Let me cut to the chase… there’s not much in this budget for business owners!

The Federal Budget is normally released on the first Tuesday of May each year. They brought this one forward to March [I assume for political and election reasons], but to be honest, I don’t know why they bothered.

We shared recently some of the items we ‘wanted’ to see in the budget, knowing there was a very slim chance they would even be on the agenda. [You can watch our wishlist video here] NONE of these have been addressed.

Although there’s nothing much to get excited about in this budget, these are the bits that are good to know:

 

1. very minor tax cuts

 

‘Tax cuts for everyone’ sounds exciting, but let’s not get carried away.

  • From 1 July 2026, the 16% tax rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15%
  • From 1 July 2027, this tax rate will be reduced further to 14 per cent

To be clear, there are no new tax cuts until 1 July 2026, and this amount will be a measly $268 per annum for FY26/27 and a further $268 per annum for FY27/28.

That is $5 per week – not even enough to buy my morning  long black!

Although it’s not known as a ‘tax’ as such, there are also some changes to the thresholds for the 2% Medicare Levy. The threshold from which someone pays the full 2% Medicare Levy is proposed to increase from $32,500 for a single person to $34,027 in 2024/25. That amounts to $30 per annum!

 

2. ban on non-compete clauses for certain employees

 

Employers will no longer be able to get a non-compete clause in the employment contracts of their team. The ban will apply to workers earning less than the high-income threshold in the Fair Work Act [currently $175,000].

It’s understood this measure is to make it easier for employees to change employers.  Great for employees. Not so great for employers, especially when the supply of good quality team members is already limited.  I worry about the impact of this measure on wages and the flow-on impact on inflation.

 

3. more funding for the ATO

 

I would suggest we should not expect any reduction in the aggressive tactics we are currently seeing the ATO take.

 

4. no extension of instant asset write-off

 

There does not appear to be any plans to extend the instant asset write-off past 30 June 2025. That said, the proposal [announced in last year’s budget] for the instant asset write-off for businesses with less than $10m turnover for purchase of up to $20,000, still has not been passed by the government.

 

5. nothing on super [guess that’s a good thing in some ways]

 

There was literally nothing in the budget on superannuation. Notably nothing on the proposed Div 296 regime for super balances above $3m – so the uncertainty continues.

We assume the next increase in the Super Guarantee Rate will continue with the already legislated increase to 12% on 1 July 2025.

 

6. extension of government energy rebates

 

The rebate that was introduced last year of $75 per quarter has been extended for another 2 quarters to 31 December 2025.

Again, I cannot get excited about this. Although I do get concerned about the inflationary impact when it does come off.

 

7. further expansion of schemes to improve the supply of housing

 

The ‘Help to Buy Home’ scheme has been expanded with an increased income cap and property price cap.

A ban on foreign persons from purchasing established dwellings from 1 April 2025 to 31 March 2027 [previously announced]. There are some exceptions to this rule, but essentially, this is trying to shore up the housing supply.

Changes in the licencing rules for electricians to enable them to work across different states.

 

8. more support for apprenticeships and fee-free TAFE

 

I believe most of the budget initiatives have been previously announced but continue to focus on making it easier for the construction industry to build the housing we need.

 

9. 20% discount on HELP student loans

 

Students will receive a discount on the balance of their HELP debts as at 1 June 2025 before the annual indexation is applied.

 

10. some great family support measures

 

Big changes proposed to early childhood with a 3-day guarantee to replace the Child Care Subsidy activity test from January 2026.

 

11. government debt growing

 

Underlying cash balances beyond 2024/25 to dive, with no apparent plan to stop the leakage.  Of course, that means debt keeps growing, too.

Source: Budget 2025-26: Budget Overview

 

I would go so far as suggesting that the only way this cash shortage does not blow out even further is due to ‘bracket creep’ within the income tax system, as a result of no indexation of tax brackets.

 

12. beer excise indexation paused

 

Yes, you read that correctly! I thought I would conclude this budget summary on a high note!  The government will pause indexation on draught beer excise until August 2027 [yay]!

 

what is NOT included in the 2025 budget:

 

Probably the more notable observations on this budget are around what’s not included:

  1. Nothing on superannuation and no word on the proposed Div 296 changes for accounts with more than $3m
  2. No extension of instant asset write-off [and we haven’t even got the one they proposed last year legislated yet]
  3. No detailed plan to address the increasing debt balances and shortfall in cash balances [a business owner cannot spend more than they earn so how does that work for the government?]
  4. No indexation of tax brackets [so an inherent tax increase over the coming years]
  5. No real tax reform and no guidance of key tax uncertainties like Bendels case
  6. Nothing on stemming the reliance of our growth on migration or the impact on housing
  7. Nothing on improving productivity [one of the growing challenges within the economy] but a stated reliance on the private sector to drive growth
  8. Very little [if anything] for business owners.

 

we’re here to help!

 

If you have any questions about the budget or need to look at the future of your business in light of the forecast economic conditions, please reach out to your usual advisor at businessDEPOT, give us a buzz on 1300 BDEPOT or  contact me directly.

 

want more from us?

If you like this information and want to get more tips and tricks delivered straight to your inbox, you can sign up for our mailing list below.