The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024.
The full Budget papers are available at www.budget.gov.au.
The following provides the key points in relation to business, individuals and superannuation:
BUSINESS
Small business depreciation — instant asset write-off threshold of $20,000 for 2024–25
The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.
Small businesses (aggregated annual turnover less than $10 million) may choose to calculate capital allowances for depreciating assets under a simplified regime in Subdiv. 328-D of ITAA 1997. Under these simplified depreciation rules, an immediate write-off applies for low-cost depreciating assets. The measure will apply a $20,000 threshold for the immediate write-off, applicable to eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025.
Assets valued at $20,000 or more (which cannot be immediately deducted) 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. The provisions that prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out will also continue to be suspended until 30 June 2025.
The measure extends a 2023–24 Budget measure to increase the instant asset write-off threshold to $20,000 for the 2023–24 income year. A Bill containing amendments to increase the instant asset write-off threshold for 2023–24 is currently before parliament. The Bill was amended by the Senate to increase the instant asset write-off threshold for 2023–24 to $30,000 and extend access to the instant asset write-off to entities that are not small business entities but would be if the aggregated turnover threshold were $50 million.
Source: Budget Paper No 2, pp 14–15; Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023.
INDIVIDUALS
From 1 July this year, the Government will:
• reduce the 19 per cent tax rate to 16 per cent
• reduce the 32.5 per cent tax rate to 30 per cent
• increase the income threshold above which the 37 per cent tax rate applies from $120,000 to $135,000
• increase the income threshold above which the 45 per cent tax rate applies from $180,000 to $190,000.
The revised Stage 3 tax rates for the 2024–25 and later income years are as follows:
Source: Budget Paper No. 2 page 12
Increased Medicare levy low-income thresholds
As part of the 2024–25 Federal Budget, the Government announced that the Medicare levy low-income thresholds will be increased for singles, families, and seniors and pensioners from 1 July 2023. Individuals and families will not have to pay the Medicare levy if their individual or family taxable income is below the low-income threshold.
Medicare low income threshold changes:
Source: Budget Paper No. 2 page 12
Student loans indexation reform
Indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023, subject to the passage of legislation. The measure will apply retrospectively.
Source: Budget Paper No 2, p 63.
Eligibility for higher rate of Jobseeker payment to be extended
Eligibility for the higher rate of Jobseeker payment will be extended to single recipients with a partial capacity to work of zero to 14 hours per week from 20 September 2024.
The higher Jobseeker payment rate is currently provided to single recipients with dependent children and those aged 55 and over who have been receiving an income support payment for 9 continuous months or more.
Source: Budget Paper No 2, p 164; Budget Factsheet — Easing cost-of-living pressures, p 2.
Commonwealth Rent Assistance to increase
The maximum rates of the Commonwealth Rent Assistance (CRA) will increase by 10% from 20 September 2024 to help address rental affordability challenges for recipients.
This measure builds on the 2023–24 Budget measure to increase the CRA maximum rates by 15%.
Source: Budget Paper No 2, p 167.
Extension and expansion of the Energy Bill Relief Fund
As part of the 2024–25 Federal Budget, the Government announced that it will provide $3.5 billion over three years from 2023–24 to extend and expand the Energy Bill Relief Fund to provide a $300 rebate to all Australian households and a $325 rebate to eligible small businesses on 2024–25 bills. From 1 July 2024, all households will see a $300 credit automatically applied to their electricity bills and around one million small businesses will receive $325 off their bills over 2024–25. The credits will be applied in quarterly instalments.
Source: Budget Paper No. 2 page 179-180
SUPERANNUATION
Super to be paid on government-funded paid parental leave
Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025. Eligible parents will receive an additional payment based on the superannuation guarantee (12% of their PPL payments), as a contribution to their superannuation fund.
Payments will be made annually to individuals’ superannuation funds from 1 July 2026.
Source: Budget Paper No 2, p 166; Budget Factsheet — Broadening opportunity and advancing equality.
Recovery of unpaid super from liquidated or bankrupt employers
The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
Source: Budget Paper No 2, p 96
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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2024. Please do not reproduce without the expressed written consent of the author.