Key Initiatives for Business and Individuals
Jim Chalmers’ 4th budget has been delivered in the lead up to the federal election. With some major spending measures announced, and the budget plunging into deficit over the next few years, the Government aims to juggle the realities of a return to deficit with the need to deliver cost-of-living relief to Australians. In an effort to increase tax compliance, the ATO is again receiving large amounts of extra funding to bolster their task forces across all focus areas. We have outlined below some of the key initiatives outlined in the budget for businesses and individuals.
Personal income tax cuts
From 1 July 2026, the Government proposed further tax cuts to assist with cost-of-living pressures and mitigate bracket creep.
The tax cuts will be delivered by lowering the marginal tax rate for taxable income between $18,201 to $45,000. Currently at 16% for the 2024-25 and 2025-26 income years, this rate will reduce to 15% for the 2026-27 income year, and 14% for the 2027-28 and future income years.
Medicare levy thresholds increased for low-income earners
The Medicare levy low-income threshold will increase from 1 July 2024 for singles, families, seniors and pensioners.
More than 1 million Australians on lower incomes will continue to be exempt from the Medicare levy or continue to pay a reduced levy rate, under this cost‑of‑living measure.
Reducing student HELP debt
A reduction to outstanding Higher Education Loan Program (HELP) and other student debts by 20% has been announced, subject to the passage of legislation. This is in addition to the previous reforms to indexation which limit future indexation and retrospectively reducing the indexation applied in the 2023 and 2024 years.
The Government will also increase the repayment income threshold of $54,435 in 2024/25 to $67,000 in 2025/26.
Funding to enforce foreign ownership restrictions on housing
Foreign persons (including temporary residents and foreign-owned companies) will be temporarily banned from 1 April 2025 for two years from purchasing established dwellings in Australia, unless an exception applies.
Housing support measures
The Government has announced several housing support measures intended to make it easier for Australians to buy and rent a home. A few key initiatives include:
─ A national plan to build 1.2 million new homes over the next five years
─ Investing $54 million to accelerate the uptake of modern prefabricated and modular construction methods
─ The ‘Help To Buy’ scheme will be extended by providing an equity contribution of up to 40% for new homes, and 30% for existing homes, to support households buy a home with a lower deposit and smaller mortgage
─ Providing increased incentive payments of $10,000 to eligible housing construction apprentices from 1 July 2025 in a bid to increase the construction workforce
No extension to the small business $20,000 instant asset write off
Last year’s Federal Budget announced an extension of the $20,000 instant asset write off for small businesses until 30 June 2025. This measure is yet to be legislated.
The Government has not announced a further extension of the instant asset write off in the 2025-26 Budget. Accordingly, the instant asset write off will revert back to its $1,000 limit from 1 July 2025.
Enhanced funding for ATO compliance programs
The Government has announced that it will provide the ATO with almost $1bn over four years to strengthen the fairness and sustainability of Australia’s tax system.
The funding will go toward extending and expanding existing ATO audit and compliance programs, including the Tax Avoidance Taskforce, which supports the ATO’s scrutiny of tax compliance for large taxpayers, as well as programs that target the shadow economy, prevent and correct non-compliance activities, and ensure the timely payment of tax and superannuation liabilities by medium and large businesses and wealthy groups.
The significant increase in funding for the ATO programs across all taxpayer populations and risk areas will result in increased audit and compliance activity and scrutiny of taxpayer lodgements.
Banning of non-complete clauses
The Government has announced the next tranche of its competition reforms will include banning non-compete clauses for workers earning less than the high-income threshold in the Fair Work Act (currently $175,000).
Payday superannuation is coming
From 1 July 2026, Government intends to proceed with introducing major reforms to the Superannuation Guarantee regime, requiring employers to align payment of an employee’s Superannuation Guarantee contributions within seven days of paying the employee’s salary and wages.
Superannuation Guarantee increase to 12%
The Superannuation Guarantee rate is set to increase from the current 11.5% to 12% from 1 July 2025 onwards.
This is the final increase to the Superannuation Guarantee rate based on previous legislation.