Taxable Payments Annual Report
The ATO reminds businesses to pay contractors for services covered by the taxable payments reporting system (TPRS). They must submit a taxable payments annual report (TPAR) by 28 August each year. The TPRS services include:
- Building and construction
- Courier and road freight
- Cleaning
- Information technology
- Security, investigation, or surveillance
Starting from 22 March 2025, the ATO will impose penalties on businesses that have not filed their TPAR for 2024 or earlier years, following three reminder letters regarding their overdue TPAR.
ATO Moving Non-Compliant Small Businesses to Monthly GST Reporting
Starting 1 April 2025, the ATO will move certain small business taxpayers from quarterly to monthly GST reporting if they have a history of non-compliance, such as missed payments, late BAS lodgments, or incorrect GST reporting. Affected taxpayers and their tax professionals will be notified in writing. This change in reporting frequency will be in effect for at least 12 months. Additionally, small business clients can choose to switch to monthly GST reporting voluntarily, which may help improve cash flow management and better align with the reconciliation process.
FBT for the 2025 Year
The ATO is reminding taxpayers of their Fringe Benefits Tax (FBT) obligations as the 2025 FBT year concludes on 31 March 2025. Clients need to:
- Determine if they have an FBT liability for fringe benefits provided to employees or their associates between 1 April 2024 and 31 March 2025.
- If there is an FBT liability, submit an FBT return and pay the amount due by 21 May 2025.
- Report each employee’s reportable fringe benefits amount in their end-of-year payment information.
For the 2025 year, clients can use existing records instead of travel diaries and declarations for certain fringe benefits. If using corporate records, they must ensure they meet the minimum required information when lodging the FBT return.
Please note that the FBT exemption for plug-in hybrid electric vehicles will end on 31 March 2025. Employers can continue to apply the exemption only if specific conditions are met:
- The vehicle was used or available for use before 1 April 2025 (and that use was exempt).
- There is a financially binding commitment to provide private use of the vehicle on and after 1 April 2025.
Focus Areas for Small Business
The ATO is alerting taxpayers to several specific areas of concern for small businesses:
- Contractors failing to report all income
- Transitioning from quarterly to monthly BAS reporting for GST to foster good business practices and enhance cash flow management
- Small business boost measures that encourage self-amendment to rectify errors and omissions
Additionally, the ATO will maintain its focus on non-commercial business losses, small business capital gains tax (CGT) concessions, the treatment of business income as personal income, GST registration, and the income from taxi, limousine, and ride-sourcing services.
New Requirements for Child Care Subsidy Providers
All new Child Care Subsidy provider approval applicants must provide a statement of tax record (STR) to the Australian Government Department of Education. The STR shows satisfactory engagement with the tax system and is essential when applying to administer CCS. Applications for an STR can be made using ATO online services. After submitting your application, you will receive a receipt and your STR within 4 business days.
Requesting Lodgment Deferrals
The ATO has released website guidance that outlines three questions for tax practitioners to ask themselves before applying to the ATO for lodgment deferrals.
- Are the circumstances exceptional or unforeseen?
Practitioners may qualify for a lodgment deferral if they encounter exceptional or unforeseen circumstances that affect their ability to submit on time, such as severe illness, unexpected staff shortages, or natural disasters. However, deferrals should not be sought solely because a client has not provided necessary information in a timely manner for preparation and submission. Applications for deferrals must provide comprehensive details about the exceptional circumstances, their impact on the ability to lodge on time, and, if relevant, an explanation for why the request is being made after the due date.
- Does your client have a due date of 15 May?
Some clients can submit their tax returns by 5 June without needing to request an extension for the 15 May due date. This applies to individual, partnership, and trust returns, as long as any required payment is made by that date. For companies and super funds (excluding large and medium taxpayers), this concession applies if the previous and current year returns are either non-taxable or result in a refund. - Do you need extra support?
If the issues you’re facing impact your entire practice, you can use the supported lodgment program, which is available for practices of any size when you need more time to submit many clients’ obligations. The ATO advises requesting this program as early as possible.
