Treasurer Jim Chalmers presented the 2024-25 Federal Budget on Tuesday 14 May, focusing on a shift towards clean energy and providing significant cost-of-living relief. This budget is particularly relevant for businesses and individuals, with a range of incentives and supports to boost the economy and ease personal financial pressures.
Table of Contents
Main Highlights:
- Tax Cuts
- Instant Asset Write-Off
- Energy Bill Relief
- Mental Health Support for Businesses
- Employee’s Superannuation on Paid Parental Leave
2024 Federal Budget: For Individuals
The 2024-25 Federal Budget brings a series of significant measures aimed at providing cost-of-living relief to Australians amid ongoing economic challenges. While the focus remains on easing household financial pressures.
Tax Cuts:
The 2024-25 Federal Budget introduces significant tax cuts for all 13.6 million Australian taxpayers, starting from 1 July 2024. These adjustments aim to ease cost-of-living pressures, support middle Australia, enhance the labour supply and address gender disparities by boosting women’s participation in the workforce.
From 1 July this year, the Government will:
- Keep the tax-free threshold at 0 to $18,200.
- Reduce the 19 per cent tax rate to 16 per cent from $18,201 to $45,000.
- Reduce the 32.5 per cent tax rate to 30 per cent from $45,001 to $135,000.
- The 37% rate now comes in at $135,001 to $190,000 which increases the income threshold above which the 37 per cent tax rate applies from $120,000 to $135,000.
- The 45% rate now comes in at $190,001+ which increases the income threshold above which the 45 per cent tax rate applies from $180,000 to $190,000.
Taxable Income
|
Marginal tax rate |
Taxable Income
|
Marginal tax rate |
| $18,200 or less | 0% | $18,200 or less | 0% |
| $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% |
| $180,001+ | 45% | $190,001+ | 45% |
Medicare Levy Low‑Income Thresholds
The Government has increased the Medicare levy low‑income thresholds for 2023–24, ensuring more than one million low‑income taxpayers continue to be exempt from the Medicare levy or pay a reduced levy rate.
Energy Bill Relief
- $3.5 billion in energy bill relief for all Australian households.
- From 1 July 2024, more than 10 million households will receive a total rebate of $300 on their electricity bills throughout the year.
- This is estimated to directly reduce headline inflation by around 1/2 of a percentage point in 2024–25 and is not expected to add to broader inflationary pressures.
Student Debt Relief
- $3 billion cut in student debt across various loan programs, with protections for the value of the student loan system maintained.
Women’s Economic Security
- Initiatives to support women’s careers and reduce the gender pay gap, including funding to support women in clean energy sectors and other male-dominated industries.
Cheaper Medicines
- The Government is working to finalise the new Eighth Community Pharmacy Agreement, supported by up to an additional $3 billion in funding, which will deliver cheaper medicines, improve patient health outcomes and secure a strong community pharmacy sector.
- As part of the Agreement, instead of rising with inflation, there will be a one‑year freeze on the maximum Pharmaceutical Benefits Scheme (PBS) patient co‑payment for everyone with a Medicare card and a five‑year freeze for pensioners and other concession cardholders.
- This change means that no pensioner or concession cardholder will pay more than $7.70 (plus any applicable manufacturer premiums) for up to five years.
2024 Federal Budget: Superannuation
- $1.1 billion to pay superannuation on Government-funded Paid Parental Leave, benefiting families and potentially aiding small business owners and employees by supporting financial security.
- The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
- From 1 July 2024, the Super Guarantee will increase to 11.5%. It will continue to increase by 0.5% on 1 July each year until it reaches 12% in 2025.
- From 1 July 2026, employers will need to pay superannuation for their employees on the same day they pay the salary and wages. These changes were announced in the 2023-24 Federal Budget as a way of addressing the amount of superannuation that goes unpaid so the ATO can detect this earlier.
2024 Federal Budget: Relief for Home Owners and Renters
Support for Renters
- $1.9 billion over five years to increase maximum rates of Commonwealth Rent Assistance by a further 10 per cent.
- This builds on the 15 per cent increase in September 2023 and will take maximum rates over 40 per cent higher than in May 2022 – a combined result of indexation and the actions of this Government.
Support for Home Owners
- The Government is making available a further $1 billion to states and territories to deliver new housing – including for connecting essential services such as water, power, sewerage and roads.
- This investment expands on the $500 million already committed through the Housing Support Program to support enabling infrastructure to unlock more homes.
Student Housing
- To deliver more accommodation for students and to reduce pressure on the private rental market, the Government will work with the higher education sector to develop regulations requiring universities to increase their supply of student accommodation.
