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2024/25 Federal Budget Summary
The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024. Describ...
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The Federal Treasurer, Dr Jim Chalmers, handed down the 2025–26 Federal Budget at 6:30 pm (AEST) on 25 March 2025.
Guided by 5 main priorities, including helping with the cost-of-living, building more homes, and investing in education, the Budget includes 2 new personal tax cuts for all Australian individual taxpayers, increased Medicare levy thresholds, a ban on foreign individuals buying existing homes and a proposed reduction to student debts.
Being the government’s last Budget before the expected federal election, the start dates of a number of previously announced but unenacted tax measures have been deferred until amending legislation is enacted.
Described by the Treasurer as a “plan for a new generation of prosperity in a new world of uncertainty”, the Budget did not include any new measures affecting the taxation or regulation of superannuation or new income tax measures affecting small businesses.
The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au. The tax and tax-related highlights are set out below.
Please keep in mind that all budget measures are proposed and will require the passage of legislation to become effective.
Click here to read more about the announcements relating to individuals.
Click here to read more about the announcements relating to tax administration.
Click here to read more about announcements for tax agents.
Click here to read more about the superannuation update.
Click here to read more about the announcements relating to not-for-profits
Click here to read more about the indirect taxes.
The marginal tax rate for the personal income tax threshold bracket from $18,201 to $45,000 will be reduced from 16% to 15% from 1 July 2026, and further reduced to 14% from 1 July 2027.
The applicable marginal tax rates and income thresholds for recent income years, as well as the proposed new rates, are depicted in the table below.
Personal income tax rates and thresholds
| Threshold ($) | 2024-25 and 2025-26 (%) | 2026-27 (%) | 2027-28 (%) |
| 0 - 18,200 | 0 | 0 | 0 |
| 18,201 - 45,000 | 16 | 15 | 14 |
| 45,001 - 135,000 | 30 | 30 | 30 |
| 135,001 - 190,000 | 37 | 37 | 37 |
| > 190,000 | 45 | 45 | 45 |
Source: Budget Paper No 2, p 5; Budget Factsheet — New tax cuts for every Australian taxpayer, p 1; Prime Minister and Treasurer, “New cost of living tax cuts under Labor” [joint media release], 25 March 2025.
The Medicare levy low‑income thresholds for singles, families, and seniors and pensioners will be increased from 1 July 2024.
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. The threshold for single seniors and pensioners 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. The family income thresholds will increase by $4,216 for each dependent child or student, up from $4,027.
The applicable thresholds for 2023–24 and 2024–25 are depicted in the tables below.
Medicare levy low-income thresholds 2023–24
| Low-income threshold (above which levy begins to phase in) | Full Medicare levy (2%) applies above* | |
| Singles | $26,000 | $32,500 |
| Single Seniors and Pensioners | $41,089 | $51,361 |
| Families (not eligible for Seniors and Pensioners Tax Offset) | $43,846 (plus $4,027 for each dependent child) | $54,807 (plus $5,034 for each dependent child) |
| Families (Senior and Pensioner) | $57,198 (plus $4,027 for each dependent child) | $71,497 (plus $5,034 for each dependent child) |
* The Medicare levy phases in at 10 cents for each dollar above the relevant low-income threshold until the full Medicare levy at 2% applies. This column shows the level of income at which the levy begins to be paid in full.
Medicare levy low-income thresholds 2024–25
| Low-income threshold (above which levy begins to phase in) | Full Medicare levy (2%) applies above* | |
| Singles | $27,222 | $34,027 |
| Single Seniors and Pensioners | $43,020 | $53,775 |
| Families (not eligible for Seniors and Pensioners Tax Offset) | $45,907 (plus $4,216 for each dependent child) | $57,383 (plus $5,270 for each dependent child) |
| Families (Senior and Pensioner) | $59,886 (plus $4,216 for each dependent child) | $74,857 (plus $5,270 for each dependent child) |
* The Medicare levy phases in at 10 cents for each dollar above the relevant low-income threshold until the full Medicare levy at 2% applies. This column shows the level of income at which the levy begins to be paid in full.
Source: Budget Paper No 2, p 5; Budget Factsheet — New tax cuts for every Australian taxpayer, p 1.
Incentive payments will be introduced to expand bulk billing to all Australians from 1 November 2025. Also, a new Bulk Billing Practice Incentive Program will
be introduced for general practices if they bulk bill every visit under Medicare. Nine out of 10 GP visits are expected to be bulk billed by 2030.
The government will reduce all outstanding Higher Education Loan Program (HELP) and other student debts by 20%, before indexation is applied on 1 June 2025. The cut will remove a total of $16 billion in debt.
