G’day, small business owners! The new financial year brings a fresh batch of updates, opportunities, and a few bonuses to keep your business humming.
From compliance updates to financial relief, ATO’s 2025 small business updates are here to help you stay ahead of the game. Let’s take a look at the changes that will take effect from 1 July 2025.
National Minimum Wage Gets a Boost
The National Minimum Wage is on the rise again, and so are minimum modern award pay rates. As part of the ATO updates for small businesses in 2025, the Fair Work Ombudsman announced that the National Minimum Wage is set to rise by 3.5% to $24.94 per hour, or an estimated $947.72 per week (based on a 38-hour workweek) from 1 July 2025. This follows the 3.75% increase in 2024 to $24.10 per hour.
Action Item: If you employ staff on minimum wages or modern awards, review every award, update your payroll software before 1 July 2025, and ensure compliance. With Single Touch Payroll (STP) in full swing, the Australian Taxation Office (ATO) will be watching closely, so don’t skip this step. Incorrect payments could lead to penalties, so double-check your settings.
Hot Tip: Run a test payroll in late June to confirm the new rates are applied correctly. If you need to verify any specific awards, the official website of the Fair Work Ombudsman is a reliable reference, or you can consult with your accountant.
Tax Cuts to Keep More of Your Hard-Earned Cash
Great news for sole traders and small business owners. The 2025–26 Federal Budget, delivered on 25 March 2025, brings further tax relief to put more money back in your pocket. Among the ATO updates for small businesses in 2025, the tax changes include:
- The tax rate of 16% on the income range of $18,201 to $45,000 will be lowered to 15% effective from 1 July 2025.
- A reduction to 14% from further, starting from 1 July 2026, will bring about additional savings.
- The unchanged 30% tax rate applies to all individuals who earn between $ 45,001 and $ 135,000 in a year.
- The limit for the 37% tax rate remains between $135,001 and $190,000.
- There is still a 45% tax threshold for those with an income exceeding $190,000.
- Here’s how the tax brackets look for 2025–26:
| Thresholds in 2025–26 ($) | Rates in 2025–26 (%) |
| 0 – 18,200 | Tax-free |
| 18,201 – 45,000 | 15 |
| 45,001 – 135,000 | 30 |
| 135,001 – 190,000 | 37 |
| Over 190,000 | 45 |
What This Means for Small Businesses
When tax rates are lower, you can expect to have a larger portion of your profits. Defining a new way to allocate the tax rate amount could help you avoid saving too much while at the same time keeping a buffer for unplanned expenses. The latest configuration in your accounting software is for ATO updates for small businesses in 2025. Additionally, meeting with your accountant will help you comprehend and adjust your strategy correctly.
Pro Tip: Utilise the surplus money for the business that you can charge during the campaign, such as marketing, upgrading technology, or employee training. However, don’t overspend without a plan.
Instant Asset Write-Off Extended with a Twist
The popular $20,000 instant asset write-off is being carried forward to the 2025–26 financial year, which means you can deduct the entire amount of all the eligible assets purchased up to $20,000 from the taxable income in the year of purchase. Even more so, the 2025 Federal Budget introduced a new idea: small businesses can fully deduct tools and equipment in the year they are purchased, meaning they can be used solely for business purposes without the $20,000 cap, thereby eliminating the need for the owner to worry about it.
Key Considerations:
- Eligible assets include equipment, tools, or vehicles that contribute to your business’s income.
- The purchase must be a wise investment—ensure it boosts productivity or cash flow.
- This deduction is particularly valuable for startups seeking to minimise their initial costs.
Example: A café owner could immediately deduct the cost of a new coffee machine or delivery van, lowering their taxable income for 2025–26. Nonetheless, one should always think about what would be the more beneficial option: the long-term benefits of owning the product or the acquired tax exemption.
Hot Tip: Always consult with your tax consultant to clarify whether you qualify and verify that the write-off aligns with your financial goals. Be cautious not to make hasty purchases solely for tax reduction—ensure that such decisions are strategic and beneficial.
Power Bill Relief Extended
The 2025–26 Federal Budget helps alleviate a significant portion of the rising energy costs by providing financial assistance. Businesses regarded as small, having around one million eligible applications, will be granted a $150 electricity bill rebate, which will be done automatically in two instalments of $75 each for the period from July to December 2025. This follows the $325 rebate from 2024–25 and stacks with a $150 rebate for household bills, easing the pressure for business owners who work from home.
Why It Matters: This $1.8 billion initiative helps offset operational costs, particularly for energy-intensive businesses such as retail and hospitality. $150 may not be sufficient to cover everything, but it serves as a buffer.
Pro Tip: Invest the energy savings in solar panels or energy-efficient equipment. This will, on the one hand, reduce your future energy bills and, on the other hand, help you be more eco-friendly. You should also consult your energy provider so that the rebate is rectified accordingly.
Superannuation Changes to Plan For
2 key changes in the superannuation system, effective from 1 July 2025, affect both employees and employers:
- Super Guarantee Increase: The SG figures increase from the current 11.5% to a total of 12%, marking the completion of its step-by-step rise from 9% in 2023. This applies to ordinary-time earnings for salaries and wages. To prevent any potential underpayment issues, it is recommended that you update your payroll software to include this adjustment.
