Plus, from July 1, 2025, interest on your ATO debt will no longer be tax deductible, meaning you’ll have to pay even more tax – and go further in debt – come tax time.

“This will have quite a massive impact on clients,” Catarina Santini, a registered tax agent and owner of CS Accounting, told ISB. “A lot of clients are going on payment plans just because of the economy.”

So, what can small-business owners do if they owe the ATO? We asked Santini and a fellow tax agent, Morgan Wilson from Creditte, about the current state of play and what they’re telling their clients.

What to do if your business owes the ATO in 2025

Engage early

If you’re facing down tax debt, you can’t bury your head in the sand: You need to engage early. 

Wilson advised to keep up with your lodgement and talk to your tax agent – anything to show the ATO that you’re getting on top of things.

“Get on the front foot with it,” he advised. “Even if it’s purely just talking to your tax agent – you can at least have that file note there.”

Santini echoed this sentiment, and added that it’s worth having conversations about payment plans sooner rather than later. Also, start getting your documents in order – you may need up-to-date figures (i.e. cashflow or P&L) to negotiate a payment plan.

Get a payment plan

Your best option if you have ATO debt is to get a payment plan. If you’ve never had a payment plan before, you should be able to get one via the ATO business portal. If you have, you may have to call up instead. 

Santini said that the ATO has historically liked 12-24 month plans the most. However, this might be changing. In one case, Santini tried to negotiate a seven-month payment plan for a client and was told that they only allow six month plans – two weeks after she had netted another client a 24 month plan.

“I’m going to be honest with you, it depends on who [at the ATO] you talk to,” she said. “You can ring the ATO two times in one day and get two different responses, which I’ve had.”

Wilson is seeing a similar situation with his clients. He said that some have had better luck getting a payment plan when they called the ATO themselves, rather than doing it through a tax agent.

“A lot of it is hang up, try again, and see if you get the right person,” he said.

Both Santini and Wilson agreed that payment plans are much harder to get nowadays.

“A few years ago it was so easy to get a payment plan,” said Santini. “But right now, we are having to really push it. We’re having to show P&L, cashflow, and argue a point.”

Even mental or physical health issues might not be enough to get some compassion, according to both tax agents.

“There’s been some heartbreaking stories of physical and mental health issues,” said Wilson. “But the ATO have been blunt around ‘We don’t care.’”

In some circumstances, a loan might be worth it

Getting a loan to pay off ATO debt isn’t an ideal scenario, but it can be the right option in some situations. For instance, if you’re going through a business lull, but know that cashflow will be back in six months’ time, you might consider a loan to get you through the quiet period, said Santini.

Wilson agreed that a loan can be a good move to keep the business rolling along short term, in specific scenarios.

“If you’ve got suppliers on account and the ATO does ding your credit file, your suppliers can easily go ‘We’re cash on delivery now,’” he said.

The other benefit of these loans is that interest on them will remain tax deductible after July 1 – but their cost-effectiveness would, of cost, depend on the interest rate.

Both tax agents emphasised that loans are extremely context specific and that business owners should discuss their unique situation with their tax professional first.

Explore restructuring

Your last resort is engaging an insolvency practitioner to help you and taking advantage of the small business restructuring arrangement that was introduced in 2021. 

Wilson told ISB that this is becoming more popular, but that it’s a last-ditch effort. He told small-business owners to hang in there if they can.

“Hang in there – get professional help, your tax agent is there to help you,” he said.

Santini has seen clients with hundreds of thousands in tax debt turn things around – so there is hope. 

“Seek some support and come up with a strategy,” she said. “Own what you owe and work out a plan to go forward – once you’ve done that you can start achieving something.”

The post Tax debt is tougher for SMEs in 2025. Here’s what to do if you owe the ATO appeared first on Inside Small Business.

According to Coco Hou, CPA and CEO of Platinum Accounting Australia, there are a number of eligible car-related deductions, but strict rules apply.

“Car expenses are one of the most commonly misclaimed items on a tax return,” Hou said. “A lot of people assume they can claim just because they drive for work, but unless the travel meets specific criteria and you have accurate records, it won’t hold up under scrutiny.”

Hou stressed that understanding those rules can mean the difference between a maximised return and a costly audit.