2024 Federal Budget: For Businesses
The 2.5 million small businesses in Australia are a cornerstone of the economy, contributing over $500 billion and employing around 5.2 million people. These businesses are essential for driving innovation and productivity.
The key priorities from the Federal Budget for businesses are:
- Easing the pressure on small businesses by streamlining processes to minimise administrative burden and helping them bounce back from challenges.
- Supporting small businesses to grow by encouraging business entry, growth and vitality in the small business sector.
- Levelling the playing field for small businesses by enabling healthy competition and ensuring small businesses get a fair go.
CPA Australia and COSBOA highlighted that the 2024 Federal Budget might leave small business owners feeling underwhelmed. They pointed out that most investment incentives are targeted at specific industries rather than the wider small business sector. Additionally, while extensions of measures like the instant asset write-off, NewAccess, the small business debt helpline and energy bill relief are helpful, they are not enough to fully address the broader challenges that small businesses face.
Instant Asset Write-Off
Treasurer Jim Chalmers announced the extension of the instant asset write-off scheme, allowing around 4 million small businesses to claim a $20,000 tax break. This move, part of a $290 million package, aims to boost cash flow and encourage investment in productivity-enhancing assets.
- The asset must be first installed or ready to use between 1 July 2024 and 30 June 2025.
- The cost must be less than $20,000.
- Applies to businesses with an annual turnover under $10 million.
- Assets valued at $20,000 or more (which cannot be immediately deducted) 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.
- Small businesses can continue the approach from the previous income year and immediately deduct assets eligible for the instant asset write-off.
- The provisions that prevent small businesses from re-entering the simplified depreciation regime (lockout rules) for five years if they opt out will continue to be suspended until 30 June 2025.
Saving Time and Money
- $23.3 million will support increased eInvoicing adoption to improve cash flow, disrupt payment redirection scams and boost productivity for small businesses.
- From 1 July 2024, the Government will abolish 457 nuisance tariffs in the largest unilateral tariff reform in two decades. This will simplify Australia’s trade system and cut compliance costs for businesses, including small businesses which are particularly burdened by the complexity of the tariff system.
- $288.1 million to deliver and expand the Digital ID system. Once operational, the expanded Digital ID System will lower the administrative burden on small businesses by reducing the amount of ID data they need to store and protect for their customers and their employees.
- $13.2 million over three years in targeted assistance to increase the number of residential builders accredited under the Work Health and Safety Accreditation Scheme.
- An extra $25.3 million to speed up payments to small businesses, enhancing the Payment Times Reporting Regulator’s capacity to name slow-paying businesses.
- Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme.
- The foreign resident CGT regime will be strengthened for CGT events commencing on or after 1 July 2025.
Energy Bill Relief
The Government is providing direct energy bill relief for small businesses.
- The Energy Bill Relief Fund is providing energy rebates to each of the approximately one million businesses on small customer electricity plans to help cover their electricity bills. This Budget will provide additional energy bill relief of $325 to eligible small businesses.
- The Government is providing $1.8 million to progress regulatory reforms to retail energy markets that will support consumers experiencing hardship and ensure small businesses are on electricity contracts that work better for them.
There are concerns about whether the relief measures are sufficient. A source from Inside Small Business commented on the limitations of the Energy Bill Relief Fund, stating, ” The extension of the Energy Bill Relief Fund – giving one million small businesses $325 to help pay their energy bills – is a great example of helping SMEs to reduce costs. However, it only supports roughly 38 per cent of the 2.6 million small businesses, which make up 97 per cent of all businesses in Australia.” This highlights that while the relief is beneficial, it does not extend to the majority of small businesses, leaving many without the needed support to offset their energy costs.
Supporting Business Confidence and Resilience
The Government recognises that small business owners face unique challenges, with their mental health connected to the financial health of their small business. This Budget invests a further $10.8 million to support the mental health and financial wellbeing of small business owners by:
- Extending the NewAccess for Small Business Owners program, which provides tailored, free and confidential mental health support to small business owners.
- Extending the Small Business Debt Helpline, a national, free and confidential phone-based financial counselling service for small business owners.
- $20.5 million to the Fair Work Ombudsman to help small businesses understand and comply with recent workplace relations changes.
- $3 million to implement the Government’s response to the Review of the Franchising Code of Conduct, including remaking and enhancing the Code, and an additional $2.6 million to support more small businesses through alternative dispute resolution.
Balancing Small Business and Employee Needs
The Government is making it easier for small businesses to support their employees. This Budget provides:
- $60 million for the Productivity, Education and Training Fund to support practical activities by employer and worker representatives to boost workplace productivity and engage in tripartite cooperation.
