| The Government has handed down its third Federal Budget delivering a surplus of $9.3bn, with major initiatives such as the $22.7bn Future Made in Australia package at the forefront, while also attempting to balance competing priorities by providing cost of living relief without stimulating stickier than expected inflation. The opposition and various political commentators have already started dissecting the Government’s budget, its inflation expectations, and in particular their intentions as we head towards an election within the next 12 months. Whatever your view is, rather than focusing on the political drama that will continue to unfold, we have highlighted below some key initiatives outlined in the budget: The Future Made in Australia Initiative The Government has announced a bold initiative to make Australia a ‘renewable energy superpower’. The $22.7bn series of initiatives is designed to encourage investment into priority industries including renewable hydrogen, green metals, low carbon liquid fuels, refining and processing of critical minerals and manufacturing of clean energy technologies. Two key tax incentives have been detailed in the budget including a ‘critical minerals production tax incentive’ and a ‘hydrogen production tax incentive’ – more details can be found in the detailed budget link below. Stage 3 personal income tax cuts The Government has confirmed the revised stage 3 personal income tax cuts that were previously announced. The following table outlines individual income tax rates for the current financial year and 2025 financial year: |
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| Temporary increase to instant asset write off for businesses Small businesses with an annual turnover of less than $10million 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. This measure was set to end on 30 June 2024, however, has been extended by 12 months. The asset threshold applies on a ‘per asset’ basis. Energy bill reductions – business and individuals In relation to individuals, every Australian household will receive direct energy bill relief of $300 which will be automatically applied to their energy bills in quarterly instalments. Many businesses will also receive energy bill relief, with approximately 1 million eligible businesses receiving a $325 rebate. Superannuation on paid parental leave The Government has announced it will pay superannuation on Commonwealth funded paid parental leave from 1 July 2025. Contributions caps to increase from 1 July 2024 From 1 July 2024, the general concessional contributions cap will increase due to indexation from the current $27,500 to $30,000 for all individuals, regardless of age. The non-concessional contributions cap will also increase from the current $110,000 to $120,000 from 1 July 2024. For eligible individuals, the bring-forward cap may be available to a limit of up to $360,000. Superannuation Guarantee set to continue to increase to 12% The Superannuation Guarantee rate is scheduled to increase as previously legislated from the current 11% to 11.5% from 1 July 2024. Employers should review their existing systems and processes to ensure the increase is correctly reported and paid in the new financial year. There will be a final 0.5% increase to the Superannuation Guarantee rate to 12% from 1 July 2025. Extension of ATO compliance programs The Government has announced it will extend the ATO’s compliance programs for individual tax returns, the tax avoidance taskforce, and the ATO’s counter fraud measures. Under these measures, individual taxpayers may face greater scrutiny for overclaimed deductions and incorrect reporting of income, while private businesses and high net wealth individuals will be in the sights of the ATO in relation to aggressive tax avoidance strategies. Capping indexation of HELP debts As previously announced, the HELP indexation rate will be capped at the lower of either the wage price index or CPI. By changing the calculation of HELP debt indexation from 1 June 2023, the indexation rate is reduced from: • 7.1% to 3.2% in 2023, and • 4.7% to around 4% in 2024 An individual with an average HELP debt of $26,500 will see $1,200 wiped from their outstanding HELP loans this year, pending the passage of legislation. The above are some of the more relevant measures that may apply to our business and individual clients, however with any budget there are many more measures proposed. For more details, we have provided a link below to the Government’s budget overview and budget documents (https://budget.gov.au/). |