How Will the Federal Budget 2025 Impact Your Business?
On 25 March 2025, Federal Treasurer Dr. Jim Chalmers delivered the 2025-26 Federal Budget—a pre-election budget shaped by the upcoming Federal election deadline of 17 May 2025.
As expected, cost-of-living relief, Medicare funding, and tax adjustments were the main highlights, with a mix of new tax cuts, adjustments to existing tax compliance measures, and deferrals of previously announced policies.
Here’s what you need to know about how this budget will impact businesses, investors, and individuals.
Key Tax Measures in the 2025-26 Budget
Personal Taxation
Personal Income Tax Cuts:
- All Australian taxpayers will receive further personal income tax cuts from 1 July 2026.
Medicare Levy Thresholds Increase:
- From 1 July 2024, the Medicare levy low-income thresholds will rise, offering additional cost-of-living relief for lower-income earners.
Business and Investment
Managed Investment Trusts (MITs):
- Amendments will be made to ensure that legitimate foreign investors can continue to access concessional withholding tax rates.
Clean Building MIT Concessions:
- The start date of the previously announced clean building MIT withholding tax concessions will be deferred.
No Changes to Private Company Deemed Dividend Rules:
- The budget has left private company deemed dividend rules untouched, providing stability for business owners.
No Changes to Small Business Tax Concessions:
- Small business tax concessions remain unchanged, ensuring continuity in existing tax benefits.
International Tax and Trade
Foreign Resident Capital Gains Tax (CGT) Measures Deferred:
- The start date for strengthening the foreign resident CGT regime has been pushed back, with no additional changes announced.
No New Multinational Tax Measures Announced.
Other Tax Measures
ATO Funding Boost for Tax Integrity:
- Additional resources have been allocated to the Australian Taxation Office (ATO) to enhance tax enforcement and compliance programs.
Foreign Ownership Restrictions on Housing:
- The government will provide funding to tighten enforcement on foreign ownership of residential property.
Personal Taxation: What You Need to Know from the 2025-26 Federal Budget
Key Takeaways
- Personal Income Tax Cuts: From 1 July 2026, all Australian taxpayers will benefit from further reductions in personal income tax rates.
- Medicare Levy Low-Income Thresholds Increase: From 1 July 2024, the thresholds will rise, providing additional cost-of-living relief to low-income individuals and families.
Personal Income Tax Cuts
The Government has announced new personal income tax cuts, building on the reductions introduced from 1 July 2024.
The main change is a gradual reduction in the marginal tax rate for individuals earning between $18,201 and $45,000:
- 16% in the 2024-25 and 2025-26 income years
- 15% from 1 July 2026
- 14% from 1 July 2027 onwards
New Income Tax Rates for Australian Tax Residents
| Taxable Income ($) | Marginal Tax Rate (%) (2024-25 & 2025-26) | Marginal Tax Rate (%) (2026-27) | Marginal Tax Rate (%) (2027-28 & Future Years) |
|---|---|---|---|
| 0 – 18,200 | Nil | Nil | Nil |
| 18,201 – 45,000 | 16% | 15% | 14% |
| 45,001 – 135,000 | 30% | 30% | 30% |
| 135,001 – 190,000 | 37% | 37% | 37% |
| Above 190,000 | 45% | 45% | 45% |
These rates do not include the Medicare levy, which remains at 2%.
Medicare Levy Low-Income Thresholds
The Government is raising the Medicare levy low-income thresholds for singles, families, seniors, and pensioners from 1 July 2024, ensuring that low-income earners get more cost-of-living relief.
New Medicare Levy Thresholds (Effective 1 July 2024)
- Singles: Increased from $26,000 to $27,222
- Families: Increased from $43,846 to $45,907
- Single Seniors & Pensioners: Increased from $41,089 to $43,020
- Family Threshold for Seniors & Pensioners: Increased from $57,198 to $59,886
- Family Income Increase Per Dependent Child/Student: Increased from $4,027 to $4,216
What This Means for You
- If you earn $18,201 to $45,000, your tax rate will gradually decrease from 16% to 14% over the next three years.
- Low-income earners and families will benefit from higher Medicare levy thresholds, meaning fewer people will need to pay the levy.
- These tax cuts and Medicare adjustments aim to provide cost-of-living relief and ensure fairer tax outcomes for individuals and families.
Need help understanding how these tax changes impact your finances? Contact Boa & Co. Chartered Accountants today.
Business & Investment: Key Tax Insights from the 2025-26 Federal Budget
Key Takeaways
- Managed Investment Trust (MIT) Changes: Amendments to ensure legitimate foreign investors continue to access concessional withholding tax rates.
