With Labor Re-elected, What Changes Are On The Horizon For Small Business?

written by Dale Fenwick,

The dust has now settled on Labor's huge election victory and the politicians are returning to their parliamentary seats. However, after an election campaign that felt like it went on for years, you'd be forgiven for thinking 'Wait... what did they actually promise us again?'

The good news is that we've done the hard work for you, digging through the archives so that you don't have to! Here's a recap of Labor's key policies and how they might affect you!

Tax Cuts Are Coming (But Not Just Yet)

Labor’s locked in income tax cuts—just don’t expect to see them until 1 July 2026, with a second round in 2027.

Here's what it practically looks like:

• If you earn between $18,201–$45,000, your tax rate will drop from 16% to 15% in 2026, then to 14% from 2027

• The max you'll save is around $268 in the 2026–27 year, doubling to $536 from 2027–28

So helpful, but not life changing!

These tax cuts are already legislated, so there is no doubt about whether these will actually be passed as law.

Automatic $1k Tax Deduction For Work-Related Expenses

This is a big one and fundamentally changes the way a lot of Australian's will prepare for their tax returns moving forward. It's fairly simple - if you earn income from a job (i.e. not business or investment income), you'll get a $1,000 'shortcut deduction' on your tax return.

• If you're actual expenses are less than $1k, you will automatically get a $1,000 tax deduction without keeping any sort of records

• If you're actual expenses are higher than $1k, you can still go the old-school route and claim the lot

• You can still claim other deductions (i.e. not work related deductions) in addition to the $1k automatic deduction

• On average, those who benefit will receive an extra $205 of tax relief

Importantly, this policy hasn't passed as law yet, so the devil may still be in the detail. It is also unlikely to apply to the 2025 tax year, so this will likely be available for your 2026 tax return.

Further, whilst we obviously haven't seen the impact yet, the ATO are expecting that 1 in 3 taxpayers will use the $1k shortcut deduction as opposed to calculating their actual expenses. Whilst this is a great result for those taxpayers, I expect that this will almost certainly lead to increased compliance and audit activity for the remaining 2 in 3 taxpayers

So if you take away one thing from this article, make sure your record keeping is better than ever!

Energy Bill Rebate Extended

From 1 July 2025, households and small business will get an extra $150 energy rebate, applied automatically to your quarterly power bills until the end of the year.

Again, it's not going to change your life, but will still provide some small relief for those that need it.

Save $4k On A Home Battery

Labor's giving a leg up to households wanting to store their solar power.

From 1 July 2025, you'll be able to get around 30% off the installed cost of a home battery, saving up to $4,000.

Given battery technology is only getting better, this might be the incentive you need to explore the long term savings v the upfront cost of an improved solar system.

First Home Buyers; 5% Deposit, No LMI

This one could be a game changer for first home buyers looking to get into the market. The key points for the new policy is as follows:

• Buy with just a 5% deposit

• No income cap, no cap on places

• No need to pay Lenders Mortgage Insurance (LMI)

• Open to Aussies who've never owned property before (or at least not in the last 10 years)

• Owner-occupiers only

This policy removes some of the biggest hurdles that first home buyers face.

Whilst this might be a great opportunity for first home buyers, most economists agree that without improving housing supply, this won't make housing more affordable, it just shifts 'who' can buy. This will allow more buyers to enter the market, however more demand without increased supply, just leads to higher housing prices.

Another thing to consider is just because you 'can' buy a house, doesn't necessarily mean you 'should'. If you're only coming up with a 5% deposit, that means you are borrowing 95% - and if interest rates rise, or property prices fall, things can start to get tight, fast. 

Everybody's situation is different, so make sure you consider what is right for you and speak to experts who can help!

HECS/HELP Debts Cut

If you've got a student loan still hanging around, there are 2 new policies that may give you some comfort!

• On 1 June 2025, the government will cut your loan balance by 20% before indexation is applied

• From 1 July 2025, the minimum repayment threshold will raise from $54k to $67k - meaning if you earn less than $67k, you don't have to pay a cent towards your student debt (although you can still voluntarily if you would like)

Even better, repayments once you reach the $67k threshold will only be calculated on income you earn above the threshold (not your total income like it is currently).

Now importantly, if you login to your myGov right now, you won't see the 20% cut just yet! That is because (again), this isn't law just yet. Once parliament sits and passes this policy, the ATO will immediately backdate the 20% cut to the 1st June (and if you are lucky enough to have paid off your loan in the meantime, you will actually get it refunded back into your pocket).

Super: What Is this $3m Cap?

One of Labor's more controversial plans is to tax super balances over $3m @ 30% (as opposed to the normal super tax rate of 15%). This policy hasn't passed as law yet, and may depend on whether Labor cuts a deal with the Greens who want to:

• Lower the cap to $2m

• Ban super funds from borrowing to invest

While some of you might be thinking 'Must be nice, I feel so bad for people with $3m in their super fund....' there are a few other important points to note:

• The cap (either the $2m or $3m) will include both realised and unrealised gains (which means you would have to start paying tax on an asset you haven't sold yet)

• The proposed cap isn't indexed. This means that over time as investments grow, people have compulsory super contributions contributed and inflation continues over time, even some modest balances today will eventually reach the $2m or $3m cap in time

Again, this isn't law yet, however it may be worth speaking to a financial adviser to consider if your current super structure is right for you given these looming changes.

Small Business: Instant Asset Write-off Extended

If you're looking to invest in some new gear, the $20,000 instant asset write-off has been extended through to 30 June 2026.

National Small Business Strategy

Labor's released a draft small business strategy to tackle frustrating rules across different states and departments. Think of it like a big picture plan to make life simpler for small business owners.

Don't expect instant changes, it's more of an overarching framework as opposed to practical changes right now.

Long Story Short, most of these changes aren't law yet, but given Labor's enormous victory and by extension their perceived 'mandate' from the Australian public, it is unlikely that any of these policies won't be passed as law eventually. Expect a few tweaks here and there, but the core policies will remain the same.

If you have any specific questions about how these policies might impact you, feel free to reach out to us today and we'd be happy to talk it through.

And if you found this useful, feel free to forward this article to any friends or family that you think would benefit from a plain-English update.