Latest news with #TreasuryLawsAmendment
Yahoo
11-06-2025
- Business
- Yahoo
Major ATO change just weeks away as taxpayers warned over new rules: 'Will cost more'
Taxpayers have been reminded about a major change that's coming in less than a month. From July 1, you won't be able to make a tax deduction on interest charged by the Australian Taxation Office (ATO) for late or underpayments. Up until this point, you were able to reduce your taxable income through this method. However, the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 has kicked into gear, and the next financial year will see this perk removed. "These changes will mean it will cost more to carry a tax debt and, while taxpayers won't feel this change until next tax time... [it's] so important to get on top of your tax obligations," ATO Assistant Commissioner Anita Challen said. Millions of Aussies missing out on $830 tax deduction Major RBA interest rate call set to give homeowners $250 per month win $400 cash boost available for thousands of Aussies in new energy rebate The legislation to remove the tax deductibility for the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) passed the Senate back in March. The GIC would be deployed when a tax debt hadn't been paid by the due date, which included when a tax return had been lodged late. The SIC, meanwhile, applied when an incorrect self-assessment led to a shortfall in tax paid. The ATO would apply the SIC 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 was brought in to create a fairer playing field when it came to paying your tax and any charges against you. The ATO said taxpayers who did the right thing had been "disadvantaged" relative to those who delayed their payments and, as a result, incurred interest fees. Hive Wise founder Hripsime Demirdjian told Yahoo Finance that it was also designed to help the ATO crack down on its $50 billion in collectable tax debt. The change is expected to boost ATO revenue by $500 million in 2026 and 2027. If you were charged interest by the ATO before the July 1 deadline, this can still be claimed as a tax deduction when you submit your tax return this year. This will come pre-filled on your tax return if you lodge online using myTax. However, any interest charged after July 1 will not be able to be claimed. Challen had some blunt words of advice ahead of the July 1 change. "If you have a tax debt you've been putting off paying – now is the time to pay," she said. "Setting aside your GST, Pay as you go (PAYG) withholding and super from your business's cash flow in a separate bank account can help ensure you have the funds available when it's time to pay." The ATO said if you're unable to pay on time and in full, then you can contact the tax office to set up a payment plan. If you're under an agreed plan, you will avoid any debt recovery actions from the ATO. "Interest will continue to accrue if you are paying your ATO debt off through a payment plan, but as you make payments, the amount of interest you are charged will also decrease," Challen added. "If you cannot pay on time and in full, you should also discuss your financial position with your accountant or finance provider to understand if there are alternative methods of funding payment of tax debts that might have a lower interest rate. "If you are considering obtaining third party-financing to pay your tax debt, you should discuss the tax implications with your registered tax agent or adviser."Sign in to access your portfolio
Daily Mail
05-05-2025
- Business
- Daily Mail
What Albo's super changes could mean for you: How it will work, when it could happen and why the taxman will get access to your money sooner
A co-architect of Labor's radical plan to tax superannuation is adamant Anthony Albanese will use his landslide re-election as a mandate to implement a policy experts warn is a threat to retirement savings. The Senate last year blocked Labor's plan to impose an unrealised gains tax on balances above $3million. But Labor's re-election means the government could have more senators, increasing the chance of contentious legislation being made into law with help from the Greens. That means someone with a self-managed super fund would be forced to sell assets like real estate to avoid paying the tax, sparking a warning that radical new taxes could undermine confidence in Australia's $4.2trillion superannuation sector. In a break from the usual capital gains tax practice, Labor is seeking to slap a new 15 per cent tax on superannuation assets before they were sold, under the new Division 296 proposal. Outgoing assistant treasurer Stephen Jones said Labor was likely to use its landslide re-election to legislate the superannuation policy, with the government's Senate numbers also likely to improve. 'I think the government's got a mandate to prosecute its policy agenda, the agenda that it took to the election,' he told Daily Mail Australia. 'I'd expect the government to pursue all of the policies that we took to the election including that one.' But Mr Jones was reluctant to defend the idea of taxing unrealised gains, a policy that hasn't been tried on retirement savings anywhere else in the world, and referred questions to Treasurer Jim Chalmers. 'I'm not going to get into those details, you can raise those questions with Jim and I'm sure he'd be happy to take your call,' he said. 'I'd expect the new government, which won't include me, to pursue all of the policies that they took to the election.' Wilson Asset Management chairman and chief investment officer Geoff Wilson said taxing unrealised gains, based on the notional value of assets in super, was bad policy. 'Taxing unrealised profits is illogical and unfair,' he said. 'The retirement security of Australians, and indeed the long-term prosperity of our nation, depends on a thoughtful and economically sound approach to superannuation policy, not one with multiple unintended consequences.' Mr Albanese ruled out super changes ahead of the 2022 election, only to introduce the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023. 'We have no intention of making any super changes… we're making all our policies clear,' he said three years ago. How many people are affected? The government argued the plan to impose an unrealised gains tax on super balances above $3million would only affect 0.5 per cent of the population, or 80,000 people. Financial Services Council modelling put that figure at 500,000 with the threshold not indexed for inflation. 'I think it got the balance right - it was about ensuring that the significant tax concessions, the significant tax concessions, that taxpayers make to retirement savings are appropriately targeted,' Mr Jones said. 'Even after the changes, even people with high balance super above $3million will still have very generous tax concessions.' How would earnings be taxed? Labor wants earnings on balances above $3million to double to 30 per cent from 15 per cent. This was part of a plan to save $2billion a year in foregone revenue. What are the possible consequences? Wilson Asset Management released a new discussion paper arguing Labor's new proposed superannuation taxes would erode retirement savings. 'A tax perceived as eroding accumulated wealth, such as the proposed taxing of unrealised gains in super balances over $3million, may lead to reduced savings, increased consumption, or a shift towards less taxed investment options,' it said. 'Conversely, tax policies seen as promoting wealth accumulation can encourage savings and investment. The proposed policy is the former having a direct impact on reducing savings and encouraging people to alternative tax structures.' This would have the effect of diminishing federal government revenue from taxing super. 'If the tax significantly discourages investment and economic activity, it could lead to slower economic growth and lower overall capital gains across the economy, including within superannuation,' it said. 'This would further diminish the revenue potential from taxing unrealised gains.' This would ultimately erode trust in Australia's $4.2trillion superannuation system. 'Introducing a tax on unrealised gains could erode public confidence in the stability and predictability of the superannuation system,' it said. 'Australians may lose trust in the system if the tax rules are perceived as constantly changing and eroding their retirement savings. This lack of confidence could further discourage voluntary contributions and undermine the effectiveness of Australia's superannuation system.' Where do the Greens and Teals stand? The Greens want the threshold reduced from $3million to $2million, but they generally support the principle of taxing unrealised gains. During the election campaign, Senator Sarah Hanson-Young said the Greens would push Labor to reduce the threshold. 'In the new Parliament, of course, we will be pushing for making sure that there is a fairer share of these things,' she told Sky News in April. 'People who have millions and millions of dollars in superannuation being able to have special tax settings versus the rest of the population, who are struggling and worried about what their super balance is going to look like at retirement, is there even going to be enough in there? 'My focus is everyday hardworking Australians wondering if there will actually be enough money in the bank, and that's the bulk of workers. 'The people who are retiring on $2million or $3million is small.' But Teal MP Allegra Spender, who represents Wentworth in Sydney's wealthy eastern suburbs, spoke out against the policy in October last year, a month before the Senate declined to pass Labor's bill. 'Let me explain some of the concerns I have in relation to the taxation of unrealised gains,' she said. 'The first is on principle, which is that this is not money that anybody has. 'So, why the government should tax it is beyond me. As a principle of taxation, it is extremely problematic.' Climate 200-backed independent David Pocock and fellow senator Jacqui Lambie last year refused to support a bill to tax unrealised gains on super.
Daily Mail
30-04-2025
- Business
- Daily Mail
EXCLUSIVE Anthony Albanese's secret plan to tax your super is slammed by Labor ex-MP: 'Ethically wrong'
A lifelong Labor member and former colleague of Anthony Albanese has branded the Prime Minister's shock new superannuation policy as 'ethically wrong'. Labor has vowed to tax anyone with retirement savings above $3million on all notional gains - even before they're cashed in - if the government is re- elected on Saturday. Those with a self-managed super fund would be taxed at 15 per cent regardless of whether they actually sold off any assets like real estate. The policy is a radical departure from the fundamental principle of only applying capital gains tax to assets after they are sold for a profit. The government's groundbreaking policy has never before been applied to superannuation anywhere else in the world. Despite that, Labor still included it in the pre-election March Budget. Former Labor MP Michael Danby described Labor's plan to tax unrealised gains on super as 'ethically wrong'. 'It's a mistake that shouldn't be proceeded with,' he told Daily Mail Australia. 'The fact that these are unrealised gains, people may not realise they even have them. 'People have been frugal and put aside money for their superannuation and for it to be, even part of it jeopardised, and have to be sold - when it's not even realised is wrong, it's ethically wrong.' Mr Danby likened the ALP's super policies to former Opposition Leader Bill Shorten's 2019 election policy to tax shareholders on franking credits. 'I think it's a minefield and it's as bad as the idea of taxing franking credits - it's a mistake,' he said. But Mr Danby doubted Labor's super policies would hurt its re-election chances. 'I don't think it will because it's come to light too late for people to realise what's happening,' he said. Earnings taxes on balances above $3million would also double to 30 per cent under Labor's plan which last year stalled in the Senate. 'If it emerges from that other policy, it's a bad idea too,' he said. As Opposition Leader, Mr Albanese promised ahead of the 2022 election that superannuation would remain untouched. 'We've said we have no intention of making any super changes - one of the things that we're doing in this campaign is we're making all of our policies clear,' he told reporters. Despite that pledge, Labor introduced the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill in 2023. Labor won a majority at the last election and wasn't forced into introducing this policy to placate the Greens or independents. This was different to 2011, when former prime minister Julia Gillard introduced a carbon tax as the leader of a minority government, breaking a 2010 election promise. The Albanese Government's super proposal stalled in November 2024 when it failed to pass the Senate with the Greens wanting the threshold for taxing unrealised gains reduced from $3million to $2million. The idea of taxing super assets before they were sold would mark the most radical departure from the capital gains tax since it debuted in September 1985 under Bob Hawke's Labor government. Mr Danby, who held the old seat of Melbourne Ports from 1998 to 2019, is campaigning for Labor MP Josh Burns in the renamed electorate of Macnamara on the eastern side of Port Phillip Bay.
