Tax Debt Repayments are Set to Change - Here is What Newcastle Business Owners Need to Know.
We’ve been Newcastle business accountants for a good long minute, so we know that often debt is a part of life. It’s not ideal, and we (obviously) don’t love it, but the truth is that debt happens.
If you have a debt with the Australian Tax Office (or the ATO), the changes that are set to be rolled out could really hurt.
Here’s what we know.
Repayments are set to change.
The changes that are set to take effect from 1 July 2025, mean that you’ll no longer be able to claim a deduction on any interest that you have to pay on any tax debts.
Important to note, these changes are not yet law, however, this change is not something you want to find out about at the last moment.
Let’s talk tax law, for a second.
Tax laws change all the time. It’s an Accountants’ job to stay across all the changes, and that’s something we spend hours doing behind the scenes.
Accountants are sometimes referred to as Financial Advisors, because our job is more than spreadsheets and phone calls to the ATO. We look at the nuance in your numbers, consider your personal objectives and we strategise all the ways your business needs to behave in order to get there, within the ever evolving tax laws.
So why the changes?
The government basically wants to change it up to make some cash. It is projected that the federal government will make over $500 million between 2026 and 2027 with these changes. You can’t walk sideways without hearing “cost of living crisis” and the government isn’t any different, they’re looking for ways to make a dollar, or $500 million.
It’s also a move to encourage more timely payments, and reward prompt tax payments.
Now is the time to act.
While July 2025 seems a good while away right now, when it comes to paying off a debt, that is very soon.
In September 2024 though, you are still able to make a claim any interest accrued on your debts with the ATO, which is great news for you. You can continue making any payments up until July 1, 2025 as you have been.
If you’re able to, pay that debt the heck away.
Here is our best generic advice -
When it comes to tax, money, business and personal goals, no two situations are the same.
There are a number of strategies that can be applied to your tax debt and your specific situation. Knowing the ins and outs of what you’ve got going on is crucial to implementing the right strategy for you.
The best possible thing you can do about your tax debt is to speak to an accountant who can formulate a plan specific to your unique circumstances, BEFORE any changes take effect.
We’re passionate about empowering business owners to make confident & informed money decisions.