- $10 million for Services Australia to provide additional support for small business employers administering the Paid Parental Leave scheme.
Superannuation Compliance Changes
- From 1 July 2024, the Super Guarantee will increase to 11.5%. It will continue to increase by 0.5% on 1 July each year until it reaches 12% in 2025.
- From 1 July 2026, employers will need to pay superannuation for their employees on the same day they pay the salary and wages. These changes were announced in the 2023-24 Federal Budget as a way of addressing the amount of superannuation that goes unpaid so the ATO can detect this earlier.
Building Cyber Resilience
The Government is supporting small businesses to be secure online while they adopt and harness digital opportunities, including through:
- Cyber Wardens program: $23.4 million for free online training to foster a cyber-safe mindset.
- Cyber Resilience Service: $11.1 million to support businesses affected by cyber incidents.
- Cyber Health Check: $7.2 million for a tool to assess cybersecurity maturity.
Winning Government Business
The Government is helping small businesses compete for and win more Government contracts.
- Defence Industry Grants: $183.8 million in defence industry grants to support Australian small and medium businesses. This will include the new Defence Industry Development Grant Program, which will reduce the administrative burden on small and medium businesses and provide greater opportunities for tailored financial support.
- The Buy Australian Plan: Simplifying procurement processes to help businesses win more government work.
- Commonwealth Procurement Rules: Updated to increase small and medium business participation.
- Go Global Toolkit: $10.9 million to enhance support for businesses to export
For Businesses To Keep In Mind
Ensuring the Right Skills
- National Skills Agreement: The new National Skills Agreement will continue to expand access to the vocational education and training sector, support quality training and implement reforms to address critical skills needs.
- Fee-free TAFE: Investing $88.8 million to provide an additional 20,000 fee-free TAFE places in courses relevant to the construction sector. This is on top of the additional 300,000 fee-free TAFE places made available from 2024 to 2026 in areas of priority skills.
- Support for Group Training Organisations (GTOs): $1.8 million over three years from 2025–26 to support small and medium businesses to access Group Training Organisation (GTO) services for clean energy, manufacturing and construction apprentices. The Government will reimburse GTO fees for up to 800 small and medium businesses.
- Streamlined Skills Assessments: $1.8 million to deliver streamlined skills assessments for around 1,900 migrants from comparable countries to work in Australia’s housing construction industry.
- Support for Social Enterprises: $21.9 million to support social enterprises and employers to engage job seekers through paid employment placements of up to six months. This includes grant funding of $1.5 million over two years to support the certification of an expected 500 Work Integrated Social Enterprises.
Investing in Innovation and Technology
- Strategic R&D Examination: $38.2 million to review Australia’s research and development system.
- Industry Growth Program: $392.4 million to support start-ups and small businesses in innovation and growth.
- Digital Solutions Program: $18.6 million to help businesses adopt digital tools.
Energy Efficiency Initiatives
- $62.6 million through the Energy Efficiency Grants for Small and Medium-Sized Enterprises program, providing grants of up to $25,000 to businesses to fund a range of energy upgrades, such as replacing inefficient appliances and improving heating systems.
Focusing on First Nations Businesses
- Enhancing Indigenous Business Australia: Boosting its capacity to invest in First Nations communities and businesses.
- Strengthening Indigenous Procurement Policy (IPP): The Government is committed to providing more opportunities for First Nations businesses through procurement and has been consulting on how to strengthen the Commonwealth Indigenous Procurement Policy (IPP) program. Since 2015, the IPP has generated over $9.5 billion in contracts for more than 3,900 Indigenous businesses.
- First Nations Economic Partnership: scoping a Partnership with the Coalition of Peaks and other organisations to improve economic outcomes for Indigenous Australians including those operating small businesses.
- Remote Housing and Homelands: The Government’s $2.1 billion investment in remote housing and homelands in the Northern Territory along with other major remote infrastructure measures will create local employment opportunities and support the sustainability of Aboriginal Business Enterprises.
Compliance and Tax Avoidance Measures
- $187 million investment to improve the ATO’s capacity to detect and prevent fraud.
- Extension of the Shadow Economy Compliance Program and the Tax Avoidance Taskforce.
What Does The Budget Mean For Me?
It’s natural to have questions following an announcement like this. Our accountants, bookkeepers, mortgage brokers, financial advisers and insurance brokers have been studying the Budget thoroughly so you don’t have to. By getting in touch with us, you can learn about any changes that may affect your business or personal finances and how we can help you navigate those changes.
