Australia Federal Budget 2024-25

The Federal Budget for 2024-25 was announced by the Treasurer Jim Chalmers on Tuesday 14 May 2024. 

While there are no major tax changes, there are some personal and business tax, superannuation and other measures to be aware of.

Personal Income Tax Cuts

The revised measures will involve cutting the lowest rate of income tax from 19 per cent to 16 per cent and the second lowest from 32.5 per cent to 30 per cent.

The Medicare levy threshold would be increased, and the top 45 per cent tax threshold would rise from $180,000 to $190,000.

“This change means that taxpayers earning less than $45,000 will now receive a tax cut, and every working Australian will pay less tax on the first $45,000 that they earn,” Mr Albanese said. 

Following these announcements and assuming amending legislation is passed, the Australian resident personal income tax rates from 1 July 2024 will be for resident individuals:

Up to $18,200	Nil
​$18,201 to $45,000	16% on part over $18,200
$45,001 to $135,000	$4288 + 30% on part over $45,000
$135,001 to $190,000	$31,288 + 37% on part over $135,000
$190,001 and over	$51,638 + 45% on part over $190,000

 

Instant Asset Write-Off for small businesses

Small businesses with an aggregated annual turnover of less than $10 million will continue to be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025, instead of reverting to $1,000.

The asset threshold applies on a per asset basis so multiple assets can be written off instantly.

The ‘lock-out’ rules for small businesses opting out of the simplified depreciation rules remain suspended until 30 June 2025 as well.

More funding for the Small Business Debt Helpline and NewAccess

The government is investing in the mental health and financial wellbeing support of small business owners by investing an additional $10.8 million to extend both the Small Business Debt Helpline and the NewAccess for Small Business Owners programs. 

Both nationwide programs are available for free to small businesses.

Cost of Living

The government has introduced a new plan to help people with their everyday expenses which includes giving money to help with energy bills. This will start from July 1, 2024. Every household will get $300, and around one million small businesses will get $325.

They are also giving extra support to renters. The maximum amount of help renters can get will increase by 10%. Nearly one million households will benefit from this.

Additionally, the government will keep the rates for certain types of financial assistance the same until June 30, 2025. This will help around 876,000 people who get income support, including 450,000 older Australians who receive the Age Pension.

Superannuation

The Super Guarantee, which mandates employer contributions to superannuation, will rise gradually. Starting from 1 July 2024, it will increase to 11.5 percent and continue to rise by 0.5 percent annually until reaching 12 percent in 2025.

To address unpaid super issues, beginning 1 July 2026, employers must pay their employees' super at the same time as their wages. This measure aims to streamline payment tracking, enhance ATO monitoring, reduce the risk of large end-of-quarter super liabilities for businesses, and foster faster compounding of super savings for over 4 million Australians currently receiving quarterly super payments.

Superannuation will be paid on Commonwealth government-funded Paid Parental Leave (PPL) for births and adoptions on or after 1 July 2025, at the Superannuation Guarantee rate. $10m will also be provided over two years from 1 July 2024 to support small business employers in administering PPL.

Tax Avoidance

Extended by a further two years, until July 2028, the tax office’s Tax Avoidance taskforce will be cracking down on multinationals, large public and private companies and high-wealth individuals.

Foreign residents in Australia will be subject to a stronger capital gains tax regime more in line with what Australian residents pay, affecting the tax they pay when selling properties and shares.

Combating scams and fraud

Combating scams and fraud was a key focus of this year’s budget. The ATO will receive significant funding to bolster its defences. 

This includes $187 million in new funding to tackle tax and superannuation fraud, including tools to block suspicious activity in real time and a taskforce to recover lost revenue and step in when scammers try to claim fake refunds. 

The ATO will also receive $23.3 million to continue operating the nation’s e-invoicing network, which acts as an important circuit breaker for email-based scams.

Student loans

The government plans to adjust how they calculate the interest on student loans. Instead of using a formula that makes debts grow faster, they'll now use a fairer system based on the cost of living. This change will apply to all student loan accounts from June 1, 2023.

This adjustment will particularly benefit those who owe between $20,000 and $30,000. For example, someone with an average debt of $26,500 could see about $1,200 wiped off their debt this year.

The government also announced a new payment to help students when they're doing practical training as part of their studies. This payment, called the Commonwealth Prac Payment, will give eligible students $319.50 a week while they're on placements. It will start from July 1, 2025.

Future Made in Australia plan

This plan aims to strengthen Australia's role in the global economy and attract investment in key industries.

Key Points:

• The government plans to make Australia a renewable energy superpower, investing in industries such as hydrogen, green metals and clean energy technologies as well as investing in innovation, science and digital capabilities
• A National Interest Account will be established to guide investments that align with Australia's national interests
• Processes will be simplified to make it easier for investors to put money into Australia
• Investment will be made in developing a skilled and diverse workforce and trade partnerships

Resurrected tax debts

The government plans to amend the tax law to give the Commissioner of Taxation discretion to not use a taxpayer’s refund to offset old tax debts, in cases where those tax debts were put on hold prior to January 1, 2017. 

This appears to be in response to criticism of the ATO, for ‘resurrecting’ old tax debts which had previously been placed on hold as being ‘uneconomical to pursue’.

Here to help

If you have any queries or need help with any of the issues raised by the Federal Budget please contact your local TaxAssist Accountant for expert advice and guidance. Call us on 1300 513 332 or make an enquiry here.

Date published 15 May 2024 | Last updated 16 May 2024