Budget 2025 Newsletter

Please click on the following link to view this month's newsletter for the Budget 2025. We would like to highlight the following articles:-

Personal Income Tax Cuts – Additional Reductions Announced

The Government has announced further income tax cuts for low- and middle-income earners, building on the Stage 3 tax reforms already legislated to commence from 1 July 2024. From 1 July 2026, the marginal tax rate on income between $18,201 and $45,000 will be reduced from 16% to 15%, with a further reduction to 14% from 1 July 2027.

These changes are estimated to provide:

A maximum tax saving of $268 p.a. from 2026–27, increasing to $536 p.a. from 2027–28
Combined with Stage 3 cuts, a total benefit of approximately $2,548 p.a. for the average wage earner (on $79,000) compared to 2023–24

The tax cuts aim to provide modest but broad-based cost-of-living relief and are expected to improve workforce participation, particularly among part-time and lower-income earners.

Division 296 – 15% Superannuation Tax for Balances Above $3 Million

The Government is continuing with its plan to introduce a new Division 296 tax, which would apply an additional 15% tax on earnings attributable to the portion of an individual’s total superannuation balance that exceeds $3 million.

Key features of the proposed regime:

Applies to individuals with super balances over $3 million, from 1 July 2025
Taxed on a proportional basis: only the portion of earnings attributable to the excess is taxed at the additional rate
Includes unrealised capital gains in the earnings calculation
Brings the total tax rate on affected earnings to 30%

At this stage, the legislation is still before the Senate. Its passage may depend on the outcome of the next Federal election. If enacted, this will represent a significant shift in the superannuation tax landscape for high-net-worth individuals.

Instant Asset Write-Off – Extended for Small Business

Small businesses with an aggregated annual turnover under $10 million are set to benefit from an extension of the $20,000 instant asset write-off for the 2024–25 income year.

Under the measure (currently before Parliament):

Eligible businesses can claim a full deduction for the cost of each depreciating asset costing less than $20,000, acquired and installed ready for use between 1 July 2024 and 30 June 2025
The $20,000 threshold applies on a per-asset basis, allowing multiple assets to be written off
Assets valued at $20,000 or more will continue to be depreciated through the simplified small business pool
Any remaining pool balance under $20,000 at 30 June 2025 can also be written off in full

This measure is designed to improve cash flow and incentivise business investment in capital equipment.

Please do not hesitate to contact us if you have any queries in relation to your tax and accounting matters.