This bill became law on Mar 27th, 2025.
Budget, tax & economy
From 1 July 2025, only cars using 3.5 litres of fuel per 100 kilometres or less can access the higher luxury car tax thresholdThe price cutoff above which a car becomes subject to luxury car tax; this bill changes both the level and the indexation method for that cutoff. for fuel-efficient vehicles.
Tax rules left clear gaps: suspicious BASA regular tax form that businesses lodge with the ATO; the bill lets the ATO hold some BAS-linked refunds for longer while it checks them. refunds could be paid before checks, ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. interest charges were still deductible, the $20,000 write-off was due to expire, and luxury car taxA tax that applies when a car is above the luxury car threshold, with a lower or higher threshold depending on whether it is treated as fuel efficient. settings lagged. The bill tightens those tax breaks, gives the ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. 30 days to hold risky refunds, and extends the small business write-off to 30 June 2025.
A higher luxury car tax thresholdThe price cutoff above which a car becomes subject to luxury car tax; this bill changes both the level and the indexation method for that cutoff. for fuel-efficient cars had been in place since 2008, but by late 2024 the old seven-litre standard, deductible ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. interest charges, short BASA regular tax form that businesses lodge with the ATO; the bill lets the ATO hold some BAS-linked refunds for longer while it checks them. refund hold period and the looming end of the $20,000 instant asset write-offA small business tax rule that lets eligible businesses immediately deduct the cost of certain assets instead of claiming them over time. left the tax system with outdated incentives and integrity gaps. The bill responded by tightening the car threshold, ending those deductions, extending the ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill.’s refund-checking window and keeping the small business write-off alive, then passed in March 2025 ahead of key changes beginning from 1 July 2025.
The main criticism was that ending tax deductions for ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. interest charges would hit small and family businesses already under cash-flow pressure, turning a compliance penalty into a bigger financial burden. That concern was raised most clearly by the coalition and some crossbenchers, while several critics still backed the small-business write-off and anti-fraud parts of the bill.
Jones MP introduced this bill. It passed on the voices.
Did it become law?
Yes
Became law 27 Mar 2025
Final passage
Passed without a counted vote
4 recorded amendment or procedural votes were found, but no counted vote on the bill itself was recorded.
Passage speed
119 days
From introduction to the latest recorded parliamentary step
Meaning
From 1 July 2025, only cars using 3.5 litres of fuel per 100 kilometres or less can access the higher luxury car tax thresholdThe price cutoff above which a car becomes subject to luxury car tax; this bill changes both the level and the indexation method for that cutoff. for fuel-efficient vehicles.
Luxury car taxA tax that applies when a car is above the luxury car threshold, with a lower or higher threshold depending on whether it is treated as fuel efficient. on other high-value cars will start from a threshold of $80,567 in 2024-25 and then rise using motor vehicle price indexation instead of general CPIA measure of price growth used here to index the luxury car tax threshold in the current law and in the old settings..
People and businesses will no longer be able to claim a tax deduction for Australian Taxation OfficeThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. interest charges on late tax or tax shortfalls from income years starting on or after 1 July 2025.
The Australian Taxation OfficeThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. can hold BASA regular tax form that businesses lodge with the ATO; the bill lets the ATO hold some BAS-linked refunds for longer while it checks them.-linked refunds for up to 30 days before notifying a taxpayer, giving it more time to check suspicious claims and stop fraud.
Small businesses can keep using the $20,000 instant asset write-offA small business tax rule that lets eligible businesses immediately deduct the cost of certain assets instead of claiming them over time. until 30 June 2025 instead of losing access on 30 June 2024.
