Federal Budget 2025: A Snapshot
The Treasurer last night unveiled the Federal Budget for 2025-2026. Here’s a snapshot of some key points.
For the first time in history, Australia’s gross debt is tipped to exceed $1 trillion later this year. At the same time, the economy is forecast to grow over the next year at just 3.25%, one of the lowest growth rates seen since the 1990s.
Together, these factors will test the resilience of the economy to withstand shocks and turbulence caused by domestic and international issues likely to manifest and impact Australia in the next few years. In the face of these testing times, businesses will need to develop strategies and plans to safeguard their prosperity.
There is little in this Budget to assist businesses in this respect.
1. The headline item from the Budget is the tax cuts offered to all individual taxpayers. From 1 July 2026, the marginal tax rate for all income above $18,200 and up to $45,000 will reduce from 16% to 15%. This rate then will further reduce to 14% as from 1 July 2027.
2. The Budget Papers also disclosed a commitment to ban foreign persons (including temporary residents and foreign-owned companies) from purchasing established dwellings in Australia for two years from 1 April 2025.
3. Unlike in every previous Budget over the last decade, there is no extension to allow small businesses (i.e., businesses with turnover under $10 million) the ability to instantly write-off asset purchases up to $20,000. That means that all asset purchases from 1 July 2024 onwards will need to be depreciated over a number of years instead of immediately deducted upfront.
4. Additionally, the Treasurer announced an intention to ban non-compete clauses in employment contracts for employees earning up to $180,000 per year. No further details are known about this measure at this time, including the scope of employees and industries to whom such a ban would apply.
The implementation of these Budget measures will depend upon the outcome of the impending federal election. We await to see how the federal opposition will respond and what measures they will adopt, reject or propose entering into the election campaign.
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The Macro Group Team
Date: 26/03/2025
The Macro Group Limited AFSL:485843 Tax Agent Number 24 76 5236.
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