On May 14, 2024, Treasurer Jim Chalmers presented the Federal Budget tax update in Ryde for the forthcoming fiscal year. As we previously knew, individual tax cuts are the main item in this year’s federal Budget.
Beginning on July 1, 2024, all 13.6 million taxpayers will see a tax reduction that will immediately appear in their paychecks. The previous Government’s original Stage 3 tax cuts have been replaced by these ones.
Some taxpayers, particularly those with low and middle incomes, may find some respite from the rising cost of living thanks to the tax cuts.
The people with higher incomes benefited the most from the tax cuts, which were first intended by the Liberal/National coalition. With the new tax cuts, the advantages are distributed even more, with those making $40,000 being able to receive a $654 tax savings and those making $80,000 receiving a $1,679 tax cut.
For the tax cut to apply, taxpayers do not need to take any action. Employers will automatically modify the amount of taxes deducted from your pay, so starting on July 1, 2024,* you should immediately notice an increase in your take-home pay.
See how these tax changes impact you by reading on.
Reduced Personal Taxes
Tables are the most effective way to display the impact of the tax cuts. The Coalition proposed the initial stage 3 tax cuts, and the Albanese government announced and enacted the updated tax cuts.
Redistributing tax benefits
| Taxable income | Tax cut under original stage 3 | Tax cut under revised stage 3 | Difference |
| $20,000 | $0 | $0 | 0 |
| $30,000 | $0 | $354 | 354 |
| $40,000 | $0 | $654 | 654 |
| $50,000 | $125 | $929 | 804 |
| $60,000 | $375 | $1,179 | 804 |
| $70,000 | $625 | $1,429 | 804 |
| $80,000 | $875 | $1,679 | 804 |
| $90,000 | $1,125 | $1,929 | 804 |
| $100,000 | $1,375 | $2,179 | 804 |
| $120,000 | $1,875 | $2,679 | 804 |
| $140,000 | $3,275 | $3,729 | 454 |
| $160,000 | $4,675 | $3,729 | -946 |
| $180,000 | $6,075 | $3,729 | -2,346 |
| $200,000 | $9,075 | $4,529 | -4,546 |
| $250,000 | $9,075 | $4,529 | -4,546 |
Note: does not include Medicare levy
Individuals
Lower Personal Tax Rates
Undoubtedly, the primary focus of this year’s Budget was the reduction in personal tax rates, which was first declared in January 2024. Important characteristics consist of:
a reduction in the 19% tax rate to 16%, saving $804 for people with $45,000 in taxable income
Lowering the rate from 32.5% to 30% on those making between $45,000 and $135,000.
Keeping the 37 percent rate but raising the $135,000 threshold at which it applies.
Keeping the 45% tax rate in place but raising the threshold to $190,000.
Rates and criteria for residents in 2024–25
As previously enacted, the tax rates and income levels for inhabitants in 2024–2025 are as follows:
Tax rates and income thresholds from 2024-25
| Taxable income | Tax payable |
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | Nil + 16% of excess over $18,200 |
| $45,001 – $135,000 | $4,288 + 30% of excess over $45,000 |
| $135,001 – $190,000 | $31,288 + 37% of excess over $135,000 |
| $190,001+ | $51,638 + 45% of excess over $190,000 |
Rates and thresholds for nonresident taxes for 2024–25 The tax rates for foreign residents for the income years 2024–2025 and subsequent years are:
- $0 – $135,000 – 30%;
- $135,001 – $190,000 – 37%;
- $190,001+ – 45%.
Working holidaymakers
For 2024-25 and later income years, the rates of tax for working holiday makers are:
- $0 – $45,000 – 15%;
- $45,001 – $135,000 – 30%;
- $135,001 – $190,000 – 37%;
- $190,001+ – 45%.
Low-Income Tax Offset (unchanged)
The tax rates applicable to working vacationers for the income year 2024–2025 and subsequent years are:
Taxable income (TI) Amount of offset
| Taxable income (TI) | Amount of offset |
| $0 – $37,500 | $700 |
| $37,501 – $45,000 | $700 – ([TI – $37,500] x 5%) |
| $45,001 – $66,667 | $325 – ([TI – $45,000] x 1.5%) |
| $66,668 + | Nil |
The LITO can only be used up to $700. Between taxable incomes of $37,500 and $45,000, the LITO is withdrawn at a rate of 5 cents per dollar; between taxable incomes of $45,000 and $66,667, the rate is 1.5 cents per dollar.
Medicare’s 2022–2023 low-income thresholds
In a normal budget for 2024–25, the Medicare levy of low-income levels for 2023–24 would have been disclosed. However, on January 25, 2024, the Government revealed the adjustments to the Stage 3 tax cuts, which is when the 2023–24 Medicare levy thresholds were released (see above). The Treasury Laws Amendment (Cost of Living – Medicare Levy) Act 2024 established the new standards for cost-of-living assistance.
