Last night Treasurer Jim Charmers announced his fourth and pre-election, Federal Budget. The Federal Budget is a plan for how things will be spent and focus on what the Federal Government see’s as priorities as well as being a great transparency in our democratic system.
Labor’s Pre-election Budget has focused on cost of living pressures in the forms of continued energy relief, reduction in Pharmaceutical Benefits Scheme (PBS) medication co-payment and some new personal income Tax Cuts. They have also announced proposed changes on the HECS/HELP repayments and also a reduction in outstanding debt. There has been no information on any future Superannuation changes (the $3Million Cap or Division 296 Tax is still before the Senate and is likely to lapse when the election is called) noting some thresholds are due to index as we move into the new Financial Year.
For small business, there was little new support here other than a focus on protections for those in a Franchise business relationship. As previously announced from 1 July 2026 Pay Day Super legislation will require business to pay staff on the same day as their payday. Draft legislation has been released (11 April 2025) and has bi-partisan support so although it is not likely to be legislated before the election is called it will likely come into effect in the new Parliament.
Although there has been an Aged Care Taskforce Report (completed in December 2023) there are a few noted changes with extra funding but the long term viability has not been considered with focus still on increasing access to home care, improving the quality and regulation of aged care services and addressing workforce issues.
As always before any of these announcements can be implemented, they will require passage through parliament and as noted we are about to enter an Election cycle.
Overview
We have prepared a summary of the key measures for Individuals, Superannuation, Social Security and for Companies below:
Individuals and Families and Taxation:
- From 1 July 2026 it has been announced the 16 percent marginal rate will reduce to 15 percent and then from 1 July 2027 the 15 percent marginal rate will reduce to 14 percent. This would provide a tax cut of up to $268 in 2026-27 and up to $536 in 2027-28:
- Cutting Student Debt (HECS/HELP) – From 1 July 2025 The Government will reduce all outstanding Student debt by 20 percent. In addition from 1 July 2025 the income threshold for which you start repaying your debt will increase from $54,435 to $67,000.
- Increasing the Medicare levy low-income thresholds – The Medicare levy low-income thresholds for singles, families, seniors and pensioners will increase from 1 July 2025. The increase in thresholds provides cost-of-living relief by taking account of recent CPI outcomes so that low-income individuals continue to be exempt from paying the Medicare levy. The threshold for singles will be increased from $26,000 to $27,222. The family threshold will be increased from $43,846 to $45,907. For single seniors and pensioners, the threshold will be increased from $41,089 to $43,020. The family threshold for seniors and pensioners will be increased from $57,198 to $59,886. For each dependent child or student, the family income thresholds will increase by a further $4,216 instead of the previous amount of $4,027.
- Co Payment for Pharmaceutical Beneftis Scheme (PBS) – patient co-payments will reduce from 1 January 2026 from $31.60 down to $25.00. There is no change to the co-payment for concession card holders who will pay no more than $7.70 plus any manufacturer premiums.
- Foreign Property Ownership – The Government announced a number of measures to restrict foreign ownership of established housing. From 1 April 2025 for two years foreign persons (including temporary residence and foreign owned companies will be banned from purchasing established dwellings.
- Help to Buy Program – The Government will increase funding for the Help to Buy (home ownership) program and increase the income thresholds from $90,000 for singles to $100,000 and for couples from $120,000 to $160,000. There will also be increase to the property price level. Under the program the Government provides up to 40% contribution to buy homes.
Superannuation:
- Indexation of Super Transfer Balance Cap – Based on indexation which is in place Super Transfer Balance Cap will increase from 1 July 2025. This is not a budget measure but part of already in place legislation. The General Transfer Balance cap will increase from $1.9 Million to $2 Million. This is the amount of money each person can have in pension mode within the superannuation system. With this indexation the Defined Benefit Income Cap will increase to $125,000 per year.
- No Changes or further announcements on Targeted Super Concessions – As announced in March 2023, the Government plans reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million, from 1 July 2025. This legislation is held up in the Senate and is likely to lapse when the Federal Election is called.
Individuals with a total superannuation balance of less than $3 million will not be affected. It will bring the headline tax rate to 30 per cent, up from 15 per cent, for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than $3 million. Earnings relating to assets below the $3 million threshold will continue to be taxed at 15 per cent, or zero per cent if held in a retirement pension account. Interests in defined benefit schemes will be appropriately valued and will have earnings taxed under this measure in a similar way to other interests. This will ensure commensurate treatment. The measure will not place a limit on the amount of money an individual can hold in superannuation. The current contribution rules continue to apply.
- Securing Australians’ Superannuation Package (from last 2 Budgets)– increasing the payment frequency of the Superannuation Guarantee (SG) and investing in SG compliance From 1 July 2026, employers will be required to pay their employees’ SG entitlements on the same day that they pay salary and wages. Currently, employers are only required to pay their employees’ SG on a quarterly basis. By increasing the payment frequency of superannuation to align with the payment of salary and wages, this measure will both ensure employees have greater visibility over whether their entitlements have been paid, and better enable the ATO to recover unpaid superannuation. Increased frequency of payment will also support better retirement outcomes. Changes to the design of the SG charge will also be necessary to align with increased payment frequency. This has bi-partisan support and will likely be legislated in the next Parliament.
Social Security and Aged Care:
- Social Security – No Announcements made including on deeming rates which have been frozen until 30 June 2025. Current deeming rates are 0.25% and 2.25%. This may become an election announcement.
- Aged Care – No new announcements here but further funding to implement the Age Care reforms. Already announced and legislated changes will come into effect from 1 July 2025 based on new means testing and costing arrangements for new entrants into the system.
- Expanded Access to Early Child Education – funding has been announced to commit to a new 3 day guarantee where each child would be eligible for at least 3 days of subsidised care regardless of families level of work or study.
Companies and Small Business:
- Small Business Support – $20,000 instant asset write-off will cease from 1 July 2025 – No further extension of the instant asset write-off threshold of $20,000 which is due to end 30 June 2025. Small businesses with aggregated annual turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2025. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter.
- Extension of Energy Bill Relief For Small Business $325 payment -This measure has been announced to extend until 31 December 2025.
Seek out further advice and start your journey to being free around your money and creating wealth with understanding. Scott Malcolm has been awarded the internationally recognised Certified Financial Planner designation from the Financial Planning Association of Australia and is Director of Money Mechanics. Money Mechanics is a fee for service financial advice firm who partner with clients in Melbourne, Canberra and Sydney to achieve their life and wealth outcomes. Money Mechanics Pty Ltd (ABN 64 136 066 272) is a Corporate Authorised Representative (No. 336429) of Infocus Securities Australia Pty Ltd (ABN 47 097 797 049) AFSL and Australian Credit Licence No. 236523 The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs.