The Labor government has described its 2024-2025 budget as balancing cost living relief while not negatively impacting inflationary pressures. A surplus of $9.3 billion is expected to be delivered for the 2023 / 2024 financial year revenue generated from the mining and resources sector. However, a deficit of $28.3 billion is forecast for the coming year as a result of the tax cuts and new spending that are summarised below.
Many of the more significant initiatives were announced prior to the budget. The most significant of which is the amended stage 3 tax cuts that come into effect from 1 July 2024. This coupled with the HECS debt indexation amendments are the most significant measures for individuals.
There is little in the budget for businesses other than extending the $20,000 asset write off limit for businesses turning over less than $10 million to 30 June 2025.
The big spending commitments are focused on housing supply more broadly, transitional crisis accommodation for women and children from family violence and to address social housing and homelessness.
Targeted investments totalling over $15 billion to support existing and establish new manufacturing of renewable energy projects have been announced under the Future Made in Australia banner.
Health, aged care, defence and various infrastructure projects all had projected funding increases announced.
A detailed analysis for other areas of the budget can be accessed below.
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Previously announced income tax cuts have been showcased in the 2024-25 Federal budget. The cuts are across the board. These revised tax cuts were initially announced January 2024.
From 1 July 2024 the Government will pay $300 into every household’s electricity account as a credit.
HELP debts are indexed every year on 1 June. The rate of the index has historically been linked to inflation, which has picked up in recent years. There was a significant indexation rate of 7.1% imposed on 1 June 2023, which considerably increased individual’s HELP debts.
The new measures proposed in the budget include changing how the indexation rate is determined each year, which will likely lower the rate going forward. Also, the measures include backdating to implementation of the new rate setting to 1 June 2023.
By changing the calculation of HELP indexation from 1 June 2023, the indexation rate is reduced from:
Those with HELP debts that were indexed on 1 June 2023 at the higher rate will receive a credit to their HELP debt for the difference between the original rate and the new rate.
It is proposed that individuals who have paid off their HELP debt since 1 June 2023, will receive a tax credit equivalent to the reduction.
From 20 September 2024, Rent Assistance paid to individuals on some Centrelink entitlements will receive an increase. Those receiving rent assistance will receive a 10% increase in the payment.
Those receiving most Centrelink payments are assessed on their financial investment to determine a deemed income, rather than the actual income generated by those investments. The deemed income rate from investments will be frozen until June 2025. This will ensure that those receiving some Centrelink payments, such as the Age Pension will not have their payment reduced because of changes in the deeming rates.
The Education Sector was highlighted as one of the key areas for budget announcements this year. There were a number of initiatives announced including:
The proposed changes will affect some employees who have salary packaging arrangements with not for profit (NFP) organisations, but this will depend on their employer’s status for fringe benefits tax (FBT) purposes. If you work for an NFP organisation that is a ‘rebatable’ FBT employer then from 1 July 2024 you should only package ordinary benefits (such as expense payments) if your taxable income is greater than $135,000. This is because the effective FBT rate will be less than the marginal tax rate that applies to income above this threshold.
Please see an article about this previously written by Murray Nicholls
The 2024 Budget for Aged Care will increase by a further $2.2 billion with targeted support for the ageing population and those who work in the aged care industry.
A further 24,100 home care packages will be released in 2024-25 at an estimated cost of $531.4 million. This is a significant investment to increase the number of currently available packages from approximately 285,000 and aims to give older Australians further choice in the care they receive, while reducing pressures on residential aged care.
The Government will also continue to contribute towards the 15% wage increases plus on-costs as determined by the Fair Work Commission that began during the 2023-24 financial year. In 2024, this program benefitted over 250,000 workers, but cost $11.3 billion and further increases may be on the way.
Additional funding to continue the implementation of recommendations from the Aged Care Royal Commission has been allocated, including funds to enhance the Aged Care Quality and Safety Commission, technology systems and digital infrastructure in preparation for the new Aged Care Act, and other initiatives to attract nurses and other professionals to work in the sector.
As spending on the NDIS approaches $50 billion for 2024/25, the Federal budget aims to rein in spending on the NDIS, in line with the NDIS reform bill introduced in March 2024. The Scheme which currently supports 600,000 Australians with disabilities is expected to grow to 1 million by the end of the decade.
This budget introduces several savings measures and reforms, with a goal to bring NDIS spending increases to a more sustainable 8% year on year growth over the forward estimates.
The key takeaways of this budget and the introduced NDIS reform bill if it passes are:
The overhaul is projected to contribute $14.4 billion in savings over four years, which will impact some participants and providers in the short term.
As announced on 7 March, superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025.
Eligible parents will receive an additional payment based on the superannuation guarantee (12% of their PPL payments), as a contribution to their superannuation fund.
Payments will be made annually to individuals’ superannuation funds from 1 July 2026.
To support the delivery of various Government Priorities, the following additional resourcing has been announced:
Additional resourcing has also been announced to support the progression of the following workplace relations agenda items:
While no announcements were made in the budget in relation to the contribution caps but please see below for the 2024 and 2025 caps.
This year’s budget sees the continuation of the National Plan to End Violence against Women and Children 2022-2032.
In addition to the above the government has also committed to funding for programs to establish a National Student Ombudsman to help eradicate gender-based violence from universities.
The Government has extended the instant asset write-off measure for another 12 months, to 30 June 2025. Small businesses with an aggregated turnover of less than $10 million will continue to be eligible to immediately deduct the full cost of eligible assets valued up to $20,000. The assets must be first used or installed ready for use by 30 June 2025.
For assets valued above $20,000, small businesses can continue to place these assets into the small business simplified depreciation pool and depreciate these at:
Furthermore, the provision that prevents small businesses from re-entering the simplified depreciation regime for five years, if they opt-out, will continue to be suspended until 30 June 2025.
The Government will continue to fund and bolster the Australian Taxation Office (ATO) key compliance programs on personal tax, high net wealth individuals and private businesses. This extension will enable the ATO to focus on key areas such as over-claiming deductions including short-term rental property deductions, and incorrect reporting of income. With continued funds being allocated to the ATO compliance program, taxpayers should continue to be vigilant.
The Government will amend the tax law to give the Commissioner of Taxation (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. The discretion will apply to individuals, small businesses and not-for-profits.
Eligible small businesses will receive a $325 total rebate on their 2024/2025 energy bill. The small business must meet their state/territory definition of electricity ‘small customer’. This would be determined by their annual electricity consumption threshold.
The Government will no longer proceed with the 2019/2020 Budget measure announced by the previous government which proposed to impose new compliance obligations for ABN holders to retain their ABN.
The Government will invest $22.7 billion in a Future Made in Australia to bring in new jobs and opportunities to communities in every part of Australia. The stated aim is to maximise the economic and industrial benefits of the move to net zero and secure Australia’s place in a changing global economic and strategic landscape. This fund aims to foster growth and innovation, commercialisation and early-stage development in areas such as:
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