Federal Budget Wrap | May 2024

The Federal Treasurer, the Hon. Dr Jim Chalmers MP, has delivered the 2024 Federal Budget. This Federal Budget provides cost of living relief through Stage 3 tax cuts, lower power bills, higher welfare payments and support for small businesses

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Summary of key proposals

• Revised Stage 3 tax cuts will deliver tax savings from 1 July 2024.
• Energy bill relief will provide savings of up to $300 for all households and $325 for eligible small businesses.
• The $20,000 instant asset write-off threshold for eligible small businesses will be extended for another 12 months until 30 June 2025.
• Superannuation Guarantee will be paid on Paid Parental Leave from 1 July 2025.
• The freeze on social security deeming rates for financial investments will be extended until 30 June 2025.
• The maximum Commonwealth Rent Assistance will be increased by 10%.

Note: These measures are proposals only and may or may not become law.

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Cost of Living

• Electricity Relief: From July, all households will have a $300 credit automatically applied to their electricity bills. Around 1 million businesses will receive a $325 deduction off their bills over next financial year, to be applied in quarterly instalments.
• Support for renters: On 20 September 2024, the maximum Commonwealth Rent Assistance payment will increase by 10%, in addition to the regular half-yearly indexation. Rent Assistance may be available for people who pay rent and receive certain payments from Services Australia.
• PBS Medicine Freeze: The maximum Pharmaceutical Benefits Scheme (PBS) co-payment will be frozen for all on Medicare cards for the next 2 years. For those on concession cards and pension cards this will be extended to 5 years. The co-payment is the amount that must be contributed towards the cost of PBS subsidised medicines.

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Personal Taxation

From 1 July, 13.6 million taxpayers will pay less tax compared to the current financial year, when the re-worked Stage 3 tax cuts take effect. The tax savings depend on taxable income and can be estimated using this Tax cuts calculator. The tax cuts aim to provide cost-of-living relief, but may also be used to reduce debt, invest or top-up super.

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Business Taxation

The instant asset write-off scheme allows small businesses with an annual turnover below $10m to claim a tax deduction on new equipment up to the value of $20,000. This scheme has been extended for another year to 30 June 2025. There are calls to increase the value to $30,000 however this has stalled in Parliament.

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Student Debts & Loans

Higher Education Loan Program (HELP) loan holders will benefit from changes to indexation, with debts to be increased by the lower of inflation and wages growth. Currently, these debts are indexed to inflation annually on 1 June. The change will be backdated to 1 July 2023 and an ‘indexation credit’ may be provided to reduce outstanding loan balances. To estimate indexation credits, check out this HELP Indexation Credit Estimator.

If a voluntary payment is made to reduce the HELP balance and any indexation, it’s important to leave enough time after the payment is made for it to be processed by the ATO. The ATO usually release payment cut-off dates and publish this on their website.

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Paid Parental Leave

From July 2025 superannuation will be paid on top of Government funded paid parental leave. This is being used to address the continuing discussion around pay inequality between men and women, adding to already-legislated reforms that increase the length and flexibility of the scheme. Contributions will be at the same rate as employer contributions under the Superannuation Guarantee, which will be 12% from 1 July 2025.

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Social Services and Aged Care

• The ‘deeming rates’ that are used to assess income from financial investments (such as bank accounts, shares, and managed funds) will remain unchanged until 30 June 2025. Instead of assessing actual investment and bank account earnings, the deeming rates are used to determine the income that certain financial investments earn for the purpose of calculating entitlements to certain payments and benefits. This may benefit Age Pensioners, other income support recipients and concession card holders.
• More work flexibility for carers: From 20 March 2025, Carer Payment recipients will be able to work up to 100 hours at any time in a four week period without losing their payment. This is known as the ‘participation limit’ and it’s currently a maximum of 25 hours every week. Also, travel time, education and volunteering activities will no longer count towards the participation limit; only actual hours worked.
• More home care packages: An additional 24,100 home care packages will be made available in 2024/25. These packages will provide ongoing care to help older Australians to stay in their homes for longer.

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WARR HUNT is here to help

It is always important to remember that at this point, most Budget night announcements are only statements of intended change and are not yet law. There may be others that impact on your personal situation, as well as other opportunities available from changes made in prior years.

Your financial adviser can help outline what these measures may mean for you, and the opportunities available now, or in the future. Please contact us on 99350970 or admin@warrhunt.com.au if you have any questions on the Federal Budget.

Sources: www.budget.gov.au

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