The year 2025 saw tax compliance measures ramp up, headline-making tax proposals fall through, and the prospect of grander tax reform brought into the spotlight.
As we wind down the calendar year — and near the halfway point for the tax year — SmartCompany has collated some of the key moments affecting the small business and startup sector.
From penalties to phone lines, the lunch table to the roundtable, here are the moments that mattered in tax for 2025.
Collection and compliance measures in focus
In 2025, the tax office was not shy about using the tools in its arsenal to recoup billions of dollars in collectable debts.
It revealed new industry turnover and expense benchmarks, which help it assess when a business’ claims simply do not add up, and if their finances are worth a closer inspection.
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More recently, it claimed to have received 300,000 tip-offs about suspected tax cheats since 2019.
Reports of dodgy cash-in-hand jobs and suspicious lifestyle factors also helped the tax office zero in on tax dodgers throughout the year.
The tax office also brought some debts out of the deep freezer.
For years, it considered many small debts uneconomical to pursue — that is, the cost of actively chasing down those payments was higher than the debt itself.
These debts were placed ‘on hold’ and remained outside the ATO’s usual debt collection activities.
But the ATO informed taxpayers of a new policy in November: it is defrosting some ‘on hold’ debts and listing them in account balances.
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As before, the ATO will not actively pursue those debts.
However, debts listed on taxpayers’ account balances accrue the General Interest Charge (GIC) if left unpaid for too long, meaning many of those ‘on hold’ debts will worsen if not paid off.
Crucially, GIC itself is now a harsher penalty than it was last year.
That is because GIC, and its cousin, the Shortfall Interest Charge, lost their tax-deductible status on July 1, in yet another reform designed to encourage taxpayers’ compliance.
Then there were director penalty notices (DPNs), which can hold company directors personally liable for unpaid debts racked up by their businesses.
Their use surged 136% to more than 84,000 in the 2024-25 financial year.
It was a significant year for work-related tax claims, both for employers and workers.
The tax office quietly increased the ‘fixed rate’ WFH deduction method by three cents per working hour, allowing workers to claim 70 cents per hour worked from home in their 2024-25 tax return.
And in April, the federal government proposed an instant $1,000 deduction for working-from-home expenses from the 2026-27 financial year onwards.
Billed as a time-saving measure for taxpayers and accountants, that policy would lift the amount taxpayers can instantly depreciate, without receipts, from its current rate of $300.
The measure is not yet law.
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One policy that was legislated is the new instant asset write-off, which is practically identical to the old instant asset write-off.
In the current financial year, eligible small businesses can instantly depreciate the cost of eligible purchases valued up to $20,000.
Despite the Albanese government not explicitly including the policy in its 2025-26 federal budget, it quietly passed the Senate in late November.
On the other hand, one proposal that never got far was the Coalition’s work lunch election promise.
Ahead of the May poll, former Opposition leader Peter Dutton pledged an elected Coalition government would introduce a new tax deduction for small business expenditure on meal and entertainment expenses.
That deduction, capped at $20,000 per employer per year, faced a fierce backlash from federal Treasurer Jim Chalmers, who claimed it could cost up to $10 billion if every eligible business had its feed.
Ultimately, that plan sputtered out by the time of Labor’s thumping election victory.
The Coalition’s other big small business promise — its push for a longer, larger instant asset write-off — lingers on.
Superannuation
2025 brought one of the most significant superannuation reforms in years: the passage of payday superannuation laws, which tie the payment of retirement savings to a worker’s paycheque.
The plan to replace quarterly superannuation pay cycles begins July 1, 2026; however, the tax office is encouraging small businesses to acquaint themselves with the rules well ahead of time.
The Small Business Superannuation Clearing House, which will be rendered obsolete by the payday super regime, closed to new sign-ups in October 2025 and will formally close at the turn of the financial year.
Payday superannuation will make it harder for businesses to hold on to super guarantee payments that rightfully belong to their employees.
Recent figures from the ATO show the scale of that particular problem: this week, it revealed some $1.1 billion in unpaid super was returned to individual super funds in 2024-45.
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The federal government also championed another monumental superannuation reform: the taxation of unrealised gains on large super balances.
If it were legislated in its original guise, the reforms could have imposed an extra 15% tax on earnings for superannuation balances above $3 million, even if the underlying assets were not sold.
Critics feared the policy could force small business owners and farmers who hold property and farmland in their super accounts to sell those appreciating assets just to comply with the new tax burdens.
The Labor government dropped the plan in October, pledging to move ahead with a 30% total concessional tax rate for earnings on balances between $3 million and $10 million, applied only to future realised earnings.
The government says it will consult with the super sector and other key stakeholders on the mechanism for calculating those future realised earnings.
Beyond those reforms, the super guarantee percentage ticked up from 11.5% to 12%, the final increase in a gradual, years-long process.
Tax watchdog turns up the spotlight
The Tax Ombudsman, the agency responsible for monitoring the tax office, had a busy year itself.
It found the tax agents’ phone line, a dedicated point of contact for accountants and advisors, is falling short of expectations.
Discussing her October report, Ombudsman Ruth Owen said she was “overwhelmed” with feedback from tax agents about an “increasingly poor experience” using the phone line.
The potential consequences for their small business clients: less clarity, slower processing times, and more hassle when working through complex tax matters.
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The tax office ultimately agreed to the bulk of Owen’s recommendations, including the betterment of its digital services, but rejected her suggestion that a dedicated team of experienced ATO staff handle those hotline calls.
Owen also opened a review into the way the ATO remits GIC, saying, “tax professionals and taxpayers have told us that it seems to be a matter of potluck as to who gets their interest reduced or remitted and who has to pay in full”.
Her final report on the matter is expected in February next year.
DPNs have become so powerful and so prevalent in the fight against outstanding debts that the Tax Ombudsman will review their use in 2026, as part of an investigation into the way DPNs interact with vulnerable taxpayers.
Broader tax reform up for discussion
It was a year of roundtables, none rounder than August’s economic reform roundtable, which convened industry titans, academics, and government leaders to discuss matters of productivity and tax reform.
One key reform option put to the roundtable by Productivity Commission chair Danielle Wood was “changing our corporate tax system to create sharper incentives for businesses to invest and expand”.
It proposed lowering the corporate tax rate to 20% for all businesses with revenue below $1 billion, and installing a new net cashflow tax of 5%.
Businesses would be free to deduct the cost of capital expenditure in the year those costs were incurred, encouraging them to invest in productivity-boosting upgrades.
Treasurer Jim Chalmers said recommendations raised through the roundtable process will inform the government’s thinking on tax policy, without the need for another major and lengthy external tax review.
