Labor's Victory: Unpacking the promises and priorities

With Labor securing a majority in the House of Representatives, we break down what their key promises and ongoing priorities mean for individuals, investors, and small business owners.

For Individuals:

Personal Income Tax Cuts

• From 1 July 2026, tax cuts will reduce the rate for the $18,201–$45,000 bracket:

  • 16% → 15% (2026–27)

  • 15% → 14% (2027–28)

  • Max tax savings: $268 (2026–27) and $536 (2027–28)

$1,000 Instant Work-Related Expense Deduction

• An automatic $1,000 deduction for those earning labour income.

• Higher claims? You can still itemise deductions the usual way.

• Not available to those earning only business or investment income.

Energy Rebate Extension

• From 1 July 2025: $150 rebate for households and small businesses (automatically applied to quarterly electricity bills).

Cheaper Home Batteries

• From 1 July 2025: Save ~30% (around $4,000) on installed battery costs under the extended Small-Scale Renewable Energy Scheme.

5% Deposit Scheme for First Home Buyers

• Expanded eligibility with no income caps and higher property price limits.

• Covers Australian citizens or permanent residents who haven’t owned property in 10+ years.

Superannuation Reform: Still on the Table

The proposed Division 296 tax on super balances above $3 million is in limbo. If legislated:

• Extra 15% tax on earnings for TSB over $3 million.

• Applies to both realised and unrealised gains.

• Greens may back the bill if the threshold is reduced to $2 million and borrowing is prohibited within funds.

For Small Businesses:

Instant Asset Write-Off Extended

• $20,000 threshold extended through to 30 June 2026.

National Small Business Strategy

• Focuses on reducing red tape and streamlining interaction between businesses and different government systems.

Energy Industry Spotlight: Green Aluminium Credit

A $2 billion plan is in place to support smelters transitioning to renewable energy. Why?

• Aluminium accounts for ~10% of Australia’s electricity use.

• Tomago Aluminium alone is the country’s largest power user.

• The scheme offers long-term credits tied to emissions reduction targets.

More: Aluminium to Forge Australia's Manufacturing Future (Dept. of Industry, Science and Resources)

From Air Fryers to Swimwear: Claims to Avoid This Tax Season

The ATO has issued a timely reminder to stay within the rules when claiming deductions. Here are some real examples that were denied:

• A mechanic trying to claim an air fryer, gaming console & vacuum cleaners.

• A truck driver claiming swimwear due to warm weather.

• $10,000+ in luxury fashion claimed by a fashion manager.

If in doubt, leave it out — or run it by us first.

2025 ATO Audit Focus Areas:

• Work-Related Expenses: Must be substantiated and linked to income.

• Work From Home Deductions: Choose between:

  • Fixed rate method: 70c/hour (must record actual hours worked)

  • Actual cost method: Claim real costs, but requires full documentation.

  • Reminder: No double dipping! (E.g. can’t claim internet separately if using fixed rate method.)

• Multiple Income Sources: All income must be reported — including gig economy and side hustles.

For Not-for-Profits: New ATO Reporting Obligations

Annual NFP Self-Review Return: From the 2023–24 income year, NFPs with an ABN must lodge this return to maintain income tax-exempt status.

Requirements include:

• Confirming prohibition of asset/income distribution to members.

• Having updated governing documents that reflect this.

Deadline: 30 June 2025NFPs without the proper clauses must update governing documents by this date or risk losing tax-exempt status.

Pro Tip: Review governing documents annually — AGM is a great opportunity.

Global Snapshot: US Slows, China Stimulates, Australia Holds

United States

• Q1 GDP contracted by -0.3%.

• Trump-era tariffs triggered pre-emptive imports and reduced government spending.

• Market remains volatile with rising recession concerns.

China

• Announced stimulus: interest rate cuts & liquidity injection.

• Factory activity declined sharply post tariff frontloading.

• Markets cautiously optimistic but global trade flows remain affected.

Australia

• Economy remains sluggish with weak consumer spending.

• Post-election, markets largely unmoved.

• RBA has cut rates, which may support mild growth.

Note: The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone. 

If expert assistance is required, Contact the team @ Clear Accounting Solutions to run you through your options