Last night, the Hon Dr Jim Chalmers MP, unveiled the 2024-25 Federal Budget from the Albanese Government. We’ve sifted through the details to bring you the highlights.

 

2024-25 Federal Budget Highlights for Individuals

Budget Impacts: You and Your Household

Stage 3 Tax Cuts:

The government reiterated its commitment to the Stage 3 tax cuts. There weren’t any fresh developments, however. 

 

Energy Bill Relief: 

The Energy Bill Relief Fund will offer a $300 rebate for all Australian households, directly credited to your energy bill and regardless of means.

A $325 rebate for eligible small businesses will also apply to bills in 2024–25.

 

Tax Compliance Program Extension: 

The Government is extending the Australian Taxation Office’s (ATO) Personal Income Tax Compliance Program to tackle areas of non-compliance, including overclaiming of deductions and incorrect reporting of income. Continuation of this program means it’s as important as ever to ensure you’re reporting to the ATO, correctly and on time. Speak to your advice team if you have any concerns or need assistance.

 

Super on Paid Parental Leave: 

There’s good news for parents with the enhancement of the Commonwealth Government-Funded Paid Parental Leave scheme, providing superannuation contributions based on PPL payments from July 2025. Eligible parents will receive an additional payment based on the Superannuation Guarantee (12% of PPL payments), as a contribution to their superannuation fund.

 

Super Contributions Caps Increase:

From 1 July 2024, super contribution caps will increase, as previously reported.

General concessional contributions cap will be indexed from $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, up to a limit of $360,000.

Speak to your adviser before making superannuation contributions to avoid unnecessary taxes or penalties.

 

Housing:

The Government has revealed its plan to address the housing crisis, with additional funding for social housing and homelessness services, infrastructure investment, foreign rental investment initiatives, and training and support for construction workers. 

Unfortunately, the budget reveals the government is committed to building their way out of the housing crisis – with funding almost exclusively going to infrastructure and development initiatives rather than addressing the structural inequities baked into Australia’s housing market, rental and taxation systems. 

 

Aged Care:

$2.2 billion has been allocated over five years to deliver and implement key aged care reforms recommended in the Royal Commission into Aged Care Quality and Safety. Funding is slated for digital aged care systems and technology, additional home care services, specialist dementia and palliative programs and improved regulatory capabilities.

 

Carer Payment Flexibility: 

Carer Payment recipients will enjoy increased flexibility to undertake work, study, and volunteering activities, with the participation limit adjusted to 100 hours over four weeks from March 2025. $18.6 million over five years has been slated for this initiative.

 

Medicare Levy Thresholds: 

To provide cost-of-living relief, the Medicare levy low-income thresholds for singles, families, seniors, and pensioners will be increased from 1 July 2023. These adjustments ensure that individuals on lower incomes remain either exempt from paying the full Medicare levy or eligible for a reduced levy rate.

 

Rent Assistance:

The government has committed $1.9 billion over the next five years to increase the Commonwealth Rent Assistance maximum rates by 10% from September 2024.

 

Social Security Deeming Rates Freeze: 

Social security deeming rates will remain frozen at current levels until 30 June 2025, offering support to Age Pensioners and other income support recipients facing cost-of-living pressures.

 

2024-25 Federal Budget Highlights For Business

Budget Impacts: Your Business

Tax Compliance: 

The ATO will receive $187.0 million over four years to enhance its ability to detect, prevent, and mitigate fraud against the tax and superannuation systems. This includes upgrades to technology, the establishment of a new compliance taskforce and funding for counter-fraud activities. 

Subject to the enactment of legislation, the Government will also extend the ATO’s timeframe to examine BAS refunds and refer them for additional scrutiny during periods of heightened fraud activity.

Legitimate refunds will remain largely unaffected but this continued focus on compliance is a good reminder to speak to your advice team – early, often and if you need any assistance.

 

$20,000 Instant Asset Write-Off: 

Small businesses will continue to benefit from the $20,000 instant asset write-off, which has been extended until June 2025. This allows small businesses (with an aggregated annual turnover of less than $10 million) to immediately deduct eligible assets under $20,000, easing their cash flow and reducing compliance costs.

 

Superannuation increase to 12%:

The Superannuation Guarantee rate will increase from the current 11% to 11.5% from 1 July 2024. Employers should be ready to apply this increase and begin reporting on it in the new financial year.

Additionally, there will be a final 0.5% increase to the Superannuation Guarantee rate, bringing it to 12% from 1 July 2025.

 

Dedicated Small Business Support:

$41.7 million over four years is slated for a raft of support for the small business sector. This includes $10.8 million over two years for the Small Business Debt Helpline and New Access for Small Business Owners Program which offers financial counselling and mental health support to small business owners. It also includes $2.6 million over four years to help small business owners resolve business-to-business disputes.

 

Workplace Relations: 

A $111.8 million investment over four years will support the Government’s workplace relations agenda, including $20.5 for the Office of the Fair Work Ombudsman to help small businesses comply with recent changes to workplace laws.

 

Single Front Door for Investors via Future Made In Australia:

The Government is establishing a streamlined entry point, termed the “single front door,” for major investors as part of the $22.7 billion Future Made in Australia package. This initiative aims to reinforce Australia’s appeal as an investment destination and leverage the opportunities arising from the transition to net zero emissions.

The front door will serve as a centralised hub, offering a single point of contact for investors, facilitating investment attraction, identifying priority projects, expediting approvals, and connecting investors with specialised government investment vehicles. 

 

Paid Parental Leave Administration Support: 

As the Government moves to provide superannuation contributions on Paid Parental Leave, it has also allocated $10 million to assist small business employers to administer the scheme.

 

Fraud & Scam Detection:

$67.5 million over four years, with an ongoing annual budget of $8.6 million, has been allocated to tackle scams and online fraud. This includes implementing mandatory industry codes under a Scams Code Framework and bolstering the secure eInvoicing network and regulatory bodies like the ATO, ACCC, ASIC, and ACMA.

 

Budget Criticisms

The 2024-25 budget and much of the analysis we’ve reviewed gives an inordinate amount of focus to the $300 reduction in energy bills. This initiative, although labelled as a rebate, functions as a direct cash distribution, automatically deducted from electricity invoices and is offered to all households – regardless of means. It’s part of a larger rebate program costing $3.5 billion over three years.

Does everyone love an extra $300? Sure. But like most cash distributions, it’s also a blunt instrument. It’s hardly a comprehensive solution to the complex cost-of-living situation in which we find ourselves and the more cynical amongst us argue it’s a distraction dressed up as a windfall for all.

And whilst many are celebrating a projected $9.3 billion surplus, much of this comes off the back of cuts totalling $14.4 billion within the NDIS alone.

Additionally, the budget lacks immediate and material solutions for addressing the structural inequities that continue to feed the housing crisis, leaving many renters and aspiring homeowners in a state of continued hardship.

The budget’s commitment of billions for renewable hydrogen and local, clean energy manufacturing is terrific news. This positive step for the planet is dampened, however, by this week’s announcement that the Albanese Government would ramp up extraction and use of gas until “2050 and beyond” – giving strong echoes of Scott Morrison’s “gas-led recovery” plans of years past.

 

In Conclusion

For most individuals, there’s not a lot in this years’ budget which seeks to find a balance between offering some relief and restraint.

The budget is likely to have minimal direct impact on the financial and business advice you receive from us. 

It is worth noting, however, that compliance activity is on the increase and the ATO continues to expand its audit and enforcement campaigns.

“Last night’s budget underscored the Government’s dedication to compliance enforcement, allocating nearly $190 million to bolster the ATO’s fraud detection and prevention efforts, and its Personal Income Tax Compliance Program,” says Kearney Group COO, Matt Englund.

In this context, we recommend that both individuals and businesses get audit-ready and be well prepared to defend themselves in the event of a review or investigation.

Please reach out to your advice team with any questions or assistance.

 

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