Whether you are an individual taxpayer or business owner, the range of measures announced in the 2024-25 Federal Budget earlier this week, are likely to impact you in some way.

From energy rebates and extension of the $20,000 instant asset write-off, to tax cuts and changes to superannuation, there definitely is a lot to unpack.

With the cost of living, and the cost of doing business, in Australia currently having an obvious and wide-reaching effect across the country, there was lots of hope (and pressure) for the most recent Federal Budget to offer some relief.

Let’s take a look at the key features of the 2024-25 Federal Budget to better understand where things may get a little easier, as well as where you might expect to see some tightening.

Small to Medium Businesses: Key 2024-25 Federal Budget Announcements

As a large proportion of the Australian business industry comprises small to medium enterprises, it is important for the government to support these essential businesses to ensure that they can continue to operate and contribute to our communities.

$20,000 Instant Asset Write-Off Extended to 30 June 2025

To continue to assist business owners with the cost of purchasing assets, the Government has announced that it will extend the $20,000 instant asset write off for small businesses that was due to end on 30 June 2024 for a further 12 months, until 30 June 2025. 

This is an extension of a similar measure that was previously announced in the 2023-24 Federal Budget which allows small businesses with an aggregated turnover of less than $10 million to claim an immediate deduction for eligible assets that cost less than $20,000 and are first used or installed ready for use between 1 July 2023 and now, 30 June 2025. 

It is important to note that the Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 which contains the Small Business Support – $20,000 instant asset write-off measure for the 2023–24 income year is currently before Parliament, and therefore not yet legislated (has not been made law). Business owners looking to take advantage of the instant asset write-off should seek advice regarding the limits and conditions that may apply at the time they acquire an eligible asset. It may be wise to review or adjust the timing of the purchase in order to achieve the best outcome.

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

Assets that exceed the $20,000 threshold can be added to the general small business pool and depreciated at 15% in the first year of income and 30% in the subsequent income years. Further, the suspension of the five-year lock out rule for small businesses that chose to opt out of the simplified depreciation rules will also be extended to 30 June 2025. 

$325 Energy Rebate for Eligible Small Businesses

The Energy Bill Relief Fund that was rolled out in 2023-24 has been extended and expanded to provide $3.5b in energy bill relief for all Australian households and certain eligible small businesses. 

As part of the expansion, in an effort to support small business cash flow, from 1 July 2024, the Government will provide a $325 electricity bill rebate to around 1 million eligible small businesses.

The $325 will be applied in quarterly instalments over the 2024-25 year as credits on the entity’s electricity bill.

Update of ATOs Discretion when Pursuing Debts on Hold

The 2024-25 Federal Budget included an announcement that the Government will amend the existing law to provide the Commissioner of Taxation the ability to utilise discretion to refrain from using a taxpayer’s refund to offset tax debts if the Commissioner had previously placed that old tax debt ‘on hold’ before 1 January 2017. 

In the past, when it came to dealing with certain debts that were considered ‘uneconomical to pursue’ and had been placed ‘on hold’, the ATO would exercise discretion to not proceed with offsetting taxpayer refunds against those old debts. This discretion was applied in specific situations, such as for taxpayers on low incomes. Although this measure seems like a logical approach to take, the existing laws do not actually permit this discretion.

The move to change to law will ensure that it now aligns with the ATO’s current administrative practices. The discretion is expected to be applied to individuals, small businesses, and not-for-profit organisations. However, the announcement did not include details on when the ATO will use its discretionary powers or the turnover threshold for eligible small businesses.

Funding Support for the Small Business Debt Helpline

The financial and mental strain of running a business in today’s tough economic climate seems to be ever-increasing for many business owners. 

The 2024-25 Federal Budget provides $10.8 million over 2 years to extend and support the Small Business Debt Helpline and the NewAccess for Small Business Owners program. The funding will enable these services to continue to provide financial counselling and mental health services to small business owners.

2024-25 Federal Budget Measures affecting Businesses

The Federal Budget measures relating to businesses had a strong international focus.

Changes to CGT for Foreign Residents

Foreign residents for tax purposes who make a capital gain or loss from a CGT event that takes place on or after 1 July 2025 and involves a direct or indirect interest in Australian real property will be subject to amended CGT measures.

The amendments are proposed to align the Australian laws with OECD standards are intended to:

  • Clarify and broaden the types of assets that foreign residents are subject to CGT on.
  • Amend the point-in-time principal asset test to a 365-day testing period.
  • Require foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, prior to the transaction being executed

General Anti-Avoidance Rule Expanded

The 2023-24 Federal Budget, included a measure to enhance the integrity of the Australian tax system by broadening the general anti-avoidance rule for income tax (Part IVA of the Income Tax Assessment Act 1936). It was intended that the existing rule will be expanded to cover schemes that seek to reduce the amount of tax that is paid in Australia by exploiting a lower withholding tax rate on income paid to foreign residents.

The rule will also be extended to apply to schemes that achieve an Australian income tax benefit, even if their primary intention was to decrease foreign income tax.

Importantly, when announced in 2023-24, this measure was intended to be effective from income years starting on or after 1 July 2024. The 2024-25 Federal Budget announced that this measure will now become effective on the day that the amending law receives Royal Assent. There is no grandfathering provision proposed, meaning these rules would apply to all schemes in existence at the time of Royal Assent.