The difference between private and work-related travel

One of the most important distinctions taxpayers must understand is the distinction between private travel and work-related travel. 

“Driving from home to your regular workplace is considered private, and is not deductible, no matter how far you travel or how often you drive. This includes tolls, parking and fuel costs related to the commute,” Hou said. “However, travel that occurs as part of your job, such as driving between worksites, attending client meetings, collecting supplies or transporting equipment, is considered work-related. Those kilometres and related costs may be eligible for deduction.”

Cents-per-kilometre vs logbook method for claiming deductions

The law specifies two main ways to claim car expenses: the cents-per-kilometre method and the logbook method.

“The cents-per-kilometre method allows you to claim up to 5000 business kilometres per year at a set rate, currently 85 cents per kilometre. This rate includes fuel, servicing, registration, insurance and depreciation, so those cannot be claimed separately,” Hou explained. 

She also recommended, “For people who do a significant amount of work-related driving, the logbook method is often more beneficial. It allows you to claim a percentage of actual car expenses based on your documented business use.” 

Hou emphasised as well that a logbook must be maintained for a continuous 12-week period and updated if the taxpayer’s usage pattern changes. Once established, that percentage can be applied to running costs such as petrol, oil, insurance, servicing, repairs, registration, loan interest and depreciation.

Other allowable deductions

The law also allows for car washes, detailing and even things like car air fresheners, sunshades, tissue boxes and car seat covers to be claimed as deductions but only under the logbook method and only in proportion to business use.

For example, if a taxpayer frequently drives clients or colleagues to meetings and want to keep the car clean and presentable, they may be able to claim a portion of those costs, but this must be documented and clearly tied to work-related activities.

“If you buy a car scent or get the car cleaned to make a good impression on a client you are driving to a meeting, that’s potentially deductible,” Hou said. “But if you just want your car to smell nice for personal reasons, that’s not a business expense.”

Parking, tolls, and garaging

In the same manner, taxpayers cannot claim parking at their regular place of work, however they can claim parking or tolls incurred while travelling to client meetings or other work-related destinations. If they paid for toll or for parking while heading to a job site, those receipts should be kept.

Hou also clarified that garaging is considered a private cost unless the home is the base of your business and the car is essential to your work operations.

Regarding leased or financed cars

Under the law, leased or financed cars are also covered for deduction. If using the logbook method, the interest portion of your lease or loan repayments can be claimed in proportion to business use provided there is documentation.

Ride-share drivers, small-business owners and tradespeople who rely on their vehicles to generate income may be eligible for more extensive deductions, but they must still follow the same record-keeping requirements. This includes maintaining fuel receipts, service invoices, insurance documents and a current logbook if using the actual expenses method.

“Just because you can access your car records doesn’t mean they are tax-compliant records,” Hou said. “You need to actively track your use and expenses, not just make assumptions or round figures. The ATO is very specific about this.”

Talk to an accountant

While the tax rules around vehicles can seem complex, Hou advises taxpayers to keep detailed records and speak to a qualified tax advisor before lodging their return.

“A lot of people miss legitimate deductions simply because they’re not aware of them, or worse, they claim things they shouldn’t and get caught out,” she said. “A short meeting with your accountant could save you hundreds and make sure you stay well within the rules.”

The post Accountant details what you can and cannot claim as vehicle tax deductions appeared first on Inside Small Business.

As part of this campaign, Australian business number (ABN) holders will receive a series of emails from the ATO in the coming months, which include tips on ABN obligations, business structures, registering for goods and services tax (GST) and understanding employer responsibilities.

“Small businesses are vital participants in the tax and super system. As stewards for small businesses, our role in making it easy for small-business owners to get their tax and super right is more important than ever.,” ATO deputy commissioner Will Day stated. “Our goal is to provide small businesses with guidance, tools and tips so new business owners can focus on growing their business with confidence.”

The ATO conceived the campaign in light of the data that approximately 50 per cent of businesses fail in the first three years, often because they have at least been remiss in their ATO obligations from the start.

GST obligations

In particular, GST registration and payment is an ongoing area of concern for the ATO, which estimates that almost $8 billion in GST each year hasn’t been collected due to non-compliance, with small businesses contributing significantly to this gap.

