New Financial Year, New Rules: 6 Key Changes for Aussie Businesses

As the new financial year begins on July 1, 2025, Australian’s face several significant changes affecting wages, superannuation, and tax regulations. Here's a list of the top 6 to be aware of.

1.     Superannuation Guarantee Rate Increase

The super guarantee (SG) rate will increase from 11.5% to 12% on 1 July 2025. The 12% rate will need to be applied for all salary and wages paid to eligible workers on and after 1 July. This is even if some or all of the pay period it relates to is before 1 July.

This marks the final step in the legislated increase aimed at enhancing retirement savings for Australian workers.

What you need to do:

·       Check your payroll system if you have overridden the default percentage

·       Adjust gross wages in your payroll system for employees if their agreements state that their salary or wages are including super

·       Update cash flow forecasts and budgets with the new amounts

·       Communicate changes with employees

2.     Minimum Wage increase

The Fair Work Commission has announced a 3.5% increase to the National Minimum Wage and minimum pay rates under awards.

The increase applies from the first full pay period starting on or after 1 July 2025.

What you need to do:

·       Review your minimum pay rates in conjunction with the relevant awards on the Fair Work website

·       Adjust minimum pay rates in your payroll system

·       Update cash flow forecasts and budgets

·       Communicate changes with employees

3.     Australian Taxation Office (ATO) Interest changes

On 13 December 2023, as part of the 2023–24 Mid-Year Economic and Fiscal Outlook (MYEFO), the government announced it would amend the tax law to deny income tax deductions for ATO interest charges. This is now law.

The law change applies in relation to assessments for income years starting on or after 1 July 2025. An assessment for an income year is how your income tax is calculated, as explained in your notice of assessment.

This means that you can no longer deduct General Interest Charges and Shortfall Interest Charges incurred on or after 1 July 2025 in your income tax return for income years starting on or after 1 July 2025.

The government scrapped the tax deduction for ATO interest charges to keep things fair, after all, why should late payers get a tax break while those who pay on time get nothing?

It’s also a smart budget move, expected to save around $180 million over four years, without lifting tax rates. With the ATO’s interest rate now at 11.38%, some businesses were using it like cheap finance and claiming it as a deduction — the government saw the loophole and closed it.

What you need to do:

·       Look to refinance any ATO debts elsewhere – get advice first

·       Ensure all ATO debts are paid on time

4.     Paid Parental Leave extension and inclusion of super

Starting July 1, 2025, eligible parents will benefit from an increase in Paid Parental Leave (PPL) entitlements. The total duration of publicly funded PPL will extend to 24 weeks, with plans to increase it further in subsequent years.

Additionally, superannuation contributions will now be paid on government-funded PPL, helping to reduce the retirement savings gap for primary carers. The super will be paid directly to your superannuation fund after the end of the financial year you got Parental Leave Pay, starting in July 2026.

If you share Parental Leave Pay with another person, each person is eligible for a superannuation contribution on their share of the payment.

In most circumstances, your contribution will be paid to the fund your superannuation contributions are currently paid to.

What you need to do:

·       If you are already paying superannuation to employees on PPL than you no longer need to do so you will need update your payroll system and policies

·       Communicate the change to employees

5.     Working From Home Deductions Fixed Rate Increase

 If you are claiming the fixed rate method for working from home income tax deductions ensure you use the new rate for the 2025 financial year which is 70 cents per hour (up from 67 cents per hour).

6.     Monthly GST reporting

 The ATO has ramped up efforts to shift certain businesses onto monthly GST reporting, especially those showing signs of cash flow risk, poor compliance history, or receiving frequent GST refunds.

This move helps the ATO monitor high-risk businesses more closely and ensure timely tax payments. Industries like construction, hospitality, and retail are often in the spotlight, particularly when there’s a pattern of late lodgments, missed payments, or unexplained fluctuations in GST claims. While monthly reporting can feel like extra admin, it’s the ATO’s way of keeping a tighter leash on riskier businesses.

Natalie Lennon

Founder & Director

Natalie@twosides.com.au

www.twosides.com.au

02 9030 0269

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