Last night, Jim Chalmers presented the 2025/2026 Federal Budget, marking his fourth as Federal Treasurer.
The budget focuses on cost-of-living assistance, with a tax cut in the individual income tax rate. This cut will affect all incomes between $18,201 and $45,000, with the existing 16 per cent tax rate reducing to 15 per cent from 1 July 2026, and to 14 per cent from 1 July 2027.
Chalmers also announced that the Medicare levy threshold will be raised, and an extension of six months to the existing $300 a year energy rebate for all households and small businesses. The federal government also aim to reduce all student debts by 20 per cent at a cost to the Budget of $16 billion.
For details on various aspects of the Federal Budget in relation to Tax & Superannuation, Cheree and Daniel have shared their insights. If you would like to read the full Budget report, you can also access it via the link at the bottom of the article.
Cheree Woolcock, CEO & Director
Even though Australian Businesses are finding the current economic conditions challenging there was not a lot to address in the Federal Budget handed down last night.
The small business energy incentives relating to electrification and energy efficiency were announced. Some had predicted changes to the instant asset write-off threshold – but this remains at the previously announced increase from $1,000 to $20,000.
Minor personal tax cuts will be welcomed as will the changes in the Medicare levy threshold and the capping of medicines on the Pharmaceutical Benefits Scheme (PBS) being lowered to $25 per script.
In terms of education, the proposed cost-of-living relief for higher education in the form of a once-off 20% reduction in the outstanding HELP debt loans and continuing to deliver free TAFE places will be well received.
As the government prepares to announce an election it remains to be seen if the announcements in the budget will be enough to win over the voters.
Daniel Shaw, Director & SMSF Specialist Adviser
Last night’s budget was refreshingly quiet on the superannuation and SMSF front.
There had been some previously announced measures that were enacted through parliament during the year, such as allowing commutations for non-commutable pensions for a five-year amnesty period and how the ATO will penalize Non-Arm’s Length Expenses (NALE) of a general nature.
However, the Government has reinforced their intention to continue with the proposed Division 296 – the tax on member balances above $3m. We’ll need to watch this space, as the result of the election will have a significant say in whether the proposal will go any further.
Have any questions about this year’s budget? Contact us today.