Superannuation & the 2024-25 Federal Budget

The Government announced a number of measures in relation to superannuation in the 2024-25 Federal Budget. Many of the items discussed were in fact clarification or reiteration of initiatives that were previously proposed, as well as some new ones. As a significant investment in our futures, most changes to superannuation are likely to affect us all. See how the proposed changes could impact you.

Additional Tax on Superannuation Balances over $3 million

As initially announced by the Treasurer in February 2023, it was confirmed that from 1 July 2025, the Government will proceed with reducing the tax concessions available to individuals with a total superannuation balance that exceeds $3 million.

This means that an additional 15% tax rate will be applied to earnings that are related to the proportion of an individual’s superannuation balance that is over $3 million.

There will be no changes to the tax treatment of superannuation balances that are under $3 million.

On 10 May 2024, a report from the Senate Economics Legislation Committee recommended that the proposed bills be passed with no changes, so the process is already well underway to become law.

Payday Superannuation to go Ahead from 1 July 2026

Another previously proposed superannuation measure that was confirmed in this week’s Federal Budget was that of payday superannuation.

Under the new measure, from 1 July 2026 employers will be required to pay the Superannuation Guarantee for their employees at the same time that they pay their salary and wages, as opposed to at the end of each quarter. 

While it was first announced on 2 May 2023, this is not yet law. However, the fact that it was mentioned in the recent budget means that it is something that the current Government intends to proceed with.

Superannuation Guarantee on its Way to 12%

As per previous legislation, from 1 July 2024, the Superannuation Guarantee rate will increase from 11% to 11.5%.

The final scheduled increase to 12% will be effective from 1 July 2025.

Superannuation on Paid Parental Leave from 1 July 2025

When the 12% Superannuation Guarantee rate comes into effect on 1 July 2025, it will also apply to government-funded Paid Parental Leave. 

This is intended to help normalise parental leave as a workplace entitlement and reduce its impact on the retirement incomes of eligible parents.

Increase to Contributions Caps from 1 July 2024

From 1 July 2024, the general concessional contributions cap will increase from $27,500 to $30,000 for all individuals, regardless of age.

At the same time, the non-concessional contributions cap will also increase from $110,000 to $120,000. For eligible individuals, the bring-forward cap may be available to a limit of up to $360,000.

Individuals should seek professional advice to ensure that they meet the required minimum standards, age requirements and tests before making superannuation contributions. This will help to ensure that you avoid unnecessary taxes or penalties.

2024-25 Federal Budget Delivers Relief for Individuals

The 2024-25 Federal Budget provides some much needed relief for struggling households and individuals through tax cuts, energy rebates and changes to Medicare levy low-income thresholds.

New (Lower!) Personal Tax Rates & Amended Thresholds

The Government confirmed previously announced tax cuts that will take effect from 1 July 2024. There will be a reduction of some of the current tax rates as well as amendments to thresholds/income brackets.

You can see a side-by-side comparison of the current and new rates and thresholds in the table below.

2024 FY2025 FY
0 – $18,200Nil0 – $18,200Nil
$18,201 – $45,00019c for each $1 over $18,200$18,201 – $45,00016c for each $1 over $18,200
$45,001 – $120,000$5,092 plus 32.5c for each $1 over $45,000$45,001 – $135,000$4,288 plus 30c for each $1 over $45,000
$120,001 – $180,000$29,467 plus 37c for each $1 over $120,000$135,001 – $190,000$31,288 plus 37c for each $1 over $135,000
$180,001 and over$51,667 plus 45c for each $1 over $180,000$190,001 and over$51,638 plus 45c for each $1 over $190,000

Increase to Medicare Levy Low-Income Thresholds

There will be an increase to Medicare levy low-income thresholds for singles, families, seniors and pensioners, effective from 1 July 2023.

The previous and new thresholds are detailed in the table below.

2023 FY2024 FY
Single seniors and pensioners$38,365$41,089
Family seniors and pensioners$53,406$57,198

In addition, the family income thresholds will increase by a further $4,027 for each dependent child or student, which is a boost from the previous amount of $3,760.

$300 Electricity Bill Rebate for Households

As with the electricity bill rebate that will be provided for eligible small businesses, from 1 July 2024, all Australian households (that’s around around 10 million) can expect a $300 credit on their electricity bill (to be applied quarterly) thanks to the Government and the 2024-25 Federal Budget.

When it comes to making ends meet for struggling Australian families, any help to pay the bills, especially the electricity bill in winter, is most welcome!

Seek Expert Tax Advice to Benefit from the 2024-25 Federal Budget

Keeping abreast of all of the recent budget announcements and how they might affect, and benefit, you and your business can seem complicated and time-consuming.

The good news is that you don’t have to spend too much time trying to understand it all!

For the team of expert tax accountants and tax lawyers at The Quinn Group, it’s our job to be across all of the proposed changes, and to stay up-to-date with any new legislation so that we can help you get to the maximum benefit from the opportunities that are available.

Call us on 1300 (QUINNS) or + 61 2 9223 9166 or submit an online enquiry and schedule an appointment to discuss your individual situation.