As another financial year rolls over, we turn our attention to viewing the updates for the new financial year and discovering how the changes can benefit you.
Personal income tax measures
The 2024-2025 Federal Budget has announced the stage three personal tax cuts to address the rising cost of living. The measures are explained further below.
The Government announcement of the personal income tax cut measures that were passed into law on 5 March 2024 by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 (Cth).
From 1 July 2024, the tax rates and thresholds are:
| Resident tax rates 2024–25 | |
| Taxable income | Tax on this income |
| 0 – $18,200 | Nil |
| $18,201 – $45,000 | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,638 plus 45c for each $1 over $190,000 |
The above rates do not include the Medicare levy of 2%.
The key changes of the stage three tax cuts include:
- For the taxpayer taxable income from $18,201 to $45,000, a cut in the 19% tax rate to 16%. This will result in a saving of $804 for those taxpayers who’s taxable income is $45,000.
- A cut in the 32.5% rate to 30% for the taxable income between $45,000 and $135,000 will result in a saving of $2,679 for those with a taxable income of $120,000.
- Retaining the 37 per cent rate but increasing the threshold from $120,000 to $135,000.
- Retaining the current 45% tax rate but increasing the threshold from $180,000 to $190,000. The effect of the stage three tax cut for those with a taxable income of $200,000 will benefit by $4,529.
Superannuation Guarantee
From 1 July 2024, employers will now contribute 11.5% of the earnings to the superannuation fund. This will increase retirement savings for employees.
Concessional Contribution Cap and Non-concessional Contribution Cap
The concessional contribution cap increases to $30,000 from 1 July 2024, allowing for higher deductions and investments in the superfund.
The non-concessional contribution cap is now $120,000 and the bring-forward provisions will increase from $330,000 to $360,000 providing more flexibility for boosting the retirement savings.
Instant asset write-off
Small businesses with an aggregated annual turnover of less than $10 million are 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 2024.
On 14 May 2024, as part of the 2024–25 Budget, the government announced it will continue to improve cash flow and reduce compliance costs for small businesses by extending the $20,000 instant asset write-off by a further 12 months until 30 June 2025.
It’s important to note that while these measures have been announced, they are not yet law. Once passed, this legislation will formalise the extension and ensure small businesses can continue to benefit from these deductions through to the new deadline of 30 June 2025.
New power bill relief
The Government is providing $3.5 billion in energy bill relief for all Australian households and around one million for small businesses.
From 1 July 2024, all Australian households will receive a total rebate of $300, which will be automatically applied to their electricity bills in quarterly instalments.
Eligible small businesses will receive $325 off their electricity bills throughout the year.
Are you ready for the new financial year? Feel free to reach out to us for advice and happy new year.
Janey Wu, Tax Accountant
