Suntax 2024 – 25 Federal Budget Insights

The promise of cost-of-living relief has been delivered via the budget on Tuesday as Treasurer Jim Chalmers announced a second consecutive surplus with this years expected $9.3 billion. This is the first time in almost 2 decades two consecutive surplus budgets have been delivered.

Starting July 1, 2024, the Victorian Government has implemented a set of substantial tax cuts with the objective of strengthening economic growth, influencing investments, and easing financial burdens for both individuals and business.

The focus of our summary is on the key tax related announcements of the budget.

The Federal Budget update included changes to several tax measures that had previously been announced and implemented, including:

Stage 3 Tax Cuts 

Under the Changes: 

Please refer to the below table summary of changes

Table Source: taxcuts.gov.au

What does this mean for you? 
All Australians will get a tax cut, but for many on higher incomes (>$160,000) this will be a smaller tax cut than they were expecting, based on the original proposed tax cuts. With the implemented changes you will see an increase in your take home pay each pay cycle from 01 July 2024.

By way of example of the reduction in tax you will pay, if you earn $73,000 annually you will receive a tax cut of $1,504.

Increased Medicare levy low income thresholds
Singles, families, seniors and pensioners benefited from an increase in the Medicare levy low-income threshold amounts that were announced on January 25, 2024.

The new thresholds to provide cost-of-living relief were enacted by the Treasury Laws Amendment (Cost of Living – Medicare Levy) Act 2024.

Changes to the Medicare levy Threshold include:

Other Key Measures announced on Tuesday, in the 2024-2025 budget

Amended Tax Law – Tax refunds to offset old debt
In the recent federal budget update, where the commissioner had put on hold an old tax debt released prior to 1st January 2017, the Government has proposed to amend the tax law to essentially quarantine any debt prior to that taken from being offset by future refunds.
It will continue to maintain the Commissioner’s current approach and will apply to individuals, small businesses and not for profit organisations.

HECS-HELP Debt Reduction Changes 
To implement the first stage of reforms to Australia’s tertiary education system. The Government announced funding by:

  1. Limiting the indexation of the Higher Education Loan Program (and other student loans) debt to the lower of either the Consumer Price Index or the Wage Price Index.
  2. Introducing a ‘Commonwealth Prac Payment of $319.50 per week, for tertiary students undertaking supervised mandatory placements – for example nurses or teachers. The aim of this additional payment is to reduce the financial burden on those students that are ‘required’ to take up these placements and to encourage and retain more enrolments in such courses.

Support for Small Businesses – Extension to the temporary increase to the instant asset write off
The Government has announced a temporary extension of the instant asset write off by an additional 12 months to June 30, 2025 for Small business with an annual turnover of less than $10 million. Under this scheme, the $20,000 threshold is applicable to each individual asset, enabling small businesses to instantly write off multiple assets. This is yet to be passed as law. It is anticipated that the threshold will reduce back to $1,000 from the 1st July, 2025.

Paid Parental Leave PLUS Superannuation
Currently, the Government funds a Paid Parental Leave (PPL) scheme that is not subject to super contributions. In the update it was announced that eligible parents on Commonwealth- government Paid Parental Leave will be subject to superannuation guarantee contributions of up to 12%. This will be for babies born, or adopted on or after July 1, 2025.

Unpaid Super Entitlements
From 1 July 2024, The Fair Entitlements Guarantee Recovery Program will actively pursue unpaid superannuation entitlements owed by employers who have entered or currently in liquidation or bankruptcy.

This is a very aggressive undertaking by the Government but we feel is justified.

Business Activity Statement ‘BAS’ refunds
Aimed at bolstering the Australian Taxation Office’s (ATO) capacity to combat fraud, the notification period for taxpayers regarding the retention of BAS refunds, Which is currently set at 14 days, will be prolonged to 30 days to match the time limits for non-BAS refunds. These changes will be implemented at the onset of the first financial year following the Royal Assent of the enabling legislation.

Building Cyber Resilience
With the ever increasing instances of cyber attacks and digital fraud, the Government will provide aid to every small business to enhance their cyber resilience, offering guidance on preparation, response, and recovery through initiatives that will include
– Cyber Warden programs,
– Resilience Services, and
– Cyber Health Checks.

Foreign resident CGT Regime

The foreign resident CGT regime will be tightened for CGT events commencing on or after 1 July 2025. This move aims to ensure that foreign residents fulfil their tax obligations in Australia fairly while providing clearer guidelines on how the rules operate.
The proposed amendments will come into effect for CGT events occurring on or after 1 July 2025. These amendments will:
Your Suntax Team
Sunbury Essendon