Monthly technical briefing - April 2025

Personal marginal tax rates

The government will deliver new tax cuts to every Australian taxpayer from 1 July 2026. These tax cuts are in addition to the first round of tax cuts that commenced on 1 July 2024.

The proposed changes are:

• From 1 July 2026, the 16 per cent rate will be reduced to 15 per cent.
• From 1 July 2027, the 15 per cent rate will be reduced further to 14 per cent.

The current and proposed marginal tax rates for residents are as follows:

Medicare levy low-income thresholds

The government will increase the Medicare levy low income thresholds for singles, families, and seniors and pensioners from 1 July 2024 to provide cost of living relief. The increase to the thresholds ensures that low income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate.

The increase to the thresholds is estimated to decrease receipts by $648.0 million over five years from 2024–25.

The threshold for singles will be increased from $26,000 to $27,222. The family threshold will be increased from $43,846 to $45,907. For single seniors and pensioners, the threshold will be increased from $41,089 to $43,020. The family threshold for seniors and pensioners will be increased from $57,198 to $59,886. The family income thresholds will increase by $4,216 for each dependent child or student, up from $4,027.

There were no budget measures announced relating to superannuation other than funding to extend the Tax Integrity Program. This will enable the ATO to continue its engagement program to ensure timely payment of tax and superannuation liabilities by medium and large businesses and wealthy groups. This measure is estimated to increase receipts by $3.2 billion over five years from 2024–25, and increase payments by $1.4 billion, including $31.0 million in unpaid superannuation to be disbursed to employees.

Cheaper Medicines

The government will provide $784.6 million over four years from 2025–26 (and $236.4 million per year ongoing) to lower the Pharmaceutical Benefits Scheme (PBS) general patient copayment from $31.60 to $25.00 on 1 January 2026.

The measure extends the 2024–25 Budget measure titled Securing Cheaper Medicines and the 2022–23 October Budget measure titled Plan for Cheaper Medicines.

Implementation of Aged Care Reforms

The government will provide $291.6 million over five years from 2024–25 (and an additional $12.7 million in 2029–30) to continue the delivery of aged care reforms and the implementation of recommendations from the Royal Commission into Aged Care Quality and Safety.

Strengthening Medicare – Bulk billing

The government will provide additional funding of $8.4 billion over five years from 2024–25 (and $2.5 billion per year ongoing) to increase access to bulk billing.

Of this funding $7.9 billion will be provided over four years from 2025–26 (and $2.4 billion per year ongoing) to expand eligibility for bulk billing incentives to all Australians and introduce the new Bulk Billing Practice Incentive Program for general practices if they bulk bill every visit under Medicare. This is the largest single investment in the Medicare Benefits Schedule (MBS) to increase access to bulk billing.

Housing Support

The government will provide $58.8 million over five years from 2024–25 to increase support for housing, including:

• $54.0 million over four years from 2024–25 to increase the supply and adoption of prefabricated and modular housing construction, including:
  • $49.3 million over two years from 2025–26 to support states and territories to scale up existing projects for prefabricated and modular housing construction
  • $4.7 million over four years from 2024–25 to develop a voluntary certification and rating scheme for prefabricated and modular housing manufacturers. Costs for the scheme will be recovered from industry from 2028–29 onwards.
• $4.9 million over four years from 2025–26 to continue the Regional Home Guarantee and Family Home Guarantee streams of the Home Guarantee Scheme.

The government will also provide $0.8 billion in additional investment in the Help to Buy program, bringing total equity investments to $6.3 billion, through increasing property price caps and increasing income caps from $90,000 to $100,000 for singles and from $120,000 to $160,000 for joint applications.

This measure builds on the 2024–25 Budget measure titled Housing Support.

Restricting foreign ownership of housing

The government proposes action to ensure foreign investment in housing supports the government’s broader agenda to boost Australia’s housing supply by:

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.

Additional Support for the Housing Services Sector  

The government will provide $8.9 million over three years from 2025–26 to improve and expand support services for vulnerable Australians, including Australians experiencing housing insecurity and family, domestic and sexual violence.

Strengthening the National Disability Insurance Scheme

The government will provide additional funding of $175.4 million over four years from 2025–26 (and $43.8 million per year ongoing) to further safeguard the integrity of the National Disability Insurance Scheme (NDIS) and support people with disability. Funding will cover:

• $151.0 million over four years from 2025–26 (and $43.8 million per year ongoing) to continue enhancements to the National Disability Insurance Agency’s (NDIA’s) fraud detecting information technology systems, with this funding to be held in the Contingency Reserve until the fraud and compliance system enhancements funded in previous economic updates are complete
• $17.1 million in 2025–26 to continue to invest in the NDIA’s ability to detect and respond to fraud and non‑compliant payments
• $7.3 million in 2025–26 to extend supplementary funding for the NDIS Appeals Program.

Support for People with Disability

The government will provide $423.8 million over five years from 2024–25 (and $150.0 million per year ongoing) to support inclusion and build the capacity of people with disability and their families through improving accessibility, delivery of inclusive community services, and general understanding of disability.

