Topic for Practice Updates - July 2025

Superannuation and paid parental leave

A recent legislative instrument has introduced key amendments to the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations), supporting changes brought in by the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Act 2024. 

These updates are designed to strengthen retirement outcomes by ensuring paid parental leave (PPL) superannuation contributions are formally recognised: 

• Defined benefit funds must now include PPL super contributions in the calculation of minimum member benefits. 

• Super funds (excluding SMSFs) and retirement savings account providers will be required to report PPL super contributions in periodic member statements. 

• Trustees are no longer required to seek member confirmation each time a PPL super contribution is made. 

• The regulations also provide an exemption for rule changes that allow trustees to be reimbursed for any overpaid PPL contributions recovered by the ATO. 

These amendments took effect from 13 June 2025. 

NSW payroll tax: Security services were not provided under employment agency agreement

In Nova Security Group Pty Ltd v Chief Commissioner of State Revenue [2025] NSWCATAD 124, the NSW Civil and Administrative Tribunal ruled in favour of the taxpayer, finding that its security service arrangements did not constitute employment agency contracts under section 37 of the Payroll Tax Act 2007 (NSW). 

Nova Security supplied guards to venues like pubs and clubs under its own master security licence, using subcontracted personnel. The Tribunal held the guards were not integrated into clients' businesses and were working under Nova’s control—not "in and for" the client’s business. 

As a result, payroll tax was not applicable for the relevant years. Businesses that rely on subcontracted labour—particularly in industries such as security, events, construction, and cleaning—should consider reviewing your contractual and operational arrangements in light of this decision. 

Changes to income tax return amendment period for business

From the 2024–25 income year onwards (for tax returns assessed on or after 1 July 2024), businesses with annual turnover under $50 million will have up to 4 years from the date of their tax return assessment to request amendments to their income tax returns. 

This marks a significant shift from the previous 2-year amendment period that applied to small and medium businesses. The new rules now align with those already in place for larger taxpayers. 

Denying deductions for ATO interest charges 

From 1 July 2025, taxpayers will no longer be able to claim income tax deductions for General Interest Charges (GIC) and Shortfall Interest Charges (SIC) imposed by the ATO. This change applies to interest incurred on or after this date, even if the related tax liability arose earlier. 

For income years starting on or after 1 July 2025, businesses must adjust their tax planning accordingly. Interest incurred before this date remains deductible, but if later remitted, it must be included as assessable income. 

The reform aims to encourage timely tax compliance and reduce the growing tax debt burden. Businesses are urged to avoid unnecessary ATO interest by resolving debts promptly, as the cost of holding tax debt will increase without the deductibility. 

Strengthen penalty and shortfall interest charge provisions

The Government announced it will amend the tax law to: 

• ensuring tax scheme penalties apply where taxpayers are in a loss position, from 1 July 2026 

• penalising large taxpayers that mischaracterise or undervalue interest or dividend payments, to which withholding tax would otherwise apply, starting from 1 July 2026. 

These measures target gaps within the current tax penalty regime to improve tax compliance and integrity of the tax system, and to strengthen the disincentives for tax avoidance. 

These measures are not yet law. 

Victoria Payroll Tax Update: Annual Reconciliation & Higher Thresholds from 1 July 2025

The Victorian payroll tax-free threshold will increase from $900,000 to $1 million for annual returns, and from $75,000 to $83,333 for monthly returns. 

A phased reduction will apply to businesses or groups with total Australian wages between $3 million and $5 million, with the threshold reducing at a 50% phase-out rate from 2025–26 onwards (up from 45% in 2024–25). Employers with wages over $5 million will no longer receive any tax-free threshold. 

Businesses should review and update their payroll software or monthly reporting requirements to ensure your systems are compliant ahead of time, which will help avoid reporting errors and potential penalties. 

Australia’s new thin capitalisation regime: Preparing for FY2025 tax return disclosures

The ATO has issued draft Practical Compliance Guideline PCG 2025/D2, outlining its compliance approach to transfer pricing rules as they apply to inbound cross-border related party debt. The draft provides a framework for taxpayers to self-assess the risk level of their arrangements, identifies relevant factors for determining and testing debt amounts, and sets out the ATO’s expectations for documentation and supporting evidence. 

This marks the final instalment of the ATO’s three high-priority guidance areas under the new thin capitalisation rules. Public consultation on the draft closed on 30 June 2025. 

Need help preparing your trust for EOFY? Reach out to Lynden Group for expert guidance on resolutions, distributions, and trust compliance. 

Book your tax consultation now at (03) 8548 1843 or email us at info@lyndengroup.com.au