Welcome to the May 2025 Edition of the BFG Report
Federal Election 2025 – What could this mean for you and your finances?
During the Federal Election campaign, the Government made a number of election promises, which may impact finances. There were also a number of support measures proposed in the recent Federal Budget. What could this mean for you?
These announcements are proposals only and may or may not be made law. The information below, including the policy details and proposed start dates, is based on the information announced to date
Election promises
Taxation
$1,000 instant tax deduction for work-related expenses
Proposed from 1 July 2026
What’s proposed?
Taxpayers who have eligible work-related expenses may be able to claim a tax deduction of up to $1,000 without having to keep individual receipts. It will still be possible to claim work-related expenses above this limit; however, evidence will be needed.
Who could benefit?
The deduction will be available to people with ‘employment income’. This doesn’t include income from running a business or from investments, where the usual rules will continue to apply.
$20,000 small business instant asset write-off extension
Proposed from: 1 July 2025 to 30 June 2026
What’s proposed?
The higher instant asset write-off threshold of $20,000 which currently applies until 30 June 2025, is proposed to be extended for another 12 months until 30 June 2026. The threshold is available for more than one asset. Eligible businesses can continue to place assets valued at $20,000 or more into a depreciation pool, where a deduction of 15% can be claimed in the first income year and 30% thereafter.
Who could benefit?
Small businesses with an aggregated annual turnover below $10 million will be able to claim an immediate tax deduction for the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2026.
Help for home buyers Expanded ‘Help to Buy’ scheme
Proposed from: To be confirmed
What’s proposed?
The Government has proposed to expand access to the Help to Buy scheme to more home buyers by increasing the property price caps and income test thresholds, which determine eligibility to participate in the scheme.
The scheme is a shared equity scheme, which allows eligible home buyers to purchase a home with a smaller deposit, of as little as 2%. The Commonwealth will contribute up to 30% of the purchase price of an existing home and up to 40% of the purchase price of a new home.
The Help to Buy scheme is expected to open for applications later this year. Although the Federal Government has legislated the scheme, the States and Territories need to pass legislation for it to operate in each jurisdiction
Who could benefit?
Increasing the income cap and property price caps will enable more people to participate in the scheme
For singles, the income cap will increase from $90,000 to $100,000. For joint applicants (and single parents), the income cap will increase from $120,000 to $160,000.
The property price cap will depend on the location of the property and details can be found in the Government’s media release.
Participants must meet a number of eligibility rules and conditions, including repaying the Government when the home is sold or when certain changes occur in their circumstances So it’s very important to understand the rights and responsibilities of participating in the scheme before making an application.
Previously announced measures
Cost of living support
The below proposals were announced by the Government in the March 2025 Federal Budget
Energy bill relief extended for six months
Proposed from: July 2025
What’s proposed?
The Government will provide further energy rebates in addition to the bill credits people have received since July 2024.The rebate will be applied automatically to electricity bills between 1 July and 31 December 2025, in two quarterly instalments of $75.
Who could benefit?
All Australian households and eligible small businesses will receive the additional energy rebate. It’s expected the eligibility rules that apply to small businesses (quarterly power consumption) Federal Election 2025| 2 will not change.
Lower cap for PBS medicines
Proposed from: January 2026
What’s proposed?
The maximum cost of Pharmaceutical Benefits Scheme (PBS) medicines will decrease from $31.60 to $25 per script.
Who could benefit?
This will benefit people who don’t hold a concession card and would otherwise pay the maximum amount to fill a script. It doesn’t apply if the script is for a medicine not on the PBS, which may cost more than $25.
Pensioners and Commonwealth concession cardholders will continue to pay the subsidised rate of $7.70 per PBS script until 1 January 2030. This is an existing measure.
Student loans to be cut by 20%
Proposed from: 1 June 2025
What’s proposed?
Student loans will be reduced by 20% before the annual indexation (at a rate of 3.2%) is applied on 1 June 2025.
Who could benefit?
The changes will benefit all people who have Higher Education Loan Program (HELP) Student Loans, VET Student Loans, Australian Apprenticeship Support Loans, Student Start-up Loans and Student Financial Supplement Scheme, based on their outstanding 1 June 2025 balance.
