The Treasurer delivered the Federal Budget on Tuesday 25 March 2025. There were a number of key tax and cost of living announcements.
It is important to note that many of the announced measures require changes to the law before they take effect. During this process, parliament may add, remove or modify any of the measures.
Tax Cuts
The Federal Government has announced that they will reduce the 16c tax rate in the $18,201-$45,000 bracket to 15c in the 2027 Tax Year and 14c in the 2028 Tax Year. This provides an extra $268 in pay packets for the 2027 Year and an extra $536 in the 2028 Year.
Estimate your tax cut: https://budget.gov.au/content/calculator.htm
Increase in Medicare Levy low-income threshold
From 1 July 2024, the Government will increase the Medicare levy low‑income thresholds by 4.7 per cent.
Source: https://budget.gov.au/
Delay to Foreign resident Capital Gains withholding regime
The Foreign resident Capital Gains withholding regime measures from last year's budget have been 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 the Act receives Royal Assent.
Instant Asset Threshold
The Small Business Instant Asset Threshold is $20,000 for the 2025 Tax year. No provision was made in the 2025-2026 Federal Budget to continue the threshold into the 2026 Year. At this stage, the Small Business Instant Asset Threshold will revert to $1,000 from I July 2025.
Energy Bill Relief for Individuals & Small Business
All households and eligible small businesses will receive two $75 rebates off their energy bills. These rebates will occur in two quarterly payments and be offset on energy bills up until 31 December 2025.
Eligibility for small business is dependent on whether the business meets their state definition of a “small customer”. The table below provides the Annual electricity consumption threshold to be considered a ‘small customer’.
Further information: https://www.energy.gov.au/energy-bill-relief-fund
20 % Student Loan Reductions
As a one-off measure, the Government will cut student debts before indexation is applied on 1 June 2025 by 20 per cent.
The following loans are included:
- any of the HELP loans, including HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP, OS-HELP
- VET Student Loans
- Australian Apprenticeship Support Loans
- Student Start-up Loans
- Student Financial Supplement Scheme
Estimate your 20% Loan Reduction: https://www.education.gov.au/help-debt-reduction-and-repayment-estimators
Limit Non-compete clauses
A Non‑compete clause in an employment contract prevents or restricts an employee from moving to a competitor. The clause may specify a period of time or geographic area.
The Government has announced that it will ban Non-compete clauses for employees earning less than the high income threshold in the Fair Work Act – currently $175,000 per year.
If you need any tax assistance or advice, please contact Cambrian Hill Accounting.