As a self-employed professional, you're likely aware of the financial challenges that come with managing your business. Recent changes in tax legislation could impact your bottom line, but there are strategies to mitigate these effects.
🚨 Upcoming Tax Changes
The Australian Taxation Office (ATO) has announced significant changes that will affect small businesses starting from 1 July 2025:
- General Interest Charge (GIC) Deductibility: Currently, businesses can deduct the GIC on overdue tax debts. However, this will no longer be allowed from 1 July 2025. This change could result in higher taxable income and increased tax liabilities for those with existing tax debts .
- Increased ATO Enforcement: The ATO is intensifying its efforts to collect outstanding tax debts, including reporting defaults to credit agencies. This increased scrutiny means that businesses with overdue taxes may face greater financial strain .
💡 Cost-Effective Solutions
Despite these challenges, there are proactive steps you can take to manage your tax obligations and maintain financial stability:
- Debt Consolidation: Consider consolidating your ATO debt into a business loan or your mortgage, possible with banks and through non-bank lenders. Some of these lenders offer flexible income verification processes and may allow you to incorporate your tax debt into a single loan with manageable repayments .
- Review Your Tax Position: Engage with a tax professional to assess your current tax situation and don't carry an existing ATO debt past the end of this financial year. Accountants and Mortgage brokers are in a position to help identify opportunities to plan for the upcoming changes.
- Implement Efficient Tax Practices: Adopt practices that minimize tax liabilities, such as timely BAS lodgements and accurate GST reporting. This proactive approach can prevent penalties and interest charges.
🧠 Expert Insight
Claire Astle at Acorn Mortgages emphasizes the importance of addressing tax debts before the deductibility of GICs ends. She advises that businesses with consistent tax debts should consider consolidating these debts to avoid unexpected financial strain .
✅ Take Action Now
To navigate these changes effectively, it's crucial to seek professional advice and explore available financial solutions. By taking proactive steps, you can mitigate the impact of these tax changes on your business.
If you need assistance in finding a suitable solution tailored to your circumstances, feel free to reach out. I'm here to help you navigate these changes and ensure your business remains on solid financial ground.
