Described as a “responsible Budget that helps people under pressure today”, the Treasurer has forecast a second consecutive surplus of $9.3 billion. The main priorities of the government, as reflected in the Budget, are helping with the cost of living, building more housing, investing in skills and education, strengthening Medicare and responsible economic management to help fight inflation.
The key tax measures announced in the Budget include extending the $20,000 instant asset write-off for eligible businesses by 12 months until 30 June 2025, introducing tax incentives for hydrogen production and critical minerals production, strengthening foreign resident CGT rules and penalising multinationals that seek to avoid paying Australian royalty withholding tax.
The Budget also includes various amendments to previously announced measures, as well as a number of income tax measures that have already been enacted prior to the Budget announcement, including:
- the revised stage 3 personal income tax cuts (enacted by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 (Act No 3 of 2024))
- Medicare levy and surcharge threshold changes (enacted by the Treasury Laws Amendment (Cost of Living—Medicare Levy) Act 2024 (Act No 4 of 2024)), and
- a specific exemption for Australian plantation forestry entities from the new earnings-based rules introduced as part of thin capitalisation reforms (enacted by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Act 2024 (Act No 23 of 2024)).
These enacted measures have not been discussed in detail in this report.
The government anticipates that the tax measures put forward will collectively improve the Budget position by $3.1 billion over a 5-year period to 2027–28.
The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.
Key messages
In his Budget Speech Treasurer Jim Chalmers summarised the key elements of the 2024-25 Budget as:
“This Government and this Budget delivers for every Australian:
- A tax cut for every taxpayer.
- Wages growing in every industry.
- A better deal for every working parent.
- A fairer go at every checkout.
- New help with energy bills for every household and for small business.
- Stronger Medicare in every community.
- More homes in every state and territory.
- More opportunities in every TAFE and University.
- A dignified retirement for older Australians.
- Energy and industry policies that help bring the jobs of the future to every corner of our country.
- An economic plan where growth and opportunity go together.
- A Government and a Budget for every Australian.”
Summary of tax, superannuation and social security highlights.
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.
- 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.
- The minimum length requirements for content and the above-the-line cap of 20% for total qualifying production expenditure for the producer tax offset will be removed.
- A new penalty will be introduced from 1 July 2026 for taxpayers who are part of a group with more than $1 billion in annual global turnover that are found to 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.
- The start date of a 2023–24 Budget measure to expand the scope of the Pt IVA general anti-avoidance rule will be deferred to income years commencing on or after assent of enabling legislation.
- Income tax exemptions for World Rugby and/or related entities for income derived in relation to the Rugby World Cup 2027 (men’s) and Rugby World Cup 2029 (women’s).
- Deductible gift recipients list to be updated.
Social security
- Social security deeming rates will be frozen at their current levels for a further 12 months until 30 June 2025.
- Carer payment recipients will have greater flexibility with their participation requirements.
- Eligibility for the higher rate of Jobseeker payment will be extended to single recipients with a partial capacity to work of zero to 14 hours per week.
- The maximum rates of the Commonwealth Rent Assistance will increase by 10% from 20 September 2024.
- Funding will be provided to implement a social security means test treatment for military invalidity payments affected by the Full Federal Court’s decision of FC of T v Douglas 2020 ATC ¶20-773; [2020] FCAFC 220.
- Funding will be provided to enable Australia to enter into a bilateral social security agreement with Uruguay.
- Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee.
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 superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
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 (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023.
- A pilot program of matching income and employment data of migrant workers will be conducted between the Department of Home Affairs and the ATO.
- A new ATO compliance taskforce will be established to recover tax revenue lost to fraud while existing compliance programs will be extended.
- The ATO will have additional time to notify a taxpayer if it intends to retain a business activity statement refund for further investigation.
- The 2019–20 Budget measure “Black Economy — Strengthening the Australian Business Number system” will not proceed.
GST
- Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme.
Excise and customs duty
- Tariffs identified as a nuisance across a range of imported goods will be removed from 1 July 2024.
- The start dates for certain components of a measure to streamline excise administration for fuel and alcohol announced in the Coalition government’s 2022–23 Budget will be deferred.