- Clean Building MIT Withholding Tax Concessions: The start date is deferred for the extended tax concessions.
- Private Company Deemed Dividend Rules: No changes to existing rules despite recent legal developments.
- Small Business Tax Concessions: No new concessions introduced.
- Superannuation Guarantee: The minimum SG rate will increase to 12% from 1 July 2025.
- Payday Superannuation: New draft law released for consultation, with a planned start date of 1 July 2026.
- Excise & WET Relief: Alcohol and wine producers will see an increase in tax relief caps from 1 July 2026.
Managed Investment Trust (MIT) Concessions
The Government confirmed amendments to ensure widely held foreign investors (e.g., pension funds) can continue accessing concessional withholding tax rates while strengthening safeguards against misuse.
Key changes include:
- Clarifying MIT rules to prevent ambiguity while maintaining current industry practices.
- Explicitly allowing “captive MITs”—trusts ultimately owned by a single widely held foreign investor (e.g., foreign pension funds).
- Effective from 13 March 2025 for eligible fund payments.
These amendments align with the Australian Taxation Office’s (ATO) recent compliance focus on MIT structures. However, existing general anti-avoidance rules will still apply to improper restructures.
Clean Building MIT Withholding Tax Concessions – Start Date Deferred
The previously announced extension of clean building MIT withholding tax concessions (currently at 10%) for data centres and warehouses that meet energy efficiency standards has been deferred.
New start date: The first 1 January, 1 April, 1 July, or 1 October after Royal Assent of the amending Act.
Applies to fund payments from eligible buildings whose construction started after 9 May 2023.
Private Company Deemed Dividend Rules – No Changes
Despite recent legal challenges (e.g., the Bendel case), the Government has not announced any changes to the Division 7A deemed dividend rules.
- The ATO continues to hold that unpaid present entitlements (UPEs) between a trust and a private company may be treated as Division 7A loans.
- The ATO has sought High Court appeal following the Bendel case decision.
- Private companies and trusts should review their trust distributions in light of potential taxation implications.
Affected businesses should seek professional advice on structuring trust distributions to avoid Division 7A risks.
Superannuation Guarantee (SG) Increases & Payday Superannuation
Increase in Superannuation Guarantee Rate
- The superannuation guarantee rate will increase from 11.5% to 12% from 1 July 2025.
Payday Superannuation Implementation
The Government’s Payday Super initiative will require super contributions to be paid within
7 days of salary payments, rather than quarterly.
- New draft law released on 14 March 2025 (open for consultation until 11 April 2025).
- Proposed start date: 1 July 2026.
- Key tax changes: Late super payments will now be tax-deductible, but interest and penalties won’t be deductible.
Employers should start preparing for these changes now to ensure compliance.
Excise & WET Relief for Alcohol & Wine Producers
- Excise remission cap for alcohol manufacturers will increase from $350,000 to $400,000.
- Wine Equalisation Tax (WET) producer rebate will also increase from $350,000 to $400,000 per financial year.
- Effective from 1 July 2026.
- Supports brewers, distillers, wineries, and hospitality businesses.
What This Means for Your Business
- Foreign investors in MITs will have clarified tax rules, reducing uncertainty.
- Superannuation obligations for employers are changing—higher SG rates and payday super compliance will require payroll adjustments.
- Alcohol & wine businesses get more tax relief, but other small business tax concessions remain unchanged.
- Private companies and trusts must remain cautious about Division 7A tax risks despite no immediate law changes.
Need expert tax advice? Contact Boa & Co. Chartered Accountants today.
International Tax & Trade: Key Insights from the 2025-26 Australian Federal Budget
Key Takeaways
- The start date for strengthening Australia’s foreign resident Capital Gains Tax (CGT) regime has been deferred.
- No new multinational tax measures were announced.
- The Australian Taxation Office (ATO) will receive additional funding to intensify its compliance efforts on multinational corporations.
- Excise freeze on draught beer for two years, benefiting the hospitality sector.
- Higher tariffs on Russian and Belarusian goods extended until October 2027.
Foreign Resident Capital Gains Tax (CGT) Changes Deferred – What This Means for Investors
The Australian Government has decided to postpone its previously announced reforms to the foreign resident CGT regime, which were originally set to take effect from 1 July 2025.
What’s Changing?
These reforms aim to expand the types of assets subject to CGT for foreign residents, ensuring that assets with a strong economic link to Australian land and natural resources are appropriately taxed.
Key proposed changes include:
- Expanding CGT rules to capture more asset types, beyond just Australian real property.
