October 2025 Practice Update — Key Insights for Individuals and Businesses
As we move through the final quarter of 2025, the Australian Taxation Office (ATO) continues to refine its focus on compliance and accurate reporting. This month’s update highlights several important reminders for both individuals and business owners.
1. Employee vs Contractor: Getting It Right
The ATO has warned that incorrectly classifying an employee as an independent contractor can result in significant penalties — including unpaid PAYG withholding, superannuation guarantee charges, and fines of up to 200%. Employers are encouraged to review existing arrangements to ensure they reflect the true nature of the working relationship.
2. Superannuation Guarantee – September Quarter Reminder
Employee superannuation contributions for the September 2025 quarter are due by Tuesday, 28 October 2025. Late payments may attract the Super Guarantee Charge, which includes penalties and interest, even if the amount is eventually paid.
3. Rental Property Repairs and Deductions
When it comes to rental property expenses, classification matters.
Repairs and maintenance can usually be claimed in the year the expense is incurred.
Capital works (e.g., renovations, structural improvements) must be claimed over time — generally at 2.5% per year for 40 years.
Misclassifying expenses can lead to errors in your tax return, so careful record-keeping and advice are essential.
4. Common Errors Among Sole Traders
The ATO has highlighted recurring mistakes, including:
Not reporting all income (such as side hustles or cash jobs)
Overclaiming expenses
Misreporting personal services income
Failing to register for GST when required
Accurate records and regular reviews can prevent these issues and ensure compliance.
5. Work Vehicles and FBT
Employers providing vehicles to employees should review whether private use may trigger Fringe Benefits Tax (FBT). Common issues include incorrectly assuming dual-cab utes are exempt or failing to maintain proper records. Understanding how FBT applies can help avoid unnecessary tax exposure.
6. Tribunal Ruling on Medical Expenses
A recent Administrative Review Tribunal (ART) decision confirmed that medical expenses related to a total and permanent disability pension are not deductible. The expenses were deemed personal in nature, as they did not directly contribute to earning the pension income.
The Bottom Line
Tax and compliance requirements continue to evolve. Taking the time to review your business arrangements, record-keeping practices, and deductions can help you avoid costly mistakes.
If you’re unsure how these updates might apply to you, the team at Strategem Financial Services can help you navigate the details with clarity and confidence.
📞 Call: (03) 5445 4777
🌐 Visit: strategem.com.au
✉️ Email: info@strategem.com.au
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