Looking Back at 2024 & Preparing for 2025
As we enter 2025, are you fully prepared for the tax and financial changes ahead? From Fringe Benefits Tax (FBT) updates and individual tax cuts to business tax planning strategies and Federal Budget reforms, staying ahead of these developments is crucial.
This guide revisits the key tax insights from 2024, highlighting what still matters today and outlining what’s new for businesses and individuals in 2025. Whether you're a business owner, an investor, or an employee, understanding these changes will help you optimise your financial strategy, ensure compliance, and make smarter decisions for the year ahead.
January: Fringe Benefits Tax Guide for Employers
Understanding Fringe Benefits Tax (FBT) and Its Business Impact
In January 2024, Cordner explored Fringe Benefits Tax (FBT)—a tax imposed on employers who provide non-cash benefits to employees in addition to their wages. Many businesses overlook FBT, but it plays a crucial role in financial planning and tax compliance.
FBT applies to a range of benefits, including company cars, entertainment expenses, reimbursed personal costs, and discounted loans. Unlike income tax, which is deducted from employees' wages, FBT is paid directly by employers at a rate of 47% on the taxable value of benefits provided. The FBT year runs from 1 April to 31 March, requiring businesses to review their obligations annually.
Key Takeaways from Fringe Benefits Tax Guide for Employers
1. What is FBT and Why Does it Matter?
FBT is separate from income tax and is imposed to ensure non-cash employee benefits are taxed fairly. Employers must assess whether they are providing taxable fringe benefits and calculate FBT liability accordingly.
FBT applies to various perks, including:
✔ Company cars used for private purposes, even if primarily provided for work
✔ Expense reimbursements, such as school fees, gym memberships, or phone bills
✔ Entertainment benefits, including corporate event tickets, meals, and holiday accommodation
✔ Low-interest loans, where businesses lend money to employees at below-market rates
Employers must self-assess their FBT liability each year and submit an FBT return if required. If an employer provides benefits but stays below the reporting threshold, they must still maintain records in case of an ATO review.
2. FBT Calculation Methods
Employers can choose between two primary methods to calculate FBT liability for company cars and similar benefits:
Statutory Formula Method – Applies a fixed rate of 20% of the car’s base value, adjusting for private vs. business use. This method does not require logbooks, making it easier for businesses to manage.
Operating Cost Method – Based on actual running costs, including fuel, maintenance, depreciation, and registration. This method requires employees to maintain a 12-week logbook to track business vs. private use. If business use is high, this method can result in lower FBT liabilities.
Employers should choose the method that results in the lowest taxable value to minimise their FBT obligations.
Stay Compliant and Minimise FBT Costs. Asses your liability, and keep accurate records. Review your FBT Strategy Today with Cordner Advisory!
3. FBT Exemptions and Concessions
Some fringe benefits are fully or partially exempt from FBT, allowing businesses to provide incentives while minimising tax liability.
✔ Work-Related Items – Laptops, mobile phones, and professional tools are FBT-exempt if primarily used for work and not part of a salary-sacrifice arrangement.
✔ Minor Benefits Exemption – Non-cash benefits valued at less than $300 (such as occasional gifts or meals) may be exempt if they are infrequent and irregular.
✔ Remote Area Concessions – Housing or travel benefits for employees working in designated remote areas may qualify for FBT reductions or exemptions.
By structuring benefits to align with exemptions, businesses can reduce FBT liability while offering competitive employee perks.
4. Record-Keeping Requirements for FBT Compliance
The Australian Taxation Office (ATO) requires businesses to maintain accurate records to justify their FBT calculations. Essential records include:
✔ Logbooks – Required for businesses using the Operating Cost Method. Employees must track their business vs. private vehicle use for a 12-week period, and the logbook remains valid for five years unless usage changes significantly.
✔ Receipts and Invoices – Businesses must keep detailed records of reimbursed expenses, entertainment costs, and other taxable fringe benefits.
✔ Employee Declarations – Some benefits, such as expense payments, require employees to declare how much of the benefit was for business vs. personal use.
✔ FBT Return Lodgment – Businesses providing taxable fringe benefits must lodge an FBT return or incorporate FBT into their Business Activity Statement (BAS).
Failure to maintain proper records can result in penalties, audits, or additional tax liabilities.
Have There Been Any Changes Since the Original Post?
