With the 2024-25 Federal Budget presented on Tuesday 14th May, we bring you our top four highlights that will impact individuals and businesses.
Treasurer Jim Chalmers handed down the surplus budget this week, which focusses on easing cost of living pressures, with a range of measures introduced to assist businesses and households doing it tough.
Stage 3 tax cuts
Perhaps the biggest win for Australian low and middle income earners is the tax cuts which come into effect on 1 July 2024.
Those earning between $18,201 – $45,000 will pay 16% tax, down 3%. Those earning $45,001 – $135,000 will pay 30% tax, down from 32.5%. For those earning between $135,001 and $190,000, the tax rate will be 37%, while the top marginal tax rate will then kick in at $190,001 at a 45% rate.
Tax rates for foreign residents has also dropped from 32.5 to 30% for those earning under $135,000.
This cuts will put money back into the pockets of working Australians and help a little towards cost of living pressures.
Instant asset write off extended
Instant asset write off has been extended for the 2025 tax year. This is great news for small businesses with an annual turnover of less than $10 million.
These businesses will be able to immediately deduct the full cost of eligible assets costing less than $20,000. These assets are to be first used or installed ready for use by 30 June 2025. Small businesses can instantly write off multiple assets which fall under the asset cap.
Assets valued at $20,000 or more can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
Instant asset write off commences on 1 July 2024, and is proposed to revert back to less than $1,000 from 1 July 2025. If you need to purchase an asset for your business, consider if now is the right time to do so to take advantage of this incentive!
Super paid on parent payment
Superannuation will soon be paid for those on parental leave! In great news for working parents, the government will pay superannuation on Commonwealth government-funded Paid Parental Leave for births and adoptions on or after 1 July 2025.
Eligible parents will receive an additional payment based on the Superannuation Guarantee (12% of their Paid Parental Leave payments), as a contribution to their superannuation fund.
This is fantastic news for working parents whose super may have otherwise taken a hit while raising their family.
HECS/HELP Debt indexation
As part of reforms to Australia’s tertiary education system, the Government is introducing changes to the way HECS/HELP debt is indexed. Student debt has previously risen based on the inflation rate and this saw all student debts jump by 7.1% last year, a significant jump on past years.
Under the new changes, indexation of HECS/HELP debt will be the lower of either Consumer Price Index or the Wage Price Index. While the indexation rate at 1 June is estimated to be between 4-4.7%, formal confirmation has not yet been received. We’ll keep you updated when we hear more.
See the full Budget Highlights
The above four picks from the Budget are our top picks we feel will most impact our clients. You can see our full 2024-25 Budget highlights that may impact your or your business here.
If you are a current client and need assistance with any of the above please contact us on office@ultimate-tax.com.au
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