ATO updates

General interest charge and shortfall interest charge—beware new ATO penalty

Starting on 1 July 2025, taxpayers will no longer be eligible to claim a deduction for general interest charge (GIC) and shortfall interest charge (SIC) incurred in the 2025-2026 income year onwards.

This decision comes of the back of a noticeable surge in debts owed to the government. The measure was originally introduced to incentivise taxpayers to accurately assess and promptly settle tax debts.

Furthermore, the rates of GIC and SIC have seen an increase from 11.15% to 11.38% and 7.15% to 7.38% respectively since 1 January 2024.

These rates are higher than most bank institutions so taxpayers should review their borrowing arrangements prior to 1 July 2025 to ensure these are structured in the most tax effective way. 

Individual income tax rates and threshold changes

On 25 January 2024, the government announced changes to the previously legislated stage 3 tax cuts on individual income tax rates and thresholds starting from 1 July 2024. These changes have received royal assent.

From 1 July 2024, the proposed tax cuts will:

• reduce the 19% tax rate to 16%
• reduce the 32.5% tax rate to 30%
• increase the threshold above which the 37% tax rate applies from $120,000 to $135,000
• increase the threshold above which the 45% tax rate applies from $180,000 to $190,000.
  

Disclaimer

The information provided in this article does not constitute advice. The information is of a general nature only and does not take into account your individual financial situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.