Tax & Superannuation Report
Last week, Jim Chalmers presented the 2024/25 Federal Budget, marking his third as Federal Treasurer. The budget focuses on three main economic strategies: relieving the cost of living, repairing the budget position, and reforming for future growth.
Comments on the Federal Budget
While there weren’t many new significant tax announcements, the tax cuts announced will benefit all 13.6 million Australian taxpayers. Extending the Instant Asset Write-Off threshold for another 12 months will particularly aid businesses. Additionally, minor superannuation measures were introduced.
One notable relief is the indexation of HELP debt capping at the lower of CPI or WPI, offering relief to millions of Australians with student loans. For more insights on various aspects of the Federal Budget, check out the comments below from our DFK Benjamin King Money team.
For more details on various aspects of the Federal Budget, kindly refer to the insights shared below by our team at DFK Benjamin King Money.
Cheree Woolcock, CEO & Director
Superannuation
From 1 July 2025, the government will pay superannuation on Commonwealth government-funded paid parental leave (PPL) for parents of babies born or adopted on or after this date. Eligible parents will receive a Superannuation Guarantee payment, which will be 12% from 1 July 2025 as a contribution to their superannuation fund for the full partnered entitlement of 22 weeks. This measure has come in to bridge the gender pay gap by ensuring that women who currently retire with around 25% less than men will continue to have contributions going into their superannuation fund whilst being on parental leave.
Please note that from 1 July 2024, the concessional contributions cap will increase from $27,500 to $30,000, and non-concessional contributions cap will increase from $110,000 to $120,000. Also, please note that the Superannuation Guarantee will be increasing to 11.5% from 1 July 2024.
For more information regarding the Superannuation Federal budget announcement contact Adrian at adrianc@dfkbkm.com.au.
Adrian Casabene, SMSF Superviser
Electricity Rebate
Every Australian household will get a $300 rebate on their electricity bills from 1 July 2024. The rebate will be deducted at $75 from each of their quarterly bills for the year. Eligible small businesses will get a $325 rebate to be deducted at $81.25 from each of their quarterly bills for the year from 1 July 2024.
For more information regarding the Federal budget announcement contact Kevin at kevina@dfkbkm.com.au.
Kevin Adams, Director of Audit
Small Business
The budget confirmed small businesses will receive an immediate deduction for assets purchased under $20,000 for an additional year, extending the incentive to include the 2024 and the 2025 income years providing incentives for these businesses to continue to invest. The budget also provides relief and support to small businesses with a $325 rebate on their energy bills along with a series of initiatives in relation to the mental health and financial well-being of small business owners, improvements to the franchising sector, and better access to justice with improvements and funding for the Australian Small Business and Family Enterprise Ombudsman.
For more information regarding the Small Business Federal budget announcement contact Paul at pault@dfkbkm.com.au.
Cap indexation on HELP debts
As a young professional with a double degree, the proposed changes to the indexation rate greatly impact my HELP debt management. With the current rate at 7.1%, my debt increased by $6,000 in 2023. This significant rise adds financial strain, especially with the escalating living costs post-COVID-19. It’s increasingly challenging for average-income earners to tackle such a growing debt while maintaining a decent standard of living.
The proposed shift to use the lower of the CPI or WPI would substantially ease this burden. For example, under this proposal, the 2023 indexation rate would have dropped from 7.1% to 3.2%, cutting the increase to my debt by $3,000. This reduction provides considerable relief, making it easier to manage repayments alongside daily expenses. Aligning the rate with wage growth rather than inflation ensures repayment schedules better reflect real economic conditions, offering much-needed financial relief for young people.
For more information on the Cap indexation on HELP debts, contact Richard at richardl@dfkbkm.com.au.
Richard Lyons, Accountant