- Higher Contribution Caps: The concessional contribution cap has increased from $30,000 to $32,500, while the non-concessional cap has risen from $120,000 to $130,000. This is a way for Australian business owners to manage their superannuation according to their requirements, reduce taxes, and make arrangements for other aspects of their future life.
For Employers: The SG increase means higher payroll costs. Budget for this, especially if you run a lean operation, such as a café or small retail business. A 3.5% wage increase combined with the 0.5% SG hike could add up.
For Sole Traders: If you’re in a strong cash flow position, consider maximising concessional contributions to lower your taxable income while building your retirement nest egg.
Hot Tip: Use payroll software with automatic super updates, or consult your accountant to ensure compliance. For personal super top-ups, run the numbers to balance tax benefits with business liquidity.
Also read: ATO’s $16 Billion Warning: Aussie Businesses Push Back on Cash Only Trend
ATO Updates for Small Businesses in 2025: Compliance and Digital Tools
The ATO is ramping up compliance checks in 2025–26, making the ATO updates for small businesses in 2025 critical to understand. Prepare for a tighter examination of Single Touch Payroll (STP) reporting, super payments, and tax deductions. Along with the focus on digital transformation that the 2025 Federal Budget carries, funds will also be allocated for the procurement of tools that aid in streamlining compliance, such as e-invoicing and cloud-based accounting integrations.
What to Do:
- Ensure your STP reporting is accurate and timely.
- Utilise digital tools like Xero, MYOB, or Reckon to streamline compliance and minimise errors.
- Stay proactive—late super payments could trigger ATO audits.
Value-Add Insight: The ATO’s move towards digital compliance is a part of a bigger trend of automation. Cloud-based accounting is a significant investment now, as it can help you save time and reduce penalties, especially with the improvement of ATO data matching.
Your 2025–26 Action Plan
To make the most of these changes:
- Update Payroll: Adjust for the new minimum wage ($24.94/hour) and 12% superannuation (SG) rate effective before 1 July 2025.
- Reassess Tax Savings: Factor in the 15% tax rate (and 14% from 2026) when planning your finances.
- Leverage Write-Offs: Strategically use the $20,000 instant asset write-off and new tool/equipment deductions to boost efficiency.
- Monitor Energy Rebates: Confirm the $150 business and household rebates are applied to your bills.
- Boost Super: Consider increasing concessional contributions to $32,500 for tax benefits.
- Go Digital: Embrace E-invoicing and cloud accounting to stay compliant and save time.
Hot Tip: For a detailed roadmap, download our free Reckon EOFY Guide to nail your end-of-financial-year prep. (Note: Update the link to the latest guide for 2025–26.)
Why This Matters in 2025 and Beyond
In the context of the threat of worldwide economic collapse and the increased costs, such updates to the tax code mean that small businesses in Australia have additional time to breathe. Tax reductions and grants for energy expenditures alleviate the burden. At the same time, the write-off of instant assets and super changes provide avenues for companies to invest in their development and retirement funds. Conversely, the rise in ATO detection of non-compliant clients marks the fact that compliance with tax codes is no longer negotiable. If you go through these steps in advance, you will be able to benefit from these changes, which will be to your advantage and your competitors’ loss.
Got questions? Please drop them in the comments or reach out to your accountant to tailor these updates to your specific business needs. Here’s to a cracking 2025–26 financial year!
Frequently Asked Questions (FAQs)
What are the key Australian small business tax changes 2025 that affect my business?
From 1 July 2025, the 16% tax rate for incomes between $18,201 and $45,000 will drop to 15%. This means you’ll likely retain more of your business profits. Additionally, the $20,000 instant asset write-off remains in effect, and tools and equipment can be fully deducted regardless of this cap.
How will the small business financial year 2025-26 impact payroll and staffing costs?
The hourly National Minimum Wage is elevated to $24.94 now, and the Superannuation Guarantee (SG) rate is up to 12% from 1 July 2025. All employers have to reconfigure and update their payroll systems to reflect the changes made. This will ensure compliance with the regulations and avoid penalties. This will result in their staffing costs being slightly higher than before.
What is the new minimum wage in Australia in 2025, and when does it take effect?
The National Minimum Wage in Australia will increase by 3.5% to $24.94 per hour or approximately $947.72 per week. This new rate takes effect from the first full pay period commencing on or after 1 July 2025. Employers should review all award rates.
Can you explain the superannuation changes in Australia for 2025, specifically for employers and sole traders?
The Superannuation Guarantee (SG) rate increases to 12% from 11.5% on 1 July 2025, impacting employer contributions. Concessional contribution caps also rise to $32,500, offering sole traders more flexibility to boost their super and reduce taxable income. Update your payroll software to reflect these SG changes.
What is the maximum turnover a business can have to qualify for the instant asset write-off?
Your business must have an aggregated annual turnover of less than $10 million to be eligible for the instant asset write-off.
How will the electricity bill rebate be processed for businesses that are not registered for GST?
The electricity bill rebate will be directly provided by your electricity provider or embedded network operator, depending on whether you fulfil the eligibility criteria, regardless of your small business registration for GST. You do not need to take any separate action or make a GST registration to enjoy the rebate.
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