Update

2024/25 Federal Budget

Personal income tax measures 

Stage three personal tax cuts

The budget confirms the implementation of stage three personal tax cuts, effective from July 2024, as previously announced and enacted into law.

Revised tax rates and thresholds have been introduced for both Australian residents and foreign residents:

Australian resident individual income tax rates

2024 income year

From the 2025 income year

Tax rate

Thresholds

Tax rate

Thresholds

0%

$0 – $18,200

0%

$0 – $18,200

19%

$18,201 – $45,000

16%

$18,201 – $45,000

32.5%

$45,001 – $120,000

30%

$45,001 – $135,000

37%

$120,001 – $180,000

37%

$135,001 – $190,000

45%

$180,001+

45%

$190,001+

Foreign resident individual income tax rates

2024 income year

From the 2025 income year

Tax rate

Thresholds

Tax rate

Thresholds

32.5%

$0 – $120,000

30%

$0 – $135,000

37%

$120,001 – $180,000

37%

$135,001 – $190,000

45%

$180,001+

45%

$190,001+

 Increased Medicare levy low-income thresholds

Medicare levy low-income thresholds have been increased as well as phase-in ranges for all taxpayer categories. These have already been enacted into law.  The Medicare Levy low-income thresholds for individuals and families for 2024 financial year are as per the below:

  • For Individuals: low income threshold is $26,000 with full Medicare Levy payable above $32,500;
  • For Individuals eligible for SAPTO: low-income threshold is $41,089 with full Medicare Levy payable above $51,362;
  • For Individuals: low income threshold is $26,000 with full Medicare Levy payable above $32,500;
  • For Individuals eligible for SAPTO: low-income threshold is $41,089 with full Medicare Levy payable above $51,362;

For each dependent child or student, the family income thresholds will increase by a further $4,027.

Small business measures

Short term increase to the instant asset write-off

The instant asset write-off threshold for small businesses to be temporarily increased to (less than) $20,000 for the 2025 income year, although this is yet to be legislated. This allows small businesses with an annual turnover of less than $10 million to immediately deduct the full cost of eligible assets costing less than $20,000.

Retention of business activity statement (BAS) refunds extended

The BAS refund retention notification period for the Australian Taxation Office (ATO) has been extended from 14 days to 30 days, enhancing the ATO’s ability to combat fraud while ensuring legitimate refunds are unaffected.

Energy bill relief

Relief from energy bills will be provided in the form of energy rebates to all businesses on small customer electricity plans.  This budget will also include additional energy bill relief of $325 to eligible small businesses.

Expansion of the Digital ID System

To lower the administrative burden on small businesses, the Government will be funding an expansion of the Digital ID System to reduce the amount of ID data they need to store and protect for both their customers and employees.

Building cyber resilience for small businesses

The Government is supporting small businesses to be secure online while they adopt and harness digital opportunities, including through funding the following:

  • Cyber Wardens program to provide free, online training for small business owners and their staff to help drive cultural change and a cyber safe mindset in Australian small businesses.
  • Small Business Cyber Resilience Service to help small businesses build their cyber resilience and provide support when affected by a cyber incident.
  • Cyber Health Check online interactive tool to enable small and medium businesses to self- assess their cyber security maturity.

The Government is also developing a ransomware playbook to provide guidance on how to prepare for, respond to and recover from, a ransomware or cyber extortion incident.

Foreign Residents

Strengthening the foreign resident CGT regime

The foreign resident CGT regime has been strengthened to ensure fair tax payment, including clarifications on asset types subject to CGT and amendments to testing periods for certain assets

Superannuation

Paid Parental Leave

Superannuation payments will now be provided on Commonwealth-funded Paid Parental Leave from July 2025, offering additional financial support for eligible parents.

Unpaid superannuation entitlements

The Fair Entitlements Guarantee Recovery Program has been recalibrated to enable the pursuit of unpaid superannuation entitlements owed by employers in liquidation or bankruptcy, effective from July 2024.

Other budget measures

Energy bill relief for households

Direct energy bill relief is provided for households, with each household receiving a total rebate of $300 from July 2024, automatically applied to their electricity bills in quarterly instalments.

Freezing social security deeming rates

Freeze on social security deeming rates for another 12 months to support income support recipients managing cost of living pressures.

Tertiary education system reforms

Tertiary education system reforms including:

  • Limiting indexation of Higher Education Loan Program (and other student loans) debt to the lower of the wage price index or CPI from 1 June 2023, subject to legislation; and
  • A new “Commonwealth Prac Payment” of $319.50 per week from 1 July 2025 to support tertiary students during mandatory placements as part of their nursing, teaching or social work studies.
Extension of current ATO compliance programs

Funding has been provided to extend ATO compliance programs aimed at minimising tax avoidance across the full gambit of tax payers, from individuals to large private and public companies and multinationals.