In the lead-up to the next federal election, the 2025 Federal Budget positions itself as a cautious but considered offering for Australian businesses and not-for-profits (NFPs). Delivered in an environment of inflationary pressure and global uncertainty, the Budget favours targeted relief over sweeping structural reform
A Budget of Targeted Relief, Not Systemic Reform
For businesses and NFPs operating in consumer-facing sectors, the continuation of income tax cuts and energy rebates may translate into marginal improvements in discretionary spending and donor activity. The starting rate of income tax will reduce from 16% to 14% by 2027–28, a move designed to ease cost pressures on households. However, given the relatively small size of the annual tax saving for most income brackets, the flow-on benefits for community contributions and service demand are likely to be modest.
Small businesses and NFPs will also benefit from extended energy rebates, with around one million eligible enterprises receiving up to $150 directly off their power bills through to the end of 2025. In addition, the Energy Efficiency Grants for Small and Medium Enterprises program will provide $56.7 million in grants (up to $25,000 per business) to support upgrades such as replacing inefficient appliances and improving heating systems.
Workforce Reform
A notable reform in this year’s Budget is the proposed ban on non-compete clauses for employees earning under $175,000, part of a broader effort to enhance wage growth and labour market flexibility. While this shift may benefit workers seeking new opportunities, it may pose real challenges for employers — particularly small businesses and not-for-profits that already struggle to compete on salary alone.
NFPs already have limited capacity to compete on salary, as we’ve highlighted previously, so the removal of non-compete protections for small to medium businesses and not-for-profits may intensify talent churn.
No Instant Asset Write-Off
One omission for small-to-medium enterprises and community organisations is the failure to extend or legislate the $20,000 instant asset write-off. As it stands, the threshold is set to revert to $1,000 from 1 July 2025, significantly limiting the ability of smaller operators to invest in capital improvements such as IT systems, machinery, or office upgrades.
Health, Aged Care and Frontline Service Delivery
The Budget includes several headline investments in healthcare and aged care including:
- $2.5 billion to support wage increases for aged care workers,
- $8.4 billion to expand bulk billing, aiming to deliver 18 million extra GP visits annually by 2030, and
- $1.8 billion in top-up funding for state-based public hospitals.
However, without proportional increases in operational or infrastructure funding, the risk is that providers may be unable to scale service delivery in line with policy ambition.
ATO Compliance
The government is making a substantial investment in tax compliance and enforcement. With $999 million allocated over four years, the Australian Taxation Office (ATO) will expand its compliance footprint through a suite of programs aimed at improving integrity and increasing revenue without raising taxes. Funding will be allocated across the Tax Avoidance Taskforce, Shadow Economy Program, Personal Income Tax Compliance Program and the Tax Integrity Program.
Regulation, Fair Trading, and Sector Integrity
Beyond tax compliance, the Budget includes several measures aimed at strengthening the regulatory environment including $12 million to improve oversight of the Franchising Code of Conduct, enhance detection of phoenixing activity (especially in construction), and extend protections against unfair trading practices and $3 million for ASIC to target illegal phoenixing practices.
Final Reflection
The 2025 Federal Budget delivers measured, election-conscious support for businesses and not-for-profits, with selective relief measures and a focus on health and workforce reform.
What’s clear is that both businesses and NFPs will need to navigate the coming year with increased scrutiny, tighter margins, and growing demand.
