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Federal Budget 2024/25 Summary

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It's budget season in Australian politics and with the release of the 2024/25 Federal Budget in May certainly had some interesting and noteworthy inclusions and exclusions.

Our team of experienced Melbourne accountants have taken the time to summarise the 24/25 Federal Budget, highlighting factors which will most likely affect you, our clients, with a specific focus on:

  • Personal Income Tax Measures
  • Education (HECS/HELP Debt + Placement Funding) Measures
  • Small business Tax Measures
    • Other Federal Budget Matters
    • Unpaid Superannuation Entitlements
    • Personal Tax Compliance focus
    • Old Tax Debts prior 1st January 2017
    • Energy Relief

Personal Income Tax Measures

Known for quite some time, the government has confirmed the Stage Three Personal Tax Cuts which will commence from 1 July 2024. The new tax rates are summerised below.

Australian Resident Individual Income Tax Rates:

2024 Income Year From the 2025 Income Year
Tax Rate Thresholds Tax Rates Thresholds
0% $0 - $18,200 0% $0 - $18,200
19% $18,201 - $45,000 16% $18,201 - $45,000
32.5% $45,001 - $120,000 30% $45,001 - $135,000
37% $120,001 - $180,000 37% $135,001 - $190,000
45% $180,001+ 45% $190,001+

Foreign Resident Individual Income Tax Rates

2024 Income Year From the 2025 Income Year
Tax Rate Thresholds Tax Rates Thresholds
32.5% $0 - $120,000 30% $0 - $135,000
37% $120,001 - $180,000 37% $135,001 - $190,000
45% $180,001+ 45% $190,001+

Medicare Levy

There has been a change to the Medicare levy low-income threshold amounts and phase-in ranges. The thresholds for individuals and families for the 2024 income year are as follows.

Category of tax payer No Medicare levy payable at or below Reduced Medicare levy payable within Full Medicare Levy payable at or above
Individual tax payer $26,000 $26,001 - $32,500 $32,501
Individual taxpayer eligible for the SAPTO $41,089 $41,090 - $51,361 $51,362
Families eligible for the SAPTO $57,198 $57,199 - $71,497 $71,498
Families not eligible for the SAPTO with no dependent child or student $43,846 $43,847 - $54,807 $54,808

*SAPTO – Senior and Pensioner Tax Offset

Educations Measures

Changes to HECS/HELP

For those with a HECS balance, the indexation will be the lower of either the CPI or WPI moving forward from the 2023 income tax year. Therefore a review of the 2023 income tax year indexation will occur with many eligible for a refund which will be automatically refunded by the ATO as they process this.

This applies to those who have also cleared the balances post 1st June 2023.
There are no changes to the timing of indexation occurring on the 1st June each income tax year nor the repayment calculated on the Tax Return occurring on the balance of 30th June each income tax year.

On an average debt of $26,500, this measure will expect refund back about $1,200 which will go against the outstanding HECS/HELP debt.

Funding into Paid Placements

Part of this budget addressed students who are required to undertake unpaid placement as part of their studies in fields deemed as essential services such as teaching, nursing and social work.

From 1st July 2025 students in these areas will be introduced to a Commonwealth Prac Payment of $319.50 per week for the duration of their mandatory job placement.

Small Business Measures

Instant Asset Write Off

The government has temporarily increased the instant asset write-off threshold to $20,000 for the 2025 Income Tax Year. Therefore there are no changes, simply an extension of the current depreciation rules.

Superannuation on Paid Parental Leave

The government has announced that it will pay superannuation on Government Funded Paid Parental Leave for births/adoptions on or after 1st July 2025.

The rate paid will be based on the Superannuation Guarantee of 12% with some funding being paid from the government to business to facilitate the administration and payment of this.

Other Federal Budget Matters

Unpaid Superannuation Entitlement

From 1st July 2024, the government will be putting a stronger emphasis on unpaid superannuation entitlements, especially those owed by employers in liquidation or bankruptcy.

Personal Tax Compliance Focus

The Government has extended the ATO compliance program for one year from 1st July 2027. This program aims at reviewing Individual Tax Returns with a specific focus named from this budget on short-term rental properties income and deductions

ATO discretion to not offset a refund against old tax debts

The Government has proposed to amend tax law to allow the Commissioner to not offset new refunds on previous old tax debts that have been on hold or ‘uneconomical to pursuant’ prior to 1st January 2017

BAS Refund Retention Period extension

Not yet in affect but the proposed extension time period of BAS refund retention from 14 days to 30 days will allow the ATO to retain BAS refunds for further investigations.

Energy Relief

This budget has announced an Energy Bill Relief Fund which provides:

  • $300 credit to all household in quarterly instalments through their electricity bill
  • $325 for eligible small businesses
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Changes to Superannuation (effective 1st July 2024)