The 2025-26 Australian Federal Budget was handed down on Tuesday 25 March, and it marked the final Budget from the Albanese Government before we head into the federal election.
Here's our 2025-26 Budget breakdown highlighting the measures and initiatives with potential impacts for DSPs.
DSPANZ members can access our more detailed analysis via the Members Only section of
our website.
Cost of Living Relief
The government has announced that it will increase the Medicare levy low-income threshold for singles, families, and seniors and pensioners from 1 July 2024. Given the potential impacts on payroll software providers, we will closely watch how the legislation progresses for this measure.
There are expected to be further tax cuts for all taxpayers in 2026 and 2027:
- From 1 July 2026 - the 16 per cent rate will be reduced to 15 per cent
- From 1 July 2027 - the 15 per cent rate will be reduced further to 14 per cent.
Legislation to increase the Medicare levy low-income thresholds and deliver new tax cuts has now passed both Houses.
The government referenced pending changes to reduce outstanding Higher Education Loan Program (HELP) and other student debts by 20 per
cent. Subject to the passage of legislation, changes will apply from 1 July 2025.
Compliance Activities
The Australian Taxation Office (ATO) will receive a total of $999 million over four years to extend and expand their tax compliance activities, including:
- $717.8 million over four years from 1 July 2025 for a two-year expansion and one-year extension of the Tax Avoidance Taskforce
- $155.5 million over four years from 1 July 2025 to extend and expand the Shadow Economy Compliance Program
- $75.7 million over four years from 1 July 2025 to extend and expand the Personal Income Tax Compliance Program
- $50 million over three years from 1 July 2026 to extend the Tax Integrity Program.
There was also $3 million provided to the Australian Securities and Investments Commission (ASIC) to improve its data analytics capability to better target enforcement activities to deter illegal phoenixing activities, particularly in the construction sector.
The government is also expected to strengthen the sanctions available to the Tax Practitioners Board (TPB), modernise the registration framework for tax practitioners and provide funding to the TPB to undertake additional compliance targeting high-risk tax practitioners over four years from 1 July 2025. There will be consultation on the implementation of this measure.
We know that government compliance activity typically impacts DSP's customers, which may or may not have a flow-on impact on software
processes and interactions.
Competition and Investment
The government has further reinstated its intentions to support competition and investment in Australia with a revitalised National Competition Policy and a new Front Door for investors.
In November 2024, Commonwealth, state and territory governments built on the revitalising National Competition Policy announcement by agreeing to a 10-year reform plan underpinned by a $900 million National Productivity Fund. Learn more here.
From September 2025, the new Front Door is expected to act as a single entry point for investors, providing priority projects with
coordinated facilitation services guided by an Investor Council. Read
the latest here.
Workforce
The announcement to ban non-compete clauses in employment contracts for low and middle income employees may impact workforce
management software providers and how they support the hiring process.
Continued Funding
The Budget contained several measures that will support ongoing programs or work and activities, including:
- $207 million over two years from 2025-26 to deliver the second tranche of stabilisation and uplift of ASIC's business registers following the transfer of this responsibility from the ATO to ASIC
- $6.7 million in 2025-25 to extend the operation of the National Anti-Scam Centre within the Australian Competition and Consumer Commission (ACCC)
- $5.3 million in 2025-26 to the Office of the Australian Information Commissioner (OAIC) to continue its regulatory oversight of the Digital ID and Identity Verification Service Programs.
What Does this Budget Mean for DSPs?
Following the trend of recent Budgets, the 2025-26 Federal Budget has continued to focus on cost of living measures and supporting ongoing compliance activities and programs of work.
From our perspective, this Budget has missed the opportunity to invest in digital economy initiatives and provide a clear direction for the future of digital interactions and experiences.
The ATO has an ambitious vision to digitalise the tax system by 2030. To date, we have not seen significant investment or proposed legislative changes supporting this digital transformation journey. For DSPs to support the systems and experiences expected to be delivered to support this digital vision, they require the legislation to be in place several years before enabling these for their customers.
DSPANZ will watch closely to see how these measures progress and whether the government will announce further policies in the upcoming federal election campaign. We'll keep our members updated with more information as it becomes available.