Changes in Tax Return 2025: What You Need to Know Before You Lodge

Navigating the complexities of the new 2025 tax regulations.

Tax time 2025 is bringing a few changes that could affect how much you claim, how much you pay or how closely the ATO looks at your return. Whether you're a salary earner, small business, or investor, staying updated could mean a smoother lodgment and a better result.

Here’s what to watch out for this year.

1. Tax Rate Cuts: What You’ll Actually Pay

The government has made changes to income tax brackets from 1 July 2024:

• $18,201–$45,000 is now taxed at 16% (was 19%)

• $45,001–$135,000 is taxed at 30% (was 32.5%)

• $135,001–$190,000: 37%

• $190,001+: 45%

These changes could reduce your tax bill, especially if you’re earning in the mid-range brackets.

Planned future cuts:

• 2026: 16% drops to 15%

• 2027: 15% drops to 14%

2. Work-from-Home Fixed Rate Increase

From 1 July 2024, the fixed rate for working from home deductions has increased from 67c to 70c/hour.

This rate covers:

• Electricity

• Internet

• Mobile use

• Stationery

But: You still need to keep accurate records of your hours and bills.

• There’s also talk of a $1,000 no-proof-needed deduction, but it hasn’t been passed yet. We’ll keep you posted if it becomes law.

3. Crypto Reporting Is Under the Microscope

The ATO is now collecting more detailed data from crypto platforms to track transactions.

If you’ve:

• Sold or swapped crypto

• Converted it to fiat

• Used it to pay for something → You may have a capital gains tax obligation.

Keep clear records of:

• Date and type of transaction

• Value in AUD

• Related costs (e.g. gas fees)

4. Instant Asset Write-Off Returns for Small Business

If you run a small business (turnover under $10M), the instant asset write-off is back with a $20,000 threshold.

You can claim the full cost of eligible assets (new or second-hand) if:

• Purchased between 1 July 2024 and 30 June 2025

• Installed and ready for use by EOFY

Applies to tools, office equipment, laptops, vehicles, and more.

5. Foreign Resident CGT Withholding Tightens

For contracts from 1 January 2025:

• Withholding rate rises from 12.5% to 15%

• $750,000 property threshold is scrapped; now applies to all real property sales

💡 Even smaller property sales may trigger this obligation, so check early.

6. No More Deductions for Interest Charges

(From 2025–26)

From 1 July 2025, you won’t be able to claim general interest charges or shortfall interest charges.

If you owe the ATO, it may be worth paying up before 30 June 2025 to lock in those deductions one last time.

7. Trusts, UPEs & Division 7A – Handle With Care

Recent court decisions and ATO guidance have tightened how unpaid entitlements and trust distributions are treated, especially if linked to private companies.

If your structure involves trusts or company loans:

• Review whether you need a Division 7A-compliant loan agreement

• Be cautious with income-splitting or retention arrangements

Tax planning is crucial here, this is a high-risk area under ATO scrutiny.

Final Tip: Stay Compliant, Stay Prepared

With shifting thresholds, enhanced data-matching, and ongoing reforms, the 2025 tax season is one where good record-keeping and proactive planning can make all the difference.

If you're unsure how these updates affect you or your deductions, Precent’s expert team is here to help you claim confidently and avoid costly mistakes.