The student loan repayment system will also be reformed from 1 July 2025 by moving to a marginal repayment system with a higher minimum repayment threshold. The minimum repayment threshold is proposed to increase from $54,435 in 2024–25 to $67,000 in 2025–26.
Both these reforms (which were previously announced in November 2024) will be subject to the passage of legislation.
Source: Budget Paper No 1, p 22; Budget Factsheet — Building Australia’s Future, pp 17 and 37; Minister for Education, “Building a better and fairer education system to support a stronger economy” [media release], 25 March 2025; Making HELP and student loan repayments fairer and 20% reduction of student loan debt, Department of Education website.
The start date for the 2024–25 Budget measure to strengthen the foreign resident capital gains tax (CGT) regime will be deferred from 1 July 2025 to the later of 1 October 2025 or the first 1 January, 1 April, 1 July or 1 October after assent of amending legislation.
The 2024–25 Budget proposed to:
The start date for the measure has been deferred from 1 July 2025 to the later date of 1 October 2025 or the first 1 January, 1 April, 1 July or 1 October after the amending legislation receives assent.
Source: Budget Paper No 2, p 4.
Measures will be introduced to ensure foreign investment in housing supports the government’s broader agenda to boost Australia’s housing supply by:
The enhanced compliance approach by the ATO and Treasury to target land banking will ensure foreign investors comply with requirements to put vacant land to use for residential and commercial developments within reasonable timeframes.
Source: Budget Paper No 2, p 6.
All Australian households and eligible small businesses will receive an additional energy rebate of $150. The rebate will be automatically applied to electricity bills between 1 July and 31 December 2025, in two quarterly instalments of $75. It’s expected that the eligibility rules that apply to small businesses will remain unchanged.
The maximum cost of Pharmaceutical Benefits Scheme (PBS) medicines will decrease from $31.60 to $25 per script from 1 January 2026. Pensioners and Commonwealth concession cardholders will still only pay the subsidised rate of $7.70 per PBS script until 1 January 2030.
The Help to Buy program was established to assist eligible individuals with the purchase of a principal place of residence. Expected to commence later this year, the Commonwealth will provide an equity contribution up to 30% of the purchase price of an existing home and up to 40% of the purchase price of a new home. The income cap and property price caps used to determine eligibility will increase. For singles, the income cap will increase from $90,000 to $100,000. For joint applicants (and single parents), the income cap will increase from $120,000 to $160,000. The property price cap depends on the location of the property and details can be found in the Government’s media release.
Source: The Albanese Labor Government is building more homes, more quickly and making them easier to buy, March 22 2025.
Families will be eligible for at least 72 hours per fortnight (three days per week) of subsidised Early Childhood Education and Care (ECEC) without having to
meet certain activity requirements (such as paid work, volunteering and studying). Families that still meet activity requirements, care for a First Nations child or have a valid exemption can continue to get 100 hours of subsidised ECEC. A family income test limit ($533,280 in 2024/25) will still need to be met to qualify for subsidised care. This measure is legislated to start from 1 January 2026.
Amendments to clarify the arrangements for managed investment trusts (MITs) will be made to ensure legitimate investors can continue to access concessional withholding tax rates for fund payments from 13 March 2025.
In particular, trusts ultimately owned by a single widely-held investor will be able to access the MIT concessions. The proposed changes will ensure that genuine, foreign-based widely-held investors, such as pension funds, can still access concessional withholding tax rates on eligible distributions to members through MITs.
This measure will complement the ATO’s strengthened guidelines. The amendments will not affect the ATO's power to take action under the general anti-avoidance rules in Pt IVA of ITAA 1936 where "captive MITs" involve other characteristics of the kind set out in Taxpayer Alert TA 2025/1.
Source: Budget Paper No 2, p 4; Assistant Treasurer and Minister for Financial Services, Clarifying tax arrangements for managed investment trusts [media release], 13 March 2025.
The start date of the 2023–24 Budget measure to extend the clean building managed investment trust (MIT) withholding tax concession will be deferred from 1 July 2025 to the first 1 January, 1 April, 1 July or 1 October after assent of amending legislation.
A final withholding tax rate of 10% currently applies to payments from eligible clean building MITs made to foreign residents in countries with which Australia has effective exchange of information agreements. This applies to eligible trusts holding office buildings, retail centres and non-residential accommodation built after June 2012 that meet energy efficiency standards.
The 2023–24 Budget proposed to extend the concession to eligible data centres and warehouses from 1 July 2025, where construction commenced after 7:30 pm (AEST) on 9 May 2023. The start date for the proposal is deferred from 1 July 2025 to the first 1 January, 1 April, 1 July or 1 October after the amending legislation receives assent.
Source: Budget Paper No 2, p 4.
