2025 Budget Breakdown: Key Impacts for Small Businesses and Accountants
On Tuesday, 25 March 2025, Treasurer Jim Chalmers delivered his fourth 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.”
This could be welcome news for professionals considering temporary career pauses. 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, such as pension funds, will maintain access to concessional withholding tax rates on eligible distributions through MITs. These amendments will apply to fund payments from 13 March 2025.
Additionally, start dates have 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 measure allows small businesses with aggregated turnover under $10 million to:
- Deduct the full cost of eligible assets under $20,000 (first used or installed between 1 July 2024 and 30 June 2025)
- 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 increasing the threshold to $30,000. The Opposition Leader’s Budget Reply Speech on Thursday night may provide more details on this alternative approach.
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 program
- Increasing the Disability Australian Apprentice Wage Support subsidy
- Raising the Living Away From Home Allowance
Additionally, Free TAFE will become a permanent program from 1 January 2027, funding at least 100,000 places annually with priority for those facing barriers to education and employment.
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
- The excise remission cap and Wine Equalisation Tax producer rebate cap will increase from $350,000 to $400,000 per financial year from 1 July 2026
Tackling Illegal Phoenixing
The Government is strengthening efforts to combat illegal phoenixing, particularly in the construction sector, with:
- Additional funding for ASIC to improve data analytics for targeted enforcement
- Funding to stabilise Australia’s business registers
- Linking Director Identification Numbers (DINs) to the Company Register
These measures aim to improve information quality for investors and creditors while deterring fraudulent phoenix activity.
Employment Contract Reforms
In a significant workplace relations change, non-compete clauses will be banned for workers earning less than the high-income threshold (currently $175,000), affecting over three million Australians. The Government will also close loopholes in competition law that currently allow:
- Wage-fixing through anti-competitive arrangements
- “No-poach” agreements between businesses
These reforms will take effect from 2027, giving businesses time to adjust.
Support for Franchisees
Small business franchisees will benefit from additional funding for the ACCC to strengthen oversight of the Franchising Code of Conduct, aiming to create a more transparent and effective regulatory framework.
Foreign Property Investment Restrictions
The ATO will receive funding to enforce the ban on foreign residents purchasing established properties, which takes effect from 1 April 2025. The Government will also implement an audit program targeting land banking by foreign investors.
Charitable Giving
The Budget amends tax law to specifically list six organisations as deductible gift recipients (DGRs) for gifts after 30 June 2025, with St Patrick’s Cathedral Melbourne Restoration Fund listed as a DGR for gifts received after 30 June 2027.
What the 2025 Federal Budget Means for You
For accountants and small business owners, this Budget presents a mix of opportunities and compliance challenges.
The apparent extension of the instant asset write-off provides valuable tax planning opportunities, while increased ATO funding signals heightened scrutiny of tax affairs.
The reforms to non-compete clauses may significantly impact employment arrangements and staff retention strategies across many industries. Meanwhile, additional support for apprentices could help address skills shortages in critical sectors.
As we await the Opposition’s Budget Reply Speech and the passage of key legislation, now is the time to consult with your financial advisers to position your business optimally for the coming financial year.
Stay ahead of these changes by reviewing your tax planning, investment structures, and employment contracts in light of these new proposed measures.
For expert advice and assistance in dealing with your Tax Law and Budget Updates in Australia, please contact Mathews Tax Lawyers on 1800 685 829
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.