Australian Federal Budget 2024–25

Wis AU
May 16, 2024
1 min read

The Australian government released an exposure draft of legislative amendments regarding public

The Australian Federal Budget 2024-25, unveiled by Treasurer Jim Chalmers in Canberra on Tuesday 14 May 2024, strikes a balance between fiscal responsibility and strategic investment. With a focus on targeted tax incentives and measures to curb inflation, the budget aims to stimulate growth while addressing cost of living pressures. Small businesses receive continued support, while amendments to the capital gains tax regime signal broader changes ahead. This budget sets the stage for Australia's economic trajectory, emphasising resilience and competitiveness in a rapidly evolving global landscape. As we delve deeper into its implications for individuals and businesses, it becomes evident that the fiscal policies outlined will shape the nation's economic landscape for years to come.

Key Budget initiatives – Individuals

Personal income tax cuts

As previously announced, the Government has legislated permanent tax cuts for all Australian taxpayers from July 1, 2024. Compared to the previous Stage 3 plan, the redesigned cuts broaden the benefits of the tax cut by focusing on individuals with taxable income below $150,000.

Tax Rates (%)	Current Taxable Income Range ($)	From 1 July 2024 ($)
0	0—18,200	0—18,200
16		18,201—45,000
19	18,201—45,000
30		45,001—135,000
32.5	45,001—120,000
37	120,001—180,000	135,001—190,000
45	>180,000	>190,000

Medicare levy low-income thresholds

The Medicare levy low-income thresholds will be increased for singles, families, and seniors and pensioners from 1 July 2023.

Medicare low-income threshold	30 June 2023	from 1 July 2023
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
Family - for each dependent child or student	$3,760	$4,027

$300 energy relief

Households and eligible small businesses will benefit from significant energy bill relief initiatives. Across the 2024-25 period, households will receive automatic quarterly instalments totalling $300.

Capping indexation of HELP debts

From 1 June 2023, the Government is implementing a change to cap the HELP indexation rate, which will now be determined as the lower of either the CPI or the Wage Price Index (WPI). This alteration affects all HELP, VET Student Loans, Australian Apprenticeship Support Loans, and other student support loan accounts existing as of 1 June 2023.

From 1 June 2023, the indexation rate is reduced from:

7.1% to 3.2% in 2023, and
4.7% to around 4% in 2024.

Estimated indexation for HELP debts

*Actual credit amount will vary depending on individual circumstances including repayments made during the year. All HELP debts that were indexed in 2023 and are subject to indexation on 1 June 2024 will receive an indexation credit.

HELP debt at 30 June 2023	Total estimated credit for 2023 and 2024*
$15,000	$670
$25,000	$1,120
$30,000	$1,345
$35,000	$1,570
$40,000	$1,795
$45,000	$2,020
$50,000	$2,245
$60,000	$2,690
$100,000	$4,485
$130,000	$5,835

Superannuation on paid parental leave

On 7 March 2024, the Federal Government announced its decision to begin paying superannuation on government-funded Paid Parental Leave (PPL), managed by the ATO starting from 1 July 2025. This initiative, costing an estimated $1.1 billion initially, is aimed at supporting parents of babies born or adopted on or after 1 July 2025. Moreover, this initiative builds upon the Government's previous investment of $1.2 billion from 2022–23 to 2026–27 to enhance the PPL scheme, which will progressively extend by two weeks each year until reaching a total of 26 weeks by 1 July 2026.

Increasing commonwealth rent assistance

From September 20, 2024, the maximum rates for Commonwealth rent assistance will see a 10% increase. This boost aims to alleviate rental stress and will benefit recipients of Centrelink/Department of Veterans Affairs payments and those receiving family tax benefits who are paying rent or similar payments above a minimum fortnightly threshold. Currently, single individuals receive a maximum fortnightly rate of $188.20, while couples receive a combined maximum rate of $177.20.

This initiative, costing $1.9 billion over five years starting from 2023-24 (with an ongoing annual cost of $0.5 billion from 2028-29), follows a 15% increase implemented in September 2023. Together, these adjustments signify a cumulative rise of over 40% in the maximum rates of Commonwealth Rent Assistance since May 2022, including indexation.

