Federal Budget 2024-25 Summary
On May 14, 2024, Treasurer Dr. Jim Chalmers presented the 2024-25 Federal Budget, focusing on providing cost of living relief and encouraging business investment in clean energy as part of the "Future made in Australia" agenda. The budget includes a mix of tax, superannuation, and compliance measures aimed at benefiting individuals, small businesses, and larger enterprises.
Key Highlights
Tax and Superannuation Changes
Individuals
Stage 3 Tax Cuts: The government confirmed no further changes to the already legislated Stage 3 tax cuts, effective from July 1, 2024. These cuts aim to provide equitable cost of living relief and support for women and labor supply. The average annual tax cut is $1,888 per taxpayer.
Income Tax Rates for 2024-25:
$0 – $18,200: Nil
$18,201 – $45,000: 16c for each $1 over $18,200
$45,001 – $135,000: $4,288 plus 30c for each $1 over $45,000
$135,001 – $190,000: $31,288 plus 37c for each $1 over $135,000
Over $190,001: $51,638 plus 45c for each $1 over $190,000
Medicare Levy Exemption and Reduction Thresholds: Adjustments to ensure low-income individuals are either exempt or pay a reduced levy.
Thresholds for 2023-24:
Singles: Exempt up to $26,000, phased in up to $32,500
Families (no children): Exempt up to $43,846, phased in up to $54,807
Families (1 child): Exempt up to $47,873, phased in up to $59,841
Families (2 children): Exempt up to $51,900, phased in up to $64,875
HELP Debt Changes: Indexation on HELP debt will be capped at the lower of CPI or Wage Price Index starting from June 1, 2023. This reduces the financial burden on students, as previous indexation rates were higher due to inflation.
Small Business
$20,000 Instant Asset Write-Off: Extended for another year until June 30, 2025. Small businesses with an annual turnover of less than $10 million can immediately deduct the cost of assets under $20,000. Assets costing $20,000 or more can be depreciated over several years.
Business Taxpayers
Critical Minerals Production Incentive: From 2027-28 to 2040-41, a 10% production incentive for costs related to refining and processing Australia’s 31 critical minerals.
Hydrogen Production Incentive: From 2027-28 to 2040-41, a $2 per kilogram incentive for renewable hydrogen production to support the industry and decarbonization efforts.
Superannuation
Paid Parental Leave (PPL) Superannuation: Starting July 1, 2025, superannuation contributions will be included for Federal Government funded PPL. This aims to improve women’s retirement savings and economic security. Eligible parents will receive an additional 12% of their PPL payments as a superannuation contribution.
2. Compliance Initiatives
ATO Initiatives
The budget includes measures to enhance compliance and reduce tax avoidance, ensuring that all taxpayers meet their obligations.
3. Social Welfare and Support
Medicare Levy Adjustments
Low-Income Thresholds: Updated thresholds to ensure that low-income earners are either exempt from the Medicare levy or pay a reduced rate.
4. Other Measures
Foreign Resident Capital Gains Tax (CGT)
Extension and Strengthening: The CGT regime will be extended and strengthened to include a broader range of assets and introduce a 365-day testing period for the principal asset test. Foreign residents must notify the ATO of transactions exceeding $20 million before execution.
Disclaimer
The information provided on this page is intended to give a general overview of the Federal Budget 2024-25 based on the official documentation. While every effort has been made to ensure accuracy, readers are encouraged to consult the full budget documents and seek professional advice where necessary. The full Federal Budget 2024-25 documentation is available on the official government website.