The budget the treasurer announced last night has been delivered in a period of global uncertainty, with the threat of a global trade war and tariff tensions, and also before an election is to be held.
There have been no announcements of any policy or structural changes in this budget.
Cost-of-living relief through personal income tax cuts, energy bill relief, and other measures such as reducing the cost of PBS prescription medication were at the forefront of the 2025-26 budget measures.
These measures are being financed through debt and as such the treasurer has predicted a budget deficit of $42.1bn in 2025-26 and $35.7bn in 2026-27
Inflation is expected to be 2.5% by 30 June 2025 and is expected to rise to 3% in 2025-26
Some of the important measures announced are as follows:
- 2025-26 Personal tax cuts from 1 July 2026
The Treasurer proposed to cut the personal income tax rate for the income threshold ($18,200 – $45,000) from 16% to 15% (from 1 July 2026) and 14% (from 1 July 2027) in an attempt to provide cost-of-living relief.
Under the proposed changes, every Australian taxpayer will receive a tax cut of up to $268 from 1 July 2026, rising to $536 from 1 July 2027.
2. Energy bill relief for households and businesses
The government will provide additional energy bill relief of $150 to eligible small businesses in 2025-26.
The Government says the rebates will automatically be applied to electricity bills and will be rolled out in two installments.
3. Reduction of Help debts
The measure will reduce outstanding student debts by 20% before indexation is applied on 1 June 2025 – subject to the passage of legislation –
4. Foreign resident capital gains tax regime
- The government will clarify and broaden the types of assets that are subject to CGT for foreign residents.
- Amend the point-in-time principal asset test (“PAT”) to a 365-day testing period.
- Require foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, in the approved form prior to the transaction being executed.
5.Superannuation Guarantee opt-out for high-income earners
High-income earners with multiple employers can opt out of the SG regime in respect of an employer to avoid unintentionally breaching the concessional contributions cap ($30,000 for 2024-25 and 2025-26). Therefore, the SG opt-out threshold from 1 July 2025 will be $250,000.
6.Strengthening Tax Compliance – Increased funding to ATO.
The ATO is to receive yet another significant increase in funding to enforce taxpayer compliance. Specifically, the Government will provide $999.0 million over 4 years for the ATO “to extend and expand tax compliance activities.
7. Other Measures
- Employment Contract non–compete clauses to be abolished
The Government will ban non-compete clauses for Australian workers in industries including childcare, construction, and hairdressing. The ban on non-compete clauses will apply to workers earning less than the high-income threshold in the Fair Work Act (currently $175,000).
- Foreign Ownership of Housing
The Government has already announced the ban on foreign persons (including temporary residents and foreign-owned companies) from purchasing established dwellings for 2 years from 1 April 2025, unless an exception applies.
- Increase in the cap for eligible brewers, distillers, and wine producers
This measure will increase the caps for all eligible brewers, distillers, and wine producers to $400,000 from 1 July 2026.
