On Tuesday 25th March 2025, Jim Chalmers handed down the 2025/2026 budget which included several tax changes. Overall, there were very few surprises announced that will impact small businesses and individual taxpayers that had not previously been announced.
We have highlighted the areas below that we feel will be of most value to you. Please note, until legislated these Federal Budget announcements are only proposed changes unless noted otherwise.

2025/26 Income Year Tax Rates & Threshold Changes
The government has announced new tax cuts for individual taxpayers as follows for the 2027 and 2028 financial years:

Medicare Levy Low-Income Thresholds
Increased Medicare levy low-income thresholds will be implemented from 1st July 2024, raising the threshold at which no Medicare levy is payable for the following:

For non-senior individuals to $27,222;
For single senior individuals eligible for SAPTO to $43,020;
For families not eligible for the senior and pensioners tax offset to $45,907; and
For families eligible for the seniors and pensioners tax offset to $59,886.

Student Loans

The Government will reduce all outstanding Higher Education Loan Program (HELP) debts by 20%, subject to the passage of legislation.

The Government is also increasing the amount that individuals can earn before they are required to repay their loans from $54,435 in the 2025 financial year to $67,000 in the 2026 financial year.

Energy Bill Relief
Energy bill relief initiatives include rebates for eligible households and small businesses with two $75 bill rebates directly off electricity bills until 31st December 2025.

Strengthening Tax Integrity
The Government will provide $999 million over 4 years to the ATO to extend and expand compliance activity.

Banning non-compete clauses for low and middle income workers
The Government will ban non-compete clauses that apply to workers earning less than the high-income threshold in the Fair Work Act (currently $175,000).

Restriction on Foreign Ownership of Housing
The Government will take action to ensure foreign investment in housing supports the government’s broader agenda to boost Australia’s housing supply in the following ways:

Banning foreign persons, including temporary residents and foreign-owned companies, from purchasing established dwellings from 1st April 2025.
Providing funds to the ATO and Treasury to administer this measure.

Foreign Resident Tax Changes
The Government aimed to strengthen the foreign resident Capital Gains Tax (CGT) regime to ensure equitable taxation and improve compliance. This was proposed to start from 1st July 2025 but will now be delayed to a later date depending on when the Act for this measure receives Royal Assent. The amendments will:

Clarify and expand the types of assets subject to CGT for foreign residents.
Modify the point-in-time principal asset test to a 365-day testing period.
Require foreign residents selling shares and membership interests exceeding $20 million in value to notify the ATO before the transaction.

These changes seek to align the tax treatment of foreign residents with that of Australian residents, ensuring fair taxation on assets with a close economic connection to Australian land.

As always, if you have any questions about any of the above, please don't hesitate to contact our office to discuss on 08 8523 0999 (Gawler Office), 08 8299 9444 (Northgate Office) or admin@milaneseco.com.au.

MARCH 2025 FEDERAL BUDGET OVERVIEW