The Treasurer, Jim Chalmers, delivered the Federal Budget 2025 on Tuesday 25 March. With a general election looming this year, the Budget was an important one, setting out the Albanese Labor Government’s financial plans for the future path of Australia.
A cut in the lowest rate of income tax from 16% to 15% by 2026 may be a vote winner, but was there any good news for Aussie small businesses among the announcements?
We’ve summarised the key points that may have an impact for you and your business.
Overview of the main Federal Budget
The Treasurer focused on cost-of-living relief, strengthening Medicare and building key foundations for Australia’s future. Key measures include tax cuts for all taxpayers, energy bill rebates for households and small businesses, cheaper medicines and student debt relief.
Significant investments have been allocated to housing, education and infrastructure projects, aiming to boost productivity and resilience. The Government has also emphasised economic responsibility, highlighting improvements in debt and deficit figures since Labour came to office.
Initiatives also target fair competition, regional development and support for small businesses, with a focus on the green policies of the Future Made in Australia initiatives.
Announcements that may affect you
Here are the main announcements from the federal Budget that could have a positive impact for you and your small business:
Income Tax Cuts for Individuals
Individuals will benefit from the tax cuts that will be progressive applied over the next two years:
- From 1 July 2026 – the current 16% tax rate for individuals with taxable income between $18,201 to $45,000 will drop to 15%.
- From 1 July 2027 – this will drop further to 14%.
The average tax cut for taxpayers on average earnings will be $268 for the 2026-27 tax year and $536 for 2027-28 tax year.
Medicare Levy Low Income Threshold
The Medicare Levy low income thresholds will increase by 4.7% from 1 July 2024 for singles, families, seniors and pensioners. It is anticipated that more than 1 million taxpayers on lower incomes will continue to be exempt from Medicare Levy or pay at a reduced rate.
Cutting Student Debt
Individuals with existing Higher Education Loan Program (HELP and other student debts will benefit from a 20% cut to their balances from 1 June 2025.
The income threshold where students will be required to start making compulsory repayments towards their student debt will be increased from $54,435 in 2024-25 to $67,000 in 2025-26 tax year.
Compulsory repayments will be lower for individuals earning less than $180,000 and above the minimum threshold.
Energy Bill Relief
Every household and approximately one million small businesses will receive energy relief until the end of 2025, providing a $150 reduction in energy bills this year. This will help mitigate the impact of ongoing high energy costs for households and many small business owners.
Energy Efficiency Grants for SMEs
The Energy Efficiency Grants for Small and Medium Sized Enterprises (SMEs) program is providing $56.7 million in grants of up to $25,000 to over 2,400 businesses, funding a range of energy upgrades, such as replacing inefficient appliances and improving heating systems.
Competition and Fair Trading
The government is cracking down on supermarkets’ unfair trading practices, which will help level the playing field for small businesses. This includes empowering the ACCC, the competition watchdog, making the food and grocery code mandatory and increasing penalties.
Future Made in Australia
The Treasurer announced more support for the production of Australian-made green metals, which could create opportunities for businesses in related supply chains.
The Government is backing clean technologies through the Future Made in Australia Innovation Fund, which could provide funding and support for businesses in this sector.
Support for Small and Local Businesses
The Budget included continued support for a raft of small business initiatives, aimed at making it easier to start, run and grow small Australian enterprises.
These included:
- Measures to protect small and local businesses from unfair trading practices.
- Funding for the Buy Australian Campaign to support local producers.
- Providing new resources for regulators to ensure a level playing field.
- Tax relief for hospitality venues, brewers, distillers and wine producers.
National Broadband Network (NBN)
Increased funding of $3 billion in equity to complete the NBN rollout, which is essential for business productivity, particularly in regional and remote outback areas.
National Licencing
Introduction of a national licensing scheme for electricians, with the intention to expand this to other trades, reducing red tape and making it easier for trades to work between states.
Non-compete clauses
Abolishing non-compete clauses for most Australian workers will create more worker mobility, and also making it easier for people to create small businesses.
Major infrastructure investment
Major infrastructure investment in building new housing, upgrading highways and servicing the rail network will provide opportunities for many small contractors.
Helping you plan for the proposed Budget changes
If you believe any of the Treasurer’s Budget announcements will affect you or your small business, we’re here to explain the changes, find a solution and grab the opportunities. The Budget announcement this week is not in law and subject to the passage of legislation.
The team at EMspire Advisory are trusted, qualified Chartered Accountants, tax agents, and small business accountants. We work closely with our clients to achieve the best possible outcomes. To find out more, please contact us!
Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.