2025 Federal Budget

The 2024–25 Federal Budget is focused on providing cost-of-living relief, supporting small businesses, and improving long-term economic resilience. The Albanese Government’s third budget continues to balance household relief with economic reforms aimed at strengthening Australia’s tax integrity and sustainability.

🔖 Key Personal Tax Changes

One of the most anticipated measures is the revised Stage Three tax cuts, which take effect from 1 July 2024. These changes reduce tax rates across various brackets:

• The 19% rate will drop to 16% for incomes $18,201–$45,000.
• The 32.5% rate lowers to 30% for incomes up to $135,000.
• Higher brackets shift upward to provide relief for middle-income earners.

Additionally, the Medicare levy low-income thresholds have been increased to ensure low-income individuals and families are not burdened by the levy, reflecting inflation and living costs.

🧾 Support for Small Businesses

Small businesses benefit from several important initiatives:

• A temporary increase to the instant asset write-off threshold to $20,000 (from under $1,000), allowing immediate deduction for eligible assets until 30 June 2025.
• Energy bill relief of $325 per eligible small business.
• Expansion of the Digital ID System, reducing ID storage burdens.
• Investment in cybersecurity support, including free training and cyber resilience services.

These measures aim to ease operational costs and support digital transformation across the sector.

👩‍👧 Superannuation and Family Support

The Government will start paying superannuation on Commonwealth Paid Parental Leave from 1 July 2025—an important step in addressing the retirement savings gap for women.

Additionally, the Fair Entitlements Guarantee Recovery Program will now also recover unpaid super from insolvent employers, strengthening worker protections.

🌏 Foreign Resident Tax Reforms

From 1 July 2025, new rules will tighten the capital gains tax regime for foreign residents, requiring more comprehensive tax reporting and compliance, particularly for property-related transactions and high-value disposals.

🎓 Education and Social Measures

• A new Commonwealth Prac Payment of $319.50/week will support student teachers, nurses, and social workers during mandatory placements.
• HELP/student debt indexation will be capped at the lower of CPI or Wage Price Index, easing student loan burdens.
• All households will receive a $300 energy rebate spread over quarterly bills from 1 July 2024.

The deeming rates used for social security income testing will also be frozen to support older Australians and welfare recipients.

🔍 Tax Compliance and Integrity

The Budget funds an extended ATO compliance and anti-avoidance program, including:

• Enhanced detection and prevention of tax fraud.
• Strengthened rules under Part IVA (general anti-avoidance law).
• New penalties for mischaracterised royalty payments in low-tax jurisdictions (from 1 July 2026).

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