1. Personal income tax measures

New tax cuts for individual taxpayers in 2027 & 2028

The Government will deliver new tax cuts to individual taxpayers commencing from 1 July 2026 (i.e., from the 2027 income year). Under the new tax cuts, it is proposed that:

• the (current) 16% tax rate will be reduced to 15% from 1 July 2026; and
• the 15% tax rate will be further reduced to 14% from 1 July 2027.

The personal income tax rates (excluding the Medicare levy) for the 2025 and 2026 income years are set out in the following table, along with the proposed changes to the tax rates for the 2027 and 2028 income years:

By way of example, a taxpayer earning between $18,201 and $45,000 will get a tax cut of up to $268 in the 2027 income year and up to $536 from the 2028 income year.

Increased Medicare levy low-income thresholds

The Government will increase the Medicare levy low-income threshold amounts and phase-in ranges for single individuals, families and seniors and pensioners that apply from 1 July 2024 to provide cost-of-living relief, as set out in the table below.

The increase to the thresholds ensures that low-income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate.

The Medicare levy low-income thresholds for single individuals and families for the 2025 income year, together with the comparative thresholds for the 2024 income year, will be as follows:

For each dependent child or student, the family income thresholds will increase by a further $4,216 (up from $4,027).

2. Non-tax related budget measures of interest

Making student loans fairer

As previously announced by the Prime Minister on 3 November 2024, the Government will reduce all outstanding Higher Education Loan Program (‘HELP’) and other student debts by 20%, subject to the passage of legislation. The 20% reduction is in addition to the recent indexation reforms.

The Government is also increasing the amount that people can earn before they are required to start paying back their loans, from $54,435 in the 2025 income year to $67,000 in the 2026 income year.

Energy bill relief

The Government is extending energy bill relief by providing eligible households and small businesses with two $75 bill rebates directly off their electricity bills until 31 December 2025.

Expansion to Help to Buy scheme for first home buyers

Under the Help to Buy scheme, the Government will provide an equity contribution of up to 40% to support eligible home buyers to purchase a home with a lower deposit and a smaller mortgage.

The Government will boost the scheme by increasing income caps from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents.

Property price caps will also be increased and linked with the average house price in each state and territory, rather than dwelling price.

Restricting Foreign Ownership of Housing

The Government will take action to ensure foreign investment in housing supports the Government’s broader agenda to boost Australia’s housing supply in the following ways:

• Banning foreign persons (including temporary residents and foreign-owned companies) from purchasing established dwellings for two years from 1 April 2025, unless an exception applies.
• Exceptions to the ban will include investments that significantly increase housing supply or support the availability of housing on a commercial scale, and purchases by foreign-owned companies to provide housing for workers in certain circumstances.
• An enhanced compliance approach by the ATO and Treasury to target land banking will ensure foreign investors comply with requirements to put vacant land to use for residential and commercial developments within reasonable timeframes.

National Anti-Scam Centre

The Government will provide $6.7 million in the 2026 income year to extend the operation of the National Anti-Scam Centre.

Operating within the Australian Competition and Consumer Commission, the Centre will continue to protect consumers and businesses from scam activity.

Support for the Hospitality Sector and Alcohol Producers

The Government will increase support for hospitality venues, brewers, distillers and wine producers through changes to the alcohol tax settings in Australia.

The Government will pause indexation on draught beer excise and excise equivalent customs duty rates for a two-year period, from August 2025.

Under this measure, biannual indexation of draught beer excise and excise equivalent customs duty rates applicable from August 2025 to February 2027 will not occur. Biannual indexation will then recommence from August 2027.

The Government will also increase support available under the existing Excise remission scheme for manufacturers of alcoholic beverages (the ‘Remission scheme’) and Wine Equalisation Tax (‘WET’) producer rebate (‘Producer rebate’).

Currently, all eligible brewers and distillers can receive an excise remission under the Remission Scheme up to a cap of $350,000. All eligible wine producers can currently receive a WET rebate up to a cap of $350,000 under the Producer rebate. This measure will increase the caps for all eligible brewers, distillers and wine producers to $400,000 per financial year, from 1 July 2026.

Banning non-compete clauses for low and middle income workers

The Government will ban non-compete clauses that apply to workers earning less than the high-income threshold in the Fair Work Act (currently $175,000). The Government will also close loopholes in competition law that currently allow businesses to:

• fix wages by making anti-competitive arrangements that cap workers’ pay and conditions, without the knowledge and agreement of affected workers; and
• use ‘no-poach’ clauses to block staff from being hired by competitors.

Our clients who have recently adopted the document automation procedures in QBO and Xero are very happy with the results!

