With the unveiling of the 2024/2025 federal budget, households are eager to understand how these financial decisions will affect their day-to-day lives. With Hopscotch Accounting’s expertise, we have translated the 2024/2025 Federal Budget’s key measures into a summary for your insight into the implications it has on your household or business.
How will it affect your personal income?
- Stage Three Personal Tax Cuts
The stage three personal tax cuts will reshape income tax rates and thresholds, affecting how much you take home. The focus is on individuals with taxable income below $150,000. Beginning 1 July 2024, the new rates aim to provide relief for Australian residents. For instance, the tax rate for incomes between $45,001 and $120,000 will decrease to 30% from 32.5%. For those earning between $18,201 – $45,000 they will be taxed at 16% rather than 19%.
- Thresholds for the Medicare Levy have been Increased Aiding Low-Income Households:
Changes to Medicare levy low-income thresholds offer relief for eligible individuals and families. The revised thresholds, effective from 1 July 2023, ensure that those with lower incomes face reduced or no Medicare levy obligations, easing financial burdens on healthcare expenses. For example for families the medicare level low income threshold as at 30 June 2023 was at $40,939. As of 1 July 2023 that low income threshold will increase to $43,846.
- Capping Indexation of HELP Debts
The Government will cap the HELP indexation rate in that they will implement the lower of either the CPI or the Wage price Index from 1 June 2023. However, this does not only apply to University students. The integration of this will apply to all HELP, VET Student Loans, Australian Apprenticeship Support Loans and other student support loan accounts that existed on 1 June 2023. For example, an individual with around $50,000 worth of HELP debt at 30 June 2023 will receive an estimated credit for 2023 and 2024 of around $2,245.
- Superannuation will be paid on parental leave
Effective from 1 July 2025, superannuation contributions will be paid on Paid Parental Leave (PPL) payments, with eligible parents receiving an additional contribution equivalent to 12% of their PPL payments. Initially providing an extra two weeks of leave, the parental leave period will increase to 24 weeks from July 2025 and further extend to 26 weeks by July 2026. These measures promote financial security by bolstering retirement savings and facilitate a healthier work-life balance and economic stability for families.
- Increasing commonwealth rent assistance
Beginning 20 September 2024, the Commonwealth Rent Assistance maximum rates are set to increase by 10%. This adjustment applies to recipients of Centrelink/Department of Veterans Affairs payments and those receiving family tax benefits who pay rent or similar housing costs above a specified fortnightly threshold. Currently, the maximum fortnightly rates stand at $188.20 for single individuals and $177.20 combined for couples. The increase, costing $1.9 billion over five years from 2023 to 2024 and $0.5 billion annually from 2028 to 2029, follows a 15% increase in September 2023. These adjustments bring the maximum rates to over 40% higher than those in May 2022, aiming to provide increased financial support for individuals and families facing housing-related expenses.
- Improvements in aged care support
The government has allocated $2.2 billion over the next five years to enact aged care reforms and to uphold recommendations stemming from the Royal Commission into Aged Care Quality and Safety. As part of this funding, an additional 24,100 home care packages are slated for release in the 2024 to 2025 period.
How will it affect Small Business Measures?
- Temporary Increase to the Instant Asset Write-Off:
Small businesses stand to benefit from the temporary increase in the instant asset write-off threshold. With the threshold raised to $20,000 for the 2025 income year, eligible businesses can immediately deduct the full cost of assets, promoting investment and growth.
- Strengthening Business Activity Statement (BAS) Refunds:
Enhanced measures to combat fraud and streamline processes will impact small businesses. The extension of the ATO’s notification period for BAS refund retention aims to improve oversight and ensure legitimate refunds reach businesses promptly.
- Energy Bill Relief
Under the Energy Bill Relief Fund, the government is extending support to small businesses grappling with energy bill pressures. Approximately one million businesses on small customer electricity plans will benefit from energy rebates. Additionally, eligible small businesses can expect an extra relief of $325, providing much-needed financial assistance to navigate energy costs.
- Expansion of Digital ID System
The government is taking steps to streamline administrative processes for small businesses through the expansion of the Digital ID System. By reducing the amount of ID data small businesses need to store and protect for their customers and employees, this initiative aims to alleviate administrative burdens and enhance operational efficiency.
- Enhancing Cyber Resilience
Recognising the importance of cyber resilience in the digital age, the government is bolstering support for small businesses to navigate online threats. This includes, A Cyber Wardens Program, A Small Business Cyber Resilience Service and a Cyber Health Check.
If you ever have any concerns or feel as though you would like to speak to an expert please contact Hopscotch Accounting on 1300 HOP 123 to help unveil as to how this 2024/2025 federal budget impacts you and how you can take hold of your finances this financial year.
