ATO to include tax 'debts on hold' in taxpayer account balances

From August 2025, the ATO is progressively including 'debts on hold' in relevant taxpayer ATO account balances.

A 'debt on hold' is an outstanding tax debt where the ATO has previously paused debt collection actions. Tax debts will generally be placed on hold where the ATO decides it is not cost effective to collect the debt at the time. 

The ATO is currently required by law to offset such 'debts on hold' against any refunds or credits the taxpayer is entitled to. The difficulty with these debts is that the ATO has not traditionally recorded them on taxpayer's ATO account balances.

Taxpayers with 'debts on hold' of $100 or more will receive (or their tax agent will receive) a letter before it is added to their ATO account balance (which can be viewed in the ATO's online services or the statement of account). 

Taxpayers with a 'debt on hold' of less than $100 will not receive a letter, but the debt will be included in their ATO account balance

The ATO has advised it will remit the general interest charge ('GIC') that is applied to 'debts on hold' for periods where they have not  been   included in account balances. This means that taxpayers have not been charged GIC for this period. 

The ATO will stop remitting GIC six months from the day the taxpayer's 'debt on hold' is included in their account balance. After this, GIC will start to apply.

Student Debt Reduction Bill Passed into Law

The Federal Government has now legislated its 2025/26 Budget promise to ease student debt.

Key changes include:

• One-off 20% reduction: All HELP and other student loan balances incurred on or before 1 June 2025 will be reduced by 20%.
• Higher repayment threshold: From the 2025/26 income year, the minimum repayment threshold rises from $54,435 to $67,000, with future increases linked to wage growth.
• Marginal repayment system: Compulsory repayments will now apply only to income earned above the $67,000 threshold, rather than being calculated as a flat percentage of total repayment income.

Getting the main residence exemption right

The ATO has the following tips for taxpayers in relation to the CGT main residence exemption.

• They should consider if they have bought or disposed of property in the past income year. If they have sold property, were they using it solely as their primary place of residence, earning income from it (rental or business), or was it vacant land?
• They should understand the applicable record keeping requirements in relation to property.
• If they have disposed of vacant land, they are not eligible for the main residence exemption, even if they had intended to build their main residence on the land.
• They are only eligible for the '6-year absence rule' if the property was their main residence before they rented it out.
• Broadly, they can only have one property as their main residence at a time - the only exception is the 6-month period when they move from one home to another.

If you need assistance with the above or with completing your tax return, please contact our office.

Small Business Superannuation Clearing House is closing

The Small Business Superannuation Clearing House ('SBSCH') will close on 1 July 2026. The SBSCH is a free online service provided by the Australian Government through the ATO. 

The SBSCH can be used by employers to pay superannuation for all their employees through a single payment. The SBSCH will then distribute the money to each employee's superannuation fund according to the employer's instructions.

To support small businesses to transition to alternative services prior to this time, new users will be unable to register to use the service from 1 October 2025.

Existing users are encouraged to take steps now to transition to alternative options. These include reviewing their existing software and payroll packages (which may already include super functions), or looking at options offered by super funds, commercial dealing houses, or other payroll software or providers.

ATO AFCX data-matching program

The ATO will acquire relevant account and transaction data from the Australian Financial Crimes Exchange ('AFCX') for the 2025 to 2027 income years, including the following:

• Client identification details (names, addresses, phone numbers, dates of birth, identity verification document details, IP addresses, etc); and
• Bank account transaction details (bank account details, transaction date and amount, IP addresses, etc).

The ATO estimates that records relating to approximately 70,000 individuals will be obtained each financial year.

The data collected under this program will be used to (among other things) safeguard taxpayer accounts from identity crime by implementing protective controls to enable pre-lodgment detection and application of treatments to victims of fraud.

PAYGW reminders for activity statement lodgments

The ATO will be sending certain  employers a reminder to lodge their activity statements. The reminder will include the amounts the ATO has on record for them, such as:

• PAYG withheld amounts reported through Single Touch Payroll; and
• any other pre-filled amounts, including GST instalments and PAYG instalments (instalment amount option).

The ATO's reminders are intended to provide a timeframe for employers to review (and if necessary correct) the amounts the ATO has on record for them and lodge their activity statements.

If these selected employers do not lodge by the specified date, the ATO will consider the amounts it has on record are correct and complete, and it will add these amounts to the employer's account, meaning they will be due and payable. 

The ATO may also finalise the employer's activity statement and consider it lodged unless the employer has any other obligations such as GST to report.

