25th March, 2025
Treasurer Jim Chalmers’ fourth federal budget was just announced, with news of a budget deficit this time around.
A deficit of $42.1 billion is forecast for 2025-2026.
This year’s budget has, like last year, a big focus on helping Australians with the cost of living.
Its other main priorities are strengthening Medicare, building more homes, investing in education, and, per the federal government’s words, “making the Australian economy stronger, more productive, and more resilient”.
But if you’re a small business owner, you’re probably keen to know the biggest budget factors that will have a big impact on you and your business.
It has been a challenging year of inflationary impacts for a lot of small and medium-sized enterprises (SMEs) in Australia, and many organisations have been calling for the budget to provide additional support for this group.
In this country, our SMEs number over 2.6 million and employ over 5.4 million Australians.
They make an outsized contribution to the economy, and, according to the Council of Small Business Organisations Australia (COSBOA), this sector is “the engine that needs fuel”.
COSBOA called for a budget that “works for small business, not against it”, with a warning that “failure to act will put Australia’s economic engine at risk of stalling.”
So, how did the Government do?
In total, the budget really includes only $12 million in new direct funding support for small businesses.
The key takeaways from the budget that we’ll give you the lowdown on include:
Let’s start with a look at the government’s announced tax cuts.
The main surprise in this year’s budget was a cut in the tax rate on all incomes between $18,201 and $45,000.
The 2025-2026 budget delivered $17 billion in tax cuts, with all taxpayers earning over $18,201 getting a tax cut both next year and the year after, taking the first tax rate down to its lowest level in more than 50 years.
From 1 July 2026, the 16% tax rate will reduce to 15%, and from 1 July 2027, the 15% rate will reduce to 14%.
The government is also increasing the Medicare levy low-income thresholds, at a cost of $648 million.
The budget’s cost-of-living initiatives were focused on general aid for all Australians, such as reducing the cost of PBS prescription medications (with the maximum price to be $25 or $7.70 for concession card holders) and $8.5 billion for Medicare to improve bulk billing rates, with the goal of 90% of all GP visits bulk billed by the end of the decade.
This adds more money to the hip pockets of Australians, which may better support discretionary spending, further benefitting SMEs.
There’s also going to be more funding for urgent care clinics, women’s health, and public hospitals.
However, for certain businesses, some cost-of-living woes may be aided by support that includes:
According to the MYOB Bi-Annual Business Monitor survey of more than 1,000 Australian SMEs, one of the top 3 pressures for business owners this year is their cost of utilities, with 35% of respondents identifying this as a stressor.
This means SMEs are likely to welcome the government’s extension of the Energy Bill Relief initiative.
The $150 in energy rebates that applied to electricity bills per quarter were part of last year’s budget, and are now being extended for individuals and small businesses until the end of 2025.
That means around one million eligible small businesses will receive up to $150 in rebates directly off their bills ($75 per quarter).
This investment will cost the government $1.8 billion according to its forward estimates.
There wasn’t a whole lot announced in this area, but the new budget does include a doubling of the current maximum incentive payments for eligible housing construction apprentices from $5,000 to $10,000, which should assist builders and other construction industry firms.
Plus, the federal government is investing $3.4 million to establish a business mentoring and coaching program for First Nations businesswomen and entrepreneurs.
They’re also putting $23.9 million into strengthening the Indigenous Procurement Policy to boost opportunities for First Nations businesses to grow and create jobs.
While it was already partially funded, the Treasurer noted that his budget includes $12 million over four years to “support and protect small business” with the money allocated to:
The federal government has committed to spending $20 million on a “Buy Australian” campaign in 2025/26 to encourage Australians to buy locally-produced goods and services. An MYOB consumer survey from late last year found 61% will pay more for an Australian product or service – a promising sign for Australian SMEs.
The government is also going to help Australians have more scope to become entrepreneurs and earn more each year by banning the use of non-compete clauses for low- and middle-income workers who earn less than the high-income threshold ($175,000 currently).
This year’s federal budget brings a range of changes aimed at shaping a more affordable Australia.
Yet, the measures to support Australian businesses may not be as forthcoming as SMEs would have hoped. For example, support for making the instant asset write off permanent was strong, while the future of this initiative remains uncertain.
As always, though, the impact of this budget will likely become clearer over time.
For now, though, it offers a glimpse into the government’s current priorities and direction.
Click here for more Federal Budget coverage.
Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.