Hello, my name is Gillian Bowen.

This is Small Firm, Big Impact.

The instant asset write-off is a political football at the moment.

With the tax agent registration.

We've had some great wins.

I'm really pleased with this.

We are in election mode now and there is a likelihood of a hung parliament.

This budget has been extremely political and the announcements are very political.

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Let's start a conversation.

Today we have Susan Franks CA, our Australian Tax, Superannuation and Financial Advice Leader.

The topic: the 2025-2026 Federal Budget unveiled on Tuesday night, the 25th of March.

What's in it for our members?

What other announcements are worth highlighting?

What was in the opposition's reply?

And in breaking news this morning, when Susan and I are recording, Prime Minister Anthony Albanese called the federal election for May 3rd.

So the government is in caretaker mode.

And the campaigning that we've been seeing so far is now official, so to speak.

Susan Franks, welcome to Small Firm, Big Impact.

Oh, thank you Gill.

We were both in the lock up and I will say both a little weary eyed this morning.

So, uh, if we can, let's take ourselves back to Tuesday night.

You unwrap the official federal budget papers.

What was your initial reaction?

Was how thin Budget Paper 2 was with the tax announcements.

There were very, very few tax announcements.

But what was there was a little bit of surprise.

I wasn't expecting to see tax cuts in there.

So what the government has announced is the lowest marginal tax rate will reduce from 16% to 15% from 1st July 2026, and then it will be further reduced to 14% from 1st July 2027.

And they've supplemented that by increasing the Medicare levy thresholds and also providing a 150 electricity rebate to every household.

So let's drill, um, further into you've mentioned, obviously the tax cuts, how that how that moves and how that changes.

What other sort of tax measures do you think that we should be putting a spotlight on here as well?

Well, there hasn't been, um, too much in there.

I mean, it's the usual case.

I mean, what's a budget without, um, The ATO getting more funding.

Now they've received over $1 billion of funding in this budget.

717 of that is going to the Tax Avoidance Taskforce, which focuses on multinationals.

155 million to the shadow economy compliance regime.

And that's really trying to target the underreporting of income worker exploitation and, um, the exploitation of the tobacco excise.

So illegal operations.

75 million to the personal income tax compliance program.

And they're really focusing in there on, um, documentation of expenses, particularly working from home.

And also rental deductions is a huge issue that they've been dealing with.

And 50 million for the tax integrity program.

The government also announced that it was going to ban foreigners from buying existing homes.

And given that ATO $6 million to enforce that, and $9 million between the ATO and Treasury, to go back over the past and do audits of foreign ownership of existing dwellings.

And, um, $4 million to once again crack down on illicit tobacco.

That was a surprise.

When you looked at the budget papers.

The tobacco revenue has actually been decreasing because the taxes are so high and they've shifted into the, um, organised crime or shadow economy.

So they're really going to try and get that money back.

Let's briefly touch on some announced but unenacted measures, uh, before we get into the the tax practitioners board stuff, which I'm sure that, um, by today, many of our members will have had a bit of a taste from.

But we're going to drill deeper into that.

But on the announcement unenacted measures still a still a fair bit of uncertainty there for our members.

Let's start with the instant asset write-off.

What was in the budget on that?

And then what's happened since.

There was nothing in the budget on the instant asset write-off.

This is the first time in a long, long time that the instant asset write-off has not been extended.

So from one July 1st July 2026, it's now going to be $1,000 as opposed to, you know, 20 or 30,000 that we've been used to in the past.

Um, the instant asset write-off and was at $20,000 for the year ended 30th June 2025.

On budget night was still before Parliament.

It was, um, the following day that it actually got passed.

And that was, you know, this the expression is you never want to see sausages and law being made.

And this was a classic case of not wanting to see law made.

There was a lot of bartering and discussion about the instant asset write-off.

I mean, some parties want it to be permanent.

Some parties want it to be permanent at 30, some at 20.

Um, others, um, don't want to extend it.

There was a lot of bartering that was in the same bill as, um, making the general interest charge, which is imposed by the ATO on outstanding debts.

Non-deductible.

Um, we had been opposing that, but supporting the instant asset write-off and having them the same bills.

A bit difficult.

We'd been trying to get the general interest charge out of that bill.

Um, David Pocock, um, as a result of our lobbying, tried to carve out small business from the as an exception from the non deductibility of the general interest charge.

But um, there was a lot of horse trading about, you know, the government trying to push through its tax rates, instant asset write-off and the general interest charge.

In the end what we've got is the instant asset write-off being enacted.

So it's 20,000 up until 30th June 2025.