And while not every small business needs to be registered for GST, but when their GST turnover is $75,000 or more or when they provide taxi, limousine or ride-sourcing services they must register and collect GST and then pay this to the ATO.

Day encouraged small businesses to set aside GST, as well as pay-as-you-go (PAYG) withholding and super if they have employer obligations. “Don’t be tempted to dip into GST, PAYG withholding or super to manage your cashflow – set up separate bank accounts for these funds so you’re always prepared when it’s time to pay,” he said.

Reporting side hustles

With over 700,000 taxpayers are supplementing their income with ‘side hustles’ including ‘gig’ or sharing economy activities, the ATO has reminded that if a hobby has turned into a profit-making business, it is the side hustler’s responsibility to fulfill the pertinent tax, super and registry obligations.

“Generally, a business involves continuous and repeated activities aimed at making a profit. Visit ato.gov.au/areyouinbusiness to learn more about whether your activities qualify as a business and understand your obligations,” Day said.

Early reporting encouraged

The ATO is also encouraging new small businesses to plan ahead to avoid a large tax bill when they lodge their first tax return by voluntarily entering and prepaying their estimated tax liability through PAYG instalments as soon as they start their business.

“We know that successful small business owners understand their tax, super and registry obligations and we are committed to helping them do so.” Day said. “Through transparent communication, including the support we have available for small businesses, small-business owners are better equipped to keep up with their obligations and stay on top of their tax payments. After all, small business is serious business.”

The post ATO offers additional support to small-business owners on their tax obligations appeared first on Inside Small Business.

The Australian Securities and Investments Commission (Asic) has warned small-business directors that the misuse of company money and assets for personal gain can lead to companies being unable to pay their debts, harming other small businesses who are creditors.

The reminder follows recent action that has been taken against company directors following Asic investigations. One case involved a director of two construction-related companies who was alleged to have dishonestly used her position as a director to gain an advantage for herself by transferring company funds to a credit card and other accounts and using the funds for her personal use. The two companies subsequently went into liquidation, with one of these owing money to small businesses that has yet to be repaid.

Another case involved a director of a beverage distribution company who was found guilty by a court for dishonestly using his position to gain an advantage by using company funds to pay legal fees and other costs to annul his personal bankruptcy

These cases relate to reports lodged by registered liquidators from 2023-24, which found that poor financial control, including misuse of company assets for personal purposes, was a cause of 36 per cent of company failures. In addition, from January to March this year, Asic has prosecuted 34 individuals for 67 offences in failing to assist registered liquidators, resulting in $244,500 in fines and $4360 in costs.

Asic has pointed out that company directors have legal obligations to ensure they act in good faith in the company’s best interests ( which may involve considering the interests of shareholders, customers, suppliers, employees and other stakeholders) and not improperly use their position to gain an advantage.

In particular, Asic highlighted:

• Directors are managing company money, not their personal money, and they cannot treat company property, assets or funds as if they are their own to pay personal expenses.
• Directors must consider the interests of their company as a whole when making decisions about company assets and money.
• Directors have a legal obligation to act in the best interests of their company, which includes paying small business creditors, employees and tax debts when due.

The regulator warned that misuse of a company’s money and assets can lead to a company not being able to pay its debts, which can cause significant harm to the community (through unpaid tax debts), employees, customers, suppliers, and even creditors as the disruption to cashflow can impact their own ability to cover expenses and pay suppliers.

Company directors who are found to be misusing the funds and assets of their companies will not only be subject to legal action by Asic, which may include civil and criminal penalties that may result to their disqualification from acting as a director of a company..

Erring directors may also be subject to actions by the Australian Taxation Office for unpaid company tax debts. And if a company goes into liquidation as a result of such misuse, the liquidator tasked to investigate the reasons for the collapse of a company may sue the director seeking compensation and will be duly supported by Asic.

Asic has advised company directors to seek professional advice if they are uncertain about their legal obligations or have concerns about the company’s finances. It is important to seek this advice early to avoid trouble. In addition, Asic’s website has a small business section, which contains information to assist small business company directors in understanding their obligations as company directors.

The post Small-business directors reminded of their legal responsibilities with company money and assets appeared first on Inside Small Business.

