Forewarned and Forearmed For Change

As we head into the final days of April, with the May 3 election set for this Saturday, one thing is certain: tax debt just got a lot more expensive.

Tighter interest deductibility rules, stricter compliance, and the rising cost of inaction are setting the scene for anyone with tax debt to face a much heavier burden.

If there's one message this month, it’s this: Stop hitting snooze. Act on tax debt now.

Help your clients resolve issues before the 1 July changes—or they’ll face significantly higher costs.

With the election result still unknown, there’s little sign of long-term tax debt relief on the horizon. The political focus remains squarely on cost-of-living issues, not structural tax debt reform. Meanwhile, the ATO’s collection efforts are only ramping up.

⏰ The clock is ticking. The window for deductible interest is closing fast.

What If It’s Not Resolved by 1 July?

The cost of waiting goes up—higher interest, no deductions, and tighter options. But that doesn’t mean you’re out of moves.

There are still solutions after the deadline. The key is to avoid delay now—because early action gives your clients more room to move, and more ways to manage the cost.

Even if full resolution takes time, getting started before July gives you the upper hand.

"The best time to plant a tree was 20 years ago. The second best time is now."

— Chinese Proverb

Starting 1 July, GIC (General Interest Charge) and SIC (Shortfall Interest Charge) will no longer be tax-deductible.

What this means: The cost of tax debt just went up—significantly. If you have clients with ATO debt, particularly those with ongoing disputes or payment plans, this change will increase their burden.

Businesses and individuals should be aware of this shift and consider its implications for tax planning and cash flow management.

What to do:

• Encourage clients to act now—before deductions disappear.

• Review repayment strategies—commercial debt might still offer deductible options.

• Reassess disputes—the after-tax cost just increased.

• Get remission requests in now.

• If restructuring, act quickly—delays are no longer affordable.

The takeaway: If your clients are sitting on tax debt, now is the time to make a move.

Off the Back of the March Federal Budget: 4 Changes Impacting Tax Debt

1. ATO Compliance Crackdown

What’s happening: The ATO is ramping up its audits, backed by a $1 billion funding boost. Expect more scrutiny of businesses with incomplete or overdue records.

What to do: Review your clients’ records and encourage them to engage with the ATO before audits or penalties escalate. Early action reduces penalties and increases your options.

Takeaway: Staying ahead of audits is crucial to managing debt effectively.

2. GST Crackdown: Monthly BAS for More Businesses

What’s happening: Businesses with messy GST records are being moved to monthly BAS lodgements, which may create cash flow headaches.

What to do: Ensure your clients’ GST lodgements are in order. If clients are being moved to monthly BAS, help them resolve underlying issues now to avoid future headaches.

Takeaway: Clean up GST records to prevent cash flow nightmares down the line.

3. Instant Asset Write-Off Still Here—But Don’t Get Distracted

What’s happening: The $20,000 instant asset write-off is still available, but it’s a temporary opportunity.

What to do: Don’t let clients get distracted by short-term savings while ignoring their tax debt. Focus on resolving tax debt before pursuing further deductions.

Takeaway: Tax savings don’t help if cash flow is already in the red.

4. Tax Cuts + Government Deficit ≠ ATO Leniency

What’s happening: Tax cuts are coming. But with a growing government deficit, ATO collections aren’t slowing down—they’re stepping up.

Tax cuts may ease some pressure, but the growing government deficit means aggressive collections from the ATO will remain.

What to do: Prepare your clients who owe significant tax debt for continued ATO pressure. Address outstanding debts now to avoid tougher collection tactics later.

Takeaway: Tax cuts may ease short-term burdens, but ATO enforcement will ramp up to cover the deficit.

The Real Impact of the Interest Changes — Michael Moon

I recently sat down with a director of a long-established family business, who’s been managing his tax debt for years.

What struck me was how little he understood the true cost of waiting. And with GIC and SIC interest no longer being tax-deductible from 1 July, the cost of inaction is about to get a lot heavier.

For a business like this, carrying around $70,000 in debt, the interest cost will now hit harder.

