2024/25 Federal Budget Summary
Personal changes
-Stage three personal tax cuts
The Government has confirmed the revised stage three personal tax cuts that were announced prior to the Federal Budget being handed down and which have already been enacted into law.
-Increased Medicare levy low-income thresholds
The Government has increased the Medicare levy low-income threshold amounts and phase in ranges for singles, families and seniors and pensioners that apply from 1 July 2023. An individual tax payer with a taxable income at or below $26,000 will not pay Medicare levy and families with a taxable income at or below $43,846. For each dependent child or student, the family income thresholds will increase by a further $4,027.
Small business measures
-Temporary increase to the instant asset write-off
Under current law, the small business instant asset write-off threshold is (less than) $1,000 for the 2025 income year. However, the Government has announced that it will temporarily set the instant asset write-off threshold for small business entities at (less than) $20,000 for the 2025 income year.
Small businesses with an aggregated annual turnover of less than $10 million will generally be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025. The asset threshold applies on a ‘per asset’ basis, so small businesses can instantly write off multiple assets. Assets valued at $20,000 or more (i.e., which cannot be immediately deducted) can continue to be placed into the small business pool and depreciated at 15% in the first income year and 30% each income year thereafter.
-Retaining Business Activity Statement (‘BAS’) refunds
The Government will strengthen the ATO’s ability to combat fraud by extending the time the ATO has to notify a taxpayer if it intends to retain a BAS refund for further investigation. The ATO’s mandatory notification period for BAS refund retention will be increased from 14 days to 30 days to align with time limits for non-BAS refunds.
-Relieving energy bill pressures
The Government is providing certain direct energy bill relief for small businesses. Of note, the Energy Bill Relief Fund is providing energy rebates to each of the approximately one million businesses on small customer electricity plans to help cover their electricity bills. This Budget will provide additional energy bill relief of $325 to eligible small businesses.
Superannuation
-Superannuation on Paid Parental Leave
Following on recommendations from the Women’s Economic Equality Taskforce, in March 2024 the Government announced that superannuation will be added to the Paid Parental Leave (PPL) scheme from 1 July 2025. Eligible parents will receive an additional payment based on the Superannuation Guarantee (12% of their Paid Parental Leave payments), as a contribution to their superannuation fund.
-Unpaid superannuation entitlements
The Government will recalibrate the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
Other Budget measures
-Discretion to not offset a refund against old tax debts
The Government has proposed to amend the tax law to give the Commissioner a discretion to not use a taxpayer’s refund to offset old tax debts, where the Commissioner had put that old tax debt on hold prior to 1 January 2017.
-Personal Income Tax Compliance Program
The Government will extend the ATO’s Personal Income Tax Compliance Program for one year from 1 July 2027. This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including overclaiming of deductions, incorrect reporting of income and inappropriate tax agent influence. This will enable the ATO to continue its focus on emerging risks to the tax system, such as deductions relating to short-term rental properties
-Changes to student loans (HELP/HECS debts)
A measure announced ahead of the Budget was reform to assist those who have student debts under the Higher Education Loan Program (HELP). Specifically, the way HELP loans are indexed each year is to be amended such that the lower of the Consumer Price Index (CPI) or the Wage Price Index will be used to apply indexation to HELP loans, effective 1 June 2023. Previously, HELP loans were indexed solely by reference to CPI.
Compulsory repayments against a HELP loan are made through the tax system when repayment income exceeds the minimum repayment threshold. The Australian Taxation Office will automatically adjust any outstanding HELP loan balance that was indexed on 1 June 2023, and/or will be indexed on 1 June 2024, and apply any resulting credit to the individual’s HELP account.
-Energy bill relief for households
The Government is providing direct energy bill relief for every Australian household. From 1 July 2024, all households will receive a total rebate of $300, which will be automatically applied to their electricity bills in quarterly instalments.