Wealthy Me February 2025 Newsletter
In this edition, we deep dive into the tax cuts from the 2025-2026 Federal Budget, explain some big changes to aged care, an explainer on the Liberation Day tariffs announced by President Trump last week, and a video recap of the market movements in March and April so far.
If you are interested in discussing the topics raised in this month’s newsletter, please don’t hesitate to contact us.
In the meantime, we hope you enjoy the read.
All the best,
The Wealthy Me Team
In the shadow of an upcoming election, Jim Chalmers’ fourth Budget delivered small but unexpected tax cuts for all Australian taxpayers.
The modest cuts were delivered against a backdrop of growing economic uncertainty, with the treasurer emphasising the need for national resilience in the face of rapid global change.
In a surprise revelation, the treasurer announced two new tax cuts in the 2025 Budget.
The first is a cut in the lowest personal income tax rate, which covers every dollar of a taxpayer’s income between $18,201 and $45,000. The current 16 per cent rate will reduce to 15 per cent in 2026-27 and be lowered again to 14 per cent from 1 July 2027.
According to the government, the reduction will take the first tax rate down to its lowest level in more than half a century. Combined with the 2024 tax cuts, an average earner will be paying $2,190 less in 2027-28 compared with 2023-24.
The second tax cut is an increase of 4.7 per cent to the Medicare low-income threshold for singles and families. This means the Medicare Levy will not kick in until singles earn $27,222, rather than the current $26,000 level. The threshold for families will rise from $43,846 to $45,907, while single seniors and pensioners will have their threshold increase from $41,089 to $43,020.
The Budget also provided small businesses and households with a welcome additional energy bill rebate to cope with the burden of high energy costs.
Around one million eligible small businesses will receive an additional $150 directly off their energy bills from 1 July 2025. This will extend the government’s energy bill relief until the end of 2025, as the previous rebate scheme was due to end on 30 June.
Some businesses may be less pleased with the Budget announcement of a planned ban on non-compete clauses covering low- and middle-income employees leaving for another business or to start their own.
Competition law will be tightened to prevent businesses making arrangements that cap workers’ pay and conditions without their knowledge or agreement, or that block them from being hired by competitors. The government claims this will increase affected employees’ wages by up to 4 per cent as they will be able to move to more productive, higher-paying jobs.
Work will also begin on a national occupational licence for electrical trades, which is intended to provide a template for other industries where employees are currently restricted from working across state and territory borders.
Government support for the hospitality sector and alcohol producers was also announced in the Budget.
Indexation of the draught beer excise and excise equivalent customs duty rates will be paused in a measure costing about $165 million over five years.
Small business will benefit from the government’s decision to work with the states and territories to extending unfair trading practices protections to small businesses.
Over $7 million will be provided over two years to strengthen the Australian Competition and Consumer Commission’s enforcement of the Franchising Code.
Subject to consultation, protections from unfair contract terms and unfair trading practices will be extended to all businesses regulated by the Franchising Code.
Local companies will also benefit from $20 million in additional support for the Buy Australian Campaign, which encourages consumers to buy Australian-made products.
The Budget further supported local businesses with $16 million in funding for a new Australia-India Trade and Investment Accelerator Fund.
The ATO will be happy, with the 2025 Budget providing $999 million over the next four years to extend and expand its tax compliance activities.
This includes additional funding for the shadow economy and personal income tax compliance programs, together with $50 million from 1 July 2026 to ensure the timely payment of tax and unpaid super liabilities by businesses and wealthy groups.
Information in this article has been sourced from the Budget Speech 2025-26 and Federal Budget Support documents.
It is important to note that the policies outlined in this article are yet to be passed as legislation and therefore may be subject to change.
The number of Australians aged over 65 is expected to more than double in the next 40 years while the number of people aged over 85 is predicted to triple in that time.i
Aged care funding and services have seen major changes in the years since the 2021 report of the Royal Commission into Aged Care Quality and Safety, and this year is no exception.
1 July 2025 marks the start of a host of new programs and improvements for the aged care sector. Several announcements have already been made this year, covering wage rises for aged care workers and nurses, and an increase in government funding for residential aged care accommodation.
In one of the most significant changes, the new Aged Care Act begins on 1 July. The Act aims to ensure the viability and quality of aged care.
A report by the Aged Care Taskforce last year calculated the residential aged care sector will need $56 billion by 2050 to upgrade facilities and build more rooms.
Current funding arrangements aren’t working. In the 2022-2023 financial year, almost half of all accommodation providers made a loss.
Some $300 million in federal grants will be delivered to accommodation providers this year to help with capital works upgrades.
And to improve the viability of the facilities the government is introducing other measures including larger means-tested contributions from new entrants and a higher maximum room price that is indexed over time.
Aged Care Minister Anika Wells says half of new residents will not contribute more under the new consumer contributions.
“For every $1 an older Australian contributes to their residential aged care, the government will contribute an average of $3.30,” says Wells.
The Aged Care Act also aims to support more people who want to stay in their own homes as they age. The federal government is investing $4.3 billion in a new Support at Home program, which replaces the Home Care Packages and the Short-Term Restorative Care programs.ii
There’ll be more 300,000 places available over the next 10 years and a shorter waiting period for Support at Home, and there’s a goal to simplify and improve the assessment process, making it easier to access different services as needs change.iii
Similar to the Home Care Package, Support at Home will provide:
The government will pay 100 per cent of clinical care costs while Support at Home recipients will make a contribution towards independence and everyday living costs. The contribution amount will be calculated using the Age Pension means test and it depends on the level of support needed and the combination of income and assets. The highest classification with the most funding will receive a package of services worth $78,000 per year. There’ll also be funding for assistive technology and home modifications and end of life care.
