Latest news with #GeneralInterestCharge
Yahoo
22-04-2025
- Business
- Yahoo
All the money changes coming soon for every Aussie: 'Higher payments'
Big changes are kicking in for Aussies in the coming months that will have major impacts on your money. The end of the financial year is fast approaching, and with it comes a bunch of alterations to superannuation, tax, Centrelink and more. From July 1, Aussies can look forward to higher superannuation payments, changes to the minimum wage, and increases to some Centrelink payments and thresholds. Other money changes, like removing the tax deductibility of tax debts, won't be as welcome on the hip pocket. Here's what's changing. RELATED ATO confirms $1,380 tax change for millions of Aussies who work from home: 'Updated' Cafe owner hits back at customer's wild public holiday surcharge threat: 'Scum of the earth' Woolworths customer's secret to getting 'free money' every time she shops: 'Earned $1,400' The super guarantee rate will increase from 11.5 per cent to 12 per cent for workers. This is the final legislated increase to compulsory super payments. The change means your employer will put a higher percentage of your pay into your retirement savings. The transfer balance cap, which limits the total amount of super that can be transferred into the retirement phase, will increase by $100,000 from $1.9 million to $2 million. Other thresholds, like the $30,000 annual cap on concession tax-deductible contributions and the $120,000 cap on non-concessional contributions, will remain the same. Superannuation will start being paid on the government's Parental Leave Pay. This means parents getting the support will get an extra 12 per cent of their payment as a contribution to their super fund. The amount of Parental Leave Pay available will also increase to 24 weeks, up from 22 weeks. The amount of leave will increase by two weeks until it reaches 26 weeks from July 2026. The amount is shared between parents. From July 1, three weeks of leave will be reserved for the parent who is not using the majority of the leave. Interest on overdue tax debts will no longer be tax-deductible. The General Interest Charge (GIC) and Shortfall Interest Charge (SIC) will no longer be tax-deductible, which is expected to boost tax revenue by $500 million in 2026 and 2027. The ATO applies the GIC when a tax debt hasn't been paid by the due date, including where a tax return has been lodged late. The SIC applies when your tax return is amended and it results in a tax shortfall. The Fair Work Commission reviews and adjusts the minimum wage each year, with changes coming into effect on the first full pay period on or after July 1. Prime Minister Anthony Albanese has backed an 'economically sustainable real wage increase' for minimum and award wage earnings. However, the Labor government has not put a figure on its submissions to Fair Work. The national minimum wage is currently $24.10 per hour, which works out to $915.90 per 38-hour week or $47,626.80 per year. Family payments, including the Family Tax Benefit, Newborn Supplement and Multiple Birth Allowance will increase. This is because of regular indexation, which happens on July 1 each year, with the increase not yet confirmed by the government. Age Pension, Disability Support Pension and Carer Payment recipients will see increases to their income and asset thresholds, with the amounts also to be confirmed. Thresholds for the Medicare Levy Surcharge will increase. This is an extra tax you have to pay if you earn over a certain amount and don't have private health insurance. Singles who earn over $101,000 and families who earn over $202,000 and don't have appropriate hospital insurance will now have to pay the surcharge, up from $97,000 and $194,000, respectively. Lastly, the minimum income for HECS repayments is due to increase to $67,000, up from the current $54,435. However, this change has not yet been legislated. The change means Aussies would need to earn more than the new threshold before they start making in to access your portfolio
Yahoo
28-03-2025
- Business
- Yahoo
Major ATO tax debt change for all Aussies: 'Devastating impact'
Aussies will be hit with bigger penalties from the Australian Taxation Office (ATO) if they fail to pay their tax debts on time. The interest applied on overdue tax debts will no longer be tax deductible from July 1, 2025, after laws passed parliament this week. Legislation to remove tax deductibility for both the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) was passed by the Senate on Thursday. The change is expected to boost tax revenue by $500 million in 2026 and 2027. Hive Wise founder Hripsime Demirdjian told Yahoo Finance the change would not be tax-beneficial for individuals and small businesses. RELATED ATO warning for small businesses as $20,000 tax break scrapped in federal budget Centrelink blow for millions on JobSeeker, Age Pension as federal budget denies cash boost Aussie couple on $330,000 reveal 'trap' that saw them in $151,000 debt: 'Isn't talked about' 'The reason why this measure was introduced is because the ATO has more than $50 billion in collectable tax debt,' she said. 'This change is being enacted in an effort to encourage the payment of tax debt on time, as the cost of debt will increase.' The ATO applies the GIC when a tax debt hasn't been paid by the due date, this includes where a tax return has been lodged late. The SIC applies when an incorrect self-assessment leads to a shortfall in tax paid. The ATO applies the SIC is applied to the shortfall amount. The GIC rate is currently 11.17 per cent per annum, while the SIC is lower at 7.17 per cent per annum. Both charges apply on a daily compounding basis and were tax-deductible. The government first announced the change in December 2023 and said it would encourage tax compliance and benefit taxpayers who were already doing the right thing. "Removing these deductions will enhance incentives for all entities to correctly self-assess their tax liabilities and pay on time, and level the playing field for individuals and businesses who already do so,' the government said in the 2023-24 Mid-Year Economic and Fiscal Outlook (MYEFO). The Council of Small Business Organisations Australia (COSBOA) has criticised the move and said it would impact small businesses the most. 'The overwhelming majority of small businesses are doing the right thing and seek to pay their tax on time and pay it correctly,' COSBOA CEO Luke Achterstraat said. 'Targeted measures to deal with high-debt accounts would be more appropriate and equitable to encourage voluntary compliance across the tax system.' CPA Australia also argued against the change, noting it could have a 'devastating impact' on small businesses already dealing with high interest rates and inflation. 'For tax-paying small companies, the non-deductibility of GIC effectively raises the penalty rate by 25 per cent,' CPA Australia tax lead Jenny Wong said. 'For sole traders, it potentially increases the penalty rate by up to 47 per cent depending on their marginal tax rate.'