Energy Bill Relief Fund Extension

The government will provide $1.8 billion over two years from 2025–26 to continue energy bill rebates of $75 per quarter for eligible Australian households and small businesses until 31 December 2025 to provide cost-of-living relief.

This measure extends the 2024–25 Budget measure titled Energy Bill Relief Fund – extension and expansion.

Banning non-competes for low and middle income workers

Non-compete clauses prevent or restrict workers from moving (or attempting to move) to a competing employer, or from starting or operating a competing business, with a specific geographic location and for a certain duration.

The government’s Competition Review found compelling evidence that non-compete clauses are now a common and growing feature of Australia’s labour market, and are suppressing the wages of many workers, including many lower-paid and vulnerable workers. The review found the clauses are often being used indiscriminately across income levels and occupations including for child care workers, construction workers and hairdressers.

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
• Use ‘no-poach’ agreements to block staff from being hired by competitors

Enhancing Tax Practitioner Regulation and Compliance

The government will strengthen the sanctions available to the Tax Practitioners Board (TPB), modernise the registration framework for tax practitioners and provide funding to the TPB to undertake additional compliance targeting high-risk tax practitioners over four years from 1 July 2025.

This measure will protect taxpayers from tax agent misconduct, including poor and unlawful tax advice, and maintain community confidence in the integrity of the tax system.

It will also support the sustainability of the tax profession by increasing the ease of re-entry for tax and business activity statement agents who take career breaks.

This measure forms part of the government’s response to the PwC matter and implements recommendations from the 2019 Independent Review of the Tax Practitioners Board.

The government will consult on the implementation details of the measure.

Strengthening Tax Integrity

The government will strengthen the fairness and sustainability of Australia’s tax system by providing $999.0 million over four years to the Australian Taxation Office (ATO) to extend and expand tax compliance activities.

Additional funding includes:

• $717.8 million over four years from 1 July 2025 for a two-year expansion and a one-year extension of the Tax Avoidance Taskforce. This supports the ATO’s continued tax compliance scrutiny on multinationals and other large taxpayers.
• $155.5 million over four years from 1 July 2025 to extend and expand the Shadow Economy Compliance Program to reduce shadow economy behaviour such as worker exploitation, under‑reporting of taxable income, illicit tobacco and other shadow economy activity that enables non‑compliant businesses to undercut competition.
• $75.7 million over four years from 1 July 2025 to extend and expand the Personal Income Tax Compliance Program. This will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance.
• $50.0 million over three years from 1 July 2026 to extend the Tax Integrity Program. This will enable the ATO to continue its engagement program to ensure timely payment of tax and superannuation liabilities by medium and large businesses and wealthy groups.

This measure is estimated to increase receipts by $3.2 billion over five years from 2024–25, and increase payments by $1.4 billion, including an increase in GST payments to the states and territories of $402.6 million and $31.0 million in unpaid superannuation to be disbursed to employees.

Delivering Better Financial Outcomes (DBFO) – Tranche 2

On 21 March 2025, Treasury released exposure draft legislation relating to the Delivering Better Financial Outcomes (DBFO) reforms.

The measures contained in this consultation are:

1. The replacement of the statement of advice (SOA) with a client advice record (CAR)
   
   Key components of this change include:
   • The presentation and content requirements for the CAR are aimed at supporting clients to make informed decisions. Content requirements of the CAR include (at a minimum):
     • The words “Client Advice Record” featured prominently
     • The scope of the advice
     • The advice
     • Reasons for the advice, including how it meets the client’s objectives, financial situation and needs
     • Cost of the advice to the client and benefits received by the provider
     • The name and contact details of the providing entity and whether the providing entity is an authorised representative.

   The policy intent behind the new requirement is to focus on information that a client needs to make an informed decision. Therefore, the level of detail should be scalable, and based on a number of factors, including the scope and complexity of the advice. This contrasts with SOAs, which in practice, have tended to contain information relevant to record-keeping and proof of compliance.

   • The circumstances in which the CAR must be provided will remain the same as the current SOA requirements.
   • The current record-keeping requirements are amended to encourage a risk-based approach to keeping records.

2. Rules on what topics can be collectively charged for from superannuation
   

   
   Collective charging refers to advice fees that are charged across multiple members of a super fund, rather than fees charged to specific members. Currently, trustees are prohibited from collectively charging advice fees that relate to a financial product that is not a beneficial interest in the fund.

   The draft changes set out to provide a framework to clarify the scope of this prohibition and provide guidance to trustees about when advice is or is not taken to relate to a financial product that is a beneficial interest in the fund. The consultation process is seeking feedback on lists, to be included in regulations, that will clarify the range of advice that can be collectively charged to members. These lists are:

   • Allowed topics in relation to the member’s interest in the fund (e.g. contributions, investments, insurance and retirement income)
   • Allowed circumstances that can be considered in the advice (e.g. cashflow and income, assets and interests outside the fund, eligibility for government services and the financial position of a spouse etc), and
   • Disallowed topics (e.g. purchase/disposal of assets outside the fund, holistic financial planning, estate and tax planning).

