This year’s Australian Federal Budget has a focus on helping Australians with easing cost of living pressures with measures including tax cuts and energy bill relief. There’s also a focus on strengthening Medicare, making available cheaper medicines and increased aged care funding.
It has a number of measures that can impact you, with this analysis diving into some of the key takeaways.
It is important to note that at this time any of these proposed measures aren’t law yet and could change through implementation.
Key points:
TAX
As of July 1 2024, the Government has legislated tax cuts for all 13.6 million Australian taxpayers, arguing that these previously announced Stage 3 tax cuts will provide return bracket creep, cost of living relief, boost labour supply and support women.
Under these cuts, from 2024-25, the tax rate will be reduced to 16 per cent from 19 per cent, while the 32.5 per cent tax rate will be reduced to 30 per cent.
The income threshold will be increased from $120,000 to $135,000 – where the 37 per cent tax rate applies – and the income threshold where the 45 per cent tax rate applies, will be increased to $190,000 from $180,000.
| 2023/24 (current year) | 2024/25 and future years | ||
|---|---|---|---|
| Thresholds | Rates* | Thresholds | Rates* |
| 0 to $18,200 | 0% | 0 to $18,200 | 0% |
| $18,201 to $45,000 | 19% | $18,201 to $45,000 | 16% |
| $45,001 to $120,000 | 32.5% | $45,001 to $135,000 | 30% |
| $120,001 to $180,000 | 37% | $135,001 to $190,000 | 37% |
| Over $180,000 | 45% | Over $190,000 | 45% |
*Rates do not include Medicare Levy
*Rates do not include Medicare Levy Taxpayers on average will receive a tax cut of $1,888 or $36 per week in the next financial year.MEDICARE
Medicare levy low-income thresholds for singles, families, and seniors and pensioners for 2023-24 have been increased to provide cost-of-living relief:
| 2022-23 | 2023-24 | |
|---|---|---|
| Singles | $24,276 | $28,000 |
| Family threshold | $40,939 | $43,846 |
| Single seniors and pensioners | $38,365 | $41,089 |
| Family threshold for seniors and pensioners | $53,406 | $57,198 |
| Family income thresholds for each dependent child | $3,760 | $4,027 |
ENERGY BILL REBATES
All households will receive a $300 credit applied automatically to their electricity bills.
Meanwhile, around one million small businesses will receive $325 off their bills over the next financial year, starting from July 1 2024.
These credits will be applied in quarterly installments, extending and expanding energy bill relief for households and small businesses.
AGED CARE
$2.2 billion over five years will be invested by the Government to deliver key aged care reforms and in order to implement recommendations from the Royal Commission into Aged Care Quality and Safety.
Some of the funding includes:
- In 2024-25, $531.4 million will be released to an additional 24,100 home care packages.
- $37 million over two years to help reduce wait times for the My Aged Care Contact Centre due to an increase in demand and service complexity.
- Over the next three years, $30.4 million to states and territories to continue to deliver the Specialist Dementia Care Program.
- An additional $10.8 million over two years to extend the Palliative Aged Care Outcomes Program and the Program of Experience in the Palliative Approach program.
- $4.1 million over the next three years to undertake ICT preparation work, to help configure the new Basic Care Care Tariffs in the AN-ACC funding model.
BUSINESS SUPPORT
INSTANT ASSET WRITE-OFF
The $20,000 instant asset write-offs will be extended by 12 months until the end of next financial year – June 30 2025.
Those who will benefit are small businesses that have an aggregated annual turnover of less than $10million, and will continue to be able to deduct immediately the full cost of their eligible assets.
These assets have to be costing less than $20,000 that are first used or installed ready for use by June 30 2025. The asset threshold applies on a per asset basis, so small businesses are able to instantly write off multiple assets.
However, assets that are valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year, and then 30 per cent each income year after. These are assets that can’t be immediately deducted.
The provisions that prevent any small business from re-entering the simplified depreciation regime for these five years – if they opt out – will continue to be suspended until the end of the financial year.
SUPERANNUATION & RETIREMENT
PAYDAY SUPER
- Over the next four years from 2024–25, $60 million will be invested to increase the Productivity, Education and Training Fund to support practical activities by employer and worker representatives to boost workplace productivity and engage in tripartite cooperation. This will also help support workplaces in implementing policy changes such as the introduction of payday superannuation.
- The Government will provide over $1.1 billion over the next five years and an additional $0.6 billion per year ongoing, to help strengthen the Paid Parental Leave scheme and improve women’s retirement outcomes.
PAID PARENTAL LEAVE
Eligible parents will also receive an additional payment based on their Superannuation Guarantee (12 per cent of their Paid Parental Leave payments) as a contribution to their superannuation fund.
OTHER SUPERANNUATION INITIATIVES
From July 1 2024, Fair Entitlements Guarantee Recovery Program will be recalibrated by the Government to pursue any unpaid superannuation entitlements owed by employers in liquidation or bankruptcy.
Over four years from this financial year, $9.2 million will be spent with an extra $1.1 million per year ongoing, to implement Better Targeted Superannuation Concessions for all members of the Commonwealth defined benefit superannuation scheme.
$187 million over four years will also be provided by the Government to the Australian Taxation Office to strengthen its ability to detect, prevent and mitigate fraud against the superannuation and tax systems.
An additional $10 million over two years will be invested to provide additional support for small business owners, to help administer the scheme along with an extra $1.4 million over two years to update communication products and documents for potential recipients.
OTHER INITIATIVES
DEEMING RATES FREEZE EXTENDED
The Government has announced that social security deeming rates will remain frozen at their current levels until June 30, 2025. This decision aims to support Age Pensioners and other income support recipients who rely on income from deemed financial investments to manage the pressures of cost of living.
CARER PAYMENT
The Government will invest $18.6 million over the next five years, along with $3.1 million per year ongoing, to support Carer Payment recipients. The participation limit will be amended to 100 hours over four weeks from March 20, 2025, and will no longer include study, volunteering, and travel time. Payments will be suspended for six months instead of being cancelled for those exceeding the limit, and single temporary cessation of care days can be used when exceeding the limit.
GREATER FUNDING FOR SERVICE AUSTRALIA
Recent stories have described difficulties with Services Australia and Department of Veteran Affairs.
This is due to unanswered calls, long wait times, and delayed document processing.
The government has spent to address these issues:
- Service Australia will get $1.8 billion over three years for extra frontline staff to address claim backlogs, service standards, emergency response, and cyber security. Around 7,500 new employment will be created to meet government and community aspirations.
- 630.3 million over four years to upgrade MyGov 2024-25.
- Over the next four years, $194.4 million (and $20.6 million each year ongoing) will help address rising delivery challenges, particularly claims processing, and update the Department of Veterans’ Affairs’ digital capability.
WHAT ELSE IS INCLUDED?
The 2024/25 budget will also include the following:
- Foreigner CGT rates for Commonwealth rent aid
- Increased job seeker payments Decreased student debt indexation
- Cheaper Medicines
DISCLAIMER: Please note the information in this article is general in nature and does not constitute financial advice. For professional and tailored advice, please contact our team at Wealth Architects.
