GST Changes in 2025: What Australian Businesses Need to Know This Year
Managing GST obligations is becoming increasingly complex for Australian businesses. With new compliance measures, reporting requirements, and strategic incentives introduced in 2025, staying informed is critical to avoiding penalties and optimising financial outcomes. This article breaks down the key GST changes impacting businesses this year, offering actionable insights to help you adapt effectively—whether you’re dealing with taxable sales, claiming input tax credits, or ensuring your tax invoices are in order.
Mandatory Monthly GST Reporting for Non-Compliant Small Businesses
From 1 April 2025, the Australian Taxation Office (ATO) will transition approximately 3,500 small businesses from quarterly to monthly GST reporting. This shift targets enterprises with a history of non-compliance, including late lodgements, incorrect reporting, or unresolved GST debts. Affected businesses will receive formal notification from the ATO and must maintain monthly reporting for at least 12 months before requesting a return to a quarterly basis.
Why the ATO is Enforcing Monthly Reporting
The ATO’s “Getting it right” campaign aims to improve compliance by aligning reporting with natural business processes like monthly reconciliations. Smaller, more frequent GST payments reduce the risk of large quarterly debts accumulating, which often lead to financial strain and administrative backlogs. Businesses that voluntarily adopted monthly reporting have reported better cash flow management and fewer errors due to real-time financial tracking. This is especially important for businesses that regularly charge GST on their goods and services or need to claim GST credits on business purchases.
Implications for Affected Businesses
While monthly reporting promotes accountability, it also increases administrative workloads. Businesses must adjust bookkeeping practices, update cash flow forecasts, and allocate resources for more frequent business activity statement (BAS) preparation. Those reliant on seasonal income or irregular cash flows may face liquidity challenges, as GST liabilities become due sooner. Proactive measures—such as automating invoicing systems or outsourcing compliance tasks—can help ensure that GST components are accurately reported and that input tax credits are claimed on time.
Facing new GST reporting requirements?
Let’s review your compliance—book a consultation now.
Supplementary Annual GST Returns for Large Taxpayers
The ATO is rolling out a supplementary annual GST return for Top 100 and Top 1,000 businesses that underwent GST assurance reviews before June 2024. This return focuses on governance updates, compliance improvements, and actions taken post-review, streamlining future assurance processes for taxable sales and input taxed supplies.
Pilot Program and Implementation Timeline
A six-month pilot launching in late 2025 will test the return’s functionality with select taxpayers. Full implementation begins in the 2024–25 financial year, with staggered due dates based on a business’s financial year-end:
December 2024 year-end: 21 August 2025
June 2025 year-end: 21 February 2026.
Large businesses must treat this return as a legislative requirement, as late lodgements or inaccuracies may incur penalties. The ATO anticipates the return will reduce the scope of future justified trust reviews for compliant entities, rewarding robust governance practices. This is particularly relevant for businesses with significant GST turnover, as well as those dealing with complex transactions such as digital products, retail sales, or cross-border goods and services.
Extended Instant Asset Write-Off for Small Businesses
Small businesses with annual turnover under $10 million can continue claiming the $20,000 instant asset write-off until 30 June 2025. This measure allows immediate deductions for eligible assets—such as equipment or technology—purchased and ready for use within the financial year. The GST component of these purchases can also be claimed as a GST credit, provided the business is registered for GST and the asset is used for taxable sales.
Strategic Considerations for Asset Purchases
While the write-off improves short-term cash flow, it’s not a blanket solution. The $20,000 threshold applies per asset, meaning businesses planning bulk purchases must prioritise items offering the highest operational return. Tax deductions only offset taxable income, so profitability and timing are crucial. For example, a business in a loss position won’t benefit from immediate deductions, making depreciation a better option for income tax purposes. Always ensure that tax invoices are kept for all business purchases to support claims for GST credits and income tax deductions.
Removal of Deductibility for ATO Interest Charges
Starting 1 July 2025, the General Interest Charge (GIC) on overdue tax debts is no longer tax-deductible. With the GIC rate at 11.17%, this change transforms interest from a partially offsetable expense into a direct financial burden. For instance, a $50,000 debt could incur over $5,500 in non-deductible interest annually, straining cash reserves and affecting the net amount available for business operations.
Mitigating Interest Risks
Businesses should prioritise resolving existing debts through payment plans and avoid relying on deductibility to soften interest impacts. Proactive cash flow forecasting and quarterly tax instalments can prevent arrears. This is especially important for businesses that pay GST on a quarterly basis and need to manage their GST refund claims and GST payable amounts efficiently.
Preparing for Compliance in 2025
Adopt Digital Tools and Automation
Cloud-based accounting software (e.g., MYOB, Xero) can automate GST calculations, BAS preparation, and payment reminders, reducing manual errors. Integrating these tools with bank feeds ensures real-time transaction tracking, simplifying monthly reporting. This is particularly useful for businesses that need to track GST credits, GST refunds, and the GST component of each taxable sale or purchase.
Review Compliance History and Seek Advice
Businesses unsure of their compliance status should audit past lodgements, payments, and reporting accuracy. Engaging a tax professional to negotiate ATO payment plans or restructure reporting workflows can prevent forced monthly transitions. This is especially relevant for businesses with complex GST arrangements, such as those dealing with input taxed supplies, GST-free sales, or the wine equalisation tax.
Educate Your Team
Regular training on updated GST rules ensures staff understand documentation requirements and deadlines. For example, incorrect RCTI (Recipient-Created Tax Invoice) practices could lead to compliance breaches. Ensuring that all invoices meet the requirements for GST credits and that GST is correctly charged on taxable sales is essential for compliance.
Other GST Considerations for 2025
The Goods and Services Tax (GST) in Australia is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia. Some items, such as certain health, education, and basic food products, are GST-free. Others, like residential premises and financial supplies, may be input taxed, meaning GST is not charged, and input tax credits cannot be claimed on related purchases.
Businesses must register for GST if their GST turnover meets or exceeds the registration threshold. Non-profit organisations and non-residents making taxable sales in Australia may also have specific GST obligations. The ATO website provides detailed guidance on GST registration, claiming GST credits, and lodging business activity statements.
For businesses involved in importing goods, GST is calculated on the customs value plus any applicable excise or other taxes. The tourist refund scheme allows Australian consumers and non-residents to claim a GST refund on goods purchased in Australia and taken overseas.
The federal government continues to review GST legislation to ensure it remains effective and fair. Recent changes have brought Australia’s GST system closer in line with Value Added Tax (VAT) systems in the European Union and other countries, particularly regarding digital products and cross-border sales.
Conclusion
The 2025 GST changes underscore the ATO’s focus on transparency, compliance, and financial accountability. Small businesses must adapt to stricter reporting timelines, while large enterprises face enhanced governance disclosures. By leveraging technology, seeking expert guidance, and prioritising proactive planning, businesses can turn these changes into opportunities for stronger financial health.
If your business needs assistance with GST, income tax, land tax, or other tax matters, our team at ACT Tax Group offers tailored compliance strategies and cash flow solutions. We help you stay on top of your GST obligations, from preparing business activity statements to claiming GST credits and managing taxable sales. Contact us today to ensure your operations align with the latest ATO requirements.