The Federal Government's 2024-25 Budget has prioritised tax cuts, cost-of-living relief, and investments in key sectors, aligning with expectations. Treasurer Jim Chalmers labelled it a "responsible budget," aiming to provide cost-of-living support without further inflating a sluggish economy. Key points of interest for our clients include the extension of the small business asset write-off.
Tax
Stage 3 Tax Cuts
Effective July 1, 2024, Stage 3 tax cuts will increase disposable income for working Australians by reducing tax obligations across the board.
Tax Savings
Below is a comparison of tax payable in the 2023/24 fiscal year versus the 2024/25 fiscal year, highlighting potential savings.
| Taxable Income | Tax Payable 2023/24 | Tax Payable 2024/25 | Tax Savings |
|---|---|---|---|
| $30,000 | $1,542 | $1,188 | $354 |
| $45,000 | $4,767 | $3,963 | $804 |
| $70,000 | $13,217 | $11,788 | $1,429 |
| $100,000 | $22,967 | $20,788 | $2,179 |
| $150,000 | $40,567 | $36,838 | $3,729 |
| $190,000 | $56,167 | $51,638 | $4,529 |
Notably, those earning $190,000 or more will see the greatest benefit, with a tax saving of $4,529, while middle-income earners will also enjoy significant reductions, such as a $2,179 saving for those with a $100,000 income.
Business Tax
Instant Asset Write-Off Extension
Small businesses with annual turnovers below $10 million can continue to claim immediate tax deductions for eligible assets under $20,000 until June 30, 2025. Each asset must be acquired and ready for use between July 1, 2024, and June 30, 2025.
Superannuation
Paid Parental Leave
From July 2025, the government will introduce a 12% superannuation contribution on paid parental leave, costing $1.1 billion over five years. This change, which previously excluded super from paid parental leave, is expected to benefit women, who typically retire with lower superannuation balances due to career breaks for child-rearing.
Cost-of-Living
Energy Price Relief
All Australian households will receive $300 off their electricity bills next financial year, costing the government $3.5 billion. Previously, lower-income households could apply for a $500 credit. Additionally, approximately one million small businesses will get a $325 credit.
Deeming Rate Freeze
The freeze on social security deeming rates, which calculate the income from financial investments, will continue for another year. This ensures that recipients of income support, such as age pensioners, won't face reduced payments due to higher deeming rates. Commonwealth Seniors Health Card holders and means-tested aged care recipients will also be unaffected.
Rental Assistance Increase
Starting September 2024, Commonwealth Rent Assistance will increase by 10%. The government will invest $1.9 billion over five years from 2023-24 (and $0.5 billion annually from 2028-29) to support this measure, aiming to improve rental affordability.
$3 Billion for Student Debt Relief
Around 3 million Australians with student loans will receive an average reduction of $1,200 in their HELP or HECS debt, totalling over $3 billion. This measure addresses last year's steep debt increase due to 7.1% inflation indexing, which outpaced wage growth. Moving forward, student debt will be indexed to the lower of wage growth or inflation, retroactive to June 1 of the previous year.
This information is general in nature and does not consider your individual objectives, financial situation, needs or tax circumstances.
