Description
The Federal Government has handed down its 2024-25 Budget on 14 May 2024.
The Government has outlined its economic forecasts and its main priorities which include helping with the cost of living, building more homes for Australians, investing in domestic manufacturing (‘A Future Made in Australia’), helping Australians upskill and access education, and strengthening Medicare and the care economy.
These measures have been designed to provide relief that eases pressure on people and directly reduces inflation.
Notably, the Budget forecasts a surplus of $9.3 billion in 2023-24, to be followed by deficits of $28.3 billion in 2024-25 and $42.8 billion in 2025-26.
Australia’s economic growth is expected to remain subdued over the Budget forecast period. Real gross domestic product (GDP) is forecast to grow by 2% in 2024-25, 2.25% in 2025-26 and 2.5% in 2026-27.
Although inflation remains elevated, it has moderated substantially and is now less than half of its peak in 2022. Inflation is forecast to fall from 6% in 2022-23, to 3.5% in 2023-24, 2.75% in 2024.
Below are the key tax and superannuation highlights from this year’s Budget.
Income tax
- The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.
- The foreign resident CGT regime will be strengthened for CGT events commencing on or after 1 July 2025 (eg, for more Australian assets to be subject to the regime).
- A critical minerals production tax incentive will be available from 2027-28 to 2040-41 to support downstream refining and processing of critical minerals.
- A hydrogen production tax incentive will be available from 2027-28 to 2040-41 to producers of renewable hydrogen.
- A new penalty will be introduced from 1 July 2026 for taxpayers who are part of a group with more than $1bn in annual global turnover that have mischaracterised or undervalued royalty payments.
- The Labor government’s 2022-23 Budget measure to deny deductions for payments relating to intangibles held in low- or no-tax jurisdictions is being discontinued.
Tax administration
- The ATO will be given a statutory discretion to not use a taxpayer’s refund to offset old tax debts on hold.
- Indexation of the Higher Education Loan Program debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023.
- A new ATO compliance taskforce will be established to recover tax revenue lost to fraud while existing compliance programs will be extended.
GST, excise and customs duty
- Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme.
- Tariffs identified as a nuisance across a range of imported goods will be removed from 1 July 2024.
Superannuation
- Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025.
- The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid super entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
Other
- Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee.
To assist you with understanding the key measures contained in the Budget, buy our Budget Paper here.
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