If employers do not make any changes to correct the data or lodge by the due date and the activity statement has been finalised in ATO systems, they will need to adjust these amounts by lodging a revised activity statement. 

If the information is correct, they will not need to take any further action. 

Tax Time 2025: What You Need to Know – ATO Updates That Could Affect You

We’re now two months into the 2025 tax season, and the ATO is turning its attention to a few key areas for individual taxpayers. Whether you're earning a salary, running a side hustle, or managing an investment property, staying informed on what the ATO is looking at can help you claim the right deductions, avoid slip-ups, and lodge your return with confidence. Below, we’ve pulled together the latest insights from ATO Assistant Commissioner and Tax Time spokesperson Rob Thompson—plus some practical tips to help you stay on track this year.

1. Work-Related Deductions: The Main Area Under the Microscope

Work-related deductions remain the number one focus. The ATO is keen to stamp out exaggerated and ineligible claims, particularly after seeing some “wild” examples, such as mechanics claiming air fryers and truck drivers attempting to claim swimwear. The golden rule is simple: For a deduction to be eligible, it must directly relate to earning your income.

• Key Tip: Ask yourself: Was the expense necessary for my job? Did I pay for it myself (and not get reimbursed)? Can I prove it with a receipt?
• Work from home claims continue to be significant. To claim, you must have genuinely worked from home to fulfill your role—not just taken a call or checked email sporadically.
• The fixed rate method is now $0.70 per hour.
• Alternatively, use the actual cost method, but maintain detailed records and receipts.

2. Reporting All Income – Especially Side Hustles

Another major focus area is omitted income. The ATO expects taxpayers to declare all sources, including money earned from side gigs, the sharing economy, and platforms (like ride-sourcing and freelance work).

• Key Tip: If you’ve earned money outside your normal job—from driving for a rideshare company, renting out a room, or selling items online—that income must be included in your tax return.

3. Common Mistakes: How to Avoid Them

A recurring problem is poor record keeping and misunderstanding what can and can’t be claimed. Remember, the "three golden rules" for work-related expense claims:

1. You paid for it yourself and weren't reimbursed
2. The expense directly relates to earning your income
3. You have a record (usually a receipt) as proof

Be wary of common errors, such as:

• Claiming the cost of travel between home and work (generally not deductible)
• Everyday clothing or generic meals, even if consumed at work (private, not deductible)
• Donations to charities that are not deductible gift recipients (DGR)

A bank statement alone is generally insufficient evidence; receipts should specify the supplier, amount, date, and item purchased. Records should be kept for at least five years.

4. Investment Properties: Interest and Repairs in the Spotlight

If you own an investment property, be especially diligent this year. The ATO is closely reviewing claims related to interest expenses and repairs.

• Interest Expenses: Only the portion of your loan used to produce rental income is deductible. Drawing on your investment loan for personal use—such as buying a new car or paying school fees—means you should apportion the interest and only claim the rental-related share.
• Repairs vs. Capital Improvements: Costs incurred to fix problems existing at purchase (for example, painting before a new tenant moves in) are generally capital improvements, not immediate deductions. These expenses are claimed over time through depreciation, not claimed upfront.

Keep thorough records, as you’ll need these both for your annual return and when you eventually sell the property.

5. Substantiation and Getting Help

Not having the right paperwork is still one of the most common (and expensive) tax-time mistakes. In most cases, you’ll need written proof—like receipts, vehicle logbooks, or detailed records if you're working from home—to back up your claims.

If you’re not sure what you can claim for your job, the ATO has occupation- and industry-specific guides that can help—or feel free to reach out to us for advice.

With the ATO stepping up compliance checks and using smarter data-matching technology, it’s more important than ever to make sure your deductions are legit and all your income is reported. Staying on top of these rules can help you avoid any audit stress—and make tax time a lot smoother.

Need Help with your Business, Bookkeeping, Tax or SMSF requirements?

If you would like a little help, please get in touch with us for assistance. We can help with your business, bookkeeping, tax and SMSF requirements. To book an appointment, use our online booking system, give us a call on 07 3289 1700, or email us at reception@rgaaccounting.com.au.We look forward to assisting you this tax season!

Please also note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Should you have any further questions, please get in touch with us for assistance with your SMSF, business, bookkeeping and tax requirements. All rights reserved. Brought to you by RGA Business and Tax Accountants. Liability Limited by a scheme approved under Professional Standards Legislation.