Higher JobSeeker rate for partial capacity to work

The Government will extend eligibility for the existing higher rate of JobSeeker payment to single recipients with a partial capacity to work (zero to 14 hours per week) from 20 September 2024. Currently, those on JobSeeker payments aged 55 or over and who have been on the payment for nine continuous months receive a higher rate of payment. These are:

Relationship status	Maximum payment per fortnight
Single with no children	$762.70
Single with dependent children	$816.90
Single 55 or older after 9 continuous months of payments	$816.90
Partnered (Each)	$698.30

Freezing social security deeming rates

When calculating Centrelink and Department of Veterans affairs payments, rather than assessing the actual income from financial investments, a deemed rate of return based on the total value of these investments is assumed. Some common examples of financial investments include bank accounts, term deposits, shares and managed funds.

The Government proposes to freeze the deeming rates (shown below) until 1 July 2025:

Deeming rate	Single	Pensioner Couple
0.25%	Up to $60,400	Up to $100,200
2.25%	Amounts over $60,400	Amounts over $100,200

High-quality health services through Medicare

The Government will ensure that the cost of medicines remains low by freezing indexation:

PBS general co-payments to not be indexed between 1 January 2025 and 31 December 2025 (inclusive), with indexation resuming on 1 January 2026
PBS concessional co-payments to not be indexed between 1 January 2025 and 31 December 2029 (inclusive), with indexation resuming on 1 January 2030

The $1 optional discount available on patient co-payments for subsidised prescriptions will be reduced each year by the relevant notional indexation amount until the $1 discount has been reduced from $1 to zero.

From 1 January 2024, you may pay up to $31.60 for most PBS medicines, or $7.70 if you have a concession card. The Australian Government pays the remaining cost (with the exception of brand premiums and certain other allowable charges).

Key Budget initiatives – Business

$325 energy relief for small business

Around one million small businesses will receive $325 off their energy bills over 2024–25. The support will apply as an automatic quarterly credit to energy bills.

$20k Small business instant asset write-off extended

Small businesses, with an aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2025. This measure extends the 2023-24 Budget announcement to the 2024-25 financial year.

“Immediately deductible” means a tax deduction for the asset can be claimed in the same income year that the asset was purchased and used (or installed ready for use).

If the business is registered for GST, the cost of the asset needs to be less than $20,000 after subtracting the GST credits that can be claimed for the asset. If the business is not registered for GST, it is less than $20,000 including GST.

The write-off applies per asset, so a small business can deduct the cost of multiple assets.

The rules only apply to assets that fall within the scope of the depreciation provisions. Expenditure on capital improvements to buildings that falls within the scope of the capital works rules is not expected to qualify.

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 at15% in the first income year and 30% each income year thereafter if the asset has been acquired by a small business entity that chooses to apply the simplified depreciation rules.

The provisions that prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out will continue to be suspended until 30 June 2025.

The increased small business instant asset write-off announced in the 2023-24 Federal Budget is not yet law, see Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023). Senate amendments proposed increasing the threshold from $20,000 to $30,000 and expanding the measure to apply to medium entities.

Expanding CGT regime for foreign residents

The foreign resident capital gains tax (CGT) regime will be expanded by:

Clarifying and broadening the types of assets on which foreign residents are subject to CGT
Amending the point-in-time principal asset test to a 365-day testing period
Requiring foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, prior to the transaction being executed.

The Future Made in Australia initiative

The Government has announced a bold initiative to make Australia a “renewable energy superpower.”

As part of the Future Made in Australia initiative, the Government will provide an estimated $19.7 billion over ten years from 2024–25 to accelerate investment in Future Made in Australia priority industries including renewable hydrogen, green metals, low carbon liquid fuels, refining and processing of critical minerals and manufacturing of clean energy technologies including in solar and battery supply chains.

