The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024.
Described as a “fiscally responsible Budget aimed at alleviating current financial pressures,” the Treasurer has projected a surplus of $9.3 billion for the second consecutive year. The government’s primary focuses, outlined in the Budget, include easing the cost of living, bolstering housing development, investing in education and skills, fortifying Medicare, and maintaining prudent economic management to combat inflation.
Key tax initiatives unveiled in the Budget encompass the extension of the $20,000 instant asset write-off for eligible businesses until June 30, 2025, incentives for hydrogen and critical minerals production, reinforcement of foreign resident capital gains tax rules, and penalties for multinational entities attempting to circumvent Australian royalty withholding tax.
Additionally, the Budget introduces modifications to previously announced measures and incorporates various income tax changes that were enacted prior to the Budget declaration. Notably, these include revised personal income tax cuts, alterations to Medicare levy thresholds, and exemptions for certain entities from thin capitalisation reforms.
The government anticipates that these tax measures will enhance the Budget’s position by $3.1 billion over a five-year span ending in 2027–28. Detailed Budget papers and statements from Treasury ministers are available online.
Highlights of tax, superannuation, and social security adjustments are provided below:
Income Tax:
- Extension of the instant asset write-off threshold for small businesses.
- Strengthening of the foreign resident capital gains tax regime.
- Introduction of tax incentives for critical minerals and hydrogen production.
- Removal of content length requirements and caps for the producer tax offset.
- Introduction of penalties for taxpayers mischaracterising or undervaluing royalty payments.
- Discontinuation of deductions for intangible payments in low-tax jurisdictions.
- Postponement of the expansion of the general anti-avoidance rule.
- Income tax exemptions for World Rugby events.
- Update of deductible gift recipients list.
Social Security:
- Freezing of social security deeming rates.
- Increased flexibility for carer payment recipients.
- Extension of Jobseeker payment eligibility.
- 10% increase in Commonwealth Rent Assistance rates.
- Implementation of social security means test treatment for military invalidity payments.
- Negotiation of a bilateral social security agreement with Uruguay.
- Reduced foreign investment fee for established build-to-rent properties.
Superannuation:
- Inclusion of superannuation in government-funded paid parental leave.
- Recalibration of the Fair Entitlements Guarantee Recovery Program.
- Statutory discretion for the ATO regarding taxpayer refunds offsetting old tax debts.
- Limitation of indexation for student loans.
Tax Administration:
- Pilot program for matching income and employment data of migrant workers.
- Establishment of a compliance taskforce to recover lost tax revenue.
- Extension of existing compliance programs.
- Extended timeframe for ATO notification of business activity statement refund retention.
- Cancellation of the “Black Economy — Strengthening the Australian Business Number system” measure.
GST:
- Extension of refunds under the Indirect Tax Concession Scheme.
Excise and Customs Duty:
- Removal of tariffs on various imported goods.
- Deferral of certain components of excise administration streamlining measures.
Feel free to reach out to discuss the implications of these Budget announcements for you.
