BUDGET 2026

The governments fourth budget has been handed down and below are some of the key components that affect most individuals and businesses.

Personal income tax measures

1.1Personal tax cuts

From 1 July 2026, ie the 2027 tax year, the 16% tax rate will reduce to 15% and from 1 July 2027, by another 1% to 14%. A small decrease, but more disposable income for all Australians.

1.2 Increased Medicare levy low-income thresholds

The Government has increased the Medicare levy low-income threshold amounts and phase in ranges for singles, families and seniors and pensioners that apply for the 2025 tax year.

The threshold has been increased up to $27 222 for individuals while the family threshold has been increased to $45,907. For single seniors and pensioners, the threshold has been increased to $43,020 while the family threshold will increase to $59,886.

The family income thresholds will now increase by $4,216 for each dependent child, up from $4 027.

1.3 Electricity Bill

Every Australian household will get a $150 rebate on their power bills in the way of two $75 rebates off their quarterly energy bills.

Small business measures

2.1 No extension to the instant asset write-off

The Government has not announced that it will extend the instant asset write-off threshold for small business entities of $20,000 past 30 June 2025.
This means that unless a law is passed before 30 June 2025 to extend this threshold, you must assume that it will decrease to $1 000 from 1 July 2025.

2.2 Support for Hospitality Sector

The Government will increase support for hospitality venues, brewers, distillers and wine producers through changes to the alcohol tax settings in Australia.
The Government will pause indexation on draught beer excise and excise equivalent customs duty rates for a two-year period, from August 2025.
Under this measure, biannual indexation of draught beer excise and excise equivalent customs duty rates due to occur in August 2025, February 2026, August 2026 and February 2027 will not occur. Biannual indexation will then recommence from August 2027.
The Government will also increase support available under the existing Excise remission scheme for manufacturers of alcoholic beverages (the ‘Remission scheme’) and Wine Equalisation Tax (‘WET’) producer rebate (‘Producer rebate’).
Currently, all eligible brewers and distillers can receive an excise remission under the Remission Scheme up to a cap of $350,000. All eligible wine producers can currently receive a WET rebate
up to a cap of $350,000 under the Producer rebate. This measure will increase the caps for all eligible brewers, distillers and wine producers to $400,000 per financial year, from 1 July 2026. 

Other measures

3.1 Restricting Foreign Ownership of Housing

The Government will take action to ensure foreign investment in housing supports the Government’s broader agenda to boost Australia’s housing supply in the following ways:
• Banning foreign persons (including temporary residents and foreign-owned companies) from purchasing established dwellings for two years from 1 April 2025, unless an exception applies.
Exceptions to the ban will include investments that significantly increase housing supply or support the availability of housing on a commercial scale, and purchases by foreign-owned companies to provide housing for workers in certain circumstances.

3.2 Expansion to Help to Buy scheme for First Home Buyers 

Under the Help to Buy scheme, the Government will provide an equity contribution of up to 40% to support eligible home buyers to purchase a home with a lower deposit and a smaller mortgage.
The Government will boost the scheme by increasing income caps from $90,000 to $100,000 for individuals and from $120,000 to $160,000 for joint applicants and single parents.
Property price caps will also be increased and linked with the average house price in each state and territory, rather than dwelling price.

3.3 Student Debts

As previously announced by the Prime Minister on 3 November 2024, the Government will reduce all outstanding Higher Education Loan Program (‘HELP’) and other student debts by 20%, subject to the passage of legislation. The 20% reduction is in addition to the recent indexation reforms.
The Government is also increasing the amount that people can earn before they are required to start paying back their loans, from $54,435 in the 2025 income year to $67,000 in the 2026 income year.

3.4 Banning non-compete clauses for Low and Middle income workers

The Government will ban non-compete clauses that apply to workers earning less than the high income threshold in the Fair Work Act (currently $175,000). The Government will also close loopholes in competition law that currently allow businesses to:
• fix wages by making anti-competitive arrangements that cap workers’ pay and conditions, without the knowledge and agreement of affected workers; and
• use ‘no-poach’ agreements to block staff from being hired by competitors.

3.5 National Anti-scam Centre

The Government will provide $6.7 million in the 2026 income year to extend the operation of the National Anti-Scam Centre within the Australian Competition and Consumer Commission (‘ACCC’)
to continue protecting consumers and businesses from scam activity.

Should you have any questions specific to your situation, contact us at questions@accoladeaccounting.com.au or contact  Accolade Accounting on (08) 6263 4466 or (03)  9524 3145 to get further advice.