QBO allows users to automate almost every aspect of their workflow, including bills, receipts and  invoicing along with secure storage of documents such as bank statements.  These automated features can save valuable time and reduce errors.

In Xero, setting up specific bank rules supports the automatic coding of transactions which can save time.  You can also use Hubdoc to reduce manual entry and streamline document collection, although this is not available with all subscriptions.

The accounts payable function can be further enhanced by utilising the automated bill entry function.

Xero also has the capacity to store any resource documents such as employment contracts, insurance policies, bank statements etc.

Contact our bookkeeping team or your accountant if you require assistance regarding these automation features.

Please also note if you require any further assistance with your bookkeeping needs, we have some scope in our bookkeeping team at present to assist you.

Around 3,500 small businesses with a history of non-payment, late or non-lodgement, or incorrect reporting will be moved to monthly GST reporting from April 1, 2025.

The ATO will be contacting small businesses and their tax professionals when their GST reporting cycle is changing from quarterly to monthly.

Changes to the reporting cycle will remain in place for a minimum of 12 months.

Prior to 1 January 2025, Victorian Residential Land Tax (VRLT) applied to vacant residential land in inner and middle Melbourne. However, from 1 January 2025, VRLT will be extended to now apply to residential land anywhere in Victoria that is vacant in the preceding year.

Vacant residential land is defined as property that has not been lived in for more than 6 months in the preceding calendar year. Land owners are required to notify the Commissioner of State Revenue of any vacant residential land owned by 15 January of the relevant land tax year.

Notably, this means that if you own residential land in Victoria that is vacant in 2024 then you may be liable for VRLT in 2025. Holiday homes are exempted from VRLT under certain circumstances and documentation, such as a logbook, may be required to demonstrate use of the holiday home.

Further information regarding VRLT can be found at: SRO – Vacant Residential Land.

Should you require any additional assistance regarding these changes to VRLT please contact our office.

Annual indexation update

The changes to annual indexation for study and training loans has been legislated, with indexation of the loans based on the lower value of either the Consumer Price Index (CPI) or the Wage Price Index (WPI).

This change has been backdated to indexation applied from 1 June 2023. If clients had a study loan indexed on 1 June 2023 or 1 June 2024, the credits will be processed and applied automatically.

Notably, if you’ve paid off your study loan once the credit has been applied, a refund may be generated. If this is the case, please check your bank account details are up to date with the ATO or with our office.

For additional information please follow the link: Changes to indexation

Repayment threshold and once-off reduction update

The Government also recently announced changes to the minimum repayment threshold for HELP and student loans, increasing from $54,435 in 2024-25 to $67,000 in 2025-26.

Further, HELP and other student loans will be reduced by 20%, with a one-off reduction on 1 June 2025. The Australian Tax Office (ATO) will automatically apply the reduction before indexation is applied to outstanding HELP balances.

Both changes to the minimum repayment threshold and the one-off 20% reduction require the successful passage of the legislation. We will keep you updated on their progress and advise of any action required. Should you require any further information, please access the following: Making student repayments fairer

Please be aware that some awards will have new definitions and minimum pay rates for entry-level classifications from 2025.

These changes will apply from 1 January 2025 for most awards, and from 1 April 2025 to the Horticulture Award and Pastoral Award. To find out if your award is affected, please visit: List of affected awards

In addition, a further key change includes the time limitation of introductory classifications in certain affected awards. With these introductory classifications typically only applying on temporary basis, they are now time limited and will never be longer than 6 months.

For employers and employees covered by an enterprise agreement and paid introductory rates, they will also be required to also be paid in line with the new classification rate according to the award that would otherwise apply to them.

Additional information concerning these award changes can be found at: Changes to entry level classifications in awards

One of the many responsibilities SMSF trustees have every income year is valuing their fund’s assets at market value.

The market value of an asset is the amount that a willing buyer and seller would agree to in an arm’s-length transaction.  These valuations will be used  when preparing the fund’s accounts, statements and SMSF annual return (‘SAR’).

Asset valuations will be reviewed by an approved SMSF auditor as part of the annual audit prior to lodgment of the SAR.  The auditor will check that assets have been valued correctly and assess and document whether the basis for the valuations is appropriate given the nature of the asset.

Taxpayers should ensure they have their valuations done before going to the auditor.

It is the responsibility of the SMSF trustee to provide objective and supportable evidence to their auditor for the valuation of the fund’s assets, including all relevant documents requested to prevent delays in auditing the fund.

SMSF trustees should start researching now to find what type of evidence they need to support the valuation as this can take time.  For some asset types valuations must be undertaken by a qualified independent valuer.

Please contact our office for further information and assistance.

