST Analytical Tool, a spreadsheet-based reconciliation process to better understand variances between accounting and GST figures. Understanding these variances is one of the pillars of justified trust that is used to obtain greater assurance entities are paying the right amount of GST. The supplementary annual GST return includes questions about whether this reconciliation has been undertaken and the outcomes.
Person fails experience test for registration as agent
The ART has confirmed the Tax Practitioners Board’s decision that a person did not have the relevant experience to be registered as a tax agent. Among other things, the ART found that the work he undertook as a contractor for an online tax agent business was primarily undertaken on a “piece meal” basis and that, as a result, he did not satisfy the requirement of working for the requisite period under the supervision of a registered tax agent. (Dennis and Tax Practitioners Board [2025] ARTA 1001, 30 April 2025)
FRIDAY 1 August 2025
Roundtable issue papers released
The Treasurer has released three issues papers ahead of the Government’s Economic Reform Roundtable from 19-21 August. The papers cover each of the three themes of the Economic Reform Roundtable – resilience, productivity, and budget sustainability and tax reform. In issuing the papers the Treasurer said the papers are deliberately factual and the issues are already well known and broadly understood, but that the paper are being circulated now so participants can spend time at the Roundtable on specific ideas not just problem identification. The issues papers are available on the Treasury website.
ATO focus on property and construction
The ATO has released information on its focus on the property and construction industry. The ATO said that this is one of the largest sectors in the small business market and a frequent source of tip-offs. It also said that it continues to see recurring issues, including: omitting income (whether received in cash or money deposited into bank accounts); overclaiming expenses and GST credits; incorrectly reporting expenses that are private in nature as business expenses; not registering for GST when required; and using business funds and assets to support their personal lifestyle, tax-free. Finally, the ATO said that for those that run a business in property or construction, or otherwise operate as a builder, contractor or tradie, it is important to make sure that they are reporting correctly and meeting your obligations.
SUPER & FINANCIAL SERVICES
Treasury Consults on Special Levy Options for CSLR
Assistant Treasurer and Minister for Financial Services Daniel Mulino has announced that Treasury is consulting on options to address excess costs in the Compensation Scheme of Last Resort (CSLR). The CSLR compensates claimants when eligible determinations by the Australian Financial Complaints Authority (AFCA) remain unpaid.
The CSLR operator reported estimated claims costs for personal advice in 2025-26 at $67.3 million, exceeding the $20 million levy limit for the advice sub-sector. This triggers the option for the Minister to impose a special levy to cover the shortfall. Treasury’s consultation paper seeks feedback on all options to inform the Minister’s decision.
Submissions are due by 29 August 2025. If you have any feedback, please email us at [email protected] by 22 August 2025.
Institute of Financial Professionals Australia (IFPA) comment
The levy is a significant burden on the already contracting financial advice sector – most of which comprises small businesses.
We remain seriously concerned about the CSLR and have called on the government to urgently reform the Scheme to ensure it is fair, financially sustainable, and consistent with its original intent. Without prompt action, the rising costs threaten the viability of small advice practices and could further restrict consumer access to quality financial advice.
Earlier this year, we outlined eight key reform recommendations in a submission to government, which can be accessed here.
Treasury Consults on Superannuation Retirement Phase Reforms
In a media release, Treasury have announced two consultation papers to reform the retirement phase of superannuation. Its stated purpose is to provide retirees with better choices, guidance, and products for retirement.
The consultation seeks feedback on:
- Best practice principles for superannuation retirement income solutions: Guiding the industry to design modern, high-quality retirement products to deliver reliable income in retirement. Submissions for the principles are due by 18 September 2025.
- Retirement reporting framework: A new framework to enhance transparency on retirement outcomes, with data collected and published by the Australian Prudential Regulation Authority (APRA). Submissions for the framework are due by 5 September 2025.
The intention of the reforms is to build on the Retirement Income Covenant and align with the government’s Delivering Better Financial Outcomes package.
If you have any feedback on the retirement phase reforms, please email us at [email protected].
IFPA comment
Treasury sought submissions for ‘superannuation in retirement’ in February 2024. In our submission we recommended:
- Excluding SMSFs from the Retirement Income Covenant to avoid regulatory overlap
- A cautious introduction of new SMSF retirement products to prevent issues like legacy pensions
- Retaining flexible account-based pensions with potential drawdown rate adjustments, and
- Establishing a clear objective for the retirement system.
Full details are on our website.
Financial dependency must be supported with proof
In a recent private ruling, the ATO determined that two adult children of a deceased member were not death benefits dependents under section 302-195(1)(d) ITAA, as they were not financially dependent on the deceased just before their death.
The ATO found insufficient evidence of substantial, regular, and continuous financial support from the deceased to meet the beneficiaries’ ordinary living expenses, such as rent, utilities, or groceries.
Despite claims that the deceased provided reduced rent, paid utilities, and occasional cash or groceries, the evidence – primarily cash-based transactions and limited bank transfers – was deemed inadequate.
The ATO emphasised that dependency requires objective proof of reliance on regular financial support to maintain a normal standard of living, which was not demonstrated.
Consequently, the taxable-taxed element of the superannuation death benefit lump sum paid to the beneficiaries was assessable income and taxed at a maximum rate of 17% (including Medicare levy).