26/03/2025
Is the 2025-2026 Federal Budget an Election Budget?
It has been several decades since an Australian Federal Treasurer has handed down a fourth budget within a 3 years term of parliament. Commentaries have been made in various media outlets about this being an election budget, but we will leave that up to you to make your own decision on it.
Below is a summary of the announcements made in Tuesday night’s budget, without the political spins.
Most of the measures in the Budget have already been announced prior to the Budget being handed down, with only one minor surprise announcement. It should be mentioned that the measures announced in the 2025 - 2026 Budget have yet to be passed by parliament.
Families and Individuals
The “modest” tax cut was the surprise on the night, with a cut to the tax rate on the lowest tax bracket being reduced from 16% to 15%, commencing 1 July 2026. This rate will be cut further to 14%, commencing 1 July 2027.
Households and small businesses will receive an additional $150 assistance with their electricity bill between 1 July 2025 and 31 December 2025.
As announced in November 2024, the government proposes to reduce all Higher Education Loan Program (HELP) debt by 20%. Also, the amount that people can earn before having to start repaying their HELP debt will increase to $67,000 from 1 July 2025.
From 1 January 2026, the maximum cost of a PBS prescription will be $25.
The government’s equity contribution under the Help to Buy scheme will increase to 40%. Additionally, the income caps under this scheme will increase to $100,000 for individuals, and $160,000 for joint applicants and single parents.
Businesses
As mentioned earlier, small businesses will receive an additional $150 assistance on their electricity bill between 1 July 2025 and 31 December 2025.
From August 2025, the automatic indexation of draught beer excise and equivalent customs duty rates will be paused for 2 years.
Starting in 2027, the government intends to ban non-compete clauses for employees earning up to $175,000 a year. The non-compete clauses generally prevent an employee from opening up a competing business within certain radius from their current employer, over a specified period, once they are no longer employed by that business.
Unless a further time extension is passed by parliament, the instant asset write-off threshold will revert to $1,000 for the 2024 – 2025 financial year.
Tax Compliance
The ATO will be provided fundings just short of $1 billion to increase its audit and tax compliance activities.
The National Economy
Inflation is forecasted to be around 3%.
A budget deficit of $42.1 billion is forecasted for 2025 – 2026, and the budget is forecasted to remain in deficit for the next decade.
The national debt is expected to grow to $1.02 trillion in 2025 – 2026 (35.5% of GDP), and is forecasted to grow to 37% of GDP by 2029 – 2030, well surpassing the $1.02 trillion debt level.
The Hunter Region
There weren’t that many announcements made that were specific for the Hunter, other than $88 million over 2 years to support clean energy production, and to help the Port of Newcastle to be hydrogen ready.
The Central Coast is due to receive $100 million to support maternity services, after the closure of several wards. A further $115 million was announced to help with the Terrigal Drive upgrade.
The final payment of $7.5 million will be made to the Newcastle Airport International Terminal upgrade
For more information on the Federal Budget and how it may affect you, please contact our friendly and helpful team at H & M Accountants.
