Taxpayers who have had work done on their rental property should ensure the expense is categorised correctly to avoid errors when completing their tax return.

A deduction for ‘repairs and maintenance’ expenses can be claimed for work done to remedy, or prevent defects, damage or deterioration from using the property to earn income. These expenses can be claimed in the year they were incurred.

However, some ‘capital’ expenditure may not be immediately deductible, such as for ‘initial repairs’, ‘capital works’, ‘improvements’ and depreciating assets.

Initial repairs include fixing any pre-existing damage or deterioration that existed at the time of purchasing the property, even if the damage or deterioration was unknown to the taxpayer at the time of purchase. Initial repairs are treated as part of the acquisition cost and included in the cost base of the property for CGT purposes, unless they are capital works or depreciating assets.

Capital works are structural improvements, alterations and extensions to the property, and can generally be claimed at 2.5% over 40 years. Capital works deductions can only be claimed after the work has been completed, regardless of when the taxpayer pays the deposit and instalments.

Improvements or renovations that are structural are also capital works. Work that goes beyond remedying defects, damage or deterioration that improves the function of the property is regarded as an improvement.

Repairs to an ‘entirety’ are capital and cannot be claimed as repairs. Repairs to an entirety generally involve the replacement or reconstruction of something separately identifiable as a capital item.

Depreciating assets are treated as follows:

• Deductions for ‘new’ assets must generally be claimed over time according to their effective life.
• Second-hand depreciating assets generally cannot be deducted.

Employers are reminded that employee super contributions for the quarter ending 30 September 2025 must be received by the relevant super funds by Tuesday, 28 October 2025. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which (as noted above) includes a penalty and interest component.

The ATO is warning businesses that if they incorrectly treat an employee as an independent contractor, then they risk receiving penalties and charges, including:

• PAYG withholding penalty for failing to deduct tax from worker payments and send it to the ATO;
• Super guarantee charge (‘SGC’), which is more than the super that would have been paid if the worker was classified correctly. SGC consists of a super guarantee shortfall amount, nominal interest, and an administration fee; and
• Additional SG penalties, including a penalty amount of up to 200% of the SGC.

‘Sham contracting’ may also contravene the Fair Work Act 2009. Courts can impose penalties against a business or person that incorrectly informs an employee that they are an independent contractor.

In a recent decision, the Administrative Review Tribunal (‘ART’) held that a taxpayer could not claim a tax deduction for medical expenses incurred by him in relation to his total and permanent disability pension.

The taxpayer had been terminated from his employment due to total and permanent disablement (‘TPD’). For the 2024 income year, his only income was a TPD pension.

The taxpayer wanted to claim a deduction for medical expenses to be incurred, estimated to be approximately $100,000 in the 2024 income year.

The ART agreed with the ATO that the medical expenses were not deductible. The ART noted in this regard that the medical expenses were “incurred by (the taxpayer) to better live with his medical condition, not incurred ‘in’ gaining or producing the TPD pension.” That is, “the occasion of the Medical Expenses is to assist (the taxpayer) with his medical condition, not to gain or maintain his eligibility to the TPD pension.”

The ART also did not accept the taxpayer’s argument that the medical expenses were not private or domestic in nature, as they were essentially personal in character.

Running a business is rewarding – but it can also be complex, especially when it comes to your tax and super obligations. Getting the basics right can make a big difference.

When we see businesses operating well, the common theme is getting the basics right:

• Use digital tools and business software to streamline your processes and improve efficiency.
• Keep accurate and complete records all year round. Good record keeping makes tax time easier and helps you stay on top of your obligations.
• Get the right advice from trusted sources, like us or the ATO’s website.
• Lodge and pay your tax in full and on time. If you’re worried you won’t be able to lodge and pay on time, please contact us. Proactivness is key.
• Set aside GST, pay as you go (PAYG) withholding and super from your cash flow, so you have the funds available when it’s time to pay.

Taking the time now to put these good habits in place will help you stay compliant, reduce stress, and give you more time to focus on growing your business. We’re here to help you put the right systems in place and guide you every step of the way.

Tax time is in full swing and so are the scammers! Their aim? To trick you into handing over your personal information so they can steal your identity and commit fraud in your name.

Scams Awareness Week is from 25 to 29 August 2025. It’s a great reminder to stop and take a second to check it’s really the ATO contacting you. We know you’re busy, juggling multiple deadlines, but scammers plan on you being distracted.