For Businesses

Temporary Increase to the Instant Asset Write-Off

Under current law, the small business instant asset write-off threshold is (less than) $1,000 for the 2025 income year.

However, the Government has announced that it will temporarily set the instant asset write-off threshold for small business entities at (less than) $20,000 for the 2025 income year.

Small businesses with an aggregated annual turnover of less than $10 million will generally be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025. The asset threshold applies on a ‘per asset’ basis, so small businesses can instantly write off multiple assets.

Assets valued at $20,000 or more (i.e., which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.

The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2025.  From 1 July 2025, the instant asset write-off threshold will revert back to (less than) $1,000.

Relieving Energy Bill Pressures

The Government is providing direct energy bill relief for small businesses.  The Budget provides additional energy bill relief of $325 to eligible small businesses, to be paid in installments throughout 2024-25.

Building Cyber Resilience for Small Businesses

The Government is supporting small businesses to be secure online while they utilise digital opportunities, by funding the following:

• Cyber Wardens program to provide free, online training for small business owners and their staff to help drive cultural change and a cyber safe mindset in Australian small businesses.
• Small Business Cyber Resilience Service to help small businesses build their cyber resilience and provide support when affected by a cyber incident.
• Cyber Health Check online interactive tool to enable small and medium businesses to self-assess their cyber security maturity.

The Government is also developing a ransomware playbook to provide guidance on how to prepare for, respond to and recover from, a ransomware or cyber extortion incident.

For Individuals

Personal Income Tax Measures

From 1 July 2024, the revised stage three personal tax cuts effected by the Government will provide some tax relief to income earners for the 2024/25 financial year.  The following table outlines the marginal income tax rates and thresholds that apply for resident individuals from 1 July 2024, plus for comparative purposes the rates and thresholds for the 2023/24 financial year.

Australian Resident Individual Income Tax Rates

Superannuation on Paid Parental Leave

The Government has announced that it will pay superannuation on Commonwealth government-funded Paid Parental Leave for births and adoptions on or after 1 July 2025.

Eligible parents will receive an additional payment based on the Superannuation Guarantee (12% of their Paid Parental Leave payments), as a contribution to their superannuation fund.

Freezing Social Security Deeming Rates

The Government will freeze social security deeming rates at their current levels for a further 12 months until 30 June 2025 to support age pensioners and other income support recipients who rely on income from deemed financial investments, as well as their payment, to manage cost of living

pressures.

Tertiary Education System Reforms

The Government will provide funding to implement the first stage of reforms to Australia’s tertiary education system. Of note, this includes funding:

• to limit the indexation of the Higher Education Loan Program (and other student loans) debt to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023, subject to the passage of legislation; and
• to establish a new ‘Commonwealth Prac Payment’ of $319.50 per week (benchmarked to the single Austudy rate) from 1 July 2025 for tertiary students undertaking supervised mandatory placements as part of their nursing (including midwifery), teaching or social work studies.

Energy Bill Relief for Households

The Government is providing direct energy bill relief for every Australian household. From 1 July 2024, all households will receive a $300 rebate, which will be automatically applied to their electricity bills in quarterly instalments.

By paying their tax bill in full and on time, taxpayers can avoid paying the general interest charge (‘GIC’), which is currently 11.34%, and which accrues daily for any overdue debts.

The ATO advises taxpayers that, if their business is dealing with financial difficulties, there are some options to help make their tax bill “less taxing”.

Taxpayers who are struggling to pay in full or on time may be eligible to set up a payment plan.  If they owe $200,000 or less, they may be able to do this themselves using online services.  If they cannot do so, or they owe more than $200,000, they can contact the ATO to discuss their options.

Taxpayers can ask the ATO to remit their GIC.  The ATO will then consider whether the tax bill was paid late because of circumstances that were:

• beyond the taxpayer’s control, and what steps the taxpayer took to relieve the effects of those circumstances; or
• within the taxpayer’s control, but led to results that the taxpayer could not foresee.

The ATO reminds employers they need to keep on top of their payroll governance.  This includes:

• using their tax and super software to record the amounts they pay;
• withholding the right amount of tax; and
• calculating superannuation guarantee (‘SG’) correctly.

As 30 June gets closer, employers should check their reporting obligations, along with any upcoming key dates, including for:

• PAYG withholding — From 1 July, the individual income tax rate thresholds and tax tables will change, which will impact their PAYG withholding for the 2025 tax year;
• SG rate change — From 1 July, the SG rate will increase to 11.5%. Employers must pay their SG contributions by 28 July in full, on time and to the right fund; and
• Single touch payroll (‘STP’) reporting — Employers should remember to make STP finalisation declarations by 14 July for all employees the employer has paid during the financial year, and also check their employees’ year-to-date amounts are correct.