Federal Budget leaves taxpayers and practitioners on shaky ground on tax measures but some certainty on regulation
“…a lacklustre Federal Budget that kicks the can down the road as far as tax matters are concerned,” says The Tax Institute’s Head of Tax & Legal.
SYDNEY, 25 March 2025: The Federal Budget 2025–26 failed to substantially address a number of announced but unenacted tax measures, leaving taxpayers and tax professionals uncertain of the future ahead of the Federal election in May.
Julie Abdalla, FTI, Head of Tax & Legal at The Tax Institute, said, “The priorities evident in this Budget are alleviating cost-of-living pressures, healthcare, housing, education, and strengthening the economy. But how will we fund these measures?”
“With staggering debt levels forecast, Australia needs to be looking at one of its most significant means to pay down debt, alleviate pressure on Australian families and businesses, and fund the public services it has committed to in this Budget – the tax system.”
“There were very few mentions of tax measures in this Budget, and it is disappointing that the uncertainty on so many announced but unenacted measures will continue at least until after the Federal election.”
“With only a few Parliamentary sitting days before the election, there are limited opportunities to progress any of the announced measures, overall resulting in a lacklustre Federal Budget that kicks the can down the road as far as tax matters are concerned.”
Announced but unenacted measures are a source of considerable uncertainty for the taxpayers, and can make it challenging to plan for the future. They also mean that tax practitioners are left in a challenging position of providing advice according to the current law, that may be affected by announced measures once enacted. In some cases, significant changes can materially affects a client’s business decisions and tax position, and this is exacerbated when the changes apply retrospectively.
“It’s difficult for taxpayers, perhaps especially small business owners, to make commercial decisions, and manage their tax affairs, when tax measures that may substantially affect them remain unresolved for years on end. Many of the current unenacted measures were announced quite some time ago, and still, there is no clarity as to how, when, and indeed whether, they will be enacted or abandoned.”
The Budget did include a proposal for new tax cuts for individuals. Abdalla said, “this proposal is directed to alleviating cost of living pressures and would represent a modest relief for many taxpayers. However, this is not the silver bullet to address pervasive bracket creep or Australia’s overreliance on personal income tax as one of its main sources of revenue. Moreover, the upcoming election means that the fate of this proposal is uncertain. As with any new tax measure, we’ll be analysing its potential impact on taxpayers and providing feedback where appropriate.”
The Federal Budget also provides some certainty about the approach to the TPB sanctions regime and registration framework. Importantly, there is a clear indication that the Government does not intend to pursue certain changes it had previously canvased during consultation. There is expected to be further consultation on these measures post-election which will hopefully ensure that stakeholder feedback is taken on board to ensure that any changes achieve the policy intent in a measured and fair manner.
“Of course, there is always uncertainty in an election year, even in relation to the measures that were announced in the Budget. The fate of any tax policy or announced but unenacted measure is dependent upon the Government being re-elected, or a new Government being formed, and then navigating the enabling legislation through Parliament.”
“At the moment, while there are some indications of the Governments intentions and priorities, making any kind of concrete prediction about what our tax policy or any of these measures will look like this time next year is precarious.”
The Tax Institute will continue to advocate on behalf of its members, seeking to certainty around various tax measures and to advance public discourse around much-needed holistic tax reform for a sustainable system.
Julie Abdalla and other Institute spokespeople are available for further commentary on the impact of tax measures announced in this Federal Budget and to supply technical information on the tax measures.
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