The 2025–26 Federal Budget has landed, with the government continuing its focus on easing cost-of-living pressures, strengthening small business support, and tightening integrity across the tax system. Most changes kick in from 1 July 2025, aligning with the new financial year. However, some measures—like energy bill relief—apply sooner. Now is the time to prepare so you’re ahead of the curve. At Zweck, we’ve reviewed the budget in detail and summarised the key measures for you.

For Households

1. Stage 3 Personal Income Tax Cuts – Revised but Going Ahead

• The 19% rate will be reduced to 16%
• The 32.5% rate will drop to 30% for incomes between $45,000 and $135,000
• Higher thresholds will apply for the 37% and 45% brackets

These adjustments mean more disposable income for most workers. Whether you’re saving, investing, or just covering everyday expenses, the tax cuts will put more money back into your pay packet from 1 July 2025.

2. Medicare Levy Thresholds Increased

Thresholds have been raised to reflect wage growth, exempting more low and middle-income earners from the 2% Medicare levy.

3. $300 Energy Bill Rebate for Every Household

Every household in Australia will receive a $300 electricity rebate, applied automatically in quarterly installments through energy retailers. This is a universal rebate—not means-tested—and is designed to ease the pressure from rising energy costs, especially during peak usage months.

For Small Businesses

1. $20,000 Instant Asset Write-Off Extended

The government has proposed extending the $20,000 asset write-off to 30 June 2025 for small businesses. This measure is still before Parliament and hasn’t yet been passed into law.  It applies to each individual asset used or installed by 30 June 2026.

2. Energy Bill Relief Fund

From 1 July to 31 December 2025, eligible households and small businesses will receive $75 per quarter off their electricity bills from 1 July to 31 December—totalling $150 per household.

3.  Funding for Cybersecurity and Digital Capability

New funding to help small businesses strengthen cybersecurity and upgrade digital systems. With cyber threats on the rise, these incentives help businesses future-proof their operations and remain competitive in a digital economy.

• Help businesses invest in security upgrades like multi-factor authentication, secure cloud storage, and data protection tools
• Provide access to cyber health checks and advisory services to assess risks and improve resilience
• Support the adoption of digital technologies, including e-invoicing, cloud software, customer management platforms, and online services
• Improve online visibility and customer engagement through digital capability programs

Other Changes Worth Knowing

Tightening of Foreign Resident CGT Rules

Expanding and clarifying Capital Gains Tax (CGT) rules for foreign residents in the 2025–26 Budget. The proposed reforms aim to:

• Close existing loopholes that allow foreign investors to avoid CGT on Australian assets
• Clarify the definition of “taxable Australian property”, ensuring a more consistent application of the rules
• Ensure that foreign investors pay their fair share of tax when disposing of Australian real estate and other relevant interests

These changes ensure that CGT rules are applied more effectively to cross-border transactions. If you have overseas interests or clients who do, these changes may influence decisions around property sales, structuring, and timing.

Managed Investment Trust (MIT) Reform

The Government has announced it will review and tighten tax concessions for Managed Investment Trusts (MITs), with a focus on limiting access for foreign investors. The focus is on tightening eligibility and preventing business income from being misclassified as passive income. This could affect investment structures and distributions for some trusts. It’s important to review trust arrangements before EOFY.

Compliance and Regulatory Updates

ATO Integrity Measures

The ATO will receive additional funding to strengthen tax system integrity, with a focus on:

• Expanding the Tax Avoidance Taskforce to target high-wealth individuals and complex tax schemes
• Boosting GST compliance, including identifying under-reporting and fraud
• Increasing audits of high-risk claims like work-related deductions, rental expenses, and R&D incentives

Regulation of Tax Practitioners

The Government will provide additional funding to the Tax Practitioners Board (TPB) to strengthen regulation and enforce professional and ethical standards across the tax profession. With greater enforcement on the horizon, it’s crucial to work with qualified, transparent, and proactive advisors—like Zweck—to keep your affairs in order.

Need Help Navigating the Changes?

With an election around the corner, much depends on the outcome and direction of the next government. While temporary relief and targeted compliance funding dominate the announcements, deeper tax system reform remains absent. If you have questions about how these announcements affect your personal or business tax planning, please get in touch with our office. We’re here to help you navigate this uncertain landscape with clarity and confidence.

