What It Means For You
Cost of Living Relief a Top Priority
The 2024-25 Federal Budget delivered by Treasurer Dr Jim Chalmers aims to provide relief for Australians grappling with the soaring cost of living. With inflation driving up prices on everyday essentials, the government has made easing the financial strain on households a key focus.
Australia's economy continues to face strong headwinds from recent crises like the pandemic, natural disasters, and the international energy crisis. Supply chain disruptions, high energy costs, persistent inflation, and rising interest rates have created economic uncertainty worldwide. Slowing growth in China, recessions in the UK and Japan, and geopolitical tensions add to the challenging global landscape.
As inflation remains elevated, Australians are paying significantly more for goods and services compared to just a year ago. This erosion of purchasing power has tightened household budgets and made affording basic necessities more difficult for many families.
So how will the budget impact you?
Small to Medium Business
Instant Asset Write-off
Small businesses with an aggregated annual turnover of less then $10 million will generally be able to immediately deduct eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025. The asset threshold applies on a per asset basis, so small businesses can instantly write off multiple assets.
Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
Note a similar instant asset write off was announced in the previous 2023-24 budget and has not yet been legislated.
Energy Bill Rebate
From 1 July 2024, 1 million eligible small businesses will receive a $325 annual electricity bill rebate.
Retaining BAS Refunds
Notification for retaining Business Activity Statement Refunds will be increased from 14 days to 30 days.
This will strengthen the ATO’s ability to combat fraud by extending the time for further investigation.
Digital ID System
The Digital ID System will be expanded to lower the administrative burden on small business reducing the need to store and protect data for their customers and employees.
Cyber Security
Funding to build cyber resilience for small businesses will continue with a Cyber Wardens program, Cyber Resilience Service and Cyber Health Check as well as guidance on how to prepare, respond to and recover from a Ransomware or Cyber extortion incident.
A Future Made in Australia
A proposed $22.7b investment into the ‘Future Made in Australia Act’.
Aim is to maximise the economic and industrial benefits of Australia’s move to net zero.
It will establish a national interest framework to identify priority industries such as, renewable hydrogen, critical mineral processing, green metals, low carbon liquid fuels and clean energy manufacturing including battery and solar panel supply chains.
For small to medium Australian manufacturers there could be opportunity to access funds to support innovation, commercialisation, pilot, demonstration and early stage development.
Tax Compliance Crackdown
The government will extend the Tax Avoidance Task Force and the Shadow Economy Compliance Program for two years from 1 July 2026, combating shadow economy activities, safeguarding revenue and preventing non-compliant businesses from gaining unfair advantage.
Extension of the Income Tax Compliance Program from 1 July 2027 to allow the ATO to continue its focus on emerging risks to the tax system such as deductions relating to short term rental properties.
Individuals
Personal Income Tax Rates
From 1 July 2024 there will be new personal tax rates and thresholds for 2024-25
Australian resident individual income tax rates
2024 income year | From the 2025 income year | ||
Tax Rate | Thresholds | Tax Rate | Thresholds |
0% | $0 - $18,200 | 0% | $0 - $18,200 |
19% | $18,201 - $45,000 | 16% | $18,201 - $45,000 |
32.5% | $45,001 - $120,000 | 30% | $45,001 - $135,000 |
37% | $120,001 - $180,000 | 37% | $135,001 - $190,000 |
45% | $180,001 + | 45% | $190,001 + |
Foreign resident individual income tax rates
2024 income year | From the 2025 income year | ||
Tax Rate | Thresholds | Tax Rate | Thresholds |
32.5% | $0 - $120,000 | 30% | $0 - $135,000 |
37% | $120,001 - $180,000 | 37% | $135,001 - $190,000 |
45% | $180,0001 + | 45% | $190,001 + |
Medicare Levy Low-Income Thresholds Increase
Effective from 1 July 2023, the Medicare levy low-income thresholds will increase for singles, seniors and pensioners. The new thresholds are as follows:
| 2022/23 | 2023/24 |
Singles | $24,276 | $26,000 |
Families | $40,939 | $43,846 |
Single Seniors and pensioners | $38,365 | $41,089 |
Family Seniors and pensioners | $53,406 | $57,198 |
Superannuation
The government will pay superannuation on Commonwealth government-funded Paid Parental Leave for births and adoptions on or after 1 July 2025. Eligible parents will receive as additional payment based on the Superannuation Guarantee (12% of their Paid Parental Leave payment) as a contribution to their superannuation fund.
Energy Bill Relief for Households
From 1 July 2024, all households will receive a total rebate of $300, which will be automatically applied to their electricity bills in quarterly instalments.
Capping Indexation of HELP Debts
The government will cap the HELP indexation rate to the lower of either the CPI or the WAGE Price Index (WPI) with effect from 1 June 2023. The change will apply to all HELP, VET Student Loans and other student support loan accounts that existed on 1 June 2023.
Increasing Commonwealth Rent Assistance
The commonwealth rent assistance maximum rates will increase by 10% from 20 September 2024.
PBS Co-Payments
There will be a one year freeze on the maximum PBS patient co-payment for everyone with a Medicare card and a five-year freeze applicable to pensioners and other concession cardholders.
New Fee-Free TAFE Places
The government will establish 20,000 fee-free TAFE places to expand access to pre-apprenticeship programs for construction sector students.
Focus on Housing
Funding available to expand housing in well-located areas and unblock local infrastructure bottlenecks.
Doubled the dedicated funding for social housing and homelessness services.
Regulatory requirements for universities to provide purpose built student accommodation.
Domestic Violence
The government has committed almost $1bn over 5 years to permanently establish the Leaving Violence Program accessing up to $5,000 in financial support along with referral services, risk assessments and safety planning.
Conclusion
The 2024-25 budget aims to provide targeted cost of living relief, whilst steering the economy through turbulent global conditions. Striking the right balance will be crucial for supporting Australians through this period of high inflation and economic volatility.
If you have any questions, please do not hesitate to contact your Client Manager.
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