Topic for Practice Updates - August 2025

Division 7A benchmark interest rates 

For the 2024–25 income year (ending 30 June 2025), the ATO’s Division 7A benchmark interest rate was 8.77%.

For the subsequent 2025–26 income year, the rate will be reduced to 8.37%, based on the Reserve Bank of Australia’s 2025 rate published on 6 June 2025. These rates apply to private companies with an income year ending 30 June. 

ATO holds more GST fraudsters to account 

As part of Operation Protego, the ATO has taken action against more than 57,000 alleged offenders. To date, around $300 million in penalties and interest have been imposed on those involved in the fraud. 

As at 30 June 2025, 122 individuals have been convicted, with sentencing outcomes including prison terms of up to 7 years and 6 months. In some cases, orders have also been made to restrain real property. 

The ATO has finalised 64 investigations and referred 54 briefs of evidence to the Commonwealth Director of Public Prosecutions. These figures do not include investigations involving former ATO staff. 

We encourage individuals and businesses to review their tax reporting to ensure compliance and avoid serious legal consequences. 

Remote zone tax offset – determining eligibility 

The ATO has updated their guidance to make it easier to understand eligibility for the remote zone tax offset. Taxpayers may qualify if their usual place of residence is in a remote zone for more than 183 days in a financial year. The 183 days does not have to be a continuous period of residency but must be within one financial year unless certain circumstances apply and there are provisions for those who haven’t met the 183-day threshold in a single year.  

Fly-in-fly-out (FIFO) and offshore oil or gas rig workers are generally not eligible unless their usual residence is within a remote zone.  Temporarily working in a zone, staying at an employer’s camp or provided accommodation does not mean the worker resided in the zone where the worker’s usual place of residence is outside a zone. 

A non-exhaustive list of eligible locations is available, but claims can still be made for areas geographically within a remote zone even if not listed. 

Tax Ombudsman releases review into ATO letters 

On 18 July 2025, the Tax Ombudsman released her review of ATO letters, which included an examination of the ATO’s process for designing and testing high-volume correspondence, as well as a sample of some of the most complex letters. 

The Tax Ombudsman recommended a series of improvements to the ATO’s letters to improve clarity and usability. 

• Updating templates with standard information for diverse audiences;  

• Structuring and consistent testing of letters with a variety of taxpayers and tax professionals, to ensure they are fit for purpose, including devising ways to gather and implement feedback; and 

• Ensuring taxpayers’ and tax agents’ communication preferences are applied to all letter templates. 

  
  

Reasonable travel and meal allowances for 2025-26 

You can claim deductions for accommodation, meals, and incidental travel expenses if you travel and stay overnight away from home in the course of performing work duties. The expenses must be incurred in performing your employment duties, must be unreimbursed, and must relate directly to earning income; only the work-related portion is deductible if private and business use are mixed.  

Interest charged by the ATO 

Any General Interest Charge (GIC) or Shortfall Interest Charge (SIC) incurred on or after 1 July 2025 can't be claimed as a deduction. 

GIC and SIC incurred before 1 July 2025 can be claimed as a deduction in your tax return for the income year in which it is incurred. 

You can claim GIC or SIC incurred before 1 July 2025 as a deduction at Cost of managing tax affairs – Interest charged by the ATO in your tax return. 

If you claim a deduction for GIC or SIC incurred before 1 July 2025 and then we later remit the GIC or SIC, you must report the remitted amount as interest income. This should be included in your tax return for the income year the remission was granted. 

Taxpayers who need to lodge a TPAR

Taxpayers who have paid contractors for any of the following services must lodge a Taxable Payments Annual Report (TPAR) online by 28 August:

• Building and construction;

• Cleaning;

• Courier and road freight;

• Information technology; or

• Security, investigation or surveillance

If the ATO is expecting a TPAR from you but you do not need to lodge one, you can complete a TPAR non-lodgment advice form by 28 August. This form can also be used to notify the ATO that you no longer pay contractors and will not need to lodge in the future (unless circumstances change).

Important: From 28 August 2025, the ATO will no longer accept paper lodgments of TPARs, all lodgments must be submitted online.

It’s critical to ensure your allowances are within ATO guidelines for 2025–26. Lynden Group helps you simplify your compliance, avoid unnecessary paperwork, and claim confidently. 

Office: 03 91157406  

Direct: 03 85481843 

Email: info@lyndengroup.com