These amendments reduce the maximum fuel consumption for a car to be considered fuel-efficient to 3.5 litres per 100 kilometres.Treasury Laws Amendment (Tax Incentives and Integrity) explanatory memorandum
These amendments update the number used to index the LCT threshold to the index number for the motor vehicle purchase sub-group of the CPI and prescribe that the LCT threshold for the 2024-25 financial year is $80,567.Treasury Laws Amendment (Tax Incentives and Integrity) explanatory memorandum
The Government will deny deductions for Australian Taxation Office (ATO) interest charges, specifically the general interest charge (GIC) and shortfall interest charge (SIC), incurred in income years starting on or after 1 July 2025.Treasury Laws Amendment (Tax Incentives and Integrity) explanatory memorandum
The Commissioner can retain a refund relating to a BAS credit for up to 30 days whilst determining whether further verification of information is necessary. If the Commissioner does not notify the taxpayer that the refund is being retained before the end of 30 days, the refund must be released to the taxpayer.Treasury Laws Amendment (Tax Incentives and Integrity) explanatory memorandum
Omit “30 June 2024”, substitute “30 June 2025”.Treasury Laws Amendment (Tax Incentives and Integrity) as-passed bill text
Context
A higher luxury car tax thresholdThe price cutoff above which a car becomes subject to luxury car tax; this bill changes both the level and the indexation method for that cutoff. for fuel-efficient cars had been in place since 2008, but by late 2024 the old seven-litre standard, deductible ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. interest charges, short BASA regular tax form that businesses lodge with the ATO; the bill lets the ATO hold some BAS-linked refunds for longer while it checks them. refund hold period and the looming end of the $20,000 instant asset write-offA small business tax rule that lets eligible businesses immediately deduct the cost of certain assets instead of claiming them over time. left the tax system with outdated incentives and integrity gaps. The bill responded by tightening the car threshold, ending those deductions, extending the ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill.’s refund-checking window and keeping the small business write-off alive, then passed in March 2025 ahead of key changes beginning from 1 July 2025.
Higher luxury car tax thresholdThe price cutoff above which a car becomes subject to luxury car tax; this bill changes both the level and the indexation method for that cutoff. is tied to a 7L per 100km standard
Hansard records that Labor and the Greens set the higher luxury car tax thresholdThe price cutoff above which a car becomes subject to luxury car tax; this bill changes both the level and the indexation method for that cutoff. for fuel-efficient cars in 2008 using a seven-litre-per-100-kilometre benchmark.
Hansard ↗Government introduces a bill to tighten tax breaks and integrity rules
The minister said the bill would push cleaner vehicle choices while stopping the tax system from rewarding people who were doing the wrong thing.
Hansard ↗House debate sets out the bill’s four-part response
Speakers described the bill as lowering the fuel-efficiency threshold, removing deductions for ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. interest charges, extending the BASA regular tax form that businesses lodge with the ATO; the bill lets the ATO hold some BAS-linked refunds for longer while it checks them. refund retention period and adding the small business instant asset write-offA small business tax rule that lets eligible businesses immediately deduct the cost of certain assets instead of claiming them over time. extension by amendment.
Hansard ↗Parliament passes the bill
Both houses passed the bill in the same form, completing its parliamentary passage and locking in the package of tax incentive and integrity changes.
Parliamentary timeline ↗Royal AssentThe final approval that makes the bill law so its changes can take effect on the dates set out in the Act. turns the bill into law
Royal AssentThe final approval that makes the bill law so its changes can take effect on the dates set out in the Act. converted the bill into an Act so its vehicle tax, deduction, refund-hold and small business write-off changes could take effect.
Parliamentary timeline ↗New tax settings begin from the 2025-26 income yearThe tax year a deduction or rule applies to; several changes in this bill start from income years beginning on or after 1 July 2025.
From 1 July 2025 the tighter 3.5L per 100km car test, the end of deductions for ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. interest charges and the longer BASA regular tax form that businesses lodge with the ATO; the bill lets the ATO hold some BAS-linked refunds for longer while it checks them. refund hold period begin, while the $20,000 instant asset write-offA small business tax rule that lets eligible businesses immediately deduct the cost of certain assets instead of claiming them over time. remains available until 30 June 2025.
Explanatory memorandum and bill summary ↗Legislative route
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
Referred to Committee (28/11/2024): Senate Economics Legislation Committee; Committee report (30/01/2025)
Referred to committee
APH bill page notesThe bill reached this recorded parliamentary step.
The bill reached this recorded parliamentary step.
Referred to Federation Chamber
The bill reached this recorded parliamentary step.
The bill reached this recorded parliamentary step.
Reported from Federation Chamber
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber considered amendments before the bill moved to the next stage.
Consideration in detail debate
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Second reading agreed to
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Third reading agreed to
Both houses passed the bill in the same form, completing parliamentary passage.
Finally passed both Houses
The Governor-General gave Royal AssentThe final approval that makes the bill law so its changes can take effect on the dates set out in the Act., turning the bill into an Act.
