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Federal Budget 2024: What you need to know

Full analysis of the Federal Budget and the impact of the Stage 3 tax cuts plus cost-of-living relief measures.

The 2024-25 Federal Budget showcases a surplus of $ 9.3 billion for the current financial year. This equates to 0.3% of nominal GDP and follows last year’s surplus of $22.1 billion (0.9% GDP).

Australia’s real economic growth is forecast to be 2% in the next financial year and 2.25% in 2025-26. Employment growth is expected to slow from 2.25% this financial year to just 0.75% in 2024-25 with a corresponding rise in the unemployment rate to 4.5%.   

Treasury’s forecasts are more optimistic than those of the RBA on achieving lower inflation, with the headline Consumer Price Index (CPI) expected to fall to 2.75 % by June 2025.

Taxation

The key factors for individuals include many measures previously announced. Stage 3 tax cuts will deliver savings of $4,529 per annum for those in the highest tax bracket, from 1 July this year. The average taxpayer will save $1,888 a year.

Tax rates and thresholds from 1 July 2024

Source: ato.gov.au

In addition, the Medicare levy threshold has been increased in line with indexation. The Medicare levy threshold for singles has been increased from $24,276 to $26,000. The family threshold has been increased from $40,939 to $43,846. For single seniors and pensioners, the threshold has been increased from $38,365 to $41,089. The family threshold for seniors and pensioners has been increased from $53,406 to $57,198. The family income thresholds will now increase by $4,027 for each dependent child, up from $3,760.

Small businesses will see the $20,000 instant asset write-off extended by 12 months until 30 June 2025. Small businesses with an aggregated annual turnover of less than $10 million will continue to be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025. The asset threshold applies on a per asset basis so multiple assets can be written off instantly.

The Government will also strengthen the foreign resident capital gains tax (CGT) regime. The amendments will apply to CGT events commencing on or after 1 July 2025 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, and
  • 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.

Cost of living relief

In addition, the Government will provide a $300 rebate to all Australian households and a $325 rebate to eligible small businesses on their 2024–25 energy bills. This is in addition to state government subsidies already announced for residents of WA and Qld.

For those with substantial medical expenses, 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.

For students, the government will cap the HELP indexation rate to be the lower of either the Consumer Price Index or the Wage Price Index. The Government will backdate this relief to all HELP, vocational education and training (VET) Student Loan, Australian Apprenticeship Support Loan and other student support loan accounts that existed on 1 June 2023.

And for parents, the Government will pay superannuation on Commonwealth government-funded paid parental leave for births and adoptions on or after 1 July 2025. Eligible parents will receive an additional payment based on the Superannuation Guarantee, that is 12 per cent of their paid parental leave payments, as a contribution to their existing superannuation fund.

Social security

For those receiving social security payments who are also renters, maximum rates of Commonwealth Rent Assistance will be increased by a further 10 per cent from 20 Sept 2024.

For those receiving social security payments who are income tested, deeming rates for financial investments will remain at current levels until 30 June 2025. The deeming rate for social security payments has been frozen at 0.25 per cent for the lower rate and 2.25 per cent for the higher rate for a further 12 months.

Finally, there will be changes to eligibility for the existing higher rate of JobSeeker payment to single recipients with a partial capacity to work of zero to 14 hours per week from 20 September 2024. The higher JobSeeker payment rate is currently provided to single recipients with dependent children and those aged 55 and over who have been on payment for nine continuous months or more.

In a minor change, from 20 March 2025, the existing 25 hour per week participation limit for Carer Payment recipients will be amended to 100 hours over four weeks. The participation limit will no longer capture study, volunteering activities and travel time and will only apply to employment. Carer Payment recipients exceeding the participation limit or their allowable temporary cessation of care days will have their payments suspended for up to six months, rather than cancelled. Recipients will also be able to use single temporary cessation of care days where they exceed the participation limit, rather than the current seven day minimum.

All prices and analysis at 14 May 2024.  This information has been prepared by National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 ("NAB").

Any advice and information in this publication is of a general nature only. Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of an individual’s liabilities, obligations or claim entitlements that arises, or could arise, under taxation law, and we recommend that you consult a registered tax agent. WealthHub Securities Ltd is not a registered tax agent. 

The content is distributed by WealthHub Securities Limited (WSL) (ABN 83 089 718 249)(AFSL No. 230704). WSL is a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited (ABN 12 004 044 937)(AFSL No. 230686) (NAB). NAB doesn’t guarantee its subsidiaries’ obligations or performance, or the products or services its subsidiaries offer.  This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice.  Past performance is not a reliable indicator of future performance.  Any comments, suggestions or views presented do not reflect the views of WSL and/or NAB.  Subject to any terms implied by law and which cannot be excluded, neither WSL nor NAB shall be liable for any errors, omissions, defects or misrepresentations in the information or general advice including any third party sourced data (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the general advice or information. If any law prohibits the exclusion of such liability, WSL and NAB limit its liability to the re-supply of the information, provided that such limitation is permitted by law and is fair and reasonable. For more information, please click here.


About the Author
Gemma Dale , nabtrade

Gemma Dale is Director of SMSF and Investor Behaviour at nabtrade. She is the host of the Your Wealth podcast, a fortnightly podcast for investors, featuring insights and updates from markets and finance experts across a range of topics. She provides regular market and finance commentary on ausbiz and in other media including AFR, the Australian, ABC and commercial tv and radio. Gemma was previously the Head of SMSF Solutions for nab, and the Head of Technical Services for MLC, where she led a team of specialists providing advice to advisers and their clients on SMSF, super, tax, social security and aged care.