As your trusted advisors here at TSP Accountants, I’m pleased to share with you the key highlights of the recently announced 2025/26 Australian Federal Budget. This budget comes at a crucial time, addressing the ongoing cost of living and housing crisis while also setting the stage for the upcoming Federal election. Here are some of the most impactful measures that could affect you and your business.
Federal Budget | Personal Income Tax Relief
The government has announced new tax cuts for individual taxpayers, providing much-needed relief in these challenging times. Starting from 1 July 2026, the current 16% tax rate will be reduced to 15%, and it will further decrease to 14% from 1 July 2027. This means that if you’re earning between $18,201 and $45,000, you could see a tax cut of up to $268 in the 2027 income year and up to $536 from the 2028 income year.
Additionally, the Medicare levy low-income thresholds will be increased from 1 July 2024, ensuring that low-income individuals remain exempt from paying the Medicare levy or pay a reduced rate. For instance, the threshold for single individuals will rise from $26,000 to $27,222 in the 2025 income year..
Federal Budget Insights
Cost of Living Support
Recognising the financial pressures many Australians face, the government has extended energy bill relief. Eligible households and small businesses will receive two $75 bill rebates directly off their electricity bills until 31 December 2025. This measure aims to provide immediate cost-of-living relief to those who need it most.
Housing Affordability Measures
The Help to Buy scheme has been expanded to make homeownership more accessible. The government will now provide an equity contribution of up to 40% to support eligible home buyers in purchasing a home with a lower deposit and a smaller mortgage. Income caps for the scheme have been increased to $100,000 for individuals and $160,000 for joint applicants and single parents.
To address housing supply issues, the government is taking action to restrict foreign ownership of housing. From 1 April 2025, foreign persons will be banned from purchasing established dwellings for two years, with some exceptions. This measure aims to prioritise housing availability for Australian residents.
Education and Student Loan Relief
In a significant move to support education, the government will reduce all outstanding Higher Education Loan Program (HELP) and other student debts by 20%, subject to the passage of legislation. Furthermore, the income threshold for loan repayments will increase from $54,435 in the 2025 income year to $67,000 in the 2026 income year. This change will provide relief to many Australians still paying off their student loans.
Foreign Resident Capital Gains Tax Regime
For those involved in international investments, it’s worth noting that the government has deferred the start date of the strengthened foreign resident capital gains tax regime. The new measures, which include broadening the types of assets subject to CGT for foreign residents and amending the principal asset test, will now commence from 1 October 2025, or later, depending on when the applicable Act receives Royal Assent.
Business Implications
While the budget primarily focuses on individual relief, there are implications for businesses as well. The energy bill rebates for small businesses and the changes to foreign investment in housing could impact various sectors of the economy. Additionally, the personal income tax cuts may influence consumer spending patterns, potentially benefiting businesses across different industries.
As we navigate these changes, it’s crucial to understand how they may affect your personal finances and business operations. At TSP Accountants & Business Advisors, we’re here to help you make sense of these budget measures and optimise your financial strategy accordingly.
Looking Ahead
This budget reflects the government’s efforts to address immediate economic challenges while also laying the groundwork for future growth. As we approach the Federal election, it’s clear that cost of living pressures and housing affordability remain top priorities.
At TSP, we understand that every individual and business situation is unique. Whether you’re wondering how the new tax cuts will affect your take-home pay, considering purchasing your first home under the expanded Help to Buy scheme, or navigating the implications for your business, we’re here to provide personalised advice and support.
Remember, the full impact of these budget measures can be complex and may vary based on your specific circumstances. If you have any questions about how the 2025/26 Federal Budget will affect you or your business, don’t hesitate to reach out to us at TSP Accountants & Business Advisors. We’re committed to helping you navigate these changes and make informed financial decisions.
Stay tuned for more updates as we continue to analyse the budget’s implications. Together, we can ensure that you’re well-positioned to benefit from these new measures and help you optimise these measures for you personally or for your business.
If you could like to discuss any of these budget measures please contact your TSP team on 4926 4155 or email ad***@****************om.au to make an appointment
When not at work, Deidre enjoys spending time with her husband and two children, as well as indulging in audiobooks and coffee.
Areas of Expertise:
✅ Business structuring & compliance
✅ SMSF strategy & auditing
✅ Tax planning for individuals & businesses
📧 deidrem@tspaccountants.com.au
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