As Australia prepares to vote in the 2025 Federal Election, both the Labor Government and the Liberal-National Coalition have outlined competing tax policies that will significantly influence individuals, investors and small to medium sized enterprises (SMEs). Understanding the implications of each party’s platform is essential for proactive financial planning – particularly for high-net-worth individuals (HNWIs) and business owners.

Below is our client-focused breakdown of the key tax and investment-related proposals from both major parties, and what they could mean for your financial strategy.

Labor’s Tax Platform

Labor’s approach is geared toward long-term sustainability and fiscal equity. For HNWIs and SMEs, the proposals emphasize stable policy settings and structural improvements to small business support.

Key Policies of Note

1) $1,000 Standard Tax Deduction

Labor is introducing a flat $1,000 deduction for work-related expenses with no receipts required. This will simplify tax compliance for professionals and SME operators who previously claimed modest amounts annually.

2) Personal Income Tax Reform (Low to Middle Bracket Focus)

• The 16% marginal tax rate on incomes between $18,201 and $45,000 will reduce to 15% in 2026, and to 14% in 2027
• While the cuts do not directly benefits high-income earners, they provide long-term relief for employees earning under $90,000 – which may ease upward wage pressures on small business payrolls

3) Extension of the $20,000 Instant Asset Write-Off

• The instant asset write-off threshold will remain at $20,000 for an additional 12 months (through 30 June 2026)
• This continues to apply on a per-asset basis and under simplified depreciation rules, meaning businesses can make multiple qualifying investments (e.g. tech, tools, vehicles)
• Importantly, assets must be first used or installed ready for use by the end of the 2025-26 financial year

Coalition’s Tax Platform

The Liberal-National Coalition is proposing short-term tax offsets and housing-focused tax benefits that may be particularly advantageous for first-time property investors and higher-income earners still within eligibility thresholds.

Key Policies of Note

1) One-Off $1,200 Cost-of-Living Tax Offset

• A temporary offset targeting individuals earning up to $144,000
• While limited in duration, it offers immediate relief and could slightly lower PAYG withholding in FY25-26

2) Mortgage Interest Deductibility for First Home Buyers

• Eligible first home buyers purchasing a newly constructed property may deduct mortgage interest for the first five years
• Deduction applies to interest on up to $650,000 of the loan – even if the total mortgage or property exceeds this
• Available to singles earning up to $175,000 or couple up to $250,000

3) Optional $1,000 Work Expense Deduction

Provides an alternative to itemized deductions, allowing flexibility in tax planning for those with minimal record-keeping or modest claim amounts

Strategic Considerations

For Business Owners: If captial reinvestment or equipment upgrades are on your radar, Labor’s asset write-off extension offers a clear tax planning pathway. Consider timing and staging investments to maximise deductions before the June 2026 deadline.

For HNWIs & Property Investors: The Coalition’s housing incentives introduce new tax levers for supporting younger family members or diversifying into newly constructed residential assets. Structuring will be key – particularly under existing ownership entities or for those approaching the eligibility income thresholds.

For All Taxpayers: Regardless of outcome, the introduction of standardised work deductions may simplify compliance and improve efficiency – especially for sole traders and contractor-heavy enterprises.

This election presents two distinct pathways: structured, longer-term reform from Labor, or short-term relief and targeted incentives from the Coalition. For clients with complex affairs, strategic engagement now – especially around property planning, asset acquisition, or employee compensation – will be critical.