- Adjusting the principal asset test from a single point-in-time assessment to a 365-day testing period, making it harder to avoid CGT obligations through temporary asset restructuring.
- Requiring foreign residents disposing of shares or membership interests exceeding $20 million to notify the ATO before executing the transaction.
New Timeline for Implementation
Instead of taking effect from 1 July 2025, these measures will now commence on the later of 1 October 2025 or the first 1 January, 1 April, 1 July, or 1 October after the new law receives Royal Assent.
Why This Matters
This delay gives foreign investors more time to plan and adjust their tax strategies, but once enacted, the new rules will significantly impact foreign-owned businesses, private equity funds, and international investors with holdings in Australia.
Increased Compliance Measures for Multinational Companies
While no new multinational tax policies were introduced in this Budget, the Government has reaffirmed its commitment to tax enforcement by allocating more funding to the ATO’s Tax Avoidance Taskforce.
What This Means for Global Businesses
- The ATO will increase audits and compliance checks on multinational corporations, large businesses, and foreign investors operating in Australia.
- Companies engaged in aggressive tax planning or offshore profit shifting will face heightened scrutiny.
If your business has cross-border investments or operates in Australia and overseas markets, it is critical to review your tax structures now to ensure compliance with evolving regulations.
Support for the Hospitality & Alcohol Industry
To support Australia’s hospitality sector, the Government has confirmed that it will freeze excise indexation on draught beer for two years starting August 2025.
Impact on Businesses
- Breweries, pubs, and bars will benefit from lower excise costs, reducing price pressures on businesses and consumers.
- The excise freeze is expected to provide financial relief to small and medium-sized businesses in the hospitality sector.
Extended Tariffs on Russian & Belarusian Goods
The Australian Government will continue imposing an additional 35% tariff on imports from Russia and Belarus until 24 October 2027.
Why This Matters for Chinese Businesses
For companies sourcing goods globally, these extended tariffs may:
- Increase import costs for businesses reliant on products from Russia and Belarus.
- Encourage diversification of supply chains toward other markets, including China.
- Potentially affect trade flows between Australia and countries still engaging in economic activities with Russia and Belarus.
If your business is involved in importing or exporting goods to Australia, now is the time to reassess your supply chain strategies and explore alternative sourcing options.
Key Takeaways for Chinese Investors & Businesses
- Foreign investors will have more time to adjust tax planning due to the deferral of CGT changes, but once implemented, the rules will increase taxation obligations for international investors.
- Multinational corporations operating in Australia should prepare for stricter ATO compliance measures as the Government strengthens tax enforcement.
- Hospitality and alcohol businesses can expect temporary excise relief, benefiting both local and international beverage suppliers.
- Businesses engaged in international trade should be aware of the extended tariffs on Russian and Belarusian goods and consider alternative sourcing strategies.
How Can Your Business Prepare?
If you are an investor, multinational business, or international trader operating in Australia, it is essential to stay ahead of tax and trade changes.
Boa & Co. Chartered Accountants can help you:
- Navigate complex tax regulations for foreign investors and multinational businesses.
- Optimize your business structure to comply with Australia’s evolving tax laws.
- Assess supply chain risks and develop strategies to manage tariff changes.
Contact Boa & Co. today: Need expert tax advice? Contact Boa & Co. Chartered Accountants today. Call 1300 952 286, email [email protected], or visit www.boanco.com.au.
Make informed financial decisions and stay ahead in Australia’s changing tax and trade landscape.
Strengthening Tax Integrity: Key Measures from the 2025-26 Australian Federal Budget
Key Takeaways
- $999 million in additional funding for the Australian Taxation Office (ATO) to enhance tax compliance and enforcement.
- Stronger restrictions on foreign ownership of Australian housing, with dedicated enforcement funding.
- Crackdown on the shadow economy, including under-reported income and illicit tobacco trade.
- New initiatives to ensure timely tax and superannuation payments by businesses and high-net-worth individuals.
ATO Receives $999 Million to Strengthen Tax Compliance
The Australian Government is making a major investment in tax enforcement, allocating nearly $1 billion to the ATO over the next four years. This funding will expand compliance programs targeting multinational corporations, high-net-worth individuals, and businesses operating in the shadow economy.
Where Is the Money Going?
- Tax Avoidance Taskforce – $717.8 million
- Increased scrutiny on multinational corporations and large businesses.
- More aggressive enforcement of corporate tax obligations.
- Extension of investigations into cross-border profit shifting and offshore tax structures.
- Increased scrutiny on multinational corporations and large businesses.
- Shadow Economy Compliance Program – $155.5 million
- Targeting cash-based businesses and under-reported income.
