After such an emphatic win for Labor, the Government has a clear path to actioning a lot of the priorities they took to the electorate. And because many clients are wondering what that might mean for their lifestyle, their nest egg and their family, we thought it was worth exploring the changes that are likely to be made over the next three years.

A tax on high super balances

Your adviser has probably mentioned the Div296 tax proposal to you (a doubling of the tax rate on superannuation balances greater than $3 million from 15 per cent to 30 per cent).

Now that Labor has been returned to power, we have a clearer idea of how a tax on higher super balances might play out, however the final structure won’t be fully known until Labor and the Greens have negotiated important details.

In the Australian Financial Review (AFR)1 it was reported that “The Greens are demanding that the threshold at which the new tax rate applies to $2 million, plus limit the ability of self-managed super funds to borrow to invest in property.”

Whether the threshold is $2 million, $3 million, or somewhere in between, it’s important to remember three things. One, this legislation is still being discussed and hasn’t been passed yet. Two, the extra tax is only on the proportion of super balances above that threshold – not the entire super balance. And three, your adviser is likely looking at strategies that could help to minimise the impact of the Div296 legislation. So make sure you discuss ways that you can prepare for the new rules, if and when they come into effect.

Is Government spending a sticking point for interest rates?

As inflation has shown signs of falling back to within levels that are acceptable to the RBA, interest rate cuts have been foreshadowed for a while now. Regardless of who won this election, market expectations were largely that the Reserve Bank would seek to decrease rates.

It has been argued by that interest rate drops could be hampered by a lack of fiscal discipline. “You can make an argument that without the spending announced in the run-up to the election, we probably could have been looking at lower interest rates,” Oliver says.1

Oliver also makes note of the fact that deficits will likely be with us for many years ahead, and therefore interest rates will be higher than if the Government was moving budgets into a surplus position.

Help for first home buyers

Housing was a big election issue, and it was important that both parties put forward ideas that could make it easier for first home buyers. Labor promised an additional $10 billion to build 10,000 homes. Some critics have pointed to skills shortages and construction costs hampering this goal, but Labor has promised other initiatives to help remove barriers.

Under Labor’s expanded First Home Buyer’s Scheme, a 5% deposit (rather than 20%) could be sufficient to get a loan approval. The Government is promising to go guarantor on the 15% differential (20% – %5) so that the home buyer doesn’t have to take out lenders’ mortgage insurance.

The Government is also looking at increasing the property price limits and removing the income caps that had previously limited the number of first home buyers who could apply to be part of the scheme.

Help to Buy will be expanded too. This scheme is based on deposits that can be as little as 2% and a contribution to the purchase from the Government of up to 40%. Under Help to Buy, the homeowner is required to repay the Government when the property is sold.

Will these schemes work? Many parents who are concerned about how their children can get a foot on the property ladder will be hoping the schemes will. Some commentators have indicated that these initiatives might instead push up property prices, but really it’s too early to predict how things will play out.

Reducing student debt by 20%

Labor has promised to cut outstanding student debt by 20%. This will help up to 3 million Australians. A graduate with a $30,000 HECS debt could enjoy a reduction of around $6,000. The rules around when the debt has to be paid back are changing too.

From July 1 this year, the minimum threshold at which borrowers begin paying back the debt will increase from $54,435 to $67,000. The way repayments are calculated will also change to a marginal system.

As the AFR explained on the 6th of May: For people earning $67,000 to $124,999, their repayment will be equivalent to 15c in every dollar they earn over $67,000. People earning above $125,000 will pay $8700, plus 17c in every dollar over $125,000. What does that mean? Someone on $70,000 would have had to make an annual compulsory repayment of $1750 under the current rules, but they will pay $450 under the new repayment structure. A higher earner on $130,000 would have paid $9750 a year under the current system, but they’ll pay $9550 under the new system1.

A small tax cut is better than no tax cut

It’s always nice to get a tax cut and have more money in your pocket. So new tax cuts are good news.

As reported by the AFR on 6th May, “From July 1, 2026, the tax rate for the lowest tax bracket will be cut from 16 per cent to 15 per cent. That means that for every dollar earned between $18,201 to $45,000, you’ll pay one cent less in tax. And from July 1, 2027, that will fall to 14 per cent. Every taxpayer will receive this tax cut. From July 2026, those earning $45,000 and above will receive a tax cut of $268 a year, and then $536 a year from July 20271.”

That extra cash might not seem to be a large amount of money. However, every little bit counts. Be sure to talk to your adviser about how any extra money that comes your way each year could be put to use.

Some help with the cost of living

Energy

With energy costs an ongoing concern for many households, Labor has stepped up with a home battery scheme that provides a 30% discount on installation for a battery with a home solar system. This incentive, and the cost benefits from solar (up to $2300 in energy bill reductions1 each year) is expected to attract an estimated 1 million households to the scheme.

Health

Medicare was front and centre throughout the election and Labor were keen to show that they were keeping health costs down. The Government pledged to make 90% of visits to the doctor free of charge. They plan to achieve this by increasing payments to doctors (a commitment of $8.5 billion).

Are there any other tax changes coming?

Some clients have reached out to us since the election to ask about what else the new Labor Government might have planned.

What we can say is that concerns around possible future changes to CGT legislation or negative gearing are unfounded at this point. Discussions around these sorts of issues have often been unpopular with the electorate and it is unlikely that they will be on the agenda.

We do of course understand that things can change in the future. That’s why your advice team is always keeping a close eye on how legislation might evolve in response to changing economic conditions and community needs. Wherever possible we’re anticipating what’s over the horizon and being as proactive as possible.

If you do have questions around areas that might affect your particular situation feel free to reach out to your Elston adviser. We’re always here to help.

References

1https://www.afr.com/wealth/personal-finance/what-labor-s-emphatic-win-means-for-your-money-20250505-p5lwkz