Contact us now to organise a consultation so you’re ready for 1 July and beyond.

The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024.

Described as a “responsible Budget that helps people under pressure today”, the Treasurer has forecast a second consecutive surplus of $9.3 billion. As reflected in the Budget, the government’s main priorities are helping with the cost of living, building more housing, investing in skills and education, strengthening Medicare and responsible economic management to help fight inflation.

The key tax measures announced in the Budget include extending the $20,000 instant asset write-off for eligible businesses by 12 months until 30 June 2025, introducing tax incentives for hydrogen production and critical minerals production, strengthening foreign resident CGT rules and penalising multinationals that seek to avoid paying Australian royalty withholding tax.

The Budget also includes various amendments to previously announced measures, as well as several income tax measures that have already been enacted before the Budget announcement, including:

• The revised stage 3 personal income tax cuts (enacted by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 (Act No 3 of 2024)).
• Medicare levy and surcharge threshold changes (enacted by the Treasury Laws Amendment (Cost of Living—Medicare Levy) Act 2024 (Act No 4 of 2024)).
• A specific exemption for Australian plantation forestry entities from the new earnings-based rules introduced as part of thin capitalisation reforms (enacted by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Act 2024 (Act No 23 of 2024)).

These enacted measures have not been discussed in detail in this report.

The government anticipates that the tax measures proposed will collectively improve the Budget position by $3.1 billion over a five-year period to 2027–28.

The full Budget papers and the Treasury ministers’ media releases  are available online.

The tax, superannuation and social security highlights are set out below.

Income Tax

• The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.
• The foreign resident CGT regime will be strengthened for CGT events commencing on or after 1 July 2025.
• A critical minerals production tax incentive will be available from 2027–28 to 2040–41 to support downstream refining and processing of critical minerals.
• A hydrogen production tax incentive will be available to producers of renewable hydrogen from 2027–28 to 2040–41.
• The minimum content length requirements and the above-the-line cap of 20% for total qualifying production expenditure for the producer tax offset will be removed.
• A new penalty will be introduced from 1 July 2026 for taxpayers with more than $1 billion in annual global turnover found to have mischaracterised or undervalued royalty payments.
• The Labor government’s 2022–23 Budget measure to deny deductions for payments relating to intangibles held in low- or no-tax jurisdictions is being discontinued.
• The start date of a 2023–24 Budget measure to expand the scope of the Pt IVA general anti-avoidance rule will be deferred to income years commencing on or after assent of enabling legislation.
• Income tax exemptions for World Rugby and related entities for income derived in relation to the Rugby World Cup 2027 (men’s) and Rugby World Cup 2029 (women’s).
• The deductible gift recipients list is to be updated.

Social Security

• Social security deeming rates will be frozen at their current levels for a further 12 months until 30 June 2025.
• Carer payment recipients will have greater flexibility with their participation requirements.
• Eligibility for the higher rate of Jobseeker payment will be extended to single recipients who can partially work zero to 14 hours per week.
• The maximum rates of the Commonwealth Rent Assistance will increase by 10% from 20 September 2024.
• Funding will be provided to implement a social security means test treatment for military invalidity payments affected by the Full Federal Court’s decision of FC of T v Douglas 2020 ATC ¶20-773; [2020] FCAFC 220.
• Funding will be provided to enable Australia to enter into a bilateral social security agreement with Uruguay.
• Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee.

Superannuation

• Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025.
• The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.

Tax Administration

• The ATO will be given statutory discretion not to use a taxpayer’s refund to offset old tax debts on hold.
• Effective 1 June 2023, the indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index.
• The Department of Home Affairs and the ATO will conduct a pilot program for matching the income and employment data of migrant workers.
• A new ATO compliance taskforce will be established to recover tax revenue lost to fraud while existing compliance programs will be extended.
• The ATO will have additional time to notify a taxpayer if it intends to retain a business activity statement refund for further investigation.
• The 2019–20 Budget measure “Black Economy — Strengthening the Australian Business Number system” will not proceed.

GST

• Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme.

Excise and Customs Duty

• Tariffs identified as a nuisance across a range of imported goods will be removed from 1 July 2024.
• The start dates for certain components of a measure to streamline excise administration for fuel and alcohol announced in the Coalition government’s 2022–23 Budget will be deferred.

Get in touch to discuss how the Budget announcements impact you.