DGF Advisory 2024/25 Federal Budget Summary Report
The Federal Treasurer, the Hon. Dr. Jim Chalmers MP last night delivered the 2024/25 Federal Budget in what is considered to be centred on easing cost-of-living pressures to taxpayers, but one which delivers very little to businesses and fails to progress the tax reform conversation nor on a host of other tax issues.
The expected budget surplus of $9.3 billion will give small business little to smile about, with a mere temporary extension to the instant asset write-off to 30 June 2025 (with no increases to eligible assets or businesses) and a $325 reduction in their energy costs over the next 12 months being substantially all that is in it for small businesses.
We bring you our 2024/25 Federal Budget Summary.
1. Stage 3 tax cut changes confirmed:
The stage three tax cuts, previously announced by the Albanese Government and subsequently revised, have been enacted into law. The changes in the marginal tax rates for individuals is shown as follows:
The below diagram shows the original stage 3 tax cut benefit in blue vs its final form as legislated in red. The revised changes were designed to spread the tax cuts across a greater spectrum of the income thresholds, with incomes up to $146,000 will benefit under the revised legislation, compared to its original proposal, and taxpayers who earn more than $200,000 will still be better off than in 2024 by $4,529, but not as much as the $9,075 under the original stage 3 tax cut announcement.
2. Small business support:
Whilst there were calls from industry bodies to expand the popular instant asset write-off scheme to allow more businesses and assets to be eligible under the thresholds, the Federal Government has announced a mere extension of the instant asset write-off scheme to 30 June 2025. This allows eligible small businesses with an annual turnover below $10m to claim a tax deduction on new equipment (such as a new work vehicle, mower, or a computer) up to the value of $20,000.
Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
The Federal Government has also announced additional funding of $25.3 million to improve payment times to small businesses and $23.3 million on increasing the adoption of eInvoicing.
Around 1 million businesses will receive a $325 reduction off their energy bills over next financial year, to be applied in quarterly instalments.
3. Student loan debts:
Taxpayers with HELP debts, VET student loans, Australian Apprenticeship Support Loans and other student loans will have their debts reduced as the Federal Government changes how the loans accrue interest.
Pending a legislative change that must be passed through parliament, student debts will grow each year at the rate of either the consumer price index or the wage price index — whichever is lower.
This change will also be backdated to June last year, meaning loans for that year will grow at the lower wage index rate of 3.2 per cent instead of the 7.1 per cent inflation rate they were measured at. A credit will arise on the student debt loan, and where it has subsequently fully repaid, a refundable tax offset will apply to the assessment.
Debt repayments won't change, but it means for someone with a $25,000 debt it will be $1,120 smaller than without the change.
4. National Disability Insurance Scheme (NDIS):
The automatic top-up of NDIS plans when a participant uses all their funds will be ended as part of a broader move to rein in the rapid growth in expense of the National Disability Insurance Scheme for which it has termed "intra-plan inflation".
Part of the announcement included a further $468.7 million to support people with a disability through the establishment of an Evidence Advisory Committee, making it easier for people with disability to navigate services, reforms to pricing arrangements and a crackdown on fraud.
It's part of a deal struck with the states to reduce annual growth to 8 per cent, with the states agreeing to jointly fund some supports outside the NDIS.
5. Household energy costs:
From July, all households will have a $300 credit automatically applied to their electricity bills.
The government says it amounts to a 17 per cent reduction on the average power bill.
6. Aged Care:
Despite ongoing disappointment from the Health Services Union where delays to historic pay rises not to begin until 2026, $610 million will be given to the states to assist long stay older patients to be discharged from hospital sooner. Those initiatives will be developed by states and territories.
Another $190 million will be provided on top of that to extend and redesign the Transition Care Programme to provide short-term care of up to 12 weeks for older people after a hospital stay.
7. Superannuation on Paid Parental Leave:
Commonwealth-funded Paid Parental Leave payments will now also be subject to superannuation, with an additional $1.1 billion paid to young families who have one or both parents receiving paid parental leave payments for births and adoptions or or after 1 July 2025.
8. Foreign resident CGT regime:
The Government will strengthen the foreign resident capital gains tax (CGT) regime to ensure foreign residents pay their fair share of tax in Australia and to provide greater certainty about the operation of the rules.
The amendments will apply to CGT events commencing on or after 1 July 2025 to:
Clarify and broaden the types of assets that foreign residents are subject to CGT on
Amend the point-in-time principal asset test to a 365-day testing period
Require foreign residents disposing of shares and other interests exceeding $20 million in value to notify the ATO prior to the transaction being executed
9. Increased Medicare levy low-income thresholds:
The Government had previously announced increases to the Medicare Levy low-income thresholds, and these are now enacted into law.
The Medicare levy low-income thresholds for individuals and families for the 2024 income year are as follows:
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