On Tuesday, the Federal Government handed down the 2025 Budget. As expected, with a Federal election required to be held by 31 May 2025, the Budget leans more toward political announcements than it does toward meaningful structural reform in tax, superannuation, or other major policy areas.
Nonetheless, there are several key measures that may impact Far North Queensland (FNQ) businesses directly. Here’s a summary of the major takeaways.
Tax Changes
The headline item from the Budget is individual tax cuts set to take effect from 1 July 2026. Under the cuts the 2nd personal income tax bracket will be reduced from 16% to 15% in 2026 and then further to 14% in 2027.
These changes will result in tax savings of approximately $268 per year for an average worker in 2026, rising to a total of $536 per year by 2027.
In addition the Medicare Levy threshold for low-income earners is increasing. For singles, the threshold will rise from $26,000 to $27,222. Thresholds for families, pensioners, and seniors have also increased, pushing back when the levy applies.
Outlawing Non-Compete Agreements
One surprise measure is a proposed ban on non-compete clauses for employees earning under $175,000 per year. This is being framed as a productivity-boosting measure by the Treasurer. At this stage, there is limited detail available, so key questions remain:
- Will this only apply to job switching within the same industry?
- Will broader protections around intellectual property and client poaching still stand?
Until the legislation is drafted and clarified, the potential impact on businesses remains uncertain, but it’s definitely one to keep a close eye on.
Investment in Far North Queensland
Some direct infrastructure commitments have been made for the region. According to Advance Cairns, notable announcements include:
- $87.5 million for the Cairns Water Security Project
- $70 million to seal the remaining 11km of the Canoe Developmental Road
- $7.2 billion allocated toward upgrades on the Bruce Highway
However, it’s worth noting that the Bruce Highway funding forms part of a broader $15 billion national road infrastructure package, and only $1.8 billion of that is allocated for the next four years. Many other infrastructure priorities identified by local stakeholders were not included in the Budget. These will be perused as part of the regions election lobbying.
Other Items Affecting Businesses and Families
- Childcare Subsidy Access Expanded: The activity test has been scrapped, meaning families no longer need to meet work or study requirements to qualify for subsidised childcare.
- Cheaper Medicines: The maximum co-payment under the Pharmaceutical Benefits Scheme (PBS) will drop from $31.50 to $25.00, concession rates remain unchanged.
- Student Debt Relief: Around 3 million Australians with student debt will receive a 20% reduction in their current HELP loan balances.
- Aged Care Wage Increases: Wage increases for aged care workers have been funded and backdated to 1 March 2025.
- Support for Regional Air Travel: Rex Airlines has been allocated an additional $130 million to maintain essential regional routes.
- Housing Assistance: Income and property thresholds for the Help to Buy Scheme have been increased, with the Government expecting 40,000 first home buyers to benefit over the next four years.
- Apprenticeship Incentive: A new $10,000 completion bonus has been introduced to encourage more trainees to finish their apprenticeships.
This year’s Budget is clearly influenced by the impending election. While it may not offer major reform, there are several items worth watching, particularly for employers navigating workforce challenges, tax planning, and regional investment opportunities.
As always, we are here to help assess how these changes may impact your business specifically, so please do not hesitate to reach out to your Client Manager if you have any further questions on (07) 4052 0800.
Shaun Donaldson
Director
