2024/25 Federal Budget Takeaways

On 14 May 2024, the Federal Treasurer, Jim Chalmers handed down the 2024/25 Federal Budget.

In the Federal Budget, the Treasurer announced a surplus of $9.3 billion for the 2023/24 financial year.  For the 2024/25 financial year, however, the Treasurer announced an anticipated budget deficit position of $28.3 billion due to “unavoidable spending” commitments within the Australian economy. 

The overall theme of the Federal Budget has been to reduce cost of living pressures that have impacted consumers due to higher interest rates and inflation.  Another important aspect of the budget has been the creation of a “Future Made in Australia” suite of investment commitments to ensure that investment is made in the future economic transformation of Australia.

TAX REFORM MEASURES

From a tax announcements perspective, the budget was relatively low in tax reform.  The key measures that we have identified that could impact our clients at BG Private are as follows:

Individuals

  • As previously announced, Stage 3 tax cuts will proceed from 1 July 2024.  Under the measures, all individual taxpayers in Australia will receive a tax cut.  For an individual on the average wage of $73,000, the tax cut the taxpayer will receive will be $1,504.  For those taxpayers on the top marginal rate, the maximum tax cut that the taxpayer will receive will be $4,529.

The new marginal tax rates effective from 1 July 2024 will be as follows:

Taxable income ($)Tax payable ($)
0 – 18,200Nil
18,201 – 45,000Nil + 16% of excess over 18,200
45,001 – 135,0004,288 + 30% of excess over 45,000
135,001 – 190,00031,288 + 37% of excess over 135,000
190,001+51,638 + 45% of excess over 190,000

The changes to the marginal tax rates will also impact foreign resident taxpayers as well.

  • As part of cost of living relief measures, the Treasurer announced that from 1 July 2024, an energy rebate of $300 will be provided to all households in Australia.   
  • With regard to HECS-HELP debts, the Government announced they will make retrospective changes from 2023 to the indexation rules relating to HECS-HELP debts to cap indexation to the lower of CPI (Consumer Price Index) and WPI (Wage Price Index).  What this effectively means is that HECS-HELP debts of students will be reduced to reflect the lower indexation amounts. The measures may result in students with HECS-HELP debts receiving a refund for overpayment of HECS-HELP payments made since 1 June 2023. Read 9 things to know about your HECS-HELP debt.
  • From the 2023-24 income year, the Medicare levy low-income threshold for singles has been increased to $26,000 for 2023-24 (up from $24,276 for 2022-23). For couples with no children, the family income threshold is $43,846 (up from $40,939 for 2022-23). The additional amount of threshold for each dependent child or student is $4,027 (up from $3,760). For single seniors and pensioners eligible for the SAPTO, the Medicare levy low-income threshold is $41,089 (up from $38,365). The family threshold for seniors and pensioners is $57,198 (up from $53,406), plus $4,027 for each dependent child or student (up from $3,760).

Businesses

  • The Treasurer announced that the $20,000 instant asset write-off for assets purchased by small businesses with annual turnover of less than $10 million will continue for the 2025 financial year.
  • In the budget, the Treasurer announced 2 separate measures that could impact the Capital Gains Tax liabilities of foreign residents from 1 July 2025:

– Foreign residents that sell shareholdings for more than $20 million in value will be required to notify the ATO of the transaction.  Effectively, this will allow the ATO to better determine whether the transaction has Australian Capital Gains Tax implications.

– The Government will introduce measures to clarify (and potentially extend) the situations in which foreign residents will be subject to Capital Gains Tax on the sale of assets in Australia.

  • The Treasurer announced that from 1 July 2024, eligible Small Businesses will receive an energy rebate of $325.
  • The Treasurer has advised that certain proposed amendments to extend the application of Part IVA (anti-avoidance provisions contained in the tax legislation) that were announced in last year’s budget will be deferred from 1 July 2024 to the date that the new legislation implementing the measures receives royal assent.