- Stronger actions against worker exploitation and illicit trade.
- Increased enforcement on illicit tobacco markets.
- Targeting cash-based businesses and under-reported income.
- Personal Income Tax Compliance Program – $75.7 million
- Enhanced audits on individual taxpayers suspected of tax avoidance.
- More real-time compliance measures to prevent tax under-reporting.
- Enhanced audits on individual taxpayers suspected of tax avoidance.
- Tax Integrity Program – $50 million
- Ensuring medium and large businesses, as well as wealthy individuals, pay their tax and superannuation liabilities on time.
- Preventing tax evasion through delayed or non-payment strategies.
- Ensuring medium and large businesses, as well as wealthy individuals, pay their tax and superannuation liabilities on time.
What This Means for Foreign Investors & Businesses
- Foreign-owned businesses will face heightened scrutiny, particularly around profit shifting and offshore tax arrangements.
- Individuals and small businesses engaged in cash transactions or undeclared income will be at greater risk of ATO audits and penalties.
- Increased funding for compliance means a higher likelihood of enforcement action—businesses and investors must ensure they remain fully compliant.
Tighter Restrictions on Foreign Ownership of Australian Housing
As part of its housing affordability strategy, the Australian Government has introduced new restrictions to ban foreign investors from purchasing existing residential properties, unless an exception applies.
Who Can Still Buy?
Foreign buyers can only purchase Australian property if they:
- Invest in new developments that add to Australia’s housing supply.
- Provide housing for workers through foreign-owned companies in specific business operations.
To enforce these restrictions, the ATO will receive:
- $5.7 million over four years for compliance and enforcement.
- $8.9 million over four years (and an ongoing $1.9 million per year from 2029-30) to audit foreign land banking activities.
Key Implications for Chinese Investors
- Significantly fewer opportunities for foreign buyers in the Australian residential market.
- Greater focus on compliance and enforcement, increasing the risks of penalties for non-compliant foreign investors.
- Potential new investment channels through large-scale residential or worker accommodation projects that qualify for exemptions.
If you are considering investing in Australian real estate, it is crucial to understand the new restrictions and explore compliant investment pathways.
Crackdown on Illicit Tobacco Trade
The Australian Government has also allocated $156.7 million over two years to combat the illegal tobacco trade. This will fund multiple agencies to:
- Investigate and prosecute businesses engaged in illicit tobacco trading.
- Disrupt black market operations and strengthen customs enforcement.
For businesses involved in tobacco, retail, or import/export industries, this means stricter regulation and increased compliance checks.
What Should Foreign Businesses and Investors Do Next?
With these major changes in tax compliance and foreign investment regulations, businesses and investors need to:
- Review corporate tax structures to ensure compliance with Australia’s expanding tax enforcement programs.
- Reassess property investment strategies, as restrictions on foreign ownership of Australian housing become stricter.
- Prepare for increased audits, particularly if operating in sectors prone to cash transactions, offshore arrangements, or high-value investments.
Boa & Co. Chartered Accountants can help you navigate these regulatory changes with:
- Tax compliance strategies tailored for multinational businesses and high-net-worth individuals.
- Guidance on Australian property investment under the new foreign ownership rules.
- Risk management and audit support to ensure your business meets Australia’s evolving tax obligations.
Contact Boa & Co. today: Need expert tax advice? Contact Boa & Co. Chartered Accountants today. Call 1300 952 286, email [email protected], or visit www.boanco.com.au.
Stay compliant, minimize risks, and make informed financial decisions in Australia’s evolving tax and investment landscape.
How Does This Budget Impact Your Business?
For Small Businesses: Stability is the key takeaway. No new tax concessions were introduced, but existing ones remain intact. However, ongoing tax compliance remains a focus, and additional funding for the ATO’s tax integrity measures means greater scrutiny for businesses.
For Property Investors: The government continues to enforce foreign ownership restrictions and has deferred the start date of clean building MIT concessions, potentially affecting long-term investment planning.
For Multinational Companies: No new international tax measures were introduced, but deferred CGT rules indicate potential future tax changes for foreign investors.
For Individual Taxpayers: Personal tax cuts from July 2026 will benefit all taxpayers, while lower-income earners will see relief from increased Medicare levy thresholds starting July 2024.
What’s Next?
This budget delivers a mix of short-term relief and long-term policy deferrals. As the election approaches, future tax policy changes are likely. Business owners, investors, and individuals should stay prepared for further updates.
For expert guidance on how these budget changes impact your tax planning and business strategy, contact Boa & Co. Chartered Accountants.
Call 1300 952 286, email [email protected], or visit www.boanco.com.au for more details.