A new cap on contributions will also apply. No one will pay more than $130,000 in their lifetime – whatever their means or length of care at home or in residential accommodation.
The new Aged Care Act also requires aged care accommodation providers to refund residents’ lump sum deposits within 14 days if they move to another facility or pass away. Interest must be paid on the lump sum until the amount is repaid. As before, some deductions are permitted provided they were included in the original agreement.
For those already receiving home care packages or in aged care accommodation, the government says a ‘no-worse-off’ principle will provide certainty that they won’t have to pay more under the new laws.
Whether it is you or a loved one who is considering moving into aged care, it can be an emotional time. With these new changes being implemented, you may have a few questions. Please give us a call if you’d like to hear more about the changes or if we can help to assess your next step or plan ahead.
ii Support at Home program | Australian Government Department of Health and Aged Care
On 2nd April the US President, Donald Trump, announced wide ranging tariffs which surprised investment markets due to both their magnitude and variability. These tariffs are in addition to previously announced tariffs impacting countries such as China, Canada and Mexico. The Trump administration’s motivation for tariffs include:
Investment markets reacted negatively to the announcement as investors quickly moved to a “risk-off” stance whilst they attempted to quantify the risks of the Trump tariffs and implications for both investment markets and the economy.
The table below incorporates market moves up until 4th April 2025. Whilst there has been a significant drop in equity markets in calendar year to date 2025, the medium to longer term numbers dating from end of 2022 provide some perspective noting that many commentators at the beginning of the year had noted markets, particularly the US, were somewhat fully valued.
| Asset | Change since end of 2024 | Change since 2025 high | Change since end of 2022 |
|---|---|---|---|
| S&P 500 (US) | -13.73% | -17.07% | 32.2% |
| NASDAQ Composite (US) | -19.28% | -22.28% | 48.9% |
| FTSE 100 (UK) | -1.44% | -8.57% | 8.1% |
| DAX (Germany) | 9.08% | -7.11% | 56.0% |
| Nikkei 225 (Japan) | -15.33% | -15.72% | 29.5% |
| Hang Seng (Hong Kong) | 13.91% | -7.76% | 15.5% |
| S&P/ASX 200 (Australia) | -6.02% | -10.38% | 8.9% |
| Gold USD/Oz | 15.76% | -3.06% | 66.6% |
| Bitcoin | -10.83% | -21.75% | 405.2% |
| US dollar Index | -5.04% | -6.31% | -0.5% |
| Tesla | -40.71% | -44.09% | 94.4% |
Source: Bloomberg
Similarly, bond market movements have been significant as shown in the table below. Noting that as bond yields go up, bond prices come down and vice versa. The bond market is starting to price further rate cuts.
| Instrument | Yield (End 2022) | Yield (End 2024) | High in 2025 | Yield (4 Apr 2025) |
|---|---|---|---|---|
| US 10-year bond yield | 3.87% | 4.43% | 4.57% | 4.24% |
| US 2-year bond yield | 4.79% | 4.38% | 3.99% | 3.65% |
Source: Bloomberg
The Trump tariffs have created uncertainty. This will impact on both consumer and business confidence. Consumers are likely to constrain spending in favour of building savings and businesses will be keen to ascertain what the new environment means for their industry before committing large amounts of capital in an uncertain policy environment.
Economic growth globally is likely to be curtailed by these moves as higher export prices (due to tariffs) to the United States are likely to see a softening of demand. Inflation in the United States is likely to rise due to “cost-push” influences.
Importantly, these inflationary pressures are different from those that persisted post COVID-19 which were ostensibly “demand-pull”. The likelihood of stagflation in the United States has increased.
We have seen a rapid repricing of equities and bonds post the announcement of the Trump tariffs last week. The difficulty for investors in the current environment is accurately repricing stocks and bonds to reflect the changing risk environment. There is a high degree of uncertainty on the path forward for the world economy. Key areas of focus right now are:
Given the level of uncertainty, it is not surprising investors are de-risking via selling and reducing skews. Valuations are becoming more attractive for a number of companies, particularly those who aren’t directly impacted by changes to tariff policy.
However, as we have entered a period of heightened uncertainty, companies are likely to be reluctant to give earnings guidance in the upcoming reporting season given prevailing volatility.
The Trump tariffs are unprecedented, and the economic backdrop is uncertain. Investment markets are in the process of re-pricing risk to reflect this uncertainty. We are continuing to analyse the situation and its impact on asset valuations as well as assessing the likelihood of the tariffs remaining in place.
As always, we are paying close attention to the impact on your portfolio and will continue to monitor the situation and keep you informed. In the current environment it is important to be alert and not alarmed.
Stay up to date with what’s happened in the Australian economy and markets over the past month.
Following March’s Federal Budget, Prime Minister Anthony Albanese announced a national election for May 3, kicking off a campaign centred on tax cuts and cost-of-living relief.
Globally, trade war worries dominated headlines and contributed to markets falls during the month.
Click the video below to view our update.
Please get in touch if you’d like assistance with your personal financial situation.
