With the Federal Election concluded and the Government returned, attention now turns to policy changes that could significantly reshape tax and financial advice. Here are a few measures set to impact individuals, small businesses, and advisers in the years ahead.
1. $1,000 Standard Deduction for Work-Related Expenses
Starting from the 2026–27 income year, the Government proposes introducing a $1,000 automatic deduction for individuals with labour income. This initiative aims to simplify personal tax returns by reducing the need for record-keeping and substantiating individual work-related deductions.
- • Taxpayers earning labour income may claim this deduction without needing to itemise expenses.
- • Those with expenses above $1,000, or who do not have labour income, will continue to use the standard deduction method.
This change could streamline compliance for many employees but may not suit taxpayers with significant deductible work expenses.
2. Extension of the $20,000 Instant Asset Write-Off for Small Business
Small businesses (those with aggregated annual turnover below $10 million) may benefit from an extension of the $20,000 instant asset write-off, proposed to remain in place until 30 June 2026, subject to the passage of legislation.
- • Eligible business assets under $20,000 can be fully deducted in the year of purchase, provided they are first used or installed by the deadline.
- • The threshold applies per asset, encouraging the acquisition of multiple eligible items.
- • Assets over $20,000 may still be depreciated via the small business general pool.
This measure is designed to support capital investment and improve cash flow for small business operators.
3. Reductions in Higher Education Loan Repayments
Two significant changes to Higher Education Loan Program (HELP) repayments are proposed:
- • From 1 June 2025, all outstanding student loan balances will receive a 20% reduction, applied before indexation.
- • From 1 July 2025, the minimum repayment threshold will increase from $54,435 to $67,000 (subject to legislation), reducing compulsory repayment obligations for many.
These changes aim to relieve cost-of-living pressures on young professionals and graduates, effectively increasing net take-home pay for those affected.
4. Division 296: Additional 15% Tax on Large Super Balances
The Government intends to proceed with the introduction of a new Division 296 tax, which imposes an additional 15% tax on earnings related to superannuation balances above $3 million.
Although the original legislation lapsed with the dissolution of Parliament before the election, it is expected to be reintroduced shortly.
Key concerns with the proposed measure include:
- • Taxation of unrealised gains, potentially impacting individuals with illiquid assets.
- • A non-indexed $3 million threshold, which may capture more taxpayers over time.
- • Complexity in calculating liabilities, especially where losses are carried forward.
- • Cash flow and liquidity challenges for SMSFs with holdings in property, agricultural land, or private assets.
If passed, the tax would take effect from 1 July 2025. This remains a critical area for advisers to monitor, particularly for clients with significant superannuation holdings.
Final Thoughts
These proposed measures may affect how you manage your tax and financial affairs in the years ahead. For tailored advice on how these changes could impact you or your business, contact W Wen & Co, Chartered Accountants and Business Advisors on (02) 9871 3429 — we’re here to help.
Information sourced from the Institute of Financial Professionals Australia (IFPA).