1. Record-Keeping Simplification
As of 1 April 2024, the ATO introduced changes to FBT record-keeping requirements. Employers can now use existing corporate records (such as accounting systems or payroll records) instead of statutory declarations or travel diaries for certain benefits. This change aims to reduce administrative burdens and streamline compliance.
2. Electric Vehicle FBT Exemption Update
From 1 April 2025, plug-in hybrid vehicles (PHEVs) will no longer qualify for the FBT exemption under the low-emission vehicle scheme.
However, businesses can continue claiming the exemption for PHEVs provided before this date, as long as all other conditions are met.
Key Takeaways for Businesses in 2025
✔ Stay Informed on Legislative Changes – Employers should regularly check ATO updates to ensure compliance with FBT reporting, record-keeping, and exemption policies.
✔ Evaluate Fringe Benefit Offerings – Businesses should assess which benefits they provide to employees and determine if they are tax-effective or if restructuring can reduce FBT exposure.
✔ Leverage Available Exemptions – Employers should continue utilising FBT exemptions, especially for work-related tools, minor benefits, and electric vehicles (within the revised guidelines).
✔ Ensure Proper Documentation – With record-keeping rules changing, businesses must keep accurate electronic records to substantiate claims and ensure ATO compliance.
✔ Consult with Tax Professionals – Given the complexities of FBT, working with an accountant or tax expert can help businesses optimise their tax position and avoid compliance risks.
By proactively managing FBT obligations, businesses can continue offering valuable employee perks while minimising unnecessary tax liabilities in 2025 and beyond.
February: Individual Tax Rate Changes
In February 2024, Cordner Advisory analysed the Federal Government's adjustments to individual income tax rates, effective from 1 July 2024. These changes aim to provide greater tax relief, particularly for individuals earning less than $150,000, in response to the rising cost of living. The redesigned tax structure is anticipated to benefit an additional 2.9 million Australian taxpayers, allowing them to retain more of their earnings.
Redesigned Tax Brackets
The government’s adjustments to income tax brackets aim to provide greater relief, particularly for those earning under $150,000. The changes are:
| Previous Tax Rate | New Tax Rate (As of 1st July 2024) | Income Threshold |
|---|---|---|
| 19% | 16% | Up to $45,000 |
| 32.5% | 30% | $45,0001 - $135,000 |
| 37% | 37% | $135,001 - $190,000 |
| 45% | 45% | $190,001 |
Impact on Taxpayers
Low to Middle-Income Earners: Individuals earning less than $146,486 are expected to receive more generous tax cuts under the redesigned framework, enhancing their disposable income.
High-Income Earners: While still benefiting from tax cuts, the adjustments are structured to provide proportionally greater relief to low and middle-income earners.
Government Revenue Projections
Despite the tax cuts, government revenues from individual income taxes are projected to increase by $28 billion by the 2034–35 fiscal period. This rise is attributed to "bracket creep," where inflation pushes taxpayers into higher tax brackets over time, increasing their tax liabilities without a corresponding increase in real income.
Understand How Tax Changes Affect You! Plan Ahead with Cordner Advisory!
Changes Since the Original Post
As of January 2025, the proposed individual tax rate changes have been implemented as planned. The Australian Taxation Office (ATO) has updated its guidelines and withholding schedules to reflect the new tax brackets and rates. Employers have adjusted their payroll systems accordingly to ensure accurate tax withholding for employees.
Key Takeaways for Individuals in 2025
✔ Review Your Tax Withholding: Ensure that your employer has updated your Pay As You Go (PAYG) withholding to align with the new tax rates. This will help prevent unexpected tax liabilities or refunds when filing your tax return.
✔ Assess Financial Planning Strategies: With the new tax brackets, it's advisable to review your financial planning strategies, including salary packaging, superannuation contributions, and investment decisions, to optimise tax benefits.
✔ Stay Informed on Tax Obligations: Keep abreast of any further tax changes or updates from the ATO to ensure compliance and make informed financial decisions.
✔ Consult with Tax Professionals: Engage with tax advisors to understand how the new tax rates impact your personal financial situation and to develop strategies that maximise your after-tax income.
By staying informed and proactively managing your tax affairs, you can take full advantage of the 2024 individual tax rate changes and enhance your financial well-being in 2025 and beyond.
