The new financial year brings some of the most significant tax updates in over a decade, with changes affecting individuals, small enterprises and multinational groups. While much of the public conversation has centred on personal income tax relief, business owners will also feel the impact of a range of administrative, compliance and structural reforms.
Personal tax cuts introduced in 2024 are now permanent and continue to shape take home pay for more than thirteen million Australians. The nineteen percent bracket has fallen to sixteen percent and the thirty two point five percent bracket has been reduced to thirty percent. Thresholds for the higher marginal rates have been lifted as well. These adjustments aim to ease cost of living pressures while supporting labour participation.
Small enterprises benefit from additional administrative reforms that target efficiency and compliance. Employers can now use a standing declaration for multiple Single Touch Payroll lodgements. This change reduces repetitive reporting obligations and is especially helpful for owners who manage payroll internally. The period to self amend tax returns has also been expanded from two years to four which gives businesses more flexibility to correct mistakes without penalty.
Refund behaviour has also changed. The Australian Taxation Office can hold certain refunds for as long as ninety days while confirming bank information. This measure is designed to reduce fraudulent claims and discourage the use of outdated cheque payments.
On the corporate front, the twenty five percent tax rate remains available to entities with an annual turnover below fifty million dollars. Larger companies continue to operate under the thirty percent rate. From the current year onward, multinational groups with global revenue that reaches or exceeds seven hundred and fifty million euros are subject to the OECD Pillar Two rules. These rules involve a global minimum tax of fifteen percent applied through an income inclusion mechanism and a domestic top up tax. The purpose is to reduce profit shifting and to align Australia with international standards.
Further updates will unfold over the next two years. The 2025 to 2026 Budget confirmed new personal tax relief for lower earners, including a phased reduction of the sixteen percent bracket to fifteen percent in 2026 and fourteen percent in 2027. Medicare levy thresholds are being lifted to keep pace with inflation and to ensure low income earners remain protected. Other measures have been deferred for later review including proposed changes to managed investment trust rules and amendments to foreign resident capital gains tax provisions.
Compliance remains a major priority across all levels of government. The budget committed more funding for the ATO fraud taskforce and extended shadow economy programs beyond 2026. This signals a continued focus on enforcement, digital oversight and integrity measures.
For small and medium enterprises, the overall picture points to a landscape that is more digitised, more regulated and increasingly aligned with global tax norms. Understanding these changes early can help business owners plan budgets, manage payroll adjustments and prepare for future reporting obligations. Professional guidance will become increasingly important as rules continue to tighten and as digital compliance becomes the norm.