Budget Breakdown: What You Need to Know
On Tuesday, 25 March 2025, Treasurer Jim Chalmers delivered his 4th Federal Budget, outlining the Government’s financial plans for 2025–26. For accountants and small business owners across Australia, this budget contains several significant measures that will impact your operations, compliance requirements, and potential opportunities.
ATO Compliance Funding: The Taxman Cometh (Again)
In what has become a predictable feature of recent budgets, the ATO will receive yet another substantial funding boost to enforce taxpayer compliance. This expanded funding will support several key programs:
- Tax Avoidance Taskforce
- Shadow Economy Compliance Program
- Personal Income Tax Compliance Program
- Tax Integrity Program
For accountants, this signals the need to ensure your clients’ affairs are in impeccable order, as audit activity is likely to increase across all business segments.
Tax Practitioners in the Spotlight
The Tax Practitioners Board (TPB) is set to receive additional funding and enhanced powers to target high-risk practitioners from 1 July 2025. This includes strengthened sanctions and a modernised registration framework.
On a more positive note, the TPB has been instructed to support the sustainability of the tax profession by increasing the ease of re-entry for tax and BAS agents who take career breaks. The government will consult on implementation details, so stay tuned for opportunities to provide input.
Managed Investment Trust Changes Confirmed
The Budget confirms the previously announced clarification of tax arrangements for managed investment trusts (MITs). Foreign-based widely-held investors will maintain access to concessional withholding tax rates on eligible distributions through MITs, applicable from 13 March 2025.
Start dates have also been deferred for:
- The clean building MIT withholding tax concession
- Strengthening the foreign resident capital gains tax regime
Instant Asset Write-Off
While not explicitly mentioned in the budget papers, the government appears to be proceeding with the extension of the instant asset write-off for 2024–25. This allows small businesses with aggregated turnover under $10 million to:
- Deduct the full cost of eligible assets under $20,000
- Deduct cost additions under $20,000 for previously written-off assets
- Write off small business pool balances under $20,000 at year-end
The Opposition has proposed expanding this to businesses with turnover under $50 million and raising the threshold to $30,000.
Support for Apprentices and Training
The Budget allocates funding over four years to increase support for apprentices, including:
- Reframing the New Energy Apprenticeships Program as the Key Apprenticeship Program
- Extending the Australian Apprenticeship Incentive System
- Increasing the Disability Australian Apprentice Wage Support subsidy
- Raising the Living Away From Home Allowance
Additionally, Free TAFE will become permanent from 1 January 2027, funding at least 100,000 places annually.
Relief for Alcohol Producers
Good news for brewers, distillers and wine producers:
- Draught beer excise indexation will be frozen for two years from August 2025
- Excise remission and Wine Equalisation Tax producer rebate caps will rise from $350,000 to $400,000 per year from 1 July 2026
Tackling Illegal Phoenixing
To combat illegal phoenix activity—especially in construction—the Government will:
- Provide additional funding to ASIC for targeted data analytics
- Stabilise Australia’s business registers
- Link Director Identification Numbers (DINs) to the Company Register
These measures aim to improve information quality and deter fraudulent activity.
Employment Contract Reforms
A major workplace relations change will ban non-compete clauses for workers earning below the high-income threshold (currently $175,000), affecting over 3 million Australians.
Other changes include closing competition law loopholes around:
- Wage-fixing through anti-competitive arrangements
- “No-poach” agreements between businesses
These reforms will take effect from 2027.
Support for Franchisees
Franchisees will benefit from more funding for the ACCC to enhance oversight of the Franchising Code of Conduct, aiming to build a more transparent and effective framework.
Foreign Property Investment Restrictions
The ATO will be funded to enforce the ban on foreign residents purchasing established properties, effective 1 April 2025. An audit program will also target land banking by foreign investors.
Charitable Giving
The Budget updates tax law to list six new organisations as deductible gift recipients (DGRs) after 30 June 2025. St Patrick’s Cathedral Melbourne Restoration Fund will be eligible for DGR status from 30 June 2027.
What This Means for You
For accountants and small business owners, this Budget presents a mix of opportunities and challenges. Key takeaways include:
- Tax planning opportunities from the extended instant asset write-off
- Increased compliance pressure due to ATO and TPB funding boosts
- Workplace changes from upcoming employment law reforms
- Support for training and apprenticeships to help address skills gaps
Now is the time to consult with DSV Partners to prepare for the year ahead. Review your tax strategy, employment contracts, and compliance processes to stay ahead of these changes.