March: Unveiling the Impact of Redesigned Stage 3 Tax Cuts
In March 2024, Cordner Advisory examined the Redesigned Stage 3 Tax Cuts, a significant component of Australia's tax reform aimed at simplifying the tax system and providing relief to taxpayers. These reforms primarily benefit low to middle-income earners by adjusting income tax thresholds and rates.
Key Takeaways:
✔ Simplification of the Tax System:
The adjustments to tax thresholds aim to simplify Australia's tax structure, making it more straightforward for taxpayers to understand their obligations and for the government to administer. By reducing the number of tax brackets and adjusting thresholds, the system becomes less complex, potentially reducing compliance costs for individuals and businesses.
✔ Economic Stimulus Through Increased Disposable Income:
Lowering tax rates for low and middle-income earners increases disposable income, which can lead to higher consumer spending. This boost in spending supports businesses across various sectors, contributing to economic growth and recovery.
✔ Enhanced Competitiveness for Australia:
By offering lower personal income tax rates, Australia becomes more attractive to skilled workers and businesses. This competitiveness can encourage investment in the local economy, fostering innovation and job creation.
Has Anything Changed Since the Original Post?
As of January 2025, the Redesigned Stage 3 Tax Cuts have been fully implemented as planned. The Australian Taxation Office (ATO) has updated its guidelines and tax tables to reflect the new thresholds and rates. Employers have adjusted their payroll systems to ensure accurate withholding aligns with the updated tax structure.
Stay Informed on Tax Reforms. Ensure you understand how the tax cuts impact you and Australia’s economy. Contact Cordner Advisory Today!
Key Takeaways for Individuals and Businesses in 2025:
For Individuals:
✔ Review Personal Budgets: With increased disposable income due to lower tax rates, individuals should reassess their budgets and consider allocating additional funds towards savings, investments, or debt reduction.
✔ Stay Informed on Tax Obligations: Despite the tax cuts, it's essential to remain aware of any other tax obligations or changes that may affect your financial situation.
For Businesses:
✔ Anticipate Increased Consumer Demand: Businesses should prepare for potential increases in consumer spending resulting from higher disposable incomes among customers. This preparation may involve adjusting inventory levels, staffing, or marketing strategies to capitalise on the anticipated demand.
✔ Evaluate Compensation Strategies: With changes in personal tax rates, businesses might consider reviewing their compensation packages to ensure they remain competitive and attractive to current and prospective employees.
By understanding the implications of the Redesigned Stage 3 Tax Cuts, both individuals and businesses can make informed decisions to optimise their financial well-being and capitalise on the opportunities presented by these tax reforms.
April: Business Tax Planning 2024
In April 2024, Cordner Advisory highlighted the importance of proactive tax planning for businesses aiming to optimise their financial strategies and minimise tax liabilities. Effective tax planning involves structuring financial transactions and operational activities to legally reduce tax burdens while ensuring compliance with evolving tax laws. This strategic approach is essential for businesses to leverage available tax benefits and maintain financial health.
Key Takeaways:
✔ Asset Purchases:
Businesses are encouraged to take advantage of the extended $20,000 instant asset write-off, allowing immediate deductions for eligible asset purchases under this threshold. This incentive improves cash flow and encourages investment in essential equipment or technology upgrades.
✔ Timing of Business Expenses:
Strategically timing the payment of business expenses can influence tax liabilities. For instance, prepaying certain expenses before the end of the financial year can accelerate deductions, thereby reducing taxable income for that year.
✔ Restructuring Business Entities:
Evaluating and potentially restructuring the business entity can lead to tax efficiencies. For example, operating as a trust or company might offer different tax advantages compared to a sole proprietorship or partnership, depending on the specific circumstances.
✔ Staying Informed on Tax Legislation:
Keeping on top of changes in tax laws is crucial. New legislation can introduce opportunities for tax savings or impose additional compliance requirements. Regular consultations with tax professionals can help businesses stay updated and adjust strategies accordingly.
Update Your Strategy Today! Leverage new opportunities to reduce liabilities and position yourself financially. Start Planning Now With Cordner!
Changes Since the Original Post
As of January 2025, the Australian Taxation Office (ATO) has introduced several updates affecting business tax planning:
✔ Increased Reporting Requirements:
The ATO has heightened reporting obligations for certain deductions and credits, necessitating more meticulous record-keeping from businesses.