Importantly, voluntary loan repayments that are processed before 1 June will reduce the loan balance that’s indexed on 1 June. However, the 20% debt reduction will be applied to the 1 June balance. So if this proposal is legislated, before making a voluntary repayment, it’s worth doing the numbers to see if it’s best to make a voluntary repayment before or after the 20% reduction and indexation is applied on 1 June.
Reduced student loan repayment obligations
Proposed from: 1 July 2025
What’s proposed?
The minimum income that can be earned before student loan repayments need to be made is proposed to increase. This is in addition to the standard indexation of the income repayment thresholds which ordinarily happens on 1 July each year. Also, the way repayments are calculated will be changed.
Who could benefit?
People with student debts will benefit from lower compulsory loan repayments in 2025/26 and beyond, if their ‘repayment income’ is above the minimum threshold at which loan repayments need to be made and less than $180,000.
The minimum income threshold is $54,435 in 2024/25 and will automatically increase to $56,156 on 1 July. Also, the Government has proposed:
- increasing the minimum income threshold to $67,000, and
- calculating repayments on just the repayment income earned above the income threshold, not on total income.
The list of qualifying student loans is the same as those to be eligible for the 20% debt reduction on 1 June 2025 (see above).
Expanded ‘First Home Guarantee’ program
Proposed from: To be confirmed
What’s proposed?
Help will be extended to all first home buyers under the Commonwealth’s First Home Guarantee Scheme. The scheme enables home buyers to purchase their first home with as little as a 5% deposit. The Government provides a guarantee for the remaining portion of the deposit (up to 15%), to ensure the first home buyer doesn’t pay Lenders Mortgage Insurance.
Currently, income limits and property price caps apply, and access is only granted to a maximum of 10,000 eligible participants each year. These requirements are proposed to be removed, opening the scheme to all first home buyers.
Who could benefit?
The extension of the scheme may help first home buyers to purchase their first home sooner. It’s important to understand that purchasing a home with a smaller deposit may increase the total interest that is paid over the life of the loan.
Superannuation
The below measure was initially announced by the Government in 2023, with support reconfirmed in the 2023 Federal Budget. Legislation was introduced to Parliament to make this change law in 2024 but lapsed when the election was called. The Government will need to reintroduce and pass legislation in Parliament before this change can take effect. Given the complexity of the policy and the number of days that Parliament may sit between now and 1 July, we don’t know if the proposed start date will change if the policy is reintroduced.
Higher taxes for balances over $3 million
Proposed from:1 July 2025
What’s proposed?
Where people have more than $3 million in super from 1 July 2026, higher taxes are to be paid on investment earnings.
Currently, investment earnings within the ‘accumulation phase’ of superannuation are taxed at a maximum rate of 15%. With a ‘retirement phase income stream’, such as an account-based pension once retired, investment earnings are generally tax free.
It’s proposed that from 1 July 2025, where a person has a ‘total super balance’ exceeding $3 million at the end of the financial year, an additional tax of 15% will apply to a portion of the investment earnings. The new tax will be called ‘Division 296 tax’, as that is the name of the relevant section of tax law where the proposed rules are covered.
Additional tax won’t be paid where the total super balance is less than $3 million on 30 June 2026 (the end of the first year it will apply) or the end of any following financial year.
Where to from here?
It’s important to remember these changes need to be legislated to become law.
The information above is based on the announcements made to date, and there may be changes to the start dates or other details if the policies are formalised.
Economic Wrap – April 2025
US Reciprocal Tariffs elevate volatility across investment markets.
- Global Share prices fell early April following the announcement of US “Reciprocal” tariffs on countries it believes it has unfair trading arrangement with. However, a 90 day pause on these tariffs (except for China) provided investors some relief helping markets recover most of the intra-month declines. Investors also hope the pause means that the US wants to avoid pushing their economy into recession. Hedged shares performed a little better as the $US weakened.
- Australian shares forged ahead despite tariff headwinds supported by positive inflation data and offshore flows into our market.
- Australian small caps also delivered a positive return during April despite the market volatility.
- Fixed income: global bonds were volatile as investors are uncertain of the inflationary impact tariffs may have and whether the US Federal Reserve will be able to ease interest rates if the economy slows.
