Budget Update 2025-26

Federal Budget 2025 – Key Highlights 

Treasurer Jim Chalmers handed down the Australian Federal Budget on 25 March 2025, outlining a pre-election fiscal plan with limited new reforms but several targeted measures as below. 

Tax Changes and Compliance Measures

Personal Income Tax Cuts: Future cuts to the lowest marginal income tax brackets are scheduled, with rates dropping from 16% to 15% in the 2026 / 2027 year and 14% in the 2027 /2028 year. These changes remain contingent on post-election legislation.

The proposed increase to the Medicare levy low-income threshold for singles, families and seniors will remain which raises the threshold for individuals to be exempt from paying the Medicare levy based on certain income thresholds.

ATO Compliance Funding: Nearly $1 billion is allocated to ATO compliance and audit programs, with a focus on shadow economy, multinationals and other large taxpayers activities and unpaid tax liabilities. Businesses should expect continued scrutiny.

Other Tax Measures: No major tax reforms were enacted. Several measures, including changes to foreign resident CGT and Division 7A, remain deferred.

Small Business Measures

Instant Asset Write-Off: The popular instant asset write-off for small businesses (up to $20,000 per asset) remains in place. Businesses should plan asset purchases before this deadline, as future continuity of the instant write-off remains uncertain.

Energy Bill Relief: From 1 July 2025 to 31 December 2025, households and eligible small businesses can continue to receive up to $150 off their power bills, delivered as two quarterly rebates of $75.

Excise Relief for Hospitality: Support for hospitality and brewing businesses includes a pause in draught beer excise indexation and increased rebates for brewers and distillers from 1 August 2025.

No New Small Business Taxes or Cuts: No new tax increases or broad-based tax cuts were introduced. SMEs should utilise the current incentives while awaiting post-election clarity.

Superannuation Changes

Superannuation Guarantee: The proposed increase to the Superannuation Guarantee will take effect from 1 July 2025 with the rate increasing to 12%.

Division 296 Tax: Proposed 15% tax on super earnings for balances over $3 million from 1 July 2025 remains under consultation and is unlikely to be legislated before the election.

‘Pay Day’ Superannuation: Scheduled for 1 July 2026, employers will need to remit SG contributions with each pay cycle. SMEs should begin preparing now for implementation.

Targeting of Multinationals

As part of the expanded Tax Avoidance Taskforce, the ATO has been allocated $717.8 million over four years to continue its scrutiny of multinational corporations and large businesses. This funding supports ongoing compliance activity aimed at ensuring multinationals pay their fair share of tax in Australia. It reflects the Government’s commitment to cracking down on base erosion and profit shifting, and is part of Australia’s broader alignment with OECD Pillar Two global tax reforms.

Planning Ahead in an Election Year

With many proposals hinging on the upcoming election outcome, SMEs and investors should take advantage of current, enacted incentives and maintain flexibility. Jaquillard Minns will continue to provide guidance and support as further clarity emerges.