From 1 July 2025, two major updates: super and ATO interest changes, come into effect for Australian businesses. The superannuation guarantee (SG) rate will increase to 12%, and interest charged by the ATO will no longer be tax deductible. While these updates may seem small, they will impact your payroll, cash flow, and tax position.
In this guide, we break down how to prepare and why acting now can save you stress later.
Super and ATO Interest Changes in Focus
The upcoming super and ATO interest changes are part of broader government reforms affecting employers. With super increasing again and new tax rules around ATO liabilities, it’s essential to stay compliant and financially organised.
Super Guarantee Rises to 12% from 1 July 2025
If you pay employees, the SG rate will increase from 11.5% to 12% starting with any salary or wages paid on or after 1 July 2025. This is the final step in a multi-year increase plan to help Australians grow their retirement savings.
What businesses need to do:
- Update your payroll software to apply the correct SG rate
- Notify staff about the increase in their super contributions
- Review employment contracts to ensure compliance
- Adjust budgets to reflect slightly higher payroll expenses
Even if a pay period straddles June and July, the 12% rate must apply to any payments made on or after 1 July.
ATO Interest Charges Will No Longer Be Deductible
Currently, businesses can claim ATO interest charges—known as General Interest Charge (GIC) and Shortfall Interest Charge (SIC)—as tax deductions. But from 1 July 2025, this will change.
Key changes to note:
- GIC and SIC will not be tax deductible after 1 July 2025
- Interest incurred before 1 July will remain deductible
- Businesses with outstanding ATO debts may see a direct hit to their net tax position
This move is expected to discourage long-term ATO debt and prompt businesses to take a more proactive approach to managing liabilities.
What This Means for Your Business
While the SG increase is relatively straightforward, the ATO interest deductibility change is more nuanced. If your business carries ATO debt—either through a payment plan or tax shortfall—you’ll lose a tax advantage you may have relied on in previous years.
To maintain tax efficiency, you might consider refinancing the ATO debt through a commercial facility, where interest may still be deductible. However, it’s critical that the loan is correctly structured and documented for this to apply.
Your 1 July 2025 Compliance Checklist
Here’s a practical breakdown of the steps your business should take:
- Update SG rate in payroll system
- Notify staff of super changes
- Review budget and cash flow projections
- Pay off or refinance ATO debts before 30 June
- Get professional advice to ensure interest deductibility
- Factor in non-deductible ATO interest when tax planning
Cotchy’s team of accountants and bookkeepers can assist with each of these tasks, ensuring you stay compliant and optimise your financial strategy.
Super and ATO Interest Changes: Get Help from Cotchy
Understanding how super and ATO interest changes will affect your business is the first step. Acting on those changes now is what sets you up for success in the new financial year.
Whether you need help adjusting payroll, reviewing tax deductibility, or planning around the SG increase, Cotchy has you covered.
Reach out to Cotchy today to prepare confidently for 1 July 2025 and beyond.
Source: business.gov.au