This is a Budget for the here-and-now and it’s a budget for the decades to come. It’s a responsible Budget that helps people under pressure today – and invests in the promise and potential of the more prosperous future we can make together.

Hon Dr Jim Chalmers MP - Parliament of Australia

Budget Speech 2024–25 delivered on 14 May 2024

Labor’s third Budget was widely expected to focus on cost of living. This was delivered in the form of energy bill relief for all households, along with Stage three tax cuts that had already been legislated.

Social security proposals included freezing deeming rates at their current levels for a further 12 months, increases to Commonwealth Rent Assistance, and more flexibility for Carer Payment recipients.

Super was largely left unchanged although the Treasurer announced plans for eligible parents to receive 12 per cent super on of their government-funded Paid Parental Leave. For small businesses, the government announced it would extend the $20,000 small business instant asset write-off by 12 months until 30 June 2025.

TAXATION

The Government restated its already legislated tax cuts for 13.6 million Australian taxpayers from 1 July 2024.

From 1 July this year, the Government will:

  • Reduce the 19 per cent tax rate to 16 per cent.
  • Reduce the 32.5 per cent tax rate to 30 per cent.
  • Increase the income threshold above which the 37 per cent tax rate applies from $120,000 to $135,000.
  • Increase the income threshold above which the 45 per cent tax rate applies from $180,000 to $190,000.
  • The legislated tax rates and thresholds are compared to the current rates and thresholds in the table below:

Financial year 2023-24

Financial year 2024-25

Taxable Income

Tax Rate

Taxable Income2

Tax Rate 2

$0 to $18,200

Nil

$0 to $18,200

Nil

$18,201 – $45,000

19%

$18,201 – $45,000

16%

$45,001 – $120,000

32.50%

$45,001 – $135,000

30%

$120,001 – $180,000

37%

$135,001 – $190,000

37%

$180,001 and over

45%

$190,001 and over

45%

The stage 3 personal income tax changes could provide a reduction in personal income tax for clients. As a result, leading up to 1 July 2024, it may be worthwhile to review clients’ situations in preparing for any increase in disposable income. The following table outlines the reduction in personal income tax, excluding Medicare Levy and tax offsets, for clients on specific income amounts.

Taxable Income

Tax (2023-24)

Tax (2024-25)

Difference

$50,000

$6,717

$5,788

$929

$100,000

$22,967

$20,788

$2,179

$150,000

$40,567

$36,838

$3,729

$200,000

$60,667

$56,138

$4,529

SUPER CAPS

A number of superannuation caps and thresholds are also due to increase on 1 July 2024. While not addressed in the Budget, the following is provided as a reminder of these measures.

Contribution Type

2023-24

2024-25

Concessional contributions (CC) cap

$27,500

$30,000

Non-concessional contribution (NCC) cap

$110,000

$120,000

General NCC cap three-year bring forward

$330,000

$360,000

CGT cap amount

$1,705,000

$1,780,000

Co-contribution lower threshold

$43,445

$45,400

Co-contribution higher threshold

$58,445

$60,400

Total Super Balance 30 June 2024

NCC Cap for 2024-25

Maximum Bring-Forward Period

Less than $1.66m

$360,000

3 years

$1.66m to less than $1.78m

$240,000

2 years

$1.78m to less than $1.9m

$120,000

No bring forward. General NCC cap applies.

$1.9m +

Nil

N/A

Superannuation Guarantee Charge

2023-24

2024-25

SG Charge percentage

11%

11.50%

Maximum SG contribution base per quarter

$62,270

$65,070

Maximum SG contribution base (annualised)

$249,080

$260,280

PRESERVATION AGE

Starting from 1 July 2015, depending on a person’s date of birth, preservation age has been gradually increasing from age 55 to 60. From 1 July 2024, preservation age will be age 60 for everyone.

The increase in the preservation age will impact a number of strategies:

  • Retirement condition of release

From 1 July 2024, a member can meet the retirement condition of release through two definitions:

– Has reached age 60 and ceases employment on or after turning 60. Only the balance as at termination  date can be unrestricted non-preserved.

– Has reached age 60 and does not intend to work more than 10 hours per week. The entire balance can be unrestricted non-preserved.

  • Commencement of Transition to Retirement Income Streams

With preservation age increasing to 60, this means that that Transition to Retirement Income Streams can only be commenced once the individual has reached at least age 60.

  • Low-rate cap for super lump sum withdrawals is a redundant concept

Since 1 July 2015, where a person was over preservation age and less than age 60, they got the benefit of the lifetime low-rate cap which assisted with reducing tax on super lump sums. As the low-rate cap only applied to those who were over preservation age and less than 60, from 1 July 2024, with preservation age being 60, low rate cap for super lump sum withdrawals is a redundant concept. This is because super benefits from taxed-funds are tax-free if the withdrawal is made once the individual is 60 or over and up to 22% applies if the person is under preservation age.

.

AGED CARE

The Government will provide an additional 24,100 Home Care Packages in 2024-25 to reduce wait times in the National Priority System (NPS) to an average of 6 months.

The estimated wait times for a person with medium priority entering the NPS on 31 March 2024 by HCP level are as follows:

    Level

    Time Period

    Level 1

    Less than 1 month

    Level 2

    3 – 6 months

    Level 3

    9 – 12 months

    Level 4

    6 – 9 months

    OTHER

    Energy Bill Relief

    As a relief measure for all Australian families and eligible small businesses to help with the rise in energy costs, the Government has proposed an energy bill rebate of $300 for each household and $325 for eligible small businesses. The relief will apply from 1 July 2024 until 30 June 2025.

    There is no additional requirement in order to claim this benefit. The energy provider will deliver the rebate to eligible households and businesses through a quarterly reduction in their energy bills.

    Payday super

    Payday superannuation was previously announced in the 2023-24 Federal Budget, requiring employers to pay their employees’ SG entitlements at the same time as their salary and wages. Currently, employers are required to pay their employees’ superannuation guarantee contributions on a quarterly basis. The change happens on July 1, 2026.

      Deeming Rates

      The Government announced it will freeze the social security deeming rates at their current levels for a further 12 months until 30 June 2025. The deeming rates have been frozen at 0.25% and 2.25%

      If the deeming rate freeze had ended on 30 June 2024, many social security recipients would have seen substantial reductions in their rates of payment. For example, if deeming rates had increased to 4% and 6%, a single Age Pensioner homeowner with $300,000 in financial investments would have seen a reduction in their Age Pension of $5,625pa under the income test.

        General disclaimer

        This content is intended only to provide a summary and general overview of the subject matter covered. It is not intended to be comprehensive nor does it constitute advice. We attempt to ensure that the content is accurate and current but we do not warrant the content nor its currency. You should seek professional advice before acting or relying on any of the content.

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