Reflecting on my time with the Sydney Hills Business Chamber, where I worked closely with around 350 business owners, I’ve had hundreds of discussions each year that reveal what was really happening and the true challenges at the SME level in business.
In my view, one observation stands out: small businesses are weathering some of the tightest business conditions in decades. Over the past 12-24 months, small business owners have seen considerable increases in every input cost and regulatory requirement for their businesses, leading to a continued squeeze in profit margins – if they are lucky enough to have one in this period.
With no foreseeable end to these rising cost inputs and increasing regulatory burden from the government and its agencies, planning around these changes is extremely important for businesses.
Upcoming Changes and Their Impact
Adding to this complex set of business conditions for small businesses, this article outlines the upcoming changes set to be implemented on 1st July 2025:
- Businesses will lose the opportunity to claim deductions for ATO interest charges that apply to both General Interest Charges (GIC) & Shortfall Interest Charges (SIC).
- The superannuation guarantee will increase from 11.5% to 12%.
- Overdue payments for superannuation will attract the Superannuation Guarantee Charge (SGC), which also will not be deductible.
In the current environment, these measures add more pressure to businesses’ cash flow, more cost to their tax liabilities, and increased payroll, all with the obvious negative effect on cash flow in less than three months’ time.
Strategies for Navigating these Changes
With these looming changes, small businesses must get their basic ducks in a row now.
- Are your BAS statements up to date?
- Are your company tax returns current?
- If you have entered an arrangement with the ATO, is it up to date?
- Have you incorporated these effects into your cash flow projections?
- Importantly, do your current debt collection strategies positively affect working capital?
The old saying “Cash is King” has never been truer, and paying attention to the basics of your business now is key to navigating the period ahead.
Another key item to commence forward planning around cash flow is whether your business will be ready for pay day super, which comes on 1 July 2026.
With the above ATO interest and superannuation changes, if business owners are unaware of the details pertaining to their business, we suggest they urgently discuss these changes with their accountant and bookkeeper. As an adviser, it is worth checking with your clients to see if they’re prepared for the potential impacts of these changes. Additionally, business owners may need additional funding, such as an overdraft or business loan, to support working capital during this change period. Alternatively, funding mechanisms like invoice financing and a line of credit may also be options to navigate the potential impact on cash flow. Now would be a good time to explore these options. Instead of accumulating non-deductible interest by delaying or not being able to pay the ATO, consider using a third-party loan—the interest on which is tax-deductible—to manage your obligations more efficiently.
The Importance of Being Proactive
Forward planning and implementing sound strategies to deal with changes like this is always the best recipe for success. However, not planning for these changes could further affect the business in a tough environment.
For business owners who are feeling overwhelmed by current circumstances, seeking timely and practical advice is important. For advisers, this may be the right moment to consider introducing a specialist firm like dVT Group – particularly when the situation is complex or requires restructuring expertise. Reach out to one of our experienced team at dVT Group on (02) 9633 3333 or by email at mail@dvtgroup.com.au. Early guidance can make all the difference in achieving the best possible outcome.
dVT Group — Your trusted partner in compliance, risk, and peace of mind. We are a business advisory firm that specialises in business turnaround, insolvency (both corporate and personal), business valuations and business strategy support.
