What opportunities are in it for you?
Labor’s third Federal budget was handed down by Treasurer Jim Chalmers last night. Focused on easing the cost of living for Australians, the budget features a number of measures to bolster household finances and stimulate economic growth.
It is important to note that these initiatives are proposed only and may or may not be made law. We recommend that you speak with your Crispin & Jeffery Accountant and/or Planner about making the most of the proposed changes.
Cost of Living
ENERGY BILL RELIEF
From 1 July 2024
The Government has announced that it will ease the rising increase of energy prices to Australian households with a non-means tested $300 energy bill rebate. This initiative aims to alleviate the burden of energy expenses and will be seamlessly applied to households’ electricity bills in quarterly instalments.
FREEZE ON COST OF PBS MEDICATION
The Pharmaceutical Benefits Scheme (PBS) co-payment is the portion patients contribute towards the cost of Government-subsidised medications and is typically adjusted annually in line with the Consumer Price Index. The Government has announced a freeze on the maximum co-payment for medications covered by the PBS until 1 January 2026 for both concession and Medicare cardholders. This freeze ensures that eligible individuals have stable medication costs and relief from the rising cost of healthcare.
If passed, the $300 energy bill rebate and the PBS medication co-payment freeze could offer significant relief from rising living costs, potentially increasing your disposable income.
Superannuation
PRESERVATION AGE INCREASING TO 60
From 1 July 2024
Preservation age refers to the age at which individuals can access their superannuation funds under certain conditions, typically associated with retirement. It's the minimum age at which you can access your superannuation savings, subject to meeting specific criteria set by the Australian government. Since 1 July 2015, the preservation age has been increasing incrementally from 55 to 60, depending on the individual’s date of birth. As of 1 July 2024, the preservation age will uniformly be set at age 60 for all.
SUPER ON PAID PARENTAL LEAVE
From 1 July 2025
Recipients of Government-funded Paid Parental Leave will receive Superannuation Guarantee contributions. These contributions will mirror the rate set for employer contributions under the Superannuation Guarantee, which is slated to increase to 12% starting July 1, 2025.
The introduction of Superannuation Guarantee contributions for Paid Parental Leave and the adjustment in preservation age could significantly influence your retirement planning opportunities.
Personal Income Tax
TAX CUTS FOR ALL TAXPAYERS
From 1 July 2024
Taxpayers are set to experience reduced tax burdens compared to the current financial year, as the revised Stage 3 tax cuts come into effect. Below is a table illustrating the updated tax rates and thresholds effective from July 1, 2024, alongside those of the current financial year.
| Current Financial Year 2023/24 | From 1 July 2024 | ||
|---|---|---|---|
| Taxable Income | Tax Rate | Taxable Income | Tax Rate |
| Up to $18,200 | Nil | $0 - $18,200 | Nil |
| $18,201 - $45,000 | 19% | $18,201 - $45,000 | 16% |
| $45,001 - $120,000 | 32.5% | $45,001 - $135,000 | 30% |
| $120,001 - $180.000 | 37% | $135,001 - $190,000 | 37% |
| >$180,000 | 45% | >$190,000 | 45% |
The proposed tax rate adjustments set for July 2024 would reduce your tax obligations, enhancing your take-home pay. This presents a timely opportunity to evaluate your tax planning strategies.
Social Security
FREEZE ON DEEMING RATES
The Government has announced a continuation of the freeze on social security deeming rates, maintaining their current levels for an additional 12 months until June 30, 2025. These rates, set at 0.25% and 2.25%, will remain unchanged to assist pensioners in mitigating the impact of rising living costs stemming from the COVID-19 pandemic. Originally scheduled to conclude on 30 June 2024, the extension of the deeming rate freeze aims to provide ongoing support to Age Pensioners and other income support recipients who rely on income from deemed financial investments. By alleviating cost-of-living pressures, this measure seeks to bolster the financial stability of vulnerable individuals and families dependent on social security payments.
The continuation of the freeze on social security deeming rates until 30 June 2025, is designed to help mitigate the financial strain caused by rising living costs, particularly those resulting from the COVID-19 pandemic. This measure will keep the deeming rates at their current levels, potentially affecting eligibility for income support recipients.
WORKING FLEXIBILITY FOR CARERS
From 20 March 2025
The Government has introduced funding to enhance support for Carer payment recipients, granting them greater flexibility to engage in work, study and volunteering commitments.
From 20 March 2025, Carer Payment recipients will see a modification in the participation limit, extending from the current 25 hours per week to 100 hours over a four-week period. Notably, this revised limit will exclude study, volunteering activities, and travel time, focusing solely on employment.
Recipients who surpass the participation limit or their allowed temporary cessation of care days, will have their payments suspended for up to six months, rather than experiencing a cancellation. Additionally, recipients will have the option to utilize single temporary cessation of care days when exceeding the participation limit. These adjustments aim to provide increased flexibility and support to individuals in caregiving roles.
Starting 20 March 2025, the modification in the participation limit from 25 hours per week to 100 hours over a four-week period, focusing solely on employment, offers greater work flexibility. This change is critical for carers who need to balance employment with their caregiving responsibilities. It provides flexibility for caregivers to work around their personal circumstances from week to week, whilst remaining within eligibility requirements.
Support for Small Businesses
ENERGY BILL RELIEF
From 1 July 2024
Eligible small businesses can expect additional energy bill relief of $325, seamlessly applied to electricity bills, disbursed in quarterly installments for the 2024-25 period. The Government has unveiled plans to offer direct energy bill relief for small businesses through the Energy Bill Relief Fund. This initiative aims to extend energy rebates to around one million businesses subscribed to small customer electricity plans, assisting them in managing their electricity expenses.
The additional $325 energy rebate, if enacted, could help reduce operational costs for your business, improving overall financial health.
EXTENSION OF THE $20,000 INSTANT ASSET WRITE-OFF
Extended to 30 June 2025
The Government has announced that it will continue to bolster cash flow by extending the $20,000 small business instant asset write-off for an additional 12 months until 30 June 2025. Small businesses with aggregated annual turnover of less than $10 million will retain the ability to immediately deduct the entire cost of eligible assets valued at less than $20,000, first utilized of installed ready for use between 1 July 2023 and 30 June 2025. Importantly, the $20,000 threshold applies on a per asset basis, enabling small businesses to swiftly write off multiple assets.
Assets valued at $20,000 or more, which are ineligible for immediate deduction, can still be included in the small business simplified depreciation pool. These assets will be depreciated at a rate of 15% in the first income year and 30% in each subsequent income year.
Additionally, the Government has confirmed the suspension of provisions preventing small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out, extending this suspension until 30 June 2025. This extension aims to provide small businesses with greater flexibility and support during their recovery and growth phases.
The continuation of the $20,000 instant asset write-off could enable you to invest in necessary business assets with immediate tax benefits, enhancing your business's operational capabilities.
Proactive Planning
Don't miss out on opportunities to maximise your financial potential considering the Federal Budget 2024/25.
These proposed changes underscore the necessity of staying informed and proactively planning for how they might impact your financial situation. Given the complexity of financial matters, Crispin & Jeffery highly recommends that you speak with your Crispin & Jeffery Accountant and Planner before making any financial decisions. Call us on +61 2 9908 4744, we are here to help you navigate these changes with confidence and clarity.