The Treasurer forecasts a 0.75% reduction in inflation due to the 2024-25 Federal Budget initiatives, which include energy relief for households, increased Commonwealth Rent Assistance, and a freeze on the maximum co-payment for the Pharmaceutical Benefits Scheme.
This pre-election budget aims to provide broad relief from cost of living pressures. If the Consumer Price Index (CPI) returns to its target by the end of 2024, as the government expects, the Reserve Bank of Australia (RBA) might lower interest rates. However, the RBA currently projects that inflation won’t fall within the 2-3% target range until the latter half of 2025, reaching the midpoint in 2026.
The budget surplus of $9.3 billion for 2023-24 is projected to shift to a $28.3 billion deficit in 2024-25, mainly due to the Stage 3 tax cuts.
Key Measures:
- Stage 3 Tax Cuts: Previously announced and maintained.
- Energy Bill Relief: $300 for all households and $325 for eligible small businesses, automatically applied quarterly.
- Student HELP Debts: From 1 June 2023, indexation will be the lower of the CPI or Wage Price Index (WPI), benefiting over 3 million Australians.
- Commonwealth Rent Assistance: Maximum rates to increase by 10% from 20 September 2024.
- Pharmaceutical Benefits Scheme (PBS): One-year freeze on maximum patient co-payments for Medicare cardholders, and a five-year freeze for pensioners and concession cardholders.
- Superannuation: The 30% tax on super earnings for balances above $3 million remains, effective from 1 July 2025.
Breakdown of Measures:
Individuals and Families
Personal Income Tax Cuts Effective from July 1, 2024
Starting July 1, 2024, the Government will implement previously announced permanent tax cuts for all Australian taxpayers. The updated Stage 3 tax cuts focus on individuals with taxable incomes below $150,000.
Increase in Medicare Levy Low-Income Thresholds from July 1, 2023
From July 1, 2023, the Medicare levy low-income thresholds will rise for singles, families, seniors, and pensioners, reflecting recent CPI increases to maintain exemptions for low-income taxpayers.
$300 Energy Relief for Households from July 1, 2024
Households will receive a $300 energy bill credit, distributed as automatic quarterly installments throughout 2024-25. Small businesses will receive a $325 rebate. This measure, costing $3.5 billion over three years, extends the Energy Bill Relief Fund.
Capping HELP Debt Indexation from June 1, 2023
From June 1, 2023, HELP debt indexation will be capped at the lower of the CPI or the Wage Price Index (WPI). This adjustment reduces the indexation rate, benefiting more than 3 million Australians with HELP debts, who will see reduced outstanding balances.
Superannuation on Paid Parental Leave from July 1, 2025
Effective July 1, 2025, superannuation will be paid on Paid Parental Leave payments. Eligible parents will receive an additional 12% of their PPL payments as a contribution to their superannuation fund.
Increase in Commonwealth Rent Assistance from September 2024
Starting September 20, 2024, the maximum rates for Commonwealth rent assistance will increase by 10%. This follows a previous 15% increase in September 2023, raising maximum rates by over 40% since May 2022.
Improving Aged Care Support
The Government will allocate $2.2 billion over five years to implement key aged care reforms and recommendations from the Royal Commission into Aged Care Quality and Safety. This includes releasing 24,100 additional home care packages in 2024-25 and delaying the new Aged Care Act to July 1, 2025.
Increased Flexibility for Carer Payment from March 20, 2025
From March 20, 2025, the 25-hour weekly limit for carers will change to 100 hours over four weeks, excluding study, volunteering, and travel time. Carers exceeding participation limits will have payments suspended for up to six months rather than canceled.
Higher JobSeeker Rate for Partial Capacity to Work from September 20, 2024
From September 20, 2024, single recipients with partial capacity to work (0-14 hours per week) will be eligible for the higher JobSeeker payment rate, currently available to those aged 55 and older after nine months of continuous payments.
Freezing Social Security Deeming Rates until June 30, 2025
The Government will freeze deeming rates used to calculate Centrelink and Department of Veterans Affairs payments until July 1, 2025.
Pharmaceutical Benefits Scheme Co-Payments from January 1, 2024
The Government will freeze PBS co-payment indexation, keeping costs for most medicines at $31.60, or $7.70 with a concession card, from January 1, 2024.
Federal, State, and Territory Governments Focus on Housing
The Government aims to build 1.2 million homes by the decade’s end, with measures to support homeownership, crisis, and social housing, including $1 billion for infrastructure and a $9.3 billion National Agreement on Social Housing and Homelessness.
Domestic Violence Support from Mid-2025
The Government has committed nearly $1 billion over five years to establish the Leaving Violence Program, providing financial support, safety assessments, and referrals for those escaping violence.
Superannuation and Investors
Expanding CGT Regime for Foreign Residents from July 1, 2025
The foreign resident CGT regime will be expanded to include a broader range of assets, amend the principal asset test to a 365-day period, and require prior ATO notification for transactions exceeding $20 million. These reforms align with OECD standards and aim to increase tax compliance and oversight.
Business and Employers
$325 Energy Relief for Small Business from July 1, 2024
Small businesses will receive $325 off their energy bills, credited automatically over 2024-25. This support is part of the $3.5 billion Energy Bill Relief Fund extension.
$20,000 Instant Asset Write-Off Extended to June 30, 2025
Small businesses can immediately deduct the cost of eligible assets under $20,000 purchased between July 1, 2023, and June 30, 2025. This extends the 2023-24 Budget announcement.
The Future Made in Australia Initiative
The Government will invest $22.7 billion to position Australia as a renewable energy leader, with tax incentives and funding to support industries like renewable hydrogen, green metals, and clean energy technology manufacturing.
Film Producer Tax Offset Changes from 2025-26
Changes to the Producer Tax Offset will remove minimum length requirements and the 20% cap on qualifying production expenditure for films starting from the 2025-26 income year.
Support for Small Businesses Over Four Years from 2024-25
The Government will allocate $41.7 million over four years for initiatives including improved payment times, mental health support, franchising code changes, and access to justice for small businesses.
Other Announcements
Women’s Budget Statement
The Government’s strategy for gender equality focuses on gender-based violence, economic equality, health, leadership, and care. Key measures include ongoing support for domestic violence survivors, tax cuts, energy bill relief, and investments in women’s health and career opportunities.
Safe and Responsible A.I.
The Government will invest $39.9 million over five years to develop policies and capabilities for the safe adoption of AI technology, including establishing a National AI Centre and supporting industry analytical capabilities.
Quantum Computing Capability Development
A $466.4 million financing package will support quantum computing development in Brisbane, alongside $27.7 million for oversight and management over 11 years.
If you have any questions about how the Federal Budget will affect you or your business, please contact our office on 07 2101 9070.