Australian Federal Budget 2025–26: How to Impact Small Business, Investors, Migrants and International Students

The Australian Federal Budget 2025–26 delivers a suite of policy measures that carry significant implications for small businesses, investors (both domestic and foreign), prospective migrants, and international students. While the government's fiscal focus has been on cost-of-living relief, housing supply, and industrial transformation, its ripple effects extend across multiple economic and social fronts. Here's a breakdown of how this year's budget affects key stakeholders.

1. Small Business: Protection, Fairness, and Opportunity

What’s good:

The budget enhances protections for small businesses and franchisees. The ACCC is receiving new funding to enforce the Franchising Code of Conduct, and ASIC is empowered to crack down on illegal phoenixing, particularly in construction.
A new Social Enterprise Loan Fund will be established to support small community-based businesses with a focus on employment for disadvantaged Australians.
A $20 million "Buy Australian" campaign will promote local products, indirectly supporting small manufacturers and producers.

What to watch:

Enhanced regulatory scrutiny, while positive overall, may increase compliance expectations in specific sectors.

2. Domestic Investment: Stability and Incentives

What’s good:

Major infrastructure and industry projects are backed by significant funding. The NBN will receive a multi-billion-dollar boost to extend gigabit-speed connectivity across most of Australia.
A $3.2 billion program supporting renewable-based metals production includes generous grants and production credits for green steel and aluminium.
Clarification of tax law will ensure that managed investment trusts (MITs) continue offering concessional withholding tax rates, maintaining Australia’s attractiveness as an investment destination.

What to watch:

No major tax hikes or structural changes to investment taxation were introduced. However, the ATO's compliance activities are expanding, particularly around under-reported income and shadow economy activity.

3. Foreign Investment: Housing Limits and Compliance Focus

What’s changing:

From 1 April 2025, foreign persons (including temporary residents and foreign-owned companies) will be banned from purchasing established homes for two years, unless exceptions apply.
This change aims to redirect foreign investment into new housing supply, with a compliance program to crack down on land banking and vacant properties.

What’s stable:

Concessional tax treatment for foreign investors in managed funds continues, with changes to capital gains and clean-building concessions deferred.
Foreign investment is still welcomed in areas aligned with national interests – such as housing supply and green industry – provided compliance obligations are met.

4. Migration: Housing Access and Labour Rights

What’s changing:

Temporary visa holders will be affected by the same restrictions on buying established housing, nudging new migrants toward renting or purchasing new-build properties.

What’s positive:

The government is expanding the ATO's shadow economy compliance to address wage theft and exploitation, indirectly benefiting migrant workers.
No major changes were made to migration program settings, skilled visa quotas, or family reunion pathways, signalling a continuation of existing policy.

5. International Education: Quality and Credibility Boost

What’s good:

Regulatory bodies are being funded to clamp down on fraudulent vocational education providers, which helps restore trust in the sector.
No changes to post-study work rights or student visa conditions mean continuity and certainty for international students.

What to watch:

A modest reallocation of funds away from international education support programs may slightly reduce promotional and partnership activities, though core support remains intact.

6. Taxation: Relief for Individuals, Scrutiny for Non-Compliance

What’s good:

A second round of income tax cuts will roll out from July 2026 and 2027, cutting marginal rates from 16% to 15% and then to 14%. These benefit all individual taxpayers, including sole traders and contractors.
The Medicare levy thresholds have been increased, offering relief to low-income earners.

What to watch:

While no new business taxes were introduced, the government is significantly expanding ATO funding to enhance tax compliance. Programs targeting the shadow economy, multinational avoidance, and aggressive tax agents will be expanded.

Key Takeaways for Our Clients

Small businesses stand to benefit from stronger protections and promotional efforts, but should prepare for tighter compliance.
Investors can expect continued tax certainty and new green investment opportunities, particularly in infrastructure and metals.
Foreign investors face tighter rules on housing but remain welcomed in development-linked investment.
Migrants face indirect impacts via housing rules but benefit from stronger wage protections and a stable visa policy.
International students enjoy continuity in visa settings and improved education quality oversight.
All individual taxpayers will receive tax cuts, but higher compliance standards will apply across the board.

The 2025–26 Budget offers a balanced mix of incentives and guardrails. While the government encourages participation in the economy through tax relief and investment support, it is equally focused on ensuring transparency, fairness, and integrity across all sectors.