And then at the moment only $1,000 going forward because it hasn't been extended at a higher rate.

And from 1st July 2025, we actually do have the general interest charge being nondeductible.

So members really need to be out there talking to their clients about, um, how they're going to be funding their businesses.

With the general interest charge cost increasing quite dramatically.

I don't think we can move on yet from the instant asset write-off.

I just want to explain one more thing.

So.

So what we had was, as you've said, um, the, the, the legislation that was already before Parliament.

So nothing in in the budget but the legislation that was in there from the previous budget has now been passed and it has been extended to 30th June 2025, as you said.

Then I went to the federal treasurer's post budget reply in Parliament House at the National Press Club on the Wednesday, where he indicated that there may be, um, it was kind of like a watch this space sort of statement.

So there is, um, potentially something coming from the government in terms of an announcement on the instant asset write-off future.

Uh, now that the election has been called this morning as we're recording in regards, uh, to to that the Prime Minister has called the election.

So we'll wait and see what happens.

But last night in the budget reply, um, that is Thursday the 27th of March for those not listening to us, um, today the, uh, opposition leader, um, leader of the coalition, um, Peter Dutton gave his budget reply and did make an announcement on the instant asset write-off if they were to win the election.

What's the announcement that they made in regards to the instant asset write-off?

The coalition, that is.

Well, the coalition will make it permanent and permanent at $30,000.

Now, the instant asset write-off is a political football.

At the moment, some independent and minor parties are suggesting permanent at 20, 2550.

The opposition at 30.

But they are all saying permanent, as you have noted, the government, after not saying anything, the budget has said at this lunch that they may do a later announcement later on.

At the moment it's a very because we're going we are in election mode now and there is a likelihood of a hung parliament.

Um, there's this budget has been extremely political and the announcements are very political and small business are, you know, key players in an election campaign, and they're really stuck in the middle of it.

So we don't know where the instant asset write-off is going to land going forward.

Um, when you look at the government's announcements, the tax cuts, that was very political as well.

Um, some of the minor parties had been suggesting that families can lodge a tax return to split their income.

Other other independents had been suggesting indexation of the personal tax rates.

Others had been suggesting increasing the threshold of the personal tax rates by the government, um, giving a reduction in the rate of the lowest marginal tax rate.

They've given back some bracket creep to everyone, but mainly as a percentage of income to the lower income people, and kick the can down the road for a couple of years.

So it's been political in that they've counted some of those other ideas that are kicking around the system for an election.

But, you know, tax reform and actually getting the system right has been delayed even more.

It's definitely not going to be discussed in the election, as everyone's just kicking around small changes and tinkering at the edges of the Tax Act.

Well, and regardless of of that, we we said on Tuesday night and we said again, uh, last night, that is Thursday night that we're again urging both major parties to commit to a road map for tax reform.

So there'll be information, further information about what that actually looks like on our website.

And I'll make sure we put a link to that in the episode description.

So it's easy for you to find just as we're ticking away and I'm conscious.

Um, of course we could be here talking all day, but we won't.

Um, because people's, uh, people's time, our member's time is precious.

Before we go, let's have a chat about the announcement in regards to the Tax Practitioners board that was in the federal budget.

What do our members need to know from that?

There were three lots of announcements affecting tax agents.

Um, one was in relation to tax agent registration.

Two was in relation to sanctions that the TPB can impose on tax agents.

And the third one was giving extra funds to the Tax Practitioners Board for compliance activities.

Now with the tax agent registration we've had some great wins.

I'm really pleased with this last year.

Um, the Treasury put out a paper proposing to, um, get rid of the registered professional association pathway.

We advocated very hard against that and gave lots of material about how good, um, the Chartered Accountants Professional Association pathway was, how it was much a higher standard than the TPB.

And that has been accepted.

The government is keeping the registered professional association pathway.

We'd also been advocating for our members that there needed to be greater flexibility in the timeframe to gain relevant experience, because we're hearing that members are having difficulty getting staff and staff that have had, um, taken leave for childcare or elder care or just illness are having real difficulty getting back into the workforce.

So the government has accepted that, and they're going to explore introducing longer time frames to gain relevant experience, which is fantastic.

The paper that the government put out also had some other elements in it which we didn't particularly appreciate, like, um, requiring registration of in-house advisers, prescribing the ratio of individual tax agents in an entity and not allowing and allowing microcredentials within primary qualification settings.

We opposed all of those, and the government has agreed with us.

So those proposals won't be going forward, which is fantastic.

There's also a provision about, um, spent convictions now spent convictions are where you've been convicted of a criminal offence and it's been more than ten years and you haven't been convicted of another one.