Key criticism
The main criticism was that ending tax deductions for ATOThe tax agency that collects tax, checks refund claims and applies the interest charges discussed in the bill. interest charges would hit small and family businesses already under cash-flow pressure, turning a compliance penalty into a bigger financial burden. That concern was raised most clearly by the coalition and some crossbenchers, while several critics still backed the small-business write-off and anti-fraud parts of the bill.
Criticism was real but mostly focused on selected schedules rather than the whole bill’s aims.
ATO interest change may hit small business hardest
Critics argued that stopping deductions for general interest chargeInterest charged on unpaid tax debts; under this bill people and businesses can no longer deduct it. and shortfall interest chargeInterest charged when too little tax was paid because of a tax shortfall; the bill removes the deduction for it. would increase costs for small and family businesses that fall behind on tax, even when they are already struggling with cash flow.
Some measures were described as tax grabs or extra red tape
Opponents said parts of the bill outside the instant asset write-offA small business tax rule that lets eligible businesses immediately deduct the cost of certain assets instead of claiming them over time. and BASA regular tax form that businesses lodge with the ATO; the bill lets the ATO hold some BAS-linked refunds for longer while it checks them. fraud checks would add compliance burden, raise costs for business and use a package of popular measures to push through weaker policy choices.
Further sources
Votes
The bill passed both chambers on the voices. The counted divisions below were about amendments or procedure, not final passage.
House agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Senate agreed to the bill's third reading on the voices, so there is no list of individual Aye and No votes for final passage in that chamber.
Passed on the voices
In a voice vote, members call out Aye or No and the presiding officer judges which side has it. Individual names are only recorded if a formal division is called.
Amendments grouped by chamber. These cards include amendment outcomes recorded without a counted division.
House
Defeated 50 to 81. Support came from Liberal Party and Nationals. Opposition came from Labor, Greens, and minor parties and independents. Minor-party and independent votes were split.
The House rejected the opposition's second-reading statement and kept the bill moving toward passage without that political note.
Defeated 59 to 75. Support came from Liberal Party, Nationals, Greens, and minor parties and independents. Opposition came from Labor. Minor-party and independent votes were split.
The House rejected the opposition's alternative package and left the government's schedule 2 and write-off amendment intact.
Defeated 15 to 53. Support came from Greens, Centre Alliance, and minor parties and independents. Opposition came from Labor and Nationals. Minor-party and independent votes were split.
The House rejected the crossbench proposal for a larger and longer-lasting instant asset write-offA small business tax rule that lets eligible businesses immediately deduct the cost of certain assets instead of claiming them over time. and kept the government's narrower package.
Defeated 59 to 77. Support came from Liberal Party, Nationals, Centre Alliance, and minor parties and independents. Opposition came from Labor and Greens. Minor-party and independent votes were split.
The House rejected the attempt to preserve interest deductions for those tax charges and kept schedule 2 in the bill.
The House agreed on voices to government amendments adding Schedule 4, which extended the $20,000 instant asset write-offA small business tax rule that lets eligible businesses immediately deduct the cost of certain assets instead of claiming them over time. for small business entities.
Carried on voices
The chamber decided this amendment without a counted division, so there is no list of individual Aye and No votes.
These are amendment votes, not the final passage vote on the bill itself. The bill passed both chambers on the voices.
The parliamentary record also shows 2 Government amendments agreed without a counted division.
Parliamentary debate
Start here — lead voices
Mr Jones supports the bill and urges the House to pass it.
Read in Hansard ↗Terry Young opposes the bill as drafted, arguing it hurts small businesses, punishes ordinary taxpayers and forces EV policy on Australians, while the coalition will seek amendments to remove or soften the worst parts.
Read in Hansard ↗Tink says she will back the bill overall, because its benefits outweigh the downsides, but she says it is an ugly and unambitious package.
Read in Hansard ↗Steggall supports the bill overall, especially the tax integrity measures and the instant asset write-offA small business tax rule that lets eligible businesses immediately deduct the cost of certain assets instead of claiming them over time. extension, but says it still leaves loopholes in place and needs changes to better help small business.
