Australia’s Treasurer Jim Chalmers presented the 2025-26 Budget on 25 March 2025. The tax measures are limited and include plans to amend tax laws for managed investment trusts, allowing legitimate investors to access concessional withholding tax rates under the Australian Taxation Office (ATO) guidelines, effective 13 March 2025.
The 2025-26 Budget delivers on the Government’s economic plan, which is focused on finishing the fight against inflation, rolling out responsible cost-of-living relief, and building a stronger economy and budget.
As part of reducing the cost of living, Chalmers said his government’s AUD 17.1 billion two-step tax cut aims to benefit lower-income workers the most. The government also outlined proposals for strengthening the economy with new National Competition Policy measures, including allocating over AUD 3 billion for green metals production under the Future Made in Australia initiative and boosting the Clean Energy Finance Corporation by AUD 2 billion.
Other proposals include amendments to small and medium business tax measures and increased excise remission cap and wine tax rebates for alcohol manufacturers.
Deferred start dates for key tax measures for upcoming budgets
The start dates of the following tax measures have been deferred:
- The 2023–24 budget measure extends the clean building managed investment trust withholding tax concession from 1 July 2025 to the first 1 January, 1 April, 1 July, or 1 October after the Act receives Royal Assent;
- The 2024–25 budget measure Strengthening the foreign resident capital gains tax regime will apply from 1 July 2025 or the next 1 January, 1 April, 1 July, or 1 October after the Act receives Royal Assent, whichever is later.
Small and medium business tax measures
The budget included a Small Business Statement outlining AUD 2 billion in targeted support. This covers non-tax measures like extended energy bill relief through 31 December 2025, 20-day payment terms for contractors in specific sectors, and financial aid for the hospitality sector, alcohol producers, and creditors affected by the Whyalla Steelworks administration.
Excise remission cap raised for alcohol manufacturers
The government announced increases to excise remission cap and wine tax rebates for alcohol manufacturers, raising the cap to AUD 400,000 from AUD 350,000, starting 1 July 2026. Additional support will be provided to Australian distillers, brewers, and wine producers to expand exports in key overseas markets.
New tax cuts for individuals
The government will deliver more tax cuts to all Australian taxpayers, with additional tax cuts in 2026 and 2027. These tax cuts will be delivered over two years:
- From 1 July 2026, the 16% tax rate, which applies to taxable income between AUD 18,201 and AUD 45,000, will be reduced to 15%;
- From 1 July 2027, this tax rate will be reduced to 14%.