Superannuation

  • From 1 July 2024, the Treasurer has announced that the Government paid parental leave scheme will also include the payment of superannuation contributions for the benefit of the employee.
  • The Treasurer has announced that from 1 July 2026, employers will be required to make superannuation contributions on behalf on their employees on the same date that wages are paid to them.
  • In the budget, no further announcements were made by the Treasurer relating to the proposed additional 15% tax on earnings of superannuation funds on the component of a member’s account balance which exceeds $3 million.  However, it should be noted that these measures were previously announced in the 2023/24 budget and are currently in draft legislation format yet to be passed by Parliament.  If enacted, these measures will apply from 1 July 2025.

Tax Administration

In the budget, the Treasurer committed additional resources to assist the ATO with its tax compliance obligations. This includes:

  • The personal income tax compliance program operated by the ATO will be granted with additional funding to operate for a further 12 month period.
  • The Government will provide additional funding to the ATO to help with capabilities of the ATO to detect fraud against income tax and superannuation.
  • The shadow economy compliance program will be extended for an additional 2 years.  The aim of the program is to help identify and reduce shadow economy activity.
  • The ATO anti-avoidance taskforce will be extended for an additional 2 years.  The aim of the program is to detect anti-avoidance risks in relation to multi-nationals, large business and high-net-worth individuals.

OTHER MEASURES

Cheaper medicines

The Government will implement a freeze on increases to the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment, which will last one year for Medicare card holders and five years for pensioners and other concession cardholders. According to the Budget papers, this means that no pensioner or concession card holder will have to pay more than $7.70 on their co-payment (plus any applicable manufacturer premiums) until 2030.

Housing

Major investment in housing is also on the agenda, with the Government announcing a suite of measures aimed at boosting housing supply and making cities and regional communities more liveable.

Aged care

Approximately $2.2 billion will go towards supporting aged care, which the Government hopes will show the beleaguered sector it’s serious about implementing some of the recommendations from the Royal Commission into Aged Care Quality and Safety.

Healthcare

Medicare will also receive a boost, with the Government pouring $2.8 billion into the system to ensure it can continue to meet Australians’ healthcare needs.

Higher education

In a bid to combat ‘placement poverty,’ the Government will be introducing a payment for student teachers, nurses, midwives and social workers, who often have to undertake several months’ worth of unpaid work as part of their course. The payment, which will be means tested, will come to $319.50 per week.

Support for renters

The Commonwealth Rent Assistance program, which is a fortnightly supplement available to welfare recipients who rent, will increase by 10%. This builds on the 15% increase from September 2023 and marks the first back to back increase outside of inflation in three decades. 

Future Made in Australia

Local manufacturing will receive a shot in the arm via the Government’s flagship Future Made in Australia initiative, which will allocate $22.7 billion towards improving regional trade, investing in new technologies and modernising industry and education. To ensure Australia doesn’t fall behind in the road to net zero, significant investments will also be made in the renewable energy sector.

Support for new parents

The Government-funded paid parental leave (PPL) scheme will be modified so parents accessing the scheme can receive superannuation in addition to their payments. The changes hope to address the lacklustre super balances many women find themselves with later in life, which are often attributed to taking time off work to raise children.

Currently, couples who have recently had or adopted a child and meet the eligibility criteria can access up to 20 weeks of paid parental leave set at the minimum wage. The number of weeks will increase by two week increments in July each year until it reaches 26 weeks in 2026. If super is added to the equation, it would be paid to parents at 12% of the PPL rate. 

Domestic violence

As part of its pledge to address the crisis of domestic violence, the Government will commit $925.2 million over five years towards establishing the Leaving Violence Program. The program will provide up to $5,000 in financial support to eligible victim-survivors of domestic abuse — consisting of up to $1,500 in cash and up to $3,500 in goods and services — and will be indexed annually to make sure the payment can meet the rising cost of living.

Disability

The Government has committed to providing an additional $468.7 million to support the NDIS, following the $732.9 million allocated in the 23-24 budget. $226.7 million will also be used to fund a new employment program supporting Australians with disability.

Contact us

At BG Private we have Tax Advisors, Accountants and Financial Advisors who can help you clarify how the Federal Budget for FY 2024-25 affects you.

Contact your BG Private advisor, or contact our Tax Advisory Partner, Tim Olynyk on +61 3 9810 0700 or t.olynyk@bgprivate.com.au

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