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Federal Treasurer Dr Jim Chalmers delivered the 2025–26 Federal Budget on 25 March 2025. As the government’s final Budget before the upcoming federal election, several previously announced but unenacted tax measures have been deferred, pending legislative approval.
The Treasurer framed this Budget as a “plan for a new generation of prosperity in a new world of uncertainty.” Notably, there were no new superannuation tax changes or additional income tax measures targeting small businesses—providing some stability for investors and enterprises.
Below, we summarise the key tax implications and what they mean for you.
For small to medium businesses:
No further extension to the small business $20,000 instant asset write off
In last year’s Federal Budget, the Government proposed extending the $20,000 instant asset write-off for small businesses until 30 June 2025. However, this measure has yet to be legislated. The 2025-26 Budget does not include any further extension of the instant asset write-off. As a result, even if last year’s proposed extension is passed into law, the write-off threshold will revert to $1,000 from 1 July 2025.
Energy bill relief for Australian households
The Government will extend the cost-of-living support measure announced in last year’s Budget for an additional six months, through to the end of 2025. Eligible small businesses and Australian households may receive a $150 energy bill rebate for the September and December 2025 quarters. In most cases, the rebate will be applied automatically by electricity providers, requiring no further action from recipients.
Individuals
Personal Income Tax Cuts: What You Need to Know
Taxable income ($) | Marginal tax rate (%) for 2024-25 and 2025-26 | Marginal tax rate (%) for 2026-27 | Marginal tax rate (%) for 2027-28 |
0 - 18,200 | Nil | Nil | Nil |
18,201 - 45,000 | 16 | 15 | 14 |
45,001 - 135,000 | 30 | 30 | 30 |
135,001 - 190,000 | 37 | 37 | 37 |
Above 190,000 | 45 | 45 | 45 |
These adjustments aim to provide ongoing relief for low- and middle-income earners, ensuring greater take-home pay in future years.
Medicare Levy Low-Income Thresholds: 2024-25 Updates
In line with previous years, the Government has announced increased Medicare levy low-income thresholds effective from 1 July 2024, providing relief for eligible taxpayers.
Key Threshold Adjustments:
| 2023/24 | 2024/25 |
Singles | $26,000 | $27,222 |
Families | $43,846 | $45,907 |
Single Seniors and Pensioners | $41,089 | $43,020
|
Families (Senior and Pensioner) | $57,198 | $59,887
|
Additional Dependent Child/Student: Threshold rises by 4,216 (up from 4,027)
These changes ensure low-income earners, seniors, and families retain more of their income before becoming liable for the Medicare levy.
Major Reforms to Student Loan Repayments
The Government is reforming the student loan repayment system announcing a reduction to outstanding Higher Education Loan Program (HELP) and other student debts by 20%, 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.
Start date deferred for measure to strengthen foreign resident CGT regime
The implementation date for the 2024–25 Budget measure aimed at strengthening the foreign resident capital gains tax (CGT) regime has been postponed. Originally set for 1 July 2025, it will now take effect on the later of 1 October 2025 or the first occurrence of 1 January, 1 April, 1 July, or 1 October following the enactment of the amending legislation.
The 2024–25 Budget proposes the following changes:
Expanding and clarifying the types of assets subject to CGT for foreign residents.
Modifying the principal asset test from a point-in-time assessment to a 365-day testing period.
Requiring foreign residents selling shares or membership interests valued at more than $20 million to notify the ATO before completing the transaction. This notification process aims to enhance oversight and compliance with foreign resident CGT withholding rules, particularly in cases where vendors self-assess their sale as not involving taxable real property.
As a result, the measure's commencement has been deferred to the later of 1 October 2025 or the first 1 January, 1 April, 1 July, or 1 October after the amending legislation is enacted.
Restrictions on foreign ownership of housing
New measures will be introduced to align foreign investment in housing with the government’s broader goal of increasing Australia’s housing supply. These measures include:
A two-year ban on foreign persons purchasing established dwellings: From 1 April 2025, foreign individuals (including temporary residents and foreign-owned companies) will be prohibited from buying existing residential properties unless an exemption applies. Exemptions will be granted for investments that significantly increase housing supply, support large-scale housing availability, or involve foreign-owned companies acquiring properties to provide worker housing in specific circumstances.