Spent convictions can't be generally revealed or don't need to be revealed.

But the government is proposing that if tax agents have got a spent conviction, and it relates to the provision of tax agent services.

Um, then it will need to be disclosed, um, when you're registering.

And um, also large entities will need to demonstrate that they're complying with governance.

So that's pretty much good news from a tax agent registration perspective.

It's just tightening it up.

The other consultation, which was way back in December 23rd, a couple of days before Christmas with a short period.

So it was on sanctions.

Um, it's a bit of a mixed bag, this one.

The government reaction.

We've we're certainly very, very pleased that the giving criminal penalties for unregistered preparers.

I mean, it's about time that, um, people that are not complying with the registration requirements, um, and providing tax agent services, actually, um, had some severe penalties thrown at them.

So we're pleased about that.

And then we're also pleased that, you know, the tax practitioner board at the moment is in a position where way, it has very light touch sanctions such as educations and cautions, or very heavy ones like suspensions and dismissals of registrations.

It's missing this middle ground in between those two for sanctions.

And you know, when you want an effective operating regulator, you need to have one that has a range of sanctions, not just the two extremes.

So the government has said it's going to be introducing enforceable voluntary undertakings.

And that seems to be a reasonable way to try and implement sort of some middle, middle range sanctions for the TPB.

They've also suggested, um, doing civil penalties for code of conduct breaches and increasing the amount of civil penalties.

Now, this is one that they will be consulting on and quite carefully with not just cans, but we will organise ourselves as a group of ten organisations to speak with one voice on this.

Um, the code of conduct, as you're aware, has quite a range of behaviour in it, from very small administrative areas to very severe um.

Actions can fall foul of the um code of conduct.

So we just want to ensure that, um, when the government's drafting legislation to introduce civil penalties for code of conduct breaches, it's legislating them in a way that it attacks or they apply to the really bad behaviour.

So we need to make sure that the legislation is fit for purpose, but also, very importantly, is right sized.

So it's not too heavy for sole practitioners.

You know, it it takes into account the size of business.

The other couple of things that they've been mentioning for sanctions is they're looking at introducing infringement notices and enrichment and contingent suspensions.

So we'll be having long discussions with, um, Treasury and Assistant Treasurer's office about these over the next 6 to 12 months.

So a bit of work to come.

And of course, uh, some of it may be up in the air.

Susan, if if, uh, the Labor, um, Labor Party doesn't win the government.

Yes, but I think the Greens will have a fair say as well.

And I'm pretty sure that these type of, um, proposals are close to their heart.

So it really is a mixed bag.

I mean, we just can't we need to take all of this seriously.

Yes.

You can't take your foot off the pedal.

I completely agree.

And, um, on that, uh, the, uh, things that have passed, uh, the tax cuts are passed, but that the rest of the measures in the budget, they are still also up in the air, aren't they, until, um, until we get an outcome of the election and then and then we we we work out the state of play.

Yes.

And that that may not be on election night.

It could take a little while, depending on how the numbers fall.

Um, okay.

All right.

So there's obviously, um, information on our website on a range of other things that's not just tax.

So I do want to flag that that it's worth as a member to head to our landing page on the ANZ website.

That's in relation to the federal budget.

I will put a link to that in the episode description, so it's easy to find.

But on there is, uh, a very comprehensive article by Tony Negline, our superannuation expert, about what was not in the budget in regards to super.

There was nothing in there on that.

So he's written an article about what he was hoping to see, but he didn't.

There's a story up there as well from, um, our expert in in regards to expert, uh, in regards to education and skills, there are some economic analysis there from our Chief Economist, Richard Holden, and there's some, some, some other bits and pieces, including the media release where you can check out the other, uh, measures in regards to small business.

And that page will continue to be, uh, updated, uh, as we go along with anything else that's relevant to the budget.

So plenty to read and digest, plenty to take on board.

There's also a catch up recording of the Sharing Knowledge federal budget webinar that we did earlier this week.

Uh, on that page as well.

I highly recommend you go and watch that.

There's some more in-depth analysis there as well.

This is all we have time for.

I feel like we've talked enough and perhaps a bit too long, but we'll see how we go in the edit.

Um, I also encourage you to check out the podcast page as well as the federal budget page, because there's plenty of great content there as well.

I'll put a link to that in the show notes.

If you'd like to get in touch with the podcast email: podcast@charteredaccountantsanz.com and follow the pod in your favourite podcast app.

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Let's start a conversation.

Thank you Susan Franks for being my expert on Small Firm, Big Impact and for your hard work this week on the federal budget and all the work you do for our members.

Thank you.

Gill.

Bye bye.