Federal Budget 2024-25

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In a world filled with more twists and turns than a rollercoaster, it’s evident that the spotlight on the 2024 Budget is on tackling the issues closest to the hearts (and wallets) of individual taxpayers, especially their worries about inflation. From sky-high energy bills to the eternal quest for affordable housing, juggling tertiary education fees, and the never-ending saga of healthcare expenses, the 2024 Budget zeroes in on what Australians hold near and dear.

Looking at the Budget focus, providing relief on living costs and investing in the Future Made in Australia Act to bolster medium-term economic growth, our government is looking at a significant increase in spending over the next four years which could stir up some inflationary waves. It’s all about the tightrope between balancing the books and building economic resilience for the long haul.

In a country surrounded by professional and government business bodies, there’s a chorus of underwhelming sentiments echoing in support of small businesses. While the budget did roll out a range of measures to ease the burden of living costs and inflationary pressures, let us look at some key takeaways for you and your business:

Key Highlights

  1. Instant asset write off for small business purchasing assets costing less than $20,000 has been extended to 30 June 2025.

  2. Alleviating cost of living pressures by providing a $300 electricity bill rebate in 2024-2025 for Australian Households and a $325 rebate for eligible small businesses.

  3. Stage 3 personal tax cuts to apply from 1 July 2024 with an average annual tax cut of $1,888.

  4. Superannuation on Government Paid Parental Leave for birth and adoptions on or after 1 July 2025.

  5. Foreign resident CGT Rules is proposed to be expanded from 1 July 2025 to include additional assets other than Australian Property.

  6. Future Made in Australia Initiative to incentivize advanced manufacturing and clean energy project within Australia.

SMEs

Instant Asset Write Off

$20,000 instant asset write-off for small business to continue, allowing those with aggregated annual turnover of less than $10 million to immediately deduct eligible depreciating assets costing less than $20,000 up until 30 June 2025. These changes will apply from the first financial year after royal assent.

Energy Bill Relief

The Government announced it will provide a $300 rebate to all Australian households, and a $325 rebate to eligible small businesses, on 2024–25 bills.

Department of Industry, Science and Resources

Boost Australian manufacturing and take advantage of our comparative strengths in science, research and development. Investments include:

  • Transforming Australia’s battery industry by helping manufacturers through a new Battery Breakthrough Initiative.
  • Supporting a thriving, skilled and diverse science, technology, engineering and mathematics workforce.
  • Positioning Australia as the world leader in green production of steel, aluminium, alumina and processed iron.
  • Commissioning a strategic examination of Australia’s R&D policies.


Apprentices and Tradies

Funding to provide 20,000 new fee-free TAFE, VET and pre-apprentice courses related to the housing sector.

Small Business Support Measures

The Government announced it will build upon the MYEFO 2023-24 measure Ensuring Small Businesses are Paid on Time with funding to:

  • Payment Times Reporting Regulator to implement reforms recommended by the statutory review of the Payment Times Reporting Act 2020.   
  • Extend the Small Business Debt Helpline and the New Access for Small Business Owners program so that they can continue to provide financial counselling and mental health support for small business owners.
  • Implement the Government’s response to the Review of the Franchising Code of Conduct, including by investigating the feasibility of a licensing model and remaking and updating the Franchising Code of Conduct before it expires in April 2025.  
  • Australian Small Business and Family Enterprise Ombudsman to support unrepresented small businesses to navigate business-to-business disputes through alternative dispute resolution.

Plug In Hybrid Electric Vehicles 

While not an update pertaining to this budget, it is important to note from 1 April 2025, Plug-in Hybrid electric vehicles will cease to be considered an exempt vehicle under the FBT Law.

Corporate and International Tax Issues

Significant Global Entities (SGEs)

Introduction of a new provision from 1 July 2026 that will apply a penalty to taxpayers who are part of a group with more than $1 billion in global turnover annually (SGEs) that are found to have mischaracterised or undervalued royalty payments, to which royalty withholding tax would otherwise apply.

Foreign Resident Capital Gains Tax Regime

Currently foreign residents are allowed to disregard a capital gain or loss made on selling an asset, unless it is Taxable Australian Real Property (TARP). However, the amendments will apply to CGT events that occur on or after 1 July 2025 and seek to:

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

Future Made in Australia Support

Allocate funds to expedite investment in key Australian industries of the future. These industries encompass renewable energy, with a focus on advancing renewable hydrogen, sustainable metals, eco-friendly liquid fuels, critical minerals refinement, and the manufacturing of clean energy technologies like solar panels and batteries. As part of the funding, the government propose to introduce:

  • Critical Minerals Production Tax Incentive to bolster Australia’s 31 essential minerals and enhance supply chain robustness.
  • Hydrogen Production Incentive to incentivize hydrogen producers.

Individuals and Superannuation

Stage 3 Tax Cuts

Stage 3 tax cuts will apply from 1 July 2024. Below table compares the current and new tax rates for individuals.

Tax Rates

Tertiary Education System Reforms

Reforming the formulae used to index HELP student debts and proposed to be backdated to 1 June 2023 onwards. This means that the indexation rate of 7.1% applied on 1 June 2023 would be reduced to 3.2% and the indexation rate to be applied on 1 June 2024 of 4.7% would be reduced to 4%.

Medicare Levy Low-Income Thresholds

Slight increases to the Medicare low-income thresholds from 2023-23 income year being $25,000 for singles and $43,846 for couples with no children. Additional amount of threshold for each dependent child or student has increased to $4,027.

Superannuation on Government Funded Paid Parental Leave

Payments of superannuation on paid parental leave. Eligible parents will receive an additional payment based on the Superannuation Guarantee (12% of their PPL payments) as a contribution to their superannuation fund.

Payday Superannuation

Continuing from 2023/2024 budget and to apply from 1 July 2026, employers will need to pay superannuation at the same time they remit wages to employees.

Overall, individuals and businesses should closely monitor the evolving economic landscape and adapt their strategies accordingly to navigate the opportunities and challenges presented by the budget update.

InCorp Advisory prides itself on being here to guide you through your most critical decisions and help facilitate sustained growth. We will continue to keep you updated as matters develop, however please reach out to us to clarify these updates and assist with any questions.

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About the Author

Mark Wellings

Mark Wellings

Partner, Tax & Advisory | InCorp Advisory