- The Australian dollar was benefited from broader US dollar weakness in April. Investors see benefits in European currency as the region boosts its spending on defence and infrastructure and the Japan Yen benefited from as safe haven currency.
US/China trade tensions escalate as US tariffs are paused for others.
Globally:
- The first week of April saw a significant following the US’s “Liberation Day” where higher “reciprocal” tariffs were announced against countries where the US believed there were barriers to US trade. The US lifting tariffs on Chinese good to 54% and China responded with tariffs on US goods.
- On 9 April the US paused all reciprocal tariffs so trade negotiations could occur with all countries. The US excluded China from this pause, as the US viewed their response in early April as an escalation of trade tensions. As a result, the US placed higher reciprocal tariffs on Chinese goods. This was not taken well and tariffs between the countries escalated further, ending April with a 145% tariff on Chinese goods and 125% on US goods.
- Europe eased interest rates again in April supported by moderating inflation. Rising global trade tensions were also expected to hurt consumer and business confidence and tighten financial conditions.
- The Chinese trade surplus rose higher than expected in March due to a surge in exports as factories rushed to ship goods to the US ahead of the tariffs.
Locally:
- Australian economic data during the month provided some support for the RBA’s easing cycle.
- Q1 2025 inflation remained modest supported by easing services inflation, bringing the core inflation figure into the RBA’s target range. Employment remained resilient while retail sales came in slightly below expectations.
Major asset class performance
| Asset classes | 1 month % |
1 year % |
5 years (p.a.) % |
| Australian Shares | 3.6% | 9.8% | 12.1% |
| Australian small companies | 1.8% | 3.7% | 7.7% |
| Global shares (hedged) | -0.5% | 9.8% | 13.0% |
| Global shares (unhedged) | -1.8% | 13.9% | 14.5% |
| Global small companies (unhedged) | -1.9% | 7.5% | 11.3% |
| Global emerging markets (unhedged) | -1.3% | 10.6% | 6.8% |
| Global listed property (hedged) | -0.4% | 9.0% | 4.3% |
| Cash | 0.4% | 4.5% | 2.2% |
| Australian fixed income | 1.7% | 7.1% | -0.2% |
| International fixed income | 0.9% | 6.5% | -0.6% |
Source: FactSet, Lonsec & Insignia Financial, 30 April 2025.
Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Australian small companies: S&P/ASX Small Ordinaries Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets (unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property (hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate Total Return Index Value Hedged AUD
Please note: Past performance is not indicative of future performance
Currency markets
| Exchange rates | At close on 30/04 | 1 month Change % | 1 year Change% |
| AUD/USD | 0.640 | 2.4% | -1.2% |
| AUD/Euro | 0.565 | -2.2% | -6.9% |
| AUD/Yen | 91.60 | -2.2% | -10.3% |
Source: FactSet & Insignia Financial, 30 April 2025.
Please note: Past performance is not indicative of future performance.
High yielding internet savings accounts
| Financial Institution | Interest Rate** | Financial Institution | Interest Rate** | |
| ING | 5.40% | Rabobank | 5.15% | |
| MOVE Bank | 5.25% | Bankwest | 5.15% | |
| BOQ | 5.25% | Newcastle Permanent | 5.00% |
** Rates are subject to conditions and change. Rates are correct as at 29 May 2025
This document is prepared by BFG Financial Services (BFG). General Advice Disclaimer: The information in this document is general advice only and does not consider the financial objectives, financial situation or needs of any particular investor. Before acting on this document, you should assess your own circumstances or seek personal advice from us. This report is current as at the date of issue but may be subject to change or be superseded by future publications. The content is current as at the date of issue and may be subject to change. If an investor requires access to other research reports, they should ask their adviser. In some cases, the information has been provided to us by third parties. While it is believed that the information is accurate and reliable, the accuracy of that information is not guaranteed in any way. Past performance is not a reliable indicator of future performance, and it should not be relied on for any investment decision. Whilst care has been taken in preparing the content, no liability is accepted BFG, nor their agents or employees for any errors or omissions in this report, and/or losses or liabilities arising from any reliance on this report. This report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of BFG.
