On the evening of 14 May 2024, Federal Treasurer Dr. Jim Chalmers presented the 2024–25 Federal Budget, emphasising a commitment to responsible economic management and support for Australians under financial pressure.

With a second consecutive surplus of $9.3 billion, the Budget focuses on several key areas: cost of living, housing, skills and education, Medicare, and inflation control.

Here’s a breakdown of the main points and what they mean for you.

Key Tax Measures

The Budget includes several important tax measures aimed at boosting business, fostering new industries, and ensuring fairness in the tax system:

  1. Instant Asset Write-Off Extension: Eligible businesses can continue to take advantage of the $20,000 instant asset write-off until 30 June 2025.
  2. Incentives for Hydrogen and Critical Minerals Production: New tax incentives will promote the growth of the hydrogen and critical minerals sectors.
  3. Strengthened CGT Rules for Foreign Residents: The government will tighten capital gains tax rules for foreign residents.
  4. Multinational Tax Avoidance: Multinational corporations will face penalties if they attempt to avoid paying Australian royalty withholding tax.
  5. Discontinued Measure: The plan to deny deductions for payments related to intangibles in low- or no-tax jurisdictions has been scrapped.
  6. Deferred Anti-Avoidance Rule Expansion: The start date for expanding the Pt IVA general anti-avoidance rule has been deferred.
  7. Rugby World Cup Tax Exemptions: Income tax exemptions will apply to World Rugby entities for the 2027 and 2029 Rugby World Cups.
  8. Updated Deductible Gift Recipients List: The list of organisations eligible for deductible gifts will be updated.

Social Security Enhancements

To support vulnerable Australians, the Budget introduces several social security measures:

  1. Frozen Deeming Rates: Social security deeming rates will remain at their current levels until 30 June 2025.
  2. Flexible Carer Payments: Carer payment recipients will benefit from more flexible participation requirements.
  3. Extended Jobseeker Eligibility: The higher rate of Jobseeker payment will now be available to single recipients with a partial capacity to work between 0 and 14 hours per week.
  4. Increased Rent Assistance: The maximum rates for Commonwealth Rent Assistance will rise by 10% from 20 September 2024.
  5. Military Invalidity Payments: Funding will address the social security means test for military invalidity payments following a 2020 court decision.
  6. Social Security Agreement with Uruguay: Australia will enter into a bilateral social security agreement with Uruguay.
  7. Foreign Investor Provisions: Foreign investors can purchase established build-to-rent properties with a lower investment fee.

Superannuation Changes

Significant updates to superannuation aim to support parents and secure entitlements:

  1. Superannuation on Parental Leave: Starting 1 July 2025, superannuation will be paid on government-funded paid parental leave.
  2. Pursuit of Unpaid Super: From 1 July 2024, the Fair Entitlements Guarantee Recovery Program will focus on recovering unpaid superannuation from employers in liquidation or bankruptcy.

Tax Administration Improvements

Several measures are introduced to improve tax administration and compliance:

  1. Refund Offset Discretion: The ATO will have the discretion not to use a taxpayer’s refund to offset old tax debts on hold.
  2. Student Loan Indexation: Indexation of Higher Education Loan Program debts will be limited to the lower of the Consumer Price Index or the Wage Price Index from 1 June 2023.
  3. Migrant Worker Income Matching: A pilot program will match income and employment data of migrant workers between the Department of Home Affairs and the ATO.
  4. New Compliance Taskforce: A taskforce will target tax revenue lost to fraud, with extended programs for existing compliance efforts.
  5. Business Activity Statement Refunds: The ATO will have more time to notify taxpayers if it intends to investigate a business activity statement refund.
  6. ABN System Measure Dropped: The 2019–20 measure to strengthen the Australian Business Number system will not proceed.

GST and Excise Adjustments

Changes to GST and excise/customs duties include:

  1. Extended Refunds for Indirect Taxes: Refunds of indirect taxes, including GST, fuel, and alcohol taxes, will be extended.
  2. Removal of Nuisance Tariffs: From 1 July 2024, tariffs on a range of imported goods deemed nuisances will be removed.
  3. Deferred Excise Administration Streamlining: Certain components of the previous government’s measure to streamline excise administration for fuel and alcohol will be deferred.

Summary

The 2024–25 Federal Budget presents a comprehensive plan to address immediate financial pressures, invest in future growth, and ensure responsible economic management. Key initiatives include extending the instant asset write-off, promoting new industries, enhancing social security benefits, and improving tax administration. These measures reflect the government’s priorities and aim to support Australians through strategic investments and targeted relief.

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