The Federal Treasurer, Dr Jim Chalmers, handed down the 2025–26 Federal Budget on 25 March 2025.
Guided by five priorities, including helping with the cost-of-living, building more homes and investing in education, the Budget includes two new personal tax cuts for all Australian individual taxpayers, increased Medicare levy thresholds, a ban on foreign individuals buying existing homes and a proposed reduction to student debts.
Described by the Treasurer as a “plan for a new generation of prosperity in a new world of uncertainty”, the Budget did not include any new measures affecting the taxation or regulation of superannuation or new income tax measures affecting small businesses.
Being the government’s last Budget before the expected federal election, the start dates of a number of previously announced but unenacted tax measures have been deferred until amending legislation is enacted.
The tax and tax-related highlights are set out as follows. While this Budget provides an indication of some measures that may be pursued post-election, in reality, they all hang in the balance until a new government is formed and its priorities are laid down.
Small Business
- There were no new measures for small business other than the Government’s commitment to deliver the previously announced measure to temporarily extend to 30 June 2025 the $20,000 instant asset write off threshold. This Bill is currently before the House of Representatives and, unless enacted the instant asset threshold for this 2025 financial year will revert to $1,000. There was no announcement of what lies beyond 30 June 2025 for this small business measure.
Individuals
- The marginal tax rate for the personal income tax threshold bracket from $18,201 to $45,000 will be reduced from 16% to 15% from 1 July 2026, and further reduced to 14% from 1 July 2027.
- The Medicare levy low‑income thresholds for singles, families, and seniors and pensioners will be increased from 1 July 2024.
- Student loan debts will be cut by 20% and other reforms will be made to the student loan repayment system from 1 July 2025.
- The start date of the 2024–25 Budget measure to strengthen the foreign resident CGT regime will be deferred from 1 July 2025 to the later of 1 October 2025 or the first 1 January, 1 April, 1 July or 1 October after assent.
- Foreign ownership of housing will be restricted.
Tax administration
- Rules on managed investment trusts will be amended to ensure legitimate investors can continue to access concessional withholding tax rates from 13 March 2025.
- The start date of the 2023–24 Budget measure to extend the clean building managed investment trust withholding tax concession will be deferred from 1 July 2025 to 1 January, 1 April, 1 July or 1 October after assent.
- The ATO will be given $999M funding over 4 years to extend and expand its tax compliance activities.
Indirect taxes
- Indexation on draught beer excise and excise equivalent customs duty rates will be paused for a 2‑year period from August 2025.
- The excise remission cap is proposed to be increased from $350,000 to $400,000 each financial year for all eligible alcohol manufacturers from 1 July 2026. The Wine Equalisation Tax producer rebate would similarly increase from $350,000 to $400,000 each financial year from 1 July 2026.
Full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.
To discuss how these Budget measures impact you or your business, please contact your Allan Hall Advisor.