Small-business owners carrying ATO debt have just shy of nine weeks before the General Interest Charge (GIC) on tax debt will no longer be tax deductible. This change eliminates the tax benefit that effectively reduced the real cost of the interest by 25 per cent for most businesses.

I’ve seen firsthand how tax debt can silently erode a business’s financial foundation. Now, with this legislative change on the horizon, addressing ATO debt becomes even more urgent.

The real cost of the GIC deductibility change

Currently, the ATO’s General Interest Charge sits at 11.17 per cent and compounds daily. While this rate can sometimes exceed business loan options, it has been somewhat offset by tax deductibility. For a business on a 25 per cent tax rate, the effective cost has been around 8.38 per cent after tax deductions.
From 1 July 2025, that disappears. The full 11.17 per cent (or whatever the rate is by then) will hit your bottom line with no tax relief which could mean thousands in additional costs annually.

Even before this legislative change, ATO debt has always been problematic from a financial management perspective. The compounding daily interest means your debt grows more rapidly than most people realise. A $50,000 tax debt accrues over $15 in interest every day – that’s more than $5,500 annually.

The financeability factor

ATO debt also impacts a business’ broader “financeability.” When assessing loan applications, lenders can view significant or long-standing tax debt as a signal of financial management issues. The big banks often see ATO debt as a huge red flag for lending to a small business, and even much more lenient non-bank lenders see it as a negative indicator, especially if your ATO debt exceeds 8-10 per cent of your annual turnover.

The compounding effect of both higher costs and reduced financing options makes addressing tax debt before July 2025 even more critical.

Strategic options for clearing tax debt

If you’re carrying ATO debt and are concerned about the upcoming changes, or you’ve got a tax bill that you simply can’t pay, reach out to a financial professional to discuss your specific situation.

Additionally, businesses should consider:

1. Working with the ATO – Contact them proactively to establish a payment plan. While this won’t avoid the interest entirely, it demonstrates good faith and offers a structured approach.
2. Prioritising tax debt in your cashflow – With costs set to increase, allocating available funds to reduce tax debt makes more financial sense than ever. You will also be demonstrating a track record of proactively meeting tax obligations.
3. Considering refinancing options – Refinancing tax debt can:
   • Lock in a fixed interest rate that may be lower than the GIC
   • Provide a structured repayment schedule aligned with your cash flow
   • Convert a problematic debt into a standard business expense (business loan interest is tax-deductible, unlike the GIC after 1 July)
   • Improve your overall creditworthiness and set yourself up for cheaper debt over time

Also, depending on the business, there are other solutions that can unlock capital from elsewhere in the business to help pay off ATO debt and improve the cashflow position long term. These include invoice financing to access the value from unpaid invoices or unlocking equity in business assets like vehicles or equipment.

Businesses should pay close attention to the impact of the repayment term of their ATO debt compared to a replacement business loan. ATO repayment plans are often structured to repay the outstanding debt over 18 to 24 months. Many non-bank loan options can be structured for 36 months (or even longer), significantly reducing monthly repayments for businesses that are cash-strapped. Even if the business loan’s interest rate ends up being higher (after tax deductibility) than the GIC on ATO debt, it still may be worthwhile to refinance if the business loan significantly reduces month-to-month cash stress on the business (and its owners!)

Getting ahead of the deadline

With 1 July 2025 approaching, businesses should:

1. Calculate the true impact – Determine exactly how much more your current ATO debt will cost after the deductibility changes. Remember that removal of the deduction will impact tax paid on your highest marginal rate not your average tax rate! Work with your tax agent to be as accurate as possible.
2. Review cashflow projections – Assess whether your current payment arrangements will clear the debt before the deadline and if not, start adding as much as reasonably possible
3. Explore all available options – From accelerated payment plans to refinancing, find what approach makes the most financial sense for your situation

The clock is ticking on tax debt deductibility. By addressing this issue now, you not only avoid the coming price increase but also position your business for stronger financial health and better financing options in the future.

The post Why ATO debt should become your top financial priority in 2025 appeared first on Inside Small Business.

This week, the ATO revealed some of the dodgiest deductions workers tried to claim – in vain – and offered advice to taxpayers on where it draws the line.

