The Government has handed down a ‘no surprises’ budget with little in the way of any substantive tax measures, focussing more on the immediate challenge of cost-of-living increases while remaining mindful of adding to inflationary pressure.

In this special edition Harris Black newsletter, we summaries the key proposals from the 2024-25 budget.

Individuals & Families

Personal income tax cuts confirmed – From 1 July 2024

As previously announced, the Government has legislated permanent tax cuts for all Australian taxpayers from 1 July 2024.

Relative to the previous Stage 3 plan, the redesigned cuts broaden the benefits of the tax cut by focussing on individuals with taxable income below $150,000.

The tax rates and income thresholds from the 2024-25 for residents (as already legislated) are:

• taxable income up to $18,200 – nil;

• taxable income of $18,201 to $45,000 – nil plus 16% of excess over $18,200;

• taxable income of $45,001 to $135,000 – $4,288 plus 30% of excess over $45,000;

• taxable income of $135,001 to $190,000 – $31,288 plus 37% of excess over $135,000; and

• taxable income of more than $190,001 – $51,638 plus 45% of excess over $190,000.

$300 energy relief for households – From 1 July 2024

Households will receive a credit of $300 on their energy bills credited as automatic quarterly instalments across 2024-25.

Energy relief will also be provided to eligible small businesses in the form of a $325 rebate.

Capping indexation of HELP debts – From Loans that existed on 1 June 2023

As previously announced, the Government will cap the HELP indexation rate to be the lower of either the CPI or the Wage Price Index (WPI) with effect from 1 June 2023.

The change will apply to all HELP, VET Student Loans, Australian Apprenticeship Support Loans and other student support loan accounts that existed on 1 June 2023.

By changing the calculation of HELP 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.

The change resolves an issue for more than 3 million Australians with a HELP debt when the CPI indexation rate spiked to 7.1% last year.

An individual with an average HELP debt of $26,500 will see around $1,200 reduced from their outstanding HELP loans this year, pending the passage of legislation.

Superannuation on paid parental leave – From 1 July 2025

As previously announced, from 1 July 2025 superannuation will be paid on Paid Parental Leave payments from 1 July 2025.

Eligible parents will receive an additional payment based on the superannuation guarantee (i.e. 12% of their PPL payments), as a contribution to their superannuation fund.

This payment is in addition to the changes that saw families provided with an extra two weeks of leave (22 weeks total), which will increase to 24 weeks from July 2025 and 26 weeks from July 2026.
 

Business & Employers

$325 energy relief for small business – Date 1 July 2024

Around one million small businesses will receive $325 off their energy bills over 2024–25.

The support will apply as an automatic quarterly credit to energy bills.

$20k Small business instant asset write-off extended – Date 1 July 2023 to 30 June 2025

Small businesses, with an aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2025.

This measure extends the 2023-24 Budget announcement to the 2024-25 financial year.

“Immediately deductible” means a tax deduction for the asset can be claimed in the same income year that the asset was purchased and used (or installed ready for use).

The increased small business instant asset write-off announced in last year’s Federal Budget is not yet law.

Senate amendments proposed increasing the threshold from $20,000 to $30,000 and expanding the measure to apply to medium entities (aggregated turnover of less than $50m).