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Five key areas that accountants should focus on when the Treasurer hands down the budget on Tuesday night.
What accountants should look out for in the budget
24 March 2025
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7 minute read
When Treasurer Jim Chalmers hands down the federal budget on 25 March, there will be a sea of commentary. And – as someone who has been in the last dozen media lockups – I can attest that the budget papers themselves will run into the thousands of pages.
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But there are five key items that accountants need to focus on in general. Here are the “Big 5”.
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The deficits
One issue that media will focus on and rightly so, is the overall budget deficit. The Treasurer has already declared there won’t be a surplus for 2024–25. The question is, how big will the deficit be and what will deficits be over the coming decade?
It’s important here to focus on the “headline” surplus or deficit, not the “underlying” measure. The headline number includes so-called “off budget” spending like student debt forgiveness or the National Reconstruction Fund. As the government has expanded the use of off-budget vehicles, the difference between underlying and headline has become meaningful.
In the long run, the only way to deal with a deficit is by increasing taxes or reducing spending. So, this is a key figure that will drive major policy decisions, whoever is in government after the election.
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Economic growth forecasts
Economists are notoriously bad at forecasting. But the economic growth forecasts in the budget are important to understand. Are they “bullish” (e.g. 2.5 per cent real GDP growth or above), in which case one might doubt the deficit forecasts. Or are they “bearish” (e.g. around 1–1.5 per cent), in which case Treasury is signalling tough economic times ahead. GDP is an imperfect measure of the economy, but ultimately it’s GDP that pays for all the budget spending.
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Instant asset write-offs
Small businesses and sole traders will be particularly focused on whether a $20,000 (or another level) of instant asset write-off will be in the budget. This is an important driver of short-term equipment purchases and has a direct impact on cash flow.
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Capital gains taxes
It’s unlikely that the government will announce a big reform to capital gains taxes (either a cut or an increase). But, in the context of superannuation, the government recently tried to pass legislation involving tax on unrealised capital gains. This is not only economically questionable but would be hugely disruptive to many individuals and businesses. Watch out for any such provisions either within or beyond superannuation.
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Bracket creep
The budget will provide a 10-year glimpse into how much our personal income taxes will rise (in continuous time) due to bracket creep. This stealth tax rise – something that has been accepted by both major parties – has a big impact on taxpayers and is perhaps more important than ever given the nation’s fiscal position.
Of course, the accounting profession provides services and advice to a wide range of clients with disparate personal and business interests. Various, extremely detailed provisions within the budget will be more or less relevant to different clients.
But this big five is a good place to start.
Richard Holden is chief economist at Chartered Accountants Australia and New Zealand, and Scientia Professor of Economics at UNSW Business School.
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