“If your deductions don’t pass the ‘pub test’, it’s highly unlikely your claim would meet the ATO’s strict criteria,” said Rob Thomson, ATO’s assistant commissioner. (The ‘pub test’ is a reference to the understanding that people have a collective and natural sense of when something is unfair.)

He reminded taxpayers not to try to claim personal spending as work-related expenses because the ATO carefully measures claims to ensure they meet the office’s strict criteria. 

Last year, some of the more dodgy claims the ATO rejected included:

• A claim for home equipment and recreational devices such as an air fryer, microwave, two vacuum cleaners, a TV, a gaming console, and gaming accessories from a mechanic.
• Swimwear claims from a truck driver who said they would swim during transit stops. 
• An over-$10,000 claim of luxury-branded clothing and accessories from a manager in the fashion industry who wanted to look well-presented at work.

Chartered Accountants ANZ added to the list by sharing some of the ‘cheekiest claims’ its members’ clients had tried on, promising more revelations later this month. These included monthly salon haircuts, an engagement ring, the cost of a gym membership, and even big-ticket luxury purchases, including a luxury yacht – all considered dubious.

“Work-related expenses must have a close connection to your income-earning activities, and you should be prepared to back it up, with records like a receipt or invoice,” said Thomson.

Last year, most of the tax claims among more than 10 million work-related deduction cases related to working from home. The ATO advises home workers to calculate their deductible return using the fixed rate method or the actual cost method, which requires records to prove they incurred additional expenses due to working from home.

“If you’re anything like me, a paper receipt will get lost almost immediately. The MyDeductions tool on the ATO app allows you to keep records of your work and general expenses to make lodging your tax return easier,” said Thomson.

The ATO also gives out more information on specific deductions for different job occupations in its occupation and industry-specific guides.

• Further reading: Labor’s tax on unrealised super gains: What it means for business

The post Passing the ‘pub’ test: ATO reveals the craziest work-related expenses claims it nixed appeared first on Inside Small Business.

Not sure where to start? We’ve brought on four superstar accounting professionals to help us put together a comprehensive EOFY to-do list. That means actions you can take now to set yourself up for success next financial year.

Save yourself the stress and anxiety, get your ducks in a row now, and come into July 1 feeling fresh, organised, and prepared.

1. Find an accountant you love

If you don’t have a tax professional that you trust with your life (or your business), now is the time to find one.

• Understand what you need your accountant to be able to do. For instance, if you need someone to help you with tax-related tasks, make sure you seek out a registered tax or BAS agent. If you’d like someone to help you out with accounting software, make sure you seek out someone who is across technology. Always use the Tax Practitioners Board Register to find a registered tax agent.
• Book check-ins with your accountant throughout the year, not just when BAS is due or at tax time.

“These check-ins aren’t just about ticking compliance boxes – they’re about strategy, clarity, and making sure your business is actually working for you.”

Catarina Santini, business advisor, accountant, and tax agent

2. Educate yourself

Whether you’re a brand-new entrepreneur or a seasoned business owner, you should be across your own finances.

• Browse the ATO’s Tax Time toolkit for small business, which they describe as a “one-stop shop” for tax-related help.
• If you’re after more structured learning, check out the ATO’s “essentials to strengthen your small business” platform; this offers short courses on topics like record keeping, cash flow and deductions.
• Each quarter, the ATO changes shares its small-business focus areas to help small-businesses and their tax professionals understand how they can get and stay on top of their tax, super and registry obligations. You can check this on the ATO’s website: “Small business focus areas”.
• Look up whether any legislative changes are coming up that might affect you. If you have employees, for instance, check for any upcoming changes to awards on the Fair Work Ombudsman’s “Major award changes” page, for instance.

3. Review your needs and obligations

Maybe your turnover has increased, you’ve employed new staff, or the nature of your business has changed? There are many cases in which your business’s needs and obligations might have changed. Review how things have changed for you in the past financial year and what that might mean.

• Review insurances: Do you need extra cover due to changes in business activities or income? Or are there insurances you no longer need?
• Review payroll tax obligations in your state, if you have employees.
• Check if you need to register for GST for the first time, or if you will need to soon.