The Medicare levy low-income threshold for individuals has been raised to $26,000 for 2023–24 (up from $24,276 for 2022-23) as of the 2023–24 income year. In keeping with inflation, this amounts to a 7.1% gain.
The family income requirement has increased to $43,846 (from $40,939 for 2022-23) for couples without children. For every dependent kid or student, there is now an extra threshold of $4,027 (up from $3,760).
The Medicare levy low-income threshold for seniors and pensioners who are unmarried and qualified for the SAPTO is $41,089, an increase from $38,365. Seniors and retirees now have a family threshold of $57,198 (up from $53,406), plus an additional $4,027 for each dependent child or student (up from $3,760).
Small Business
Extending the Instant Asset Write-Off by One Year
The immediate asset write-off is going to be kept in place until June 30, 2025, for an additional year.
Small enterprises, defined as those with a combined yearly revenue of less than $10 million, will be able to claim an immediate tax deduction for all qualified assets under $20,000 that are installed and put into service between July 1, 2024, and June 30, 2025, at full cost. Small companies will be able to immediately write off a number of assets because the $20,000 threshold will apply per asset.
When assets exceed $20,000 and are not immediately deductible, they can be accounted for in the small company’s simplified depreciation pool. From there, they can be depreciated at a rate of 15% in the first income year and 30% in each subsequent income year.
The extension of this provision, which was initially set to run through June 30, 2024, is a welcome reprieve for small firms.
Tax Compliance
ATO Personal Tax Compliance Program Extended
Beginning on July 1, 2027, the Government will prolong the ATO Personal Income Tax Compliance Program for a period of one year.
With this extension, the ATO will be able to carry out a mix of preventive, preventative, and corrective actions in important areas of non-compliance, such as excessive deduction claims, inaccurate income reporting, and improper tax agent influence. This will allow the ATO to keep concentrating on new tax system concerns, like deductions for short-term rental properties.
ATO’s anti-fraud tactics
In addition, From July 1, 2024, to July 1, 2024, the Government will give the ATO $187.0 million over four years to improve its capacity to identify, stop, and lessen fraud against the tax and superannuation systems. Finances consist of:
Information and communications technology enhancements worth $78.7 million will allow the ATO to detect and stop questionable conduct quickly.
A new compliance team will be funded with $83.5 million in order to recoup lost revenue and step in when attempts are made to get false reimbursements.
$24.8 million to enhance the ATO’s oversight and management of its anti-fraud initiatives, including improving the agency’s capacity to aid victims of fraud.
By extending the period of time the ATO must tell a taxpayer if it plans to hold onto a business activity statement (BAS) refund for additional inquiry, the Government will also bolster the ATO’s capacity to combat fraud. To be in line with deadlines for non-BAS returns, the ATO’s required notification period for BAS refund retention will be extended from 14 to 30 days.
This will take effect as soon as the enabling law receives royal assent and the first fiscal year begins.
To Strengthen the Capital Gains Tax Regime for Foreign Residents
In order to guarantee that foreign nationals pay their fair share of taxes in Australia and to increase clarity on the implementation of the rules, the Government will fortify the capital gains tax (CGT) regime. The following CGT events will be subject to the modifications starting on or after July 1, 2025:
- expand and make clear the kinds of assets that foreign nationals must pay capital gains tax (CGT) on
- Change the major asset test from a point-in-time to a 365-day timeframe.
- Demand that foreign nationals who are selling shares or other membership interests worth more than $20 million notify the ATO before the transaction is completed.
in addition, By implementing this policy, Australia will be able to tax foreign nationals on sales of assets, both direct and indirect, that have a strong economic link to Australian territory, matching the tax treatment currently given to Australian citizens. The vendor self-assesses that their sale is not taxable real property, and the new ATO notification method will enhance oversight and compliance with the foreign resident CGT withholding regulations.
More latitude to the ATO regarding past-due taxes
The Government will make changes to the tax code that will allow the Commissioner of Taxation to choose whether or not to utilize a taxpayer’s refund to settle past-due taxes in cases where the Commissioner had previously placed the debt on hold before January 1, 2017. This discretion will be applicable to non-profit organizations, small enterprises, and individuals.
Overage
starting on July 1, 2025, super on government-paid parental leave
For births and adoptions on or after July 1, 2025, the government-funded Paid Parental Leave (PPL) program will pay superannuation, as affirmed by the Budget. The super guarantee (SG) rate will increase to 12% from 11.5% for 2024–2025 at that point. In order to contribute to their superannuation fund, the Government will additionally pay qualified parents 12% of their PPL income.
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