What does the 2024/2025 Federal Budget mean for you?

The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024.

Described as a “responsible Budget that helps people under pressure today”, the Treasurer has forecast a second consecutive surplus of $9.3 billion. The main priorities of the government, as reflected in the Budget, are helping with the cost of living, building more housing, investing in skills and education, strengthening Medicare and responsible economic management to help fight inflation.

The key tax measures announced in the Budget include extending the $20,000 instant asset write-off for eligible businesses by 12 months until 30 June 2025; introducing tax incentives for hydrogen production and critical minerals production; strengthening foreign resident CGT rules; and penalising multinationals that seek to avoid paying Australian royalty withholding tax.

We are pleased to provide you with this brief summary of the measures that may impact you, and as always, welcome your questions to our team. 

Businesses

Small business depreciation – instant asset write-off threshold of $20,000 extended to 2024–25

• The instant asset write-off threshold of $20,000 for small businesses (aggregated annual turnover less than $10 million) applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.
• The measure applies to eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025.
• The provisions that prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out will also continue to be suspended until 30 June 2025.
• The measure builds on a 2023–24 Budget measure that would raise the instant asset write-off threshold to $20,000 for the 2023–24 income year. This measure is still pending and currently before Parliament. The Senate amended the 2023-24 Bill to boost the instant asset write-off threshold for 2023–24 to $30,000 and broaden access to the instant asset write-off to entities with an aggregated turnover of $50 million.

Statutory discretion for ATO to deal with tax refunds and debts on hold

• The Commissioner of Taxation will be given a discretion to not use a taxpayer’s refund to offset old tax debts where that debt had been put on hold before 1 January 2017. The tax law will be amended to provide for this ATO discretion which will apply to individuals, small businesses and not-for-profits. The discretion will maintain the ATO’s current administrative approach to such debts.

Removal of nuisance tariffs

• Tariffs identified as a nuisance across a range of imported goods will be removed from 1 July 2024.
• The measure will permanently set to “free” the rate of duty on tariffs had been identified as a nuisance to Australian businesses, imposing unnecessary administrative costs and compliance burdens. Tariffs that will be removed relate to a range of imported goods, including household necessities such as toothbrushes, tools, fridges, dishwashers and clothing.

Energy Bill Relief Fund – extension and expansion

• The Government will extend and expand the Energy Bill Relief Fund to provide a $300 rebate to all Australian households and a $325 rebate to eligible small businesses on 2024–25 bills to provide cost of living relief.

Small Business Debt Helpline and the NewAccess for Small Business Owners program extended.

• $10.8 million over two years from 2024–25 will be made available to extend the Small Business Debt Helpline and the NewAccess for Small Business Owners program to continue to provide financial counselling and mental health support for small business owners.
• NewAccess is a mental health coaching program to help small business owners cope with hard situations. A coach will partner with business owners for 6 sessions, and help them deal with problems and learn useful skills to handle stress.
• Small Business Debt Helpline, a national, free and confidential phone-based financial counselling service for small business owners.

Individuals

Foreign resident CGT regime to be strengthened

• The foreign resident CGT regime will be strengthened for CGT events that occur on or after 1 July 2025. In respect of such CGT events, the amendments will:
  • Clarify and broaden the types of assets that foreign residents are subject to CGT on
  • Change the point-in-time principal asset test to a 365-day testing period, this test assesses whether 50% or more of the value of an Australian entity is attributable to “taxable Australian real property.”
  • 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.
• This measure will ensure that Australia can tax foreign residents on direct and indirect sales of assets with a close economic connection to Australian land.

Student loans indexation reform

• Indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023, subject to the passage of legislation. The measure will apply retrospectively.

Superannuation

Super to be paid on government-funded paid parental leave

• Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted 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.
• Payments will be made annually to individuals’ superannuation funds from 1 July 2026.

Recovery of unpaid super from liquidated or bankrupt employers

• The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.

For more details please access our full budget report here.