Summary of tax and superannuation measures
Jim Chalmers delivered his third Federal Budget on 14 May 2024, forecasting to deliver a surplus of $9.3 billion for this financial year. It offers cost of living relief to a wide range of stakeholders and funds the government’s flagship Future Made in Australia agenda but contains little in the way of support for small business.
Here is the summary of some tax-related measures announced:
Business taxation
$20k instant asset write-off for small businesses extended to 30 June 2025
The Government will extend the instant asset write-off concession for another 12 months.
Changes to foreign residents CGT rules
The Government will amend the following areas of CGT as it applies to foreign residents, i.e. it will:
- clarify and broaden the types of assets that foreign residents will be liable for;
- amend the point-in-time principal asset test to a 365-day testing period; and
- require foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, prior to the transaction being executed.
ATO’s discretion to apply tax refunds against old tax debts
Amend the tax law to give the Commissioner a discretion to not use a taxpayer’s refund to offset old tax debts, where the Commissioner had put that old tax debt on hold prior to 1 January 2017. This discretion will apply to individuals, small businesses and not-for-profits, and is stated to be maintaining the Commissioner’s current administrative approach.
Charity transitional reporting arrangements extended; update to specifically listed DGRs
The Government will remake the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Regulation 2016 with an extension of the current charity transitional reporting arrangement for 5 years.
Superannuation announcements
Paying super on paid parental leave
As announced earlier this year, the Government will pay superannuation on Commonwealth government-funded Paid Parental Leave (PPL) scheme for births and adoptions on or after 1 July 2025. Eligible parents will receive an additional payment based on the Superannuation Guarantee (12% of their PPL payments), as a contribution to their superannuation fund.
Announcements affecting older Australians
Deeming rates frozen for 12 months
The Government is continuing the freeze on social security deeming rates for financial investments at their current levels for a further 12 months. The lower deeming rate will remain at 0.25% and the upper rate will remain at 2.25% until 30 June 2025. This will benefit around 876,000 income support recipients, including around 450,000 Age Pensioners.
Carer payment participation rules relaxed
The Government will provide $18.6 million over five years from 2023–24 (and $3.1 million per year ongoing) to support Carer Payment recipients through increased flexibility to undertake work, study and volunteering activities.
From 20 March 2025, the existing 25 hour per week participation limit for Carer Payment recipients will be amended to 100 hours over four weeks. The participation limit will no longer capture study, volunteering activities and travel time and will only apply to employment. Carer Payment recipients exceeding the participation limit or their allowable temporary cessation of care days will have their payments suspended for up to six months, rather than cancelled. Recipients will also be able to use single temporary cessation of care days where they exceed the participation limit, rather than the current seven day minimum.
Freezing medicine costs
Rather than rising with inflation, medicines will be kept cheaper through a one-year freeze on the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment for everyone with a Medicare card ($31.60) and a five-year freeze for pensioners and other concession cardholders ($7.70).
Aged care measures
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.
Announcements on cost-of-living pressures
Income tax cuts and increase of Medicare levy low-income thresholds
As has been widely reported, from 1 July 2024 the personal income tax rates and thresholds and will be changed as follows:
- The 19% tax rate reduces to 16%
- The 32.5% tax rate reduces to 30%
- The income threshold above which the 37% tax rate applies increases from $120,000 to $135,000
- The income threshold above which the 45% tax rate applies increases from $180,000 to $190,000
Resident tax rates and income thresholds from 2024-2025 onwards
| Taxable Income ($) | Tax Payable ($) |
|---|---|
| 0 – 18,200 | Nil |
| 18,201 – 45,000 | Nil + 16% of excess over 18,200 |
| 45,001 – 135,000 | 4,288 + 30% of excess over 45,000 |
| 135,001 – 190,000 | 31,288 + 37% of excess over 135,000 |
| 190,001+ | 51,638 + 45% of excess over 190,000 |
The government have also now announced the following increases to the Medicare levy low-income thresholds:
- The threshold for singles has been increased from $24,276 to $26,000
- The family threshold has been increased from $40,939 to $43,846
- The family income thresholds will now increase by $4,027 for each dependent child, up from $3,760
- The threshold for single seniors and pensioners has been increased from $38,365 to $41,089
- The family threshold for seniors and pensioners has been increased from $53,406 to $57,198
Foreign residents
For 2024-25 and later income years, the tax rates for foreign residents are:
- $0 – $135,000 – 30%
- $135,001 – $190,000 – 37%
- $190,001+ – 45%
Working holiday makers
For 2024-25 and later income years, the rates of tax for working holiday makers are:
- $0 – $45,000 – 15%
- $45,001 – $135,000 – 30%
- $135,001 – $190,000 – 37%
- $190,001+ – 45%
Personal income tax compliance program extended
The Government will extend the ATO Personal Income Tax Compliance Program for one year from 1 July 2027. This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including overclaiming of deductions, incorrect reporting of income and inappropriate tax agent influence. This will enable the ATO to continue its focus on emerging risks to the tax system, such as deductions relating to short-term rental properties.
Energy rebate
From 1 July 2024, all Australian households will receive an energy rebate of $300. The credit doesn’t need to be applied for – it will be automatically applied to electricity bills over the course of 12 months. For example, quarterly bills will each contain a $75 credit. The government provided a $500 energy rebate in last year’s budget, but this was targeted at around 5 million eligible households – around half of all households.
Rent assistance
The Government will increase all Commonwealth Rent Assistance maximum rates by 10% from 20 September 2024 to help address rental affordability challenges for recipients. This is on top of the 15% increase delivered in last year’s Budget and takes maximum rates more than 40% higher than in May 2022.
Further information
The full Budget Papers can be found at https://budget.gov.au/index.htm
The information above is sourced from Thomson Reuters Federal Budget Report and Superguide Budget Report.