With 31 March fast approaching, it’s time to ensure your business is up to speed with recent tax changes and fully prepared for year-end filing. Here’s what you need to know:
1. Income Tax Thresholds Have Shifted
From 31 July 2024, personal income tax thresholds changed, impacting PAYE calculations. Ensure your payroll system reflects the composite rates for the 2025 income year:
- 10.5%: Up to $15,600 (previously $14,000)
- 17.5%: $15,601 – $53,500 (previously up to $48,000)
- 30%: $53,501 – $78,100 (previously up to $70,000)
From 1 April 2025, new marginal tax rates apply:
- 10.5%: Up to $15,600
- 17.5%: $15,601 – $53,500
- 30%: $53,501 – $78,100
- 33%: $78,801 – $180,000
- 39%: $180,001 and over
Action:
Double-check your payroll system is using the correct rates to avoid miscalculations and PAYE issues.
2. Fringe Benefit Tax (FBT) Adjustments
Changes to income tax thresholds mean FBT rates will also be updated from 1 April 2025. If you provide perks like company vehicles or interest-free loans to employees, review your FBT reporting and ensure compliance with the new rates.
Action:
Double-check your payroll system is using the correct rates to avoid miscalculations and PAYE issues.
3. Resident Withholding Tax (RWT) Updates
If your business makes interest payments or handles other RWT-applicable transactions, note that RWT rates changed from 31 July 2024 to align with the updated income tax brackets.
Action:
Confirm you’re deducting and reporting RWT at the correct rates to avoid penalties.
4. Independent Earner Tax Credit (IETC) Review
Sole traders earning between $24,000 and $70,000 may still qualify for the IETC, which reduces tax liability. With threshold changes, it’s worth checking if you remain eligible before filing your return.
Action:
Review your income level and ensure you claim the credit if eligible.
Need Help Navigating These Changes?
Tax compliance shouldn’t be a last-minute scramble. If you want clarity or a strategy session before year-end, get in touch—we’ll ensure you’re sorted. Contact us
