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Australian Federal Budget: The 2024/2025 snapshot.

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The Australian Federal Government delivered its 2024 / 2025 Budget (the Budget) on 14 May 2024, with a focus on easing cost-of-living pressures given the recent trend of high inflation and high interest rates and investing for a better future.

Brief outline

The table below provides a brief outline of key items. All amounts are in AUD.

No.ItemImpactComment
1.Financial outlook
  • 2023/2024: $9.3 billion surplus
  • 2024/2025: $28.3 billion deficit
  • Inflation (2023/2024): 3.5%
  • Unemployment (2023/2024): 4%
2023/2024 surplus – from strong company tax receipts
2.Personal tax cuts (ease cost of living)Stage 3 tax cuts (for Australian tax residents):

  • Current 19% tax reduced to 16%
  • 32.5% reduced to 30%
  • 37% tax rate threshold now to apply from $120,000 to $135,000
  • 45% tax rate threshold now to apply from $180,000 to $190,000
Already legislated & applied from 1 July 2024.

For rates to 30 June 2024 – please refer to this link: https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents.

3.Increase government supportIncrease paid parental leave (PPL) scheme by:

  • 12% contribution on the PPL payments to superannuation fund of eligible parents
  • $10 million additional funding for small business employers in administering PPL (over two years)
For births & adoptions on or after 1 July 2025.

Over two years from I July 2024.

4.Government support – Tertiary student debtReform formula used for indexation of Student Loans.

Expected to wipe $3 billion in Student debt.

For loan balances as at 1 June 2023 & onwards.
5.Energy bill relief (ease cost of living).$300 rebate (automatic credit on energy bill) for Australian households for 2024/2025 year.

$325 rebate for eligible small businesses for 2024/2025 year.

$75 per quarter (from 1 July 2024).

$81.25 per quarter.

6.Small business supportExtend small business Instant Asset Write-off by 12 months.

Applies to eligible depreciating assets costing less than $20,000.

Extend to 30 June 2025.
7.International taxPenalty to a Significant Global Entity (SGE) where royalty payments are understated & royalty withholding tax underpaid.From 1 July 2026 new provision.

SGE is an Australian taxpayer that is part of a group with more than $1 billion in annual global turnover.

8.Government programs & commitmentsThere are a number of items:

  • $3.2 billion commitment to Australian Renewable Energy Agency – including $1.7 billion for the Future Made in Australian Innovation Fund & $523 million for Battery Breakthrough Initiative
  • $655 million commitment under the Critical Minerals Facility
  • $209 million commitment to the Net Zero Authority
9.Tax incentives
  • R&D Tax Incentive – Government anticipates increase in payments to eligible entities by $499 million in 2024 / 2025 year.
  • Critical Minerals Production Tax Incentive – $7 billion incentive for 31 Australian listed critical minerals.
  • Hydrogen Production Tax Incentive – $6.7 billion for producers of renewable hydrogen.
10.R&D (Strategic Policy Review)To improve innovation efforts in Australia.Australia found wanting/falling behind OECD average for R&D expenditure.

Policy Review to address this matter and so ensure better innovation efforts.

11.Tax administrationExtend and / or increase funding to various compliance programs – Personal Income Tax Compliance; Counter Fraud Strategy and Tax Avoidance Strategy.

How Acclime can help

If Australia is an appealing location for your business, contact Acclime. Our teams of accountants, tax experts, and legal professionals are based in Australia’s major cities and can deliver integrated solutions that enable your business to maximise all the opportunities and incentives that Australia has to offer.

Disclaimer

This information is of a general nature and is not intended to address the circumstances of any particular individual or entity. We would recommend addressing your specific circumstances as related to these topics with an appropriately qualified expert.

Australian Federal Budget: The 2024/2025 snapshot

About Acclime.

Acclime helps established multinational companies and startups start and operate their business in Australia and the APAC region. By seamlessly navigating our clients through the complexities of Australian laws and bureaucracy, we allow them to reclaim valuable time and fully focus on growing and developing their business.