Read in Hansard ↗All speeches by bloc
3 speakers · 1 oppose · 2 mixed
“We will move an amendment to increase the instant asset tax write-off and to make it permanent, not just for 12 months. It gets worse: they're offering 20 grand and they want to do it for a year, not four years. They want to do free TAFE forever, but they can't even give small businesses a $20,000 instant asset tax write-off forever. They are giving them one year. That's it. That's all they want to do. Well, the coalition are friends of small business. Do you why? Because they employ people and they're hurting under you mob. So we will support the instant asset tax write-off and support the BAS refund, but I can tell you that this government is not doing Australians any favours. Australians listening know how much they're hurting.”Read the full speech in Hansard ↗
“Schedule 4 of the bill extends the $20,000 instant asset write-off by 12 months until 30 June 2025. Labor's proposal would limit the instant asset write-off to $20,000 and only provide an initial 12-month extension. Why don't they just put it into perpetuity? I know it's rolled out every budget just to make the government of the day look good, but we had an unlimited instant asset write-off when we were in government. It got more business happening. It was an incentive to businesses. This mob just want to limit it to $20,000—miserable creatures that they are!”Read the full speech in Hansard ↗
“This is an indiscriminate measure that fails to address situations where taxpayers have historically done the right thing or have, through no fault of their own, accrued these charges due to legitimate tax disputes or administrative delays. In the explanatory memorandum, the government points to the ability of a taxpayer to apply for remission of an interest charge—that is, to ask for it to be waived. But stakeholders report the measure comes at a time of long delays in ATO service delivery and inconsistent outcomes on remission requests. Disputing decisions is already time consuming and costly and will become more costly with the risk of non-deductibility if a remission request is denied. These delays from the ATO will now cost taxpayers even more. This government's decision to introduce this measure despite widespread criticism shows that the business community should have no confidence that this government can consult and no confidence this government listens.”Read the full speech in Hansard ↗
1 speaker · 1 support
“These two changes make the rest of the bill worth supporting because these are not measures that any coalition government, with their affection for higher pollution and economic inequality, would ever pursue.”Read the full speech in Hansard ↗
3 speakers · 2 support · 1 oppose
“It couples some pretty ordinary reforms in a way that makes it hard to vote against them, as the overall potential upside probably outweighs the potential downside. But it's still ugly.”Read the full speech in Hansard ↗
“Whilst overall I support this legislation, I will be moving amendments to support small businesses in consideration in detail, and I urge the government to close the loopholes in the luxury car tax and get on with incentivising clean, net zero transport. Don't keep room for dirty combustion engines that do nothing to decarbonise Australia.”Read the full speech in Hansard ↗
“But it is the second part of this bill, the chapter that removes deductions for interest charges on GIC and SIC, that is highly problematic. I see this as an unnecessary change that will remove the ability of businesses to deduct their general interest charge and their shortfall interest charge. By Treasury's own admission, this will overwhelmingly impact small businesses that are already doing it tough. This chapter of the bill has been panned by accountant groups and small businesses alike.”Read the full speech in Hansard ↗
1 speaker · 1 support
“I commend the bill to the House. Full details of the measure are contained in the explanatory memorandum.”Read the full speech in Hansard ↗
Record
House · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
House · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
House · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
House · Referred to Federation Chamber
Referred to Federation Chamber
The bill reached this recorded parliamentary step.
House · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
House · Reported from Federation Chamber
Reported from Federation Chamber
The bill reached this recorded parliamentary step.
House · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
House · Consideration in detail: amendments considered
Amendment packages agreed
The chamber considered amendments before the bill moved to the next stage.
House · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Senate · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Senate · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Senate · Second reading agreed to
Second reading agreed
The chamber agreed to the bill at second reading, meaning it accepted the bill in principle and allowed it to continue.
Senate · Third reading agreed to
Third reading agreed
The chamber agreed to the bill at third reading, which completed passage through that chamber.
Parliament · Finally passed both Houses
Passed both houses
Both houses passed the bill in the same form, completing parliamentary passage.
Assent · Assent
Assent
The Governor-General gave Royal AssentThe final approval that makes the bill law so its changes can take effect on the dates set out in the Act., turning the bill into an Act.
Senate Economics Legislation Committee; Committee report (30/01/2025)
Referred to committee
Referred to Committee (28 Nov 2024): Senate Economics Legislation Committee; Committee report (30 Jan 2025)
APH bill page notes
