The 2025 Federal Budget has been announced, and it presents limited substantial changes or benefits for Australian businesses.
The small business sector faces ongoing challenges, with its contribution to GDP declining from 40% in 2006 to approximately 33% today, alongside a significant reduction in employment share.
Here’s a concise summary of the key announcements relevant to businesses and individuals from the 2025 Federal Budget.
1. Tax Rate Adjustments
From July 2026, the tax rate for incomes between $18,201 and $45,000 will be reduced from 16% to 15%, followed by a further reduction to 14% in July 2027.
| Financial Year | Tax Rate Change | Annual Saving | Weekly Saving |
| 2026–2027 | 16% to 15% | ~$268 per year | ~$5 per week |
| 2027–2028 onwards | 15% to 14% | Additional ~$268 | Additional ~$5 |
Additionally, there is a slight increase in the Medicare Levy threshold from $32,500 to $34,027 for singles, providing approximately $30 per annum in savings.
2. Ban on Non-compete Clauses
Employers will no longer be permitted to include non-compete clauses in employment contracts for workers earning under $175,000 annually. This reform is designed to enhance labour mobility and encourage competitive wage growth. However, this could pose challenges for small businesses already struggling to attract and retain quality staff. Despite potential concerns, the government forecasts an annual economic benefit of approximately $5 billion from this measure.
3. Enhanced Support for Trades and Apprentices
A new national licensing system will simplify the process for electricians to operate across state borders. Furthermore, financial assistance for selected construction apprentices will be doubled, increasing to $10,000, aiming to boost qualifications and enhance earning potential within trade industries.
4. Instant Asset Write-Off Ending
The current instant asset write-off scheme, allowing immediate deductions for new equipment purchases under $20,000, is set to expire on 30 June 2025. Businesses will then need to revert to standard asset depreciation rules unless further extensions are announced.
5. Increased ATO Funding for Compliance Activities
An additional $1 billion has been allocated over four years to enhance the Australian Taxation Office’s compliance activities, including increased audits and reviews. Businesses, particularly larger enterprises, multinationals, and those engaged in cash-based transactions, should ensure robust tax compliance practices to mitigate audit risks.
6. Minimal Changes to Superannuation
The budget provided no further updates on superannuation, leaving unresolved the proposed tax increase for super balances exceeding $3 million. The scheduled increase of the superannuation guarantee rate to 12% remains in place for the next financial year.
7. Additional Funding for Small Businesses and Franchises
The government has committed $12 million towards initiatives aimed at protecting small businesses, particularly within the franchising sector:
- $7.1 million over two years to strengthen the ACCC’s enforcement capabilities relating to franchising laws.
- $3 million over four years starting 2025–26 to enhance ASIC’s analytical capabilities to combat illegal phoenix activities, particularly in the construction industry.
- $1.2 million in 2025–26 to facilitate small loans to social enterprises through a partnership with White Box Enterprises.
- $0.8 million in 2025–26 for Treasury to review and potentially strengthen protections against unfair trading practices and contract terms affecting small businesses.
8. Freeze on Beer Excise Tax
The beer excise tax has been frozen until August 2027, providing relief to hospitality venues and breweries. Additionally, tax-free production thresholds for beer, spirits, and wine producers will moderately increase from July 2026.
9. Foreign Property Purchase Restrictions
Foreign buyers will be prohibited from purchasing established residential properties from April 2025 to March 2027. Certain exceptions will apply, particularly for investors demonstrably increasing housing availability.
10. Reduction in Student Debt Obligations
Effective June 2025, outstanding HELP student loans will be reduced by 20%, benefiting approximately three million Australians. Additionally, the repayment threshold will increase to $67,000, reducing financial pressure on lower-income earners.
11. Delayed Changes to Foreign Capital Gains Tax (CGT)
Proposed adjustments to CGT rules for foreign residents have been deferred until at least October 2025. This delay allows further clarification of compliance requirements relating to property investments.
12. Continuation of Temporary Energy Rebates
The $75 quarterly energy rebate has been extended until December 2025. Businesses and individuals should anticipate potential inflationary effects once this rebate concludes.
13. Managed Investment Trust (MIT) Clarifications
The budget proposes clearer guidelines for Managed Investment Trusts, facilitating easier access to concessional tax rates for genuine foreign investors. This includes extending tax concessions to specific data centres and warehouses classified as “clean buildings,” pending legislative approval.
Notable Omissions from the Budget
Several significant areas remain unaddressed:
- Clarification on superannuation reforms and higher balance taxes.
- Extension of the instant asset write-off beyond June 2025.
- Comprehensive strategies for managing government debt.
- Measures to prevent income tax bracket creep.
- Significant tax reform addressing Division 7A, residency, and CGT relief.
- Initiatives aimed at improving long-term productivity and economic growth.
- Strategies to address reliance on migration-driven growth and related housing pressures.
The 2025 Federal Budget offers incremental adjustments rather than substantial reforms for the business community. Ongoing concerns include the government’s rising debt levels and the absence of strategic clarity on key economic issues. Businesses should prioritise financial compliance, proactively manage potential audit risks, and closely monitor future policy developments.
For professional guidance on how these budget measures may impact your business or investments, please contact AFP Accounting, Tax and Advisory at (02) 7804 1849 or via email at enquiries@afpaccounting.com.au.