4. Get organised

If you’re not keeping track of sales, money might be going down the drain. Keeping receipts is essential; if you’re ever audited by the ATO, bank statements won’t cut it.

• Use the ATO’s record-keeping evaluation tool to help you evaluate your current system, if you’re unsure about it.
• Consider using the ATO app if you’re a sole trader.
• Assess whether you (really) have a system that allows you to log invoices, receipts and expenses both regularly and accurately. If not, it’s probably time to get your accounting software in order (see below).

5. Set up new software

If you need new software, make sure you leave plenty of time to get it working (and integrated into your processes) before the new financial year starts, to set you up for success.

• Assess your existing accounting software – is it working for you? Can you create efficiencies? If you want to change software or start using it for the first time, leave plenty of time to research and implement. 
• Book a training session with your accountant (well in advance of June 30) to help you set up new software, if you feel you need to do so.

6. Create some quick cashflow wins

• Review pricing – compare your rates with industry standards and factor in rising costs.
• Set up an automated transfer to send some money to a dedicated tax/GST savings account.
• Use the ATO’s Cash Flow Coaching Kit, which has tips to help you meet tax and super obligations without them getting caught up with your business cashflow.
• If you’re struggling to get paid on time, consider automating invoices and setting up direct debits from clients.
• Check your bank accounts for long-forgotten free trials etc – services you don’t use or seldom use. There are software services that can help you do this, for a small fee.

7. Calendarise your year

Make it easier for yourself to keep up with key dates by putting them in your calendar now.

• Ask your accountant for key tax dates – or find them on the ATO website – and put them into your calendar.
• Mark down upcoming legislative changes that are relevant to you. The ATO also has on its website a page dedicated to tracking upcoming legislation and a small-business newsroom. You may also want to ask your accountant about this if you’re unsure what will affect you.
• Map out income and expenses ahead of time, as best you can.

8. Identify (and prepare for) deductions

Make sure you’re not missing out on any deductions. Your accountant should be able to help you work out what you can deduct.

• Identify potential tax deductions: home office expenses, vehicle costs, professional development, underused assets and excess stock, bad debts, and so on.
• Identify pre-paid business expenses – like insurance premiums or telco services – and ask your accountant whether you can get an immediate tax deduction on them.
• Ensure that all June-quarter superannuation contributions are paid by June 30, to accelerate the tax deduction.
• Consider voluntary super contributions before year-end to maximise tax benefits and boost retirement savings.
• If your business is looking to pay bonuses, put in place a properly executed bonus plan by  June 30 to claim the deduction this year. 
• Consider how your trading stock is valued. Trading stock can be valued using different methods for taxation purposes – at cost, market value or replacement value. Changing the valuation method at year-end for tax purposes can either bring forward or defer an amount of taxable income so it pays to look closely at the method adopted.

“Provided they are used for business purposes, for instance in work recreation areas or office receptions, it is even possible to claim items like TV’s, gym equipment, works of art and computer gaming terminals. If you’re claiming more left-field deductions like these, make sure you keep proper records.”

Mark Chapman, Director of Tax Communications, H&R Block

Thanks to the following tax and accounting experts who contributed to this checklist.

The post The comprehensive EOFY checklist for small-business owners appeared first on Inside Small Business.

The plan, which passed the House of Representatives before the election, has outraged business advocates. With Labor back in power, they’re worried that it could pass the Senate and become law.

But what is being proposed, exactly – and how could it impact you?

What does it all mean?

Labor’s proposed tax change is called Division 296.

As mentioned above, the change would apply an extra tax to superannuation funds over $3 million. 

These balances are already taxed at 15 per cent, but this law would add another 15 per cent on top. And that’s not all: The extra 15 per cent tax would also apply to unrealised gains, a fact that has many concerned.

Unrealised gains are profits you make on paper – the increase in value of an asset you own, but haven’t sold yet. For instance, if your property or shares go up in value, that’s an unrealised gain until you actually sell them and lock in the profit.

To boil it down, Division 296 would tax profits that superannuation holders haven’t actually received yet.

Why should business owners be paying attention?

Business owners could be impacted by this proposed tax if they:

• Have over $3 million in super (or are close to this amount)
• Are seeking investment (though in a less direct way).

The tax targets high-net worth individuals – it’s a form of “taxing the rich”, as wealth coach Andrew Woodward put it.

“There’s not a huge number of population who have 3 million or above, so it’s considered almost an elitist thing,” Woodward told ISB.

Accordingly, the tax will have the most direct impact on the “top end of town” – the c. 80,000 people across Australia with $3 million or more in super.

The tax would also impact about 13,000 small-business owners who have self-managed super funds (SMSFs) and use these funds to hold their business premises, according to Peter Burgess, CEO of the SMSF Association.

“We see lots of different types of small-business premises being held by self managed super funds,” Burgess told ISB. “It’s a common strategy.”

What’s the problem?

Taxing unrealised gains introduces a lot of uncertainty for those affected.

If you own shares – particularly in less stable entities – you’ll know that the value of these can rise and fall dramatically within a short period of time. If these fluctuating shares were taxed, you would owe the ATO wildly different amounts depending on how valuable they were at tax time.

The same would apply for shares you’ve invested in through your superannuation.

If unrealised super gains were taxed, it would make cashflow management almost impossible, said Burgess.

“You won’t know from one year to the next what your liability will be, because the gains are unrealised and rely on the value of shares that year,” he said.

Woodward pointed out that it’s a major disincentive to grow your super balance.

“It’s going to create a short-term mentality,” he said. “If you keep getting taxed every year on money that you haven’t actually realised, and you’ve got to fund that from somewhere – that needs people having to sell investments to pay their tax bill, which doesn’t make any sense.”

How this could impact start-up investment

SMSFs are a major source of funding for start-ups; some SMSF holders prefer to invest in start-ups as a high-growth (but high-risk) investment option.

If this tax is introduced in its current form, it could see superannuation holders hesitant to put more value into their super, stifling investment for some start-ups.

“Now there’ll be a disincentive for people to invest in startups,” said Woodward. “If that investment suddenly goes up in value and they get taxed on it, and then that company doesn’t do so, there’s no ability to recoup what you’re paying in tax.”

Burgess says he’s spoken to a number of start-up companies who are concerned about the potential change.

“We’ve had many discussions with venture capitalists and then the startup companies who are very concerned about this, because, you know, they’re in a world where they can have a very big increase in the value of their shares, for example, in one year, but it can drop significantly the next year, and you don’t get this tax back,” he said.

How likely is it for this to become law?

As mentioned above, the measure has already been passed by the House of Reps. Now that Labor is back in Government, it could have a fair chance of passing through the senate, too – especially now Labor needs the support of fewer crossbenchers.

“The government has been trying to pass 296 for two or three years now,” Mark Chapman of H&R Block told ISB. “With Labor back in power, there’s a very good chance that it’d be reintroduced to the senate – and a decent chance it could be passed.”

Burgess expressed a similar sentiment.

“In the lead up to the election, [Labor] made it very clear that this tax is still their policy,” he said. “I think the Treasurer referred to it as ‘unfinished business’.”

Some high-net worth individuals and business owners are already taking action: Woodward said he was already seeing people removing money from their super.

But the tax isn’t yet a foregone conclusion. Burgess is hopeful that the government will take a step back and reconsider the design of the tax, given that many influential business leaders have voiced their disapproval of Division 296.

“We would really like the government to consult with the industry broadly on this, and to sit down with us and talk through the different ways in which they can achieve what they’re trying to achieve,” he said.

While the proposed start date for the tax was July 1 2025, Burgess thinks it is likely this will be deferred to give superannuation holders and the ATO more time to prepare. That’s if the tax passes before then – or at all.

In addition, the first test date for the tax (when the unrealised gains are calculated) isn’t supposed to be until June 2026. In theory, this gives affected parties some time to prepare for changes.

The post Labor’s tax on unrealised super gains: What it means for business appeared first on Inside Small Business.

The ATO’s renewed focus on overdue tax debts is landing hardest on the very enterprises Australia depends on for jobs and growth. For thousands of small-business owners, enforcement is starting to feel less like a nudge toward compliance and more like an extra weight on already-strained cash flow.

