The Federal Treasurer, the Hon Dr Jim Chalmers MP, has delivered his third Federal Budget. It is a budget that will have minimal direct impact on the advice financial advisers provide to their clients.
Highlights include:
- re-stating the Stage 3 tax cuts
- help with energy bills
- rent assistance increase
- deeming rates freeze extended
- further housing assistance
- small business support
- strengthening tax compliance and counter-fraud activities
- establishing a single front door for major investors in Australia
- further aged care funding and increased flexibility for Carer Payments.
The following summary of the Federal Budget announcements is intended for financial services professionals.
Personal income tax
Stage 3 tax cuts
The Government reiterated its earlier reforms to the Stage 3 tax cuts, but there were no new developments announced.
Extending the Personal Income Tax Compliance Program
The Government will extend the Australian Taxation Office (ATO) Personal Income Tax Compliance Program for one year from 1 July 2027.
This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including overclaiming of deductions, incorrect reporting of income and inappropriate tax agent influence. This will enable the ATO to continue its focus on emerging risks to the tax system, such as deductions relating to short-term rental properties.
Increasing the Medicare levy low-income thresholds
The Government has increased the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from 1 July 2023 to provide cost-of-living relief. The increase to the thresholds ensures that low income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate.
The increase to the thresholds accounts for recent annual Consumer Price Index (CPI) outcomes and is estimated to decrease receipts by $640 million over the four years to 2026–27.
The threshold for singles has been increased from $24,276 to $26,000. The family threshold has been increased from $40,939 to $43,846. For single seniors and pensioners, the threshold has been increased from $38,365 to $41,089. The family threshold for seniors and pensioners has been increased from $53,406 to $57,198. The family income thresholds will now increase by $4,027 for each dependent child, up from $3,760.
Business owners
Small business $20,000 instant asset write-off
The Government will continue to improve cash flow and reduce compliance costs for small businesses by extending the $20,000 instant asset write-off by 12 months until 30 June 2025.
Small businesses, with an aggregated annual turnover of less than $10 million, will continue to be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025. The asset threshold applies on a per asset basis so small businesses can instantly write off multiple assets.
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter.
The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2