At the current GIC rate of 11.17%, that's around $8,000 in annual interest—none of which will be deductible after 1 July.

Until now, deductibility has softened the blow. Soon, that financial buffer will be gone.

The real cost of carrying tax debt will increase—and the longer clients delay, the bigger the burden becomes.

What this means for your clients: Delays are getting more expensive. Tax debt is no longer just a compliance issue—it’s a cash flow problem. And this change makes it even more urgent to act.

What you can do now:

• Encourage clients to act early.

• Emphasise the urgency—while it may be uncomfortable to bring it up, waiting only increases their costs, and taking action now saves them in the long run.

• Help your clients navigate the next steps.

What happens if you don’t take action:

• Costs rise: The real cost of tax debt will skyrocket without the ability to deduct interest.

• Options shrink: Delaying action limits the available restructuring and resolution strategies.

• Timing is critical: Every month of delay adds more to the debt—early action is the key to avoiding escalating costs.

For more, read Michael's article on the recent interest changes — and watch this case study video showing how strategic loans helped a client manage cash flow pressures, including a major ATO debt component.

Here are 5 key things to note and bring into your action plan. Because tax—and now interest—wait for no one!

1. Take action now on outstanding tax debts: Don’t wait—address any tax debts before the interest changes kick in on 1 July.
   

2. Review and tidy up records: Help clients clean up their books to avoid audits or penalties.
   

3. Plan ahead for GST changes: Ensure clients streamline their GST processes before monthly BAS becomes mandatory.
   

4. Don’t let tax cuts distract you: Encourage clients to focus on resolving tax debt before pursuing other deductions. The July 1 tax cuts won’t reduce what they owe—or stop the ATO from ramping up collections.
   

5. Timing is everything: The cost of waiting just increased. Every day counts.
   

When They Talk About Their Tax Debt

Many businesses don’t realise the full human toll of tax debt. Fiona Quill, Tax Assure's frontline advisor and unofficial Chief Care Officer, shares insights on why tax debt persists and how it’s possible to reduce penalties and interest—more easily than most realise—in this insightful discussion with Tax Assure director, Olga Koskie.

CASE STUDY SPOTLIGHT

QLD Engineering Firm Resolves $5M+ Debt

Challenge: Managing over $5 million in debt was putting serious strain on the client's operations and growth prospects.

The Solution: We stepped in and worked closely with the client to negotiate a 24-month, tiered payment plan with the ATO. This gave them the breathing room they needed to get back on track.

The Result: What felt like an impossible situation turned around in just 3 weeks. We helped them regain control of their debt and put their business in a position to grow again.

Key Takeaway: Sometimes, the right help can turn everything around. With our expertise, this client was able to stabilise their business and focus on moving forward, leaving the debt worries behind.

For more case studies, check out the Tax Assure website.

WHAT YOU CAN DO NOW

🔑 Proactive Action: Stay ahead of ATO deadlines and encourage clients to act now, rather than waiting for an ATO notice.

📞 Connect with Tax Assure: We’re here to guide you and your clients through the most complex tax debt scenarios. Book a consultation.

EXTRAS TO NOTE

📚 Tax Debt Resources: Want more case studies and examples of businesses coming back from tax debt? We’ve got 20+ hours of tax debt content, including case studies, interviews, and industry updates. Access the video vault now.

Tax Debt Events: Love learning and networking? So do we. Join Tax Assure director Olga Koskie for Tax Debt: A Better View—a new sun-downer event in partnership with Aptum and Dye & Co.The first event kicks off in Melbourne this May. Book now - tickets are selling fast!

💡 Upcoming State of Tax Debt Update: Olga Koskie and Michael Moon will be recording their take on the recent tax changes and what’s ahead. Stay ahead of the curve—register your interest.

THAT’S A WRAP FOR APRIL!

Got feedback? We’d love to know what landed—or what missed. Just hit reply and share your thoughts!

^{Disclaimer: The information provided is for general purposes only and should not be considered as specific financial, tax, or legal advice. We recommend consulting with a qualified tax professional or advisor to discuss your specific circumstances before making any decisions or engaging with the Tax Assure team directly.}