Online Services for Foreign Investors
The ATO has updated its guidance on the website regarding online services available for foreign investors. Through these services, foreign investors can:
- Submit applications for residential properties and pay related fees
- Track the status of their residential applications
- Access the history of residential property applications (from January 1, 2021)
- Manage their foreign person details
- Handle registrations for both residential and non-residential assets
- File vacancy fee returns and pay the associated fees
- Review their vacancy fee return submissions
- Check their payment history
- Delegate authority to representatives to act on their behalf.
Small Business Benchmarks for 100 Industries
The ATO has introduced updated financial benchmarks that enable small business owners to assess their performance, including average expenses, relative to others in the same industry. Although the ATO does not rely solely on these benchmarks, businesses that fall outside the established ranges may face increased scrutiny. These benchmarks encompass 100 industries and represent data from over 2 million small businesses nationwide, including sectors such as:
- Accommodation and food
- Building and construction trade services
- Education, training, recreation, and support services
- Health care and personal services
- Manufacturing
- Other services
- Professional, scientific, and technical services
- Retail trade
- Transport, postal, and warehousing
SMSF Quarterly TBAR
The ATO is reminding self-managed super funds (SMSFs) about their reporting obligations concerning transfer balance account events under transfer balance account reporting (TBAR). Reports for the March quarter are due on April 28, 2025, regardless of whether a member’s total superannuation balance is less than $1 million. Failure to meet these reporting deadlines may result in compliance actions, penalties, and negative consequences for members’ transfer balance accounts, potentially requiring them to adjust amounts exceeding their cap and incur additional excess transfer balance tax.
System Updates in Online Services
The ATO has informed tax agents of updates to their Online Services system as of March 2025. The card payment menu has been changed to a view-only format, meaning agents can no longer process credit or debit card payments on behalf of their clients. The ‘Make payments’ permission has also been removed in Access Manager for tax and BAS agents to facilitate this change. Additionally, the 2025 financial year FBT return is now available for submission.
Record-Keeping for Not-for-Profits
The ATO has updated its website with comprehensive guidance on record-keeping for not-for-profits (NFPs). In addition to standard financial records, NFPs must maintain essential documents, including grant-related paperwork, registration certificates, and other regulatory documents. Those applying the mutuality principle should keep detailed records of contributions made by all members to a common fund, as well as how they identify and allocate transactions benefiting both members and non-members. Charities registered with the ACNC are required to retain specific financial and operational records for seven years, while deductible gift recipients (DGRs) must keep records related to their DGR status for five years post-transaction. NFPs must also adhere to standard GST record-keeping practices, including maintaining tax invoices for claims on GST credits when costs exceed $82.50 (inclusive of GST).
Lawyers in the Spotlight
The ATO is ramping up compliance activities in the legal sector due to concerns about some lawyers failing to lodge returns, making reporting errors, or not paying on time. The ATO has noted instances of lawyers incorrectly reporting distributions from partnerships and associated service trusts. Redirecting legal firm income to an associated entity or engaging in inappropriate income alienation is considered high risk. If non-compliance is established, it could lead to a determination that the lawyer is not fit to practice law, potentially resulting in their removal from the roll.
Next 5,000: Avoid Common CGT Errors
The ATO informs the Next 5,000 privately owned and wealthy groups of common CGT errors to be aware. Common CGT mistakes include:
- cost base errors
- reporting of transactions in the wrong year, or not at all
- wrong characterisation of ordinary income as capital income
- beneficiaries that fail to gross up their share of discount capital gains distributed by trusts
- unsubstantiated carried-forward capital losses
- unable to substantiate assets sold to related parties.
Not preparing tax returns correctly can result in amendments and audits. These can be daunting and expensive, showing the significance of accurate CGT reporting.
To ensure accuracy and compliance in CGT reporting, you must:
- Understand the nature of the transaction and the asset
- Maintain records of everything that may be relevant to working out whether you’ve made a capital gain or loss from a CGT event
- Get independent professional valuations to support assets sold between related parties.