✔ Adjustment to Instant Asset Write-Off Threshold:
The instant asset write-off threshold has been revised, impacting the eligibility of certain asset purchases for immediate deduction. For the 2024–25 financial year, the key threshold remains at $20,000 (net of GST) per asset, allowing businesses to claim deductions on multiple qualifying assets.
Key Takeaways for Businesses in 2025:
✔ Review Asset Acquisition Strategies:
With changes to the instant asset write-off threshold, businesses should reassess their asset purchase plans to maximise tax benefits. Consulting with a tax professional can provide clarity on the current thresholds and eligible assets.
✔ Enhance Record-Keeping Practices:
In light of increased reporting requirements, maintaining detailed and accurate financial records is more critical than ever. Implementing robust accounting systems can aid in compliance and provide valuable insights for decision-making.
✔ Stay Updated on Legislative Changes:
Tax laws are continually evolving. Regularly engaging with tax advisors or attending informational seminars can help businesses stay informed about new regulations and their implications.
✔ Consider Professional Advisory Services:
Given the complexities of tax planning, seeking professional advice can ensure that businesses are utilising all available tax benefits and adhering to compliance obligations. Cordner Advisory offers tailored services to assist businesses in navigating the tax landscape effectively.
By implementing these strategies and staying informed about legislative changes, businesses can optimise their tax positions and achieve sustainable financial success in 2025 and beyond.
May: Navigating the Federal Budget
In May 2024, Cordner Advisory provided an in-depth analysis of the Federal Budget 2024–25, highlighting several key measures aimed at supporting small and medium-sized businesses (SMBs). The budget introduced initiatives designed to enhance cash flow, encourage investment in new technologies, and support emerging industries, reflecting the government's commitment to fostering economic resilience and growth.
Key Takeaways:
✔ Extension of the Instant Asset Write-Off:
The budget extended the $20,000 instant asset write-off until 30 June 2025. This allows SMBs to immediately deduct the cost of eligible assets costing less than $20,000, such as office equipment, tools, machinery, vehicles, and technology, thereby improving cash flow and encouraging reinvestment into the business. To qualify, assets must be first used or installed ready for use by the end of the financial year.
✔ Energy Bill Relief:
To alleviate the burden of rising energy costs, the budget introduced a $325 energy bill relief for eligible small businesses. This relief is applied as an automatic quarterly credit, helping to reduce operational expenses and allowing businesses to allocate funds to other critical areas.
✔ Support for Emerging Industries:
The budget included time-limited tax incentives to support the growth of new industries:
Critical Minerals Production Tax Incentive: Aimed at supporting the downstream refining and processing of Australia's critical minerals, enhancing supply chain resilience.
Hydrogen Production Tax Incentive: Targeted at producers of renewable hydrogen, fostering the growth of a competitive hydrogen industry.
These incentives are designed to position Australia as a leader in renewable energy and critical minerals production.
Changes Since the Original Post:
As of January 2025, the key measures outlined in the Federal Budget 2024–25 have been implemented as planned. The Australian Taxation Office (ATO) has updated its guidelines to reflect the extended instant asset write-off and the new tax incentives for emerging industries. Energy bill relief credits have been applied automatically to eligible small businesses' accounts.
Grow your Business with Cordner Advisory! Tax Advantage of Tax Incentives, Energy Relief, and Investment Opportunities. See what’s available for your business!
Key Takeaways for Businesses in 2025:
✔ Leverage the Instant Asset Write-Off:
Businesses should consider taking advantage of the extended instant asset write-off by investing in eligible assets before 30 June 2025. This can lead to immediate tax deductions and improved cash flow.
✔ Utilise Energy Bill Relief:
Ensure your business qualifies for the energy bill relief and monitor your energy statements to confirm that the credits are being applied correctly.
✔ Explore Opportunities in Emerging Industries:
If your business operates in or is considering entering the critical minerals or renewable hydrogen sectors, investigate the available tax incentives and assess how they can benefit your operations.
✔ Stay Informed and Compliant:
Keep ahead of any further updates from the ATO regarding these measures and maintain accurate records to ensure compliance and maximise the benefits available to your business.
By understanding and capitalising on the measures introduced in the Federal Budget 2024–25, businesses can enhance their financial position and contribute to Australia's economic growth in 2025 and beyond.