Increased enforcement funding for the ATO: The Australian Taxation Office (ATO) will receive additional funding over four years from 2025–26 to ensure compliance with the ban.
Enhanced oversight of land banking by foreign investors: The ATO and Treasury will receive funding from 2025–26 to implement an audit program aimed at preventing land banking, ensuring that foreign-owned vacant land is developed for residential or commercial purposes within a reasonable timeframe.
These measures will strengthen regulatory oversight and ensure foreign investment contributes to expanding Australia’s housing stock.
Tax administration
Managed investment trust rules to be amended
The Government has announced amendments to the Managed Investment Trust (MIT) rules, effective from 13 March 2025, to ensure legitimate investors retain access to concessional withholding tax rates on fund payments.
Key Changes:
Single Widely-Held Investors: Trusts ultimately owned by a single, widely-held investor (e.g., foreign pension funds) will now qualify for MIT concessions.
Preserving Access: Genuine foreign-based, widely-held investors can continue to benefit from reduced withholding tax rates on eligible MIT distributions.
These amendments align with the ATO’s strengthened guidelines but do not limit the ATO’s ability to apply Part IVA anti-avoidance rules where "captive MIT" arrangements exhibit characteristics outlined in Taxpayer Alert TA 2025/1.
Implications for Investors:
The changes provide clarity for compliant structures while maintaining scrutiny on artificial arrangements.
Clean Building MIT Concession Deferred
The extension of the clean building MIT withholding tax concession to data centres and warehouses has been deferred. Originally set for 1 July 2025, it will now commence the first quarter after legislative approval (1 January, April, July or October).
Current Rules:
10% withholding tax applies to foreign investors in eligible commercial properties (built post-June 2012, meeting energy standards)
Deferred Expansion:
Will include qualifying data centres/warehouses (construction started after 9 May 2023)
Maintains 10% concessional rate
ATO funding to strengthen compliance activities
Tax agents
Tax practitioner regulation and compliance to be enhanced
Tax practitioner regulation will be strengthened by enhancing the Tax Practitioners Board’s (TPB) sanctions, modernizing the registration framework, and funding targeted compliance for high-risk tax practitioners over four years from 1 July 2025. These measures aim to protect taxpayers from misconduct, ensure confidence in the tax system, and support the profession by easing re-entry for tax and BAS agents after career breaks. The reforms are part of the government’s response to the PwC matter and implement recommendations from the 2019 Independent Review of the TPB. The government will consult on the implementation details before finalizing the measures.
Not-for-profits
Deductible gift recipients list to be updated
The list of specifically listed deductible gift recipients (DGRs) will be updated to include:
Community Foundations Australia Ltd, Equality Australia Ltd, Foundation Broken Hill Limited, Social Enterprise Australia Ltd, and Sydney Chevra Kadisha (for gifts received from 1 July 2025 to 30 June 2030).
St Patrick’s Cathedral Melbourne Restoration Fund (for gifts received from 1 July 2027 to 30 June 2032).
Additionally, Foundation Broken Hill Limited and the Lord Mayor’s Charitable Foundation will retain their specific DGR listing, allowing them to conduct unique charitable activities outside the standard community charity DGR category.
Indirect taxes
Freezing indexation on draught beer excise and excise equivalent customs duty rates
Indexation on draught beer excise and excise-equivalent customs duty rates will be paused for two years from August 2025. The scheduled biannual indexation in August 2025, February 2026, August 2026, and February 2027 will not occur, with indexation resuming in August 2027. The Coalition also announced on 1 March 2025 that, if elected, it would implement a similar two-year freeze on draught beer excise indexation.
From 1 July 2026, the excise remission cap for eligible alcohol manufacturers, including brewers and distillers, will increase from $350,000 to $400,000 per financial year. The Wine Equalisation Tax (WET) producer rebate will also rise from $350,000 to $400,000 annually.
Excise remission cap and WET producer rebate to increase for alcohol manufacturers
The additional 35% tariff on goods from Russia and Belarus will be extended for two more years until 24 October 2027. This measure continues to deny both countries most-favored-nation status and applies to goods that had not left for direct shipment to Australia before 25 April 2022.
Lynden Group's specialists can provide tailored advice to help you navigate these reforms. Contact our team today for personalised guidance.
🔗 Visit our website: https://www.lyndengroup.com.au
📧 Email us at: info@lyndengroup.com.au
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