This includes two time‑limited tax incentives to invest in new industries:

Critical Minerals Production Tax Incentive from 2027-28 to 2040-41 to support downstream refining and processing of Australia's 31 critical minerals to improve supply chain resilience.
- the production incentive will be valued at 10% of relevant processing and refining costs
- applicable for up to 10 years per project for production between 2027-28 and 2039-40 by projects that reach final investment decisions by 2030.

a Hydrogen Production Tax Incentive from 2027-28 to 2040-41 to producers of renewable hydrogen to support the growth of a competitive hydrogen industry and Australia's decarbonisation.
- The incentive will be $2 per kilogram of renewable hydrogen produced for up to 10 years per project for production between 2027-28 and 2039-40 by projects that reach final investment decisions by 2030.
- Details are subject to consultation.

The tax incentives are proposed to be in effect from the 2027–28 to the 2040–41 income years.

Funding measures

The Government is getting into business with industry to encourage investment in select areas:

$10.2 million in 2024–25 for pre-feasibility studies for critical mineral common-user processing facilities in partnership with state and territory governments to enhance Australia’s capacity to process critical minerals, sovereign capability and economic resilience.
$1.3 billion over ten years from 2024–25 (and an average of $151.6 million per year from 2034–35 to 2038–39) for an additional round of the Hydrogen HeadStart program to bridge the green premium for early-mover renewable hydrogen projects.
$17.1 million over four years from 2024–25 (and an additional $2.5 million in 2028–29) to deliver the 2024 National Hydrogen Strategy, including hydrogen infrastructure planning, social license and industry safety training and regulation.
$1.5 billion over seven years from 2027–28 (and an average of $125.0 million per year from 2034–35 to 2036–37) to the Australian Renewable Energy Agency to invest in renewable energy and related technologies.
$1.7 billion over ten years from 2024–25 for the Future Made in Australia Innovation Fund (administered by the Australian Renewable Energy Agency), to pilot and demonstration projects and early-stage development in priority sectors, including renewable hydrogen, green metals, low carbon liquid fuels and clean energy technology manufacturing such as batteries.

$1.4 billion over 11 years from 2023–24 (and $66.8 million per year from 2034–35 to 2036–37) to support manufacturing of clean energy technologies including solar and battery manufacturing.
$20.9 million over four years from 2024–25 (and $1.2 million per year ongoing) to undertake further consultation on incentives to support the production of, and demand for, low carbon liquid fuels.
$18.1 million over six years from 2024–25 for foundational initiatives to expedite the emergence of Australia’s green metals industry.
$11.4 million over four years from 2024–25 (and $1.1 million per year ongoing) to fast track the initial phase of the Guarantee of Origin Scheme for green hydrogen and bring forward work on green metals, including iron, steel and aluminium.

Small business support services

The Government has announced $41.7 million in funding over four years from 2024–25 for a series of initiatives to support small businesses:

Improving payment times to small businesses including naming and shaming - increased resourcing for the Payment Times Reporting Regulator so that it can deliver its expanded functions, which include naming slow paying businesses.
Mental health and financial wellbeing of small business owners –
- Extending the NewAccess for Small Business Owners program, which provides tailored, free and confidential mental health support.
- Extending the Small Business Debt Helpline.

Franchising sector code changes - In response to the 2023 Schaper Review of the Franchising Code of Conduct, the Government is providing $3 million to:
- Remake and improve the Code.
- Promote best practice conduct between franchisors and franchisees.
- Make it easier for small businesses to operate in the sector including through better access to dispute resolution.

Access to justice - $2.6m in funding to the Australian Small Business and Family Enterprise Ombudsman. The ASBFEO assists and advocates for small businesses including helping to resolve disputes.

We are committed to keeping our clients informed about the latest fiscal policy changes, particularly with the recent unveiling of the 2024-25 Federal Budget by Treasurer Jim Chalmers. From tax adjustments to broader economic strategies, we understand the diverse impacts on individuals and businesses. Whether it's the extended instant asset write-off for small businesses or amendments to the capital gains tax regime, our team is dedicated to providing clarity and guidance. Stay connected with us as we navigate the Budget's intricacies, and feel free to reach out for any questions or clarifications regarding how these changes may affect your financial affairs. With our expertise and commitment to excellence, we ensure our clients' financial success in today's evolving economic landscape.

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Personal income tax rates