On Tuesday 14^th May, Jim Chalmers handed down his second Federal Budget.

The budget again focused on cost of living, whilst trying not to add to increased inflation but from an accountants perspective there wasn’t a lot of new information with most items already being released before budget night.

Below is a summary of some of the items which may impact on your business or personal financial outcomes.

 

For Business:

• Depreciation changes: The temporary full expensing measures have now been abolished, with the instant asset write off threshold now back. Proposed legislation means that that businesses with turnover less than $10 million will be able to write off any assets less than the threshold of $20,000 for the 2024 and 2025 financial years. Assets over this amount will be placed in small business pool which is depreciated at 15% in the first year and 30% after that.

• Electricity Bill Relief: Expansion of the Energy Bill Relief Fund means that around one million businesses will receive $325 off their electricity bills over the 2025 financial year.

 

For Individuals:

• Stage 3 tax cuts: The tax cuts we have heard so much about become effective from 1 July 2024. Income between $45,000 to $135,000 will be taxed at 30%, $135,000 to $190,000 will be taxed at 37%, and anything over $190,000 will be taxed at 45%.

 

• Medicare Levy threshold increases: Medicare levy low income thresholds have been increased by 7.1%, effective 1 July 2023, meaning those who earn less than $26,000 will not be liable for Medicare Levy.

 

• Electricity Bill Relief: Expansion of the Energy Bill Relief Fund, with households having a $300 credit automatically applied to their electricity bills over the 2025 financial year

 

• HELP indexation changes: Higher Education Loan Program (HELP) balances are adjusted each year on 1 June to keep up with inflation. Previously this has been based on CPI which mean a huge increase last year of 7.1%. The indexation rate will be the lower of the Consumer Price Index or the Wage Price Index, this will be back dated to loans that existed on 1 June 2023 to correct the large increase of balances.

 

• Capital Gains Tax changes for Foreign Residents: From 1 July 2025, Capital Gains Tax for Foreign residents will have more clarification and broaden the types of assets that they will be taxed on.  When disposing of shares and other interests exceeding $20 million in value, they must notify the ATO prior to the transaction being executed

 

 

ATO Targets & Additional Funding:

Each year the ATO announces their compliance focus including changes to administration policies and advising the types of activities they intend to target in terms of audits. The changes they announced re:

• From 1 July 2025 they will deny any tax deductions for ATO interest charges.
• The ATO’s timeframe to retain a BAS refund will extend from 14 days to 30 days where further investigation is required- meaning they may keep your money in their pocket longer.
• Extension to the Tax Avoidance Taskforce funding over two years from 1 July 2026.
• Further funding over four years from 1 July 2024 for ATO Counter Fraud to strengthen its ability to detect, prevent and mitigate fraud against the tax and superannuation systems

 

How Can Alto Help?

If you are unsure of how the budget measures may apply to you, please reach out to discuss in more detail with one of the Alto team.

Authors: Tanya Holtham