June: Tax Time Terrors: How to Keep Your Business Safe
In June 2024, Cordner Advisory highlighted the Australian Taxation Office's (ATO) intensified compliance activities as the financial year concluded. The ATO increases its scrutiny during this period to ensure businesses and individuals adhere to tax regulations. Being aware of the ATO's primary focus areas and implementing strategies to maximise tax deductions while minimising risks are crucial steps to maintain financial health and avoid penalties.
Key Takeaways from the Original Blog
Misuse of Company Funds
The ATO is vigilant about business owners using company resources for personal purposes, an issue governed by Division 7A of the tax law. Common problems include:
Incorrect accounting for the use of company assets.
Loans made without compliant loan agreements.
Reborrowing from the company to make repayments on Division 7A loans.
Incorrect interest rates applied to Division 7A loans.
To avoid penalties, ensure that any loans are properly documented with compliant agreements and maintain accurate records of all transactions involving trusts, shareholders, and associates. Proper documentation and adherence to Division 7A rules prevent benefits from being reclassified as unfranked dividends, which are taxed at the recipient’s higher marginal rate and can result in significant penalties.
Early Access to SMSF Funds
The ATO strictly monitors illegal early access to self-managed superannuation funds (SMSFs). Trustees must avoid accessing superannuation funds for personal use before retirement or without meeting specific conditions like severe financial hardship. Common issues include:
Trustees using SMSF funds for short-term loans during financial distress.
Falling for schemes that promote illegal early access to superannuation.
Compliance can be ensured by accessing SMSF funds only under legitimate conditions such as retirement or severe financial hardship, keeping accurate records, and ensuring timely lodgement of SMSF annual returns.
Trust Distributions
The ATO has increased scrutiny on trust income distribution to prevent tax avoidance. Common compliance risks include:
Distributing income incorrectly – Ensure distributions align with the trust deed.
Unjustified beneficiary entitlements – Beneficiaries must be eligible and properly documented.
Improper income streaming – Allocating different income types to beneficiaries must comply with ATO regulations.
📌 How to Stay Compliant:
Regularly review your trust deed to ensure distributions align with its terms.
Keep detailed records of all distributions and beneficiary entitlements.
Consult a tax professional to confirm compliance with ATO rules.
Stay Ahead of the ATO. Avoid penalties by ensuring proper documentation, trust distributions, and SMSF compliance. Review your current strategy today with Cordner
Changes Since the Original Post
As of January 2025, the ATO has maintained its focus on these key areas, with increased audits and compliance checks. There have been no significant changes to the regulations governing Division 7A, SMSFs, or trust distributions. However, the ATO has provided additional guidance to assist businesses in understanding and complying with these regulations.
Key Takeaways for Businesses in 2025
✔ Maintain Accurate Records
Ensure meticulous record-keeping for all financial transactions, including loans, asset usage, and trust distributions. Accurate records are essential for demonstrating compliance during ATO audits.
✔ Review Loan Agreements
Regularly review and update loan agreements to ensure they comply with Division 7A requirements, including correct interest rates and repayment terms.
✔Adhere to SMSF Regulations
Access SMSF funds only under legally permitted conditions. Be cautious of schemes that promise early access to superannuation funds without meeting the legal requirements.
✔ Comply with Trust Deeds
When distributing trust income, strictly follow the terms outlined in the trust deed and ensure compliance with tax laws regarding beneficiary entitlements and income streaming.
✔ Seek Professional Advice
Given the complexities of tax regulations, consider consulting with tax professionals to ensure compliance and optimise tax strategies.
By staying informed about the ATO's focus areas and implementing robust compliance strategies, businesses can navigate tax time with confidence and maintain financial health in 2025 and beyond.
Staying Ahead in 2025
The Australian tax landscape is always evolving, making proactive financial planning more important than ever. Whether you're managing business tax obligations or optimising personal tax strategies, staying informed is the key to financial success.
✔ Review Your Records: Ensure FBT, trust distributions, and deductions are accurately documented.
✔ Take Advantage of Tax Breaks: Don’t miss out on instant asset write-offs and available concessions.
✔ Prepare for ATO Compliance Checks: Focus on Division 7A loans, trust distributions, and SMSF regulations.
✔ Seek Professional Advice: Tax laws are complex—working with an expert can help maximise your savings and avoid penalties.
