The Treasurer of Australia, Jim Chalmers, has just released the 2024-25 Federal Budget. It mainly focuses on critical areas, such as cost-of-living relief, health, and housing. There’s a lot to digest, but don’t worry—we’ve got you covered. By understanding these fiscal policies, you can make educated decisions and better understand what’s happening. Let’s get into it.
The Bottom Line
The government’s current bank balance is a $9.3 billion surplus for 2023-24. But things will change next year, with a projected deficit of $28.3 billion.
Future Made in Australia
The government is investing in renewable energy with its $22.7 billion ‘Future Made in Australia’ plan, which includes significant new funding for the Australian Renewable Energy Agency (ARENA). It’s aiming to turn Australia into a renewable energy superpower by investing in:
- Low carbon liquid fuels (LCLF)
- Renewable hydrogen
- Green metals
These investments are expected to bring substantial economic and industrial benefits, enhancing manufacturing capability in renewables and its supply chain and maximising the benefits of the net zero transformation.
There are also benefits for businesses producing hydrogen and critical minerals, including the ‘Hydrogen Production Tax Incentive.’
Small Business Boost
Small businesses with a turnover under $10 million will love this. The $20,000 instant asset write-off is being extended until 30 June 2025. You can claim the total cost of eligible assets under $20,000 that are ready to go by the extension date.
Additionally, eligible small businesses will receive a $325 rebate on their electricity bills from 1 July 2024.
HELP Debt Relief
From 1 June 2023, the indexation rates for HELP debts, which are tied to the Consumer Price Index (CPI), will drop. Your HELP debt will be indexed by 4.7% to the estimated indexation factor of 4.0% starting 1 June 2024
If you have a HELP debt of around $26,000, it could fall by at least $1,000 once the legislation passes. These changes will significantly impact student debt, providing much-needed relief for students burdened by loans.
Superannuation on Parental Leave
From 1 July 2025, around 180,000 families will receive super on top of their paid parental leave. This is part of the government’s push for more economic inclusion for women. Parents get to receive 12% superannuation – about $106 a week. This is expected to cost at least $250 million a year to the federal budget.
Stage 3 Tax Cuts
The budget confirms the government’s plan to revise the stage 3 personal income tax rates. Here’s what the individual income tax rates will look like for 2024-25:
| Bracket | 2023-24 | 2024-25 |
| 0% | $0-$18,200 | $0-$18,200 |
| 16% | N/A | $18,201 – $45,000 |
| 19% | $18,201 – $45,000 | N/A |
| 30% | N/A | $45,001 – $135,000 |
| 32.5% | $45,001 – $120,000 | N/A |
| 37% | $120,001 – $180,000 | $135,000 – $190,000 |
| 45% | $180,001 + | $190,001 + |
The Medicare levy will also impact taxpayers, particularly those with low-income thresholds and eligible lump sum payments, emphasizing its significance in the Australian tax system.
Super Guarantee
- From 1 July 2024: 11% to 11.5%
- From 1 July 2025: 11.5% to 12%
Employers must make sure they update their accounting and financial systems to accommodate these increases.
Energy Bill Relief and Cost of Living
Households will get a $300 reduction on their energy bills, paid in quarterly instalments. Eligible businesses (around 1 million of them) will get a $325 rebate.
Compliance Crackdown
The ATO is extending its compliance programs, with the ATO Tax Avoidance Taskforce being extended to address key tax avoidance risks among multinationals, large public and private businesses, and high-wealth individuals.
The Personal Income Tax Compliance Program will be extended for one year from 1 July 2027, and the Shadow Economy Compliance Program will be extended for two years from 1 July 2026. High-net-worth individuals and private businesses will receive extra attention as the ATO pursues tax fraud and avoidance.
The relevance of the Income Tax Assessment Act in these compliance programs must be considered, as it governs the tax measures and rules impacting business tax planning, compliance processes, and incentives.
Rental Assistance Boost
From 20 September 2024, the Commonwealth Rent Assistance (CRA) program will get a 10% increase to the maximum rates. This is on top of the 15% increase in the previous budget to help with rental affordability.
Key Takeaways
- Budget deficit of $28.3 billion for 2024-25.
- $22.7 billion ‘Future Made in Australia’ plan to boost renewable energy industries.
- Small businesses can still use the $20,000 instant asset write-off until 30 June 2025.
- HELP debt indexation rates are decreasing, so debts will fall by at least $1,000.
- Superannuation on parental leave from 1 July 2025.
- Stage 3 personal income tax cuts revised.
- Super Guarantee 11.5% from 1 July 2024 and 12% from 1 July 2025.
- Households will get a $300 reduction in energy bills, and businesses will get a $325 rebate.
- ATO is extending compliance programs, targeting high-net-wealth individuals and private businesses.
- Commonwealth Rent Assistance program will get a 10% increase to the maximum rates from 20 September 2024.
- Impact of changes to the national minimum wage on workers’ earnings.
- Introduction of a penalty for mischaracterizing royalty payments related to the royalty withholding tax from 1 July 2026.
The 2024-25 Federal Budget is a mixed bag of challenges and opportunities. By getting your head around these changes and consulting our trusted advisors, you can navigate the new landscape and make the most of what’s on offer.
As always, staying informed and seeking professional advice from experts like Duo QS to understand how these changes might impact your personal and business finances is important.