   The proposals include amendments to MySuper legislation to allow trustees of MySuper products to charge advice fees in accordance with arrangements between members and third party financial advisers or in accordance with the terms of a written request or written consent of the member.

3. Targeted super prompts by trustees to drive greater member engagement at key life stages

Currently the law relating to the personal and general advice is not suited to super funds providing advice of a general nature through targeted prompts to groups of members. This is because the advice may be considered personal advice if the member assumes the fund has considered their objectives, financial situation or needs, and this would then require the fund to comply with the requirements associated with personal advice. Additionally, generic information provided to members may be discarded for being perceived as irrelevant.

This proposal aims to address this limitation by providing a framework for trustees to work within. The framework will involve developing a targeted group, considering the appropriateness of the advice and taking steps to identify and manage any risks.

Consultation closes on 2 May 2025.

The government have stated that it is developing draft legislation to modernise the best interests duty, remove the safe harbour steps and create a new class of adviser. These changes will also be subject to consultation and will be introduced to Parliament in a single bill with the changes released on 21 March 2025.

Further information can be found here: Treasury consultation page and Ministers media release

Payday super

On 14 March 2025, Treasury released exposure draft legislation in relation to the government’s payday super 2023-24 Budget announcement.

The proposed changes to the law include:

• A requirement for employers to pay employee super at the same time as their salary and wages
• An update to the penalties and charges for late or missed super payments and to ensure employees are fully compensated for any delay in receiving their super.

The changes aim to streamline the way employer super is paid to make it easier to meet their obligations.

The objective of the change is to reduce the amount of unpaid super. The extent of the problem is significant and the ATO estimates that $5.2 billion of super was unpaid in 2021-22.

The government has indicated that a 25-year-old median income earner that is currently receiving their super quarterly and wages fortnightly could retire with around $6,000 more in super.

In addition, the proposed changes include a ban on advertising certain super products to an employee during the employee onboarding process. Exclusions from the ban include:

• The employer’s default super fund
• MySuper products that meet certain requirements

The changes are proposed to commence on 1 July 2026.

Submissions to the consultation are due by 11 April 2025.

Further information can be found here: Treasury consultation page and Ministers media release

SMSF annual return reminder

The ATO has issued a reminder in their SMSF newsroom regarding the lodgement due dates for SMSFs that use a tax agent. For the 2023-24 SMSF annual return (SAR), the due dates are:

• 15 May 2025 for funds not eligible for the 5 June lodgement concession date
• 5 June 2025 for funds that were non-taxable or received a refund by latest year lodged and are non-taxable or will receive a refund in current year.

The SAR due date for SMSFs that were established in the 2023-24 year were either 31 October 2024 or 28 February 2025, depending on the fund’s circumstances.

Further information can be found here:
News room and Super lodgement information

Bendel and Division 7A - Interim Decision Impact Statement and appeal to the High Court

On 19 March 2025 the ATO released an interim decision impact statement (DIS) in relation to the Full Federal Court’s decision regarding the case Commissioner of Taxation v Bendel [2025] FCAFC 15.

This case considered whether a private company's failure to call for payment of entitlements to income of an associated trust was the provision of 'financial accommodation' and, therefore, a loan for the purposes of section 109D of the Income Tax Assessment Act 1936 (ITAA36). Where the arrangement is considered a loan then the corporate beneficiary is deemed to have paid a dividend.

The decision of the Full Federal Court was that the corporate beneficiary did not make a loan to the trust for the purposes of Division 7A and consequently there was no deemed dividend.

The ATO has filed a special leave application to have the decision heard by the High Court.

The ATO noted in the DIS that they will be ‘administering the law in accordance with the published views relating to private company entitlements and trust income in TD 2022/11’ until the matter is finalised in the High Court.

Further, the ATO has indicated that a distribution to a corporate beneficiary for tax purposes but retained by the trust could have implications under other taxation laws, such as section 100A of ITAA36.

Further information can be found here: Interim Decision Impact Statement - Commissioner of Taxation v Bendel [2025] FCAFC 15

Early release of superannuation data

A number of social security rates and thresholds have been indexed at 20 March 2025.

The updated rates and thresholds can be found here: Social security indexation

The schedule of fees and charges for residential and home care have been indexed at 20 March 2025.

The updated rates and thresholds can be found here: Entry to care from 1 July 2014 and Entry to care pre-1 July 2024

Importantly, significant reforms have been passed by Parliament with some changes applying from 1 January 2025 and most from 1 July 2025. Grandfathering of the existing rules will apply to those that have entered residential aged care before 1 July 2025 and those receiving home care in certain circumstances.

These reforms rely on Legislative Rules in order to fully implement the changes, which have not been released at the time of writing. The government is expected to update the My Aged Care Fee Estimator to include the new rates and thresholds.