Federal Budget 2024

On Tuesday 14 May, Treasurer Dr Jim Chalmers handed down the 2024 Federal Budget. The Budget seeks to balance the competing priorities of reducing inflation, while providing cost of living relief, better outcomes for aged care and childcare staff, and delivering housing and future investment opportunities.

The Government is framing its election pitch in the context of delivering two out of three budget surpluses in their three-year term, with the 2024-25 budget surplus estimated at $9.3 billion.

Key points

  • re-stating the Stage 3 tax cuts
  • instant asset write-off extension
  • help with energy bills for small business and households
  • further housing assistance
  • strengthening tax compliance and counter-fraud activities
  • further aged care funding and increased flexibility for Carer Payments.

Personal income tax

Stage 3 tax cuts
The Government confirmed that it would proceed with the revised and already legislated Stage 3 tax cuts for individuals set to come into effect from 1 July 2024. The Stage 3 tax cuts reduce the 19% tax rate to 16%, the 32.5% tax rate to 30%, lift the threshold for the 37% tax rate from $120,000 to $135,000 and lift the threshold for the 45% tax rate from $180,000 to $190,000.

Increasing the Medicare levy low-income thresholds
The Government has increased the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from 1 July 2023 to provide cost-of-living relief. The increase to the thresholds ensures that low income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate.

The threshold has been increased:

  • for singles from $24,276 to $26,000.
  • for families from $40,939 to $43,846
  • for single seniors and pensioners from $38,365 to $41,089
  • The family threshold for seniors and pensioners has been increased from $53,406 to $57,198
  • The family income thresholds will now increase by $4,027 for each dependent child, up from $3,760.

Small Business

Instant asset write-off extension

The Government will continue to improve cash flow and reduce compliance costs for small businesses by extending the $20,000 instant asset write-off by 12 months until 30 June 2025.

Small businesses, with an aggregated annual turnover of less than $10 million, will continue to 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.

Relieving energy bill pressure

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.

Expanding digital ID system

The Government is expanding the Digital ID System. The expanded system will lower the administrative burden on small businesses by reducing the amount of ID data they need to store and protect for their customers and their employees.

Retaining 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.

Legitimate refunds will be largely unaffected. Any legitimate refunds retained for over 14 days would result in the ATO paying interest to the taxpayer. The ATO will publish BAS processing times online.

This change will have effect from the start of the first income year after Royal Assent of the enabling legislation.

Building cyber resilience

The Government is supporting small businesses to be secure online while they adopt and harness digital opportunities, including through funding the following:

  • Cyber Wardens program to provide free, online training for small business owners and their staff
    to help drive cultural change and a cyber safe mindset in Australian small businesses.
  • Small Business Cyber Resilience Service to help small businesses build their cyber resilience
    and provide support when affected by a cyber incident.
  • Cyber Health Check online interactive tool to enable small and medium businesses to selfassess
    their cyber security maturity.

The Government is also developing a ransomware playbook to provide guidance on how to prepare for, respond to and recover from, a ransomware or cyber extortion incident.

Superannuation

Paid Parental Leave

The Government  will pay superannuation on Commonwealth government-funded Paid Parental Leave for births and adoptions on or after 1 July 2025 strengthening Australia’s government-funded Paid Parental Leave (PPL) scheme and improve women’s retirement outcomes. 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.

Other

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.

Housing support

The Government will provide additional funding to build more homes for Australians sooner, invest in more housing enabling infrastructure, train more construction workers and support social and affordable housing and homelessness services.

Aged care

The Government will provide $2.2 billion over five years from 2023–24 to deliver key aged care reforms and to continue to implement recommendations from the Royal Commission into Aged Care Quality and Safety. In a raft of measures, funding will be provided:

  • for 24,100 additional home care packages
  • for enhancements to critical aged care digital systems to support the introduction of the new Aged Care Act
  • to attract aged care workers
  • to reduce wait times for My Aged Care contact centre

In addition, the Government will provide $18.6 million over five years from 2023–24 to support Carer Payment recipients through increased flexibility to undertake work, study and volunteering activities.

Freezing social security deeming rates

The Government will freeze social security deeming rates at their current levels for a further 12 months until 30 June 2025 to support age pensioners and other income support recipients who rely on income from deemed financial investments, as well as their payment, to manage cost of living pressures.

Tertiary education system reforms
The Government will provide funding to implement the first stage of reforms to Australia’s tertiary
education system.

Additional note following Victorian State Budget

Vacant Residential Land Tax (VRLT)

The State Taxation Amendment Bill 2024 outlined keenly awaited amendments to the Land Tax Act 2005 (Vic) in respect of the exemption of holiday homes owned by trusts and companies from the Vacant Residential Land Tax where relevant requirements are met. If passed the Bill will allow for land to be exempt from VRLT if:

  • the owner of the land is a company or trustee of a trust.
  • the owner of land owned the land continuously since 28 November 2023 or after that date but pursuant to a contract for the purchase of the land that was entered into on or before 28 November 2023.
  • any changes in shareholdings (in the case of a company), unit holdings (in the case of a unit trust), beneficial interests (in the case of a fixed trust) or specified beneficiaries (in the case of a discretionary trust) has been between persons who are relatives.
  • There must be a minimum ownership interest of 50% in the landowner (in the case of companies, unit trusts and fixed trusts) by one or more individual persons who must have used and occupied other land (i.e. other than the holiday home in question) in Australia as a principal place of residence PPR or in the case of discretionary trusts, a specified beneficiary of a discretionary trust who is a natural person or a relative of that person must have used and occupied other land in Australia as a PPR.
  • the land must be used and occupied as a holiday home for at least four weeks in total in a calendar year by an individual person referred to in the ‘Interest in Landowner Threshold and PPR Requirement’ or their relative.
  • The Commissioner of State Revenue is satisfied that the land was used and occupied as a holiday home.

Supporting you

We can help with any additional information you might require about the Budget and what the announcements might mean for your personal financial situation. You can also access a number of dedicated fact sheets which contain more information about each of the Budget measures. Please speak to us if you have any questions, you can contact us here.