The ATO will be given $999 million in funding over 4 years to extend and expand its tax compliance activities.
Additional funding includes:
Source: Budget Paper No 2, p 7.
Treasurer Jim Chalmers has handed down the federal budget, with the SMSF sector keeping a close eye on the government’s Div 296 position.
Unfortunately, the government has remained committed to the Division 296 $3 million super tax despite wide-ranging pushback on the controversial measure. The Budget confirmed that the government has no plans of backing down on the tax and will take what the SMSF Association called an “ill-conceived initiative” to the election. SMSF Association chief executive Peter Burgess said the government has continued to ignore the concerns of the super industry even as the measure has been rebuffed in the Senate. “As a revenue item, tonight’s budget was the last opportunity for the government to either take this tax off the table or make changes to address the significant issues raised by industry and the Parliament,” Burgess said. “Material changes to this tax, which impact the government’s previously budgeted revenue estimate for this proposed measure, would have needed to be reflected in the budget. Considering there was no mention of changes, the government is now committed to taking this tax to the next election, warts and all.” Burgess added that it is a complex tax initiative and would be difficult and costly for both the ATO and broader superannuation industry.
“It’s disappointing that the government has decided to ride roughshod over these legitimate concerns. As we have said ad nauseum, it’s time for the government to take this tax off the table and work with industry on an equitable solution to the problem they are trying to solve,” Burgess said. We strongly agree with Burgess's comments, and the Division 296 will now be a hot topic election issue. We look forward to further comments from Shadow Treasurer Angus Taylor MP on this issue. In the meantime, please ensure your local Federal MP understands the impact of this tax on you and your family.
Source: Dissecting budget 2025: Is Div 296 back?, SMSF Adviser, March 25, 2025
Tax practitioner regulation and compliance will be enhanced by strengthening the sanctions available to the Tax Practitioners Board (TPB), modernising the registration framework for tax practitioners and providing funding to the TPB to undertake additional compliance targeting high-risk tax practitioners over 4 years from 1 July 2025.
The measure will protect taxpayers from tax agent misconduct, including poor and unlawful tax advice, and maintain community confidence in the integrity of the tax system. The measure will also support the sustainability of the tax profession by increasing the ease of re‑entry for tax and business activity statement agents who take career breaks.
The measure forms part of the government’s response to the PwC matter and implements recommendations from the 2019 Independent Review of the Tax Practitioners Board.
The government will consult on the implementation details of the measure.
As a firm committed to the highest professional standards, we support measures that strengthen integrity in the tax system and ensure clients continue to receive quality advice.
Source: Budget Paper No 2, p4-5.
The list of specifically listed deductible gift recipients (DGRs) will be updated to list the following organisations as DGRs:
In addition, Foundation Broken Hill Limited and Lord Mayor’s Charitable Foundation will retain their specific listing status in the tax law, allowing them to undertake charitable activities unique to their communities that would otherwise fall outside the community charity DGR category. They will no longer be included on a list of entities for DGR endorsement by the ATO as a community charity.
Source: Budget Paper No 2, p 7-8.
Indexation on draught beer excise and excise equivalent customs duty rates will be paused for a 2‑year period from August 2025.
Biannual indexation of draught beer excise and excise equivalent customs duty rates due to occur in August 2025, February 2026, August 2026, and February 2027 will not take place. Biannual indexation will recommence from August 2027.
The Coalition announced on 1 March 2025 that, if elected, it would also freeze indexation on draught beer excise for 2 years.
Source: Budget Paper No 2, p 8; Prime Minister and Treasurer, Albanese Labor Government to freeze draught beer excise [joint media release], 1 March 2025; Shadow Treasurer, Coalition backs struggling hospitality sector left in ruins by Labor [media release], 1 March 2025.
The excise remission cap is proposed to be increased from $350,000 to $400,000 each financial year for all eligible alcohol manufacturers, including brewers and distillers, from 1 July 2026. The Wine Equalisation Tax (WET) producer rebate would similarly increase from $350,000 to $400,000 each financial year from 1 July 2026.
Source: Budget Paper No 2, p 8; Prime Minister, Treasurer and Minister for Trade and Tourism, Albanese Government provides tax relief to support investment and jobs [joint media release], 22 February 2025.
Additional tariffs on goods that are the produce or manufacture of Russia or Belarus will be extended by a further 2 years, to 24 October 2027.
The temporary measure continues to deny Russia and Belarus access to the most favoured nation status through the application of an additional 35% tariff on goods that are the produce or manufacture of Russia or Belarus and had not left for direct shipment to Australia from a place of manufacture or warehouse before 25 April 2022.
Source: Budget Paper No 2, p 3.
81 min read
The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024. Describ...
