A Bill has been introduced and passed by both Houses of Parliament that addresses individual income tax cuts and adjustments to Medicare levy thresholds, as announced in the 2025-26 Federal Budget on 25 March 2025. The Bill is now awaiting Royal Assent. Schedule 1 reduces the current 16% personal income tax rate (applying to the $18,201 to $45,000 bracket) to 15% for the 2026-27 income year and to 14% for the 2027-28 income year and beyond. Schedule 2 proposes increasing specific Medicare thresholds- namely, low-income thresholds for individuals and families, for those eligible for the Senior Australian and Pensioner Tax Offset (SAPTO), and the surcharge low-income threshold- adjusted following the CPI, effective retrospectively from the 2024-25 income year.
Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2025
The Bill, which covers various tax-related amendments, has now passed both Houses of Parliament and is awaiting Royal Assent. The Bill has amendments for:
- Tightening the definition of a fuel-efficient vehicle for luxury car tax purposes in A New Tax System (Luxury Car Tax) Act 1999
- Refusing deductions for GIC and SIC amounts
- Extending the ATO notification time period for retaining refunds
- Extending the $20,000 instant asset write-off to 30 June 2025 for small business entities.
The increased threshold for the instant asset write-off has been raised to $20,000 and is applicable for the income year ending on 30 June 2025. However, the 2025-26 Federal Budget did not mention any further extensions of this increased threshold beyond 30 June 2025. If there are no additional amendments to the rules, the instant asset write-off threshold will revert to $1,000 after that date.