I’m not asking for exemptions or shortcuts; I understand that tax keeps the system running. Yet after two years of sticky inflation, softer consumer spending and rising interest rates, many of us are juggling BAS, super and PAYG alongside wages, rent and invoices that take longer than ever to be paid. When cash in the account won’t stretch to cover everything, delaying a tax payment isn’t about gaming the rules – it’s a short-term survival tactic.

The ATO can’t simply ignore outstanding debts, but the current escalation path is punishing viable firms that just need time. Tens of thousands of businesses are currently engaged in formal payment arrangements with the ATO, and garnishee notices and director-penalty warnings have returned at pace. For a small café, an electrical contractor, or a digital-services micro-firm, one sudden account freeze can tip a delicate balance into insolvency.

The stress is compounded by uncertainty. Owners swap stories: why did one peer receive six months’ breathing space while another had funds swept from their account after a single missed instalment? Clearer guidance on thresholds and timelines would give directors confidence to engage early rather than retreat in fear.

None of this is to dismiss the ATO’s challenge. The tax gap is real, and chronic non-payers do exist. But the recovery strategy could do more to distinguish deliberate avoidance from temporary hardship. A short, transparent pause on garnishees for debts under, say, $100,000 – provided a realistic plan is lodged – would help steady firms that are fundamentally solvent. An expanded hardship-advice hotline staffed by people who understand small-business cash cycles would lift engagement and reduce defaults.

There’s also a longer-term opportunity here. COVID-era support proved that structured, time-bound relief can keep businesses afloat and tax flowing in the long run. Low-interest consolidation loans or government-backed deferrals, linked to clear repayment milestones, would prevent a wave of unnecessary wind-ups and protect jobs the economy can’t afford to lose.

Above all, tone matters. When letters arrive without warning or accounts are frozen before a conversation occurs, trust erodes. Most owners I know are proud to contribute their share; they simply need the system to recognise how volatile trading conditions have become.

Small business isn’t looking for indulgence. We’re looking for partnership: consistent rules, proportional responses, and a willingness to see cash-flow pressure for what it is – temporary, not terminal. Give us a predictable path back to compliance and we’ll take it, because the alternative is closure, and that helps no-one: not staff, not communities, and certainly not the tax base.

A resilient economy is built on resilient small businesses. Treat us as collaborators rather than cases, and we’ll repay the faith – literally.

The post Small businesses aren’t dodging tax – we’re drowning in it appeared first on Inside Small Business.

MYOB’s latest Bi-Annual Business Monitor survey has underscored this with the finding that 40 per cent of the more than 1000 SMEs surveyed would vote for sector-specific spending to support small businesses through the current economic environment.

Cashflow in particular remains a critical concern for SME owners and operators. Given the situation, the top three policies SMEs would vote for are reducing the company tax rate to 20 per cent for small businesses (stated by 66 per cent of respondents), simplifying the GST and BAS reporting process (stated by 59 per cent) and making the instant asset write-off permanent (58 per cent).

Rising utility costs are also a top concern for SMEs (shared by 35 per cent), followed by fuel prices (33 per cent), price margins and profitability (27 per cent) and interest rates (25 per cent).

“Small and mid-sized businesses together contribute more than half of Australia’s GDP. Their vital economic role ultimately thrives on stability and predictability,” said MYOB CEO Paul Robson. “A commitment to long-term, steady policies that provide the certainty needed for confident business planning and investment – which flows onto job security for millions of Australians – is what SME owners and operators are seeking this election.”

The report noted that given the huge number of Australians employed by SMEs (more than eight million according to recent statistics), measures that can support SMEs will have far-reaching effects on the national economy, as well as the everyday life of many Australians.

Robson said: “In this final week, all political parties should recognise the central role that small and mid-sized businesses play in our economy and ensure they communicate the policies that address their concerns. This isn’t just about supporting business owners – it’s about maintaining the right conditions for job creation, innovation, and economic growth that benefits all Australians.”

He concluded by saying, “This election comes at a pivotal time for the SME community and the ongoing trajectory of the economy they contribute to so considerably. The outputs of this sector are significant, and so ensuring an environment in which these owners and operators can effectively grow their business in 2025 and beyond is essential.”

The post The issues that matter most to SMEs in the upcoming election appeared first on Inside Small Business.