Do these 3 things to help protect yourself:

1. Don’t be fooled by emails and texts with QR codes or links to an online portal that claim to be about your tax – that’s a scammer trying to steal your personal information.
2. When checking the status of your tax return or using online services, always type the URL into your web browser – don’t click a link in a message.
3. Make sure you protect your TFN, ABN and myID/RAM login details. Never give out your personal information to anyone unless they genuinely need it.

If you think a phone call, SMS, voicemail, email or social media interaction claiming to be from the ATO is not genuine, do not engage with it. You should:

• go to verify or report a scam to see how to spot and report a scam; or
• if you have divulged information or paid a scammer money, phone us immediately on 1800 008 540; or
• Contact us for further assistance.

The ATO reminds shareholders of private companies that understanding how Division 7A of the tax legislation applies is crucial to avoiding costly tax consequences when accessing the company’s money or other benefits.

When Division 7A applies, the recipient of a payment, loan or other benefit can be deemed to have been paid an unfranked dividend that will be included in their assessable income.

While Division 7A can be complex, most errors the ATO sees that result in its application are simple in nature, including:

•      shareholders not recognising that a company’s money is not their money, and they cannot access it for personal use without tax consequences;
•      loans being made without complying loan agreements; and
•      applying the wrong benchmark interest rate when calculating Division 7A loan repayments.

These errors are often the result of common myths about Division 7A and how it works.

To support taxpayers’ understanding of their tax obligations when managing private company money, the ATO has launched new content: ‘Division 7A Myths debunked’ on its website.

This page debunks common myths about Division 7A, breaking them into topics such as ‘business structure’, ‘record keeping’, and ‘payments to other entities’.

Taxpayers may need to lodge a Taxable payments annual report (‘TPAR’) online by 28 August if they have paid contractors to provide any of the following services on their behalf:

•        building and construction;
•        cleaning;
•        courier and road freight;
•        information technology; or
•        security, investigation or surveillance.

If the ATO is expecting a TPAR from a taxpayer who does not need to lodge one, they can complete a ‘TPAR non-lodgment advice form’ by 28 August.

Taxpayers who no longer pay contractors can also use this form to tell the ATO they will not need to lodge a TPAR in the future (although if their circumstances change they may need to lodge a TPAR).

Editor: Please contact our office if you need assistance with completing and/or lodging a TPAR. 

Note that paper lodgments of TPARs will no longer be accepted after 28 August 2025.

ASIC is warning Australians to be on ‘red alert’ for high-pressure sales tactics, click bait advertising and promises of unrealistic returns which encourage people to switch superannuation into risky investments.

The warning comes amid increasing concerns from ASIC that people are being enticed to invest their retirement savings in complex and risky schemes.

ASIC Deputy Chair Sarah Court said the start of a new financial year was often the trigger for people to check their super fund’s performance, and urged consumers to be extra cautious.

“When it comes to sales calls about super switching, there are some big red flags people should be alert to — being asked to make a quick decision is one of the most obvious.  Remember, a good deal won’t vanish overnight.”

She said that these calls “don’t have the hallmarks of a typical scam.  The caller will seemingly have your best interests at heart, and they say they want to help you find a better super product or locate lost super for free.”

Consumers should always ask questions about salespeople’s connections to funds, particularly in circumstances where a particular fund appears in the pitch, as there may be a commission arrangement.

“If you are unsure or are feeling pressured, just hang up.”

As from 1 July 2025, the amount of Paid Parental Leave (PPL) available to families has increased from 20 weeks to 24 weeks. In addition, the amount of Paid Parental Leave that parents can take at the same time has doubled – from two weeks to four weeks – giving families greater flexibility in how they share time off.

For the first time, superannuation will also be paid on Government Paid Parental Leave, at the new super guarantee rate of 12%, with contributions made directly to the parent’s nominated superannuation fund. This change is designed to help close the super gap that often affects parents taking extended leave, particularly women.

Parents will also benefit from an increase in the weekly payment rate of Paid Parental Leave, rising from $915.80 to $948.10 in line with the National Minimum Wage increase. Over the full 24-week entitlement, this equates to an additional $775.20 in payments.

These changes mean families will not only have more time at home with their new baby, but also improved financial support and long-term superannuation benefits, making it easier to balance work, family, and future financial security.