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Maximising your return: navigating the latest income tax changes

With the release of the Mid-Year Economic Financial Outlook (MYEFO) in December 2023, the Federal Government laid out its agenda for imminent changes to taxation law. Understanding these updates is crucial for taxpayers seeking to optimise their financial strategies in the coming year.

The end of deductibility for ATO interest from 2025

In a significant shift from previous policy, starting from 1 July 2025, neither the General Interest Charge nor the Shortfall Interest Charge on tax debts to the ATO will be deductible. Additionally, Commonwealth penalty units will see an increase from $313 to $330 post-legislation, affecting all taxpayers and potentially altering financial planning tactics.

Tax advice for foreign investors: capital gains withholding rate adjustments

Foreign investors take note: there will be an increase in the capital gains withholding tax rate from 12.5% to 15%, coupled with a reduction in the withholding threshold from $750,000 to $0. This pivot in policy, targeting real property disposals under contracts from 1 January 2025, necessitates updated strategies for international investment portfolios.

Income tax considerations for luxury vehicle owners

The definition of fuel efficiency is being reevaluated. From 1 July 2025, the luxury car tax (LCT) will adopt stricter fuel consumption criteria, decreasing from 7 litres per 100km to 3.5 litres per 100km. The LCT value threshold will align with the motor vehicle purchase sub-group of the CPI, affecting the luxury vehicle market and its consumers.

Customs duty exemption for 2023 FIFA Women’s World Cup

In an unprecedented move, the Federal Government will grant a customs duty exemption to FIFA and its associates for the 2023 FIFA Women’s World Cup. This exemption applies retroactively from 1 January 2022 until 31 December 2028, setting a ‘free’ rate of customs duty for specific goods. This development introduces a streamlined approach for international events, potentially influencing the local economic landscape.

These proposed legislative changes present both challenges and opportunities. As the landscape of income tax evolves, seeking professional tax advice becomes indispensable. It’s imperative to stay informed and adapt to the new rules to ensure compliance and maximise financial outcomes.

For personalised guidance and expert tax advice that navigates these updates, contact our dedicated team. Our specialists are equipped to provide strategic insights tailored to the unique implications of these changes on your financial health.

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