Parliament is scheduled to resume from 4 February 2025 (assuming an election is not called prior). When an election is called, the Houses of Parliament dissolve and any Bills lapse. While the Senate pushed through 32 Bills on the last sitting days of 2024, there are a few anticipated…dreaded… (pick your adjective here), Bills yet to pass.

Zombie tax: Division 296 $3m super tax

Division 296, which imposes a 30% tax rate on future earnings for superannuation balances above $3 million, is proposed to commence from 1 July 2025. The Bill implementing the measure, Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023, was divided into two by the Senate to remove the less controversial measures.

Unless there is a concerted effort to negotiate the Bill’s passage through the Senate in February, pundits have their money on this tax disappearing as a bad idea. However, the MYEFO continued to recognize the revenue from the new tax in the budget and the Government, at least at this stage, is not formally backing away from it.

Peter Dutton has vowed to abolish the tax.

No certainty on the $20k instant asset write off threshold

In the 2024-25 Federal Budget, the government announced the extension of the $20,000 instant asset write-off threshold for small business for a further year to 2024-25. The concession enables businesses with an aggregated turnover of less than $10 million to immediately deduct the full cost of eligible depreciating assets costing less than $20,000. Without this measure, the threshold returns to $1,000 for 2024-25…yes, current year.

This concession was removed by amendment from the enabling legislation at the last minute in the final sitting of Parliament of 2024. The intent is to pick it up in 2025 in a new Bill. The removal of this measure is unfortunate, as once again, SMEs now have no confidence about the tax treatment of investments in assets that they might be looking to make, or have made, in the current financial year.

Tightening the definition of fuel-efficient cars, ATO notification periods for refunds and denying deductions for GIC and SIC

The Senate Economics Legislation Committee is due to report on the measures contained in Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024 by 30 January 2025.

Luxury car tax and fuel-efficient cars

Amends the Luxury Car Tax (LCT) rules to:

  • Tighten the definition of a fuel-efficient vehicle – reducing the maximum fuel consumption for a car to be considered fuel-efficient for the LCT to 3.5 liters per 100 kilometers from the current 7 liters per 100 kilometers. For car enthusiasts, that gets you a Toyota Yaris (the Lexus UX for example is 4.2 liters per 100 kilometers).
  • Align the indexation rates for LCT thresholds. Under this revision, the LCT threshold for the 2024-25 is $80,567 and will be indexed annually using the index number for the motor vehicle purchase sub-group of the CPI. Currently, the LCT uses the threshold from 30 June 2012 and is indexed using the ‘All Groups’ CPI. Of late, motor vehicles have grown at a faster rate than CPI generally.

Deductions denied for interest charges

This measure would prevent deductions being claimed on the general interest charge (GIC) and shortfall interest charge (SIC), incurred in income years starting on or after 1 July 2025.

Extending ATO notification period for retaining BAS refunds

After the ‘TikTok’ GST refund scam that saw $1.7 billion paid out in fraudulent refunds and another $2.7bn in fraudulent claims stopped, the time period for the ATO to notify that they are retaining a refund will be extended from 14 days to 30 days.