Labor Party's Victory: Their Promises And Priorities

As the Labor party settle back into their seats having secured a majority in the House of Representatives, we look at the campaign promises and the unfinished business from the last term.

Individuals – Personal income tax cuts:

The 2025-26 federal budget introduced a modest income tax cut for all taxpayers from 1 July 2026 and again from 1 July 2027.

The tax rate for the $18,201-$45,000 tax bracket will reduce from its current rate of 16%, to 15% from 1 July 2026, then to 14% from 2027-28.

The saving from the tax cut represents a maximum of $268 in the 2026-27 year and $536 from the 2027-28 year.

Legislation enabling the tax cut passed Parliament on 26 March 2025.

The Government will offer a $1,000 shortcut deduction for work-related expenses to taxpayers earning labour income.

Taxpayers who are likely to have claims higher than $1000 can claim in the usual way.

The simplified tax deduction is only available to those earning labour income. Those earning business or investment income only will not be able to claim this shortcut deduction.

Taxpayers will be able to claim other non-work related deductions in addition to the instant work related deduction.

Energy rebate extended:

From 1 July 2025, households and small business will be eligible for a further $150 energy rebate. This will extend until the end of the 2025 calendar year.

The rebates will automatically apply to electricity bills in quarterly instalments.

Cheaper home batteries:

The Government has committed to reducing the cost of home batteries from 1 July 2025.

Through the scheme, households will be able to purchase a typical battery with a 30% discount on installed costs. This will save them around $4,000 on a typical battery.

The initiative extends the existing Small-scale Renewable Energy Scheme.

5% deposit scheme for first home buyers:

The Labor Party has committed to a 5% deposit scheme for all Australian first home buyers.

Under the scheme, the Government will underwrite eligible first home buyers. This will enable them to purchase a property with a 5% deposit without the need for Lenders Mortgage Insurance.

The media release says, ‘there will be higher property price limits and no caps on places or income, in a major expansion of the existing scheme’.

The existing Home Guarantee Scheme is limited in places and subject to income tests. The scheme is open to Australian citizens or permanent residents who have:

Never owned property or land in Australia, or
Have not owned property or land in Australia in the last 10 years.

Superannuation:

Legislation enabling the proposed Division 296 tax on superannuation balances above $3 million lapsed when Parliament dissolved.

The question now is whether the Labor Party will seek to push this reform through the Senate with the support of The Greens. Greens Senator Nick McKim has previously advocated for the Division 296 threshold to be lowered to $2 million.

Originally intended to apply from 1 July 2025, if enacted, Division 296 will increase the headline tax rate to 30% for earnings on total superannuation balances (TSB) above $3 million.

The proposed calculation captures growth in TSB over the financial year allowing for contributions and withdrawals. This method captures both realised and unrealised gains, enabling negative earnings to be carried forward and offset against future years.

How does it work?

Let’s assume for the moment that the Government passes legislation. If so:

If your TSB is over $3 million at 30 June, a portion of your annual superannuation earnings above that threshold will be taxed at an additional 15%.
The tax is assessed to you personally and can be paid from your superannuation or your own funds.
Superannuation earnings for this purpose reflect the increase in your net superannuation balance for the year, adjusted for certain contributions (eg, inheritance via death benefit pension) and withdrawals.
Some exclusions apply: children on superannuation pensions, structured settlements (personal injury), and the deceased.

What can you do?

Review your superannuation fund liquidity and cashflow planning for future tax payments.
Ensure your asset valuations are up to date.
Estimate your combined superannuation balances and plan for any large transactions.
Document asset values, especially for SMSF members.
Seek tailored professional advice before making any changes.

Small business:

Extending the instant asset write-off for small business.

An increase to the $1,000 instant asset write-off threshold has been a consistent feature of federal budgets.

The extension of the increased instant asset write-off threshold to $20,000 for the 2024-25 financial was passed by Parliament on 26 March 2025. The Government has committed to extending the $20,000 instant asset write-off threshold to 30 June 2026.

National small business strategy:

The Government has released its National small business strategy for consultation.

The strategy primarily addresses how different government jurisdictions work with small business. It also aims to relieve some of the friction when dealing across government systems and requirements.

Energy:

Green Aluminium Production Credit

The Labor Party has set aside $2 billion for a new Green Aluminium Production Credit. This will support Australian aluminium smelters switching to renewable electricity before 2036.

If you are wondering why the aluminium industry has been singled out, here’s why:

Aluminium is the second most used metal in the world.
According to the Institute of Energy Economics and Financial Analysis, represents about 10% of Australia’s electricity demand.

Transition from brown to green energy is not just a consumption issue for the industry, it’s a recreation of the value chain.

Under the initiative, smelters will be able to negotiate an emissions linked credit contract payable per tonne of green aluminium produced for up to 10 years. The final credit rates will be based on individual facility circumstances and be dependent on reducing Scope 2 emissions.

Want individual advice on how these promises and priorities may impact you and your business?

Get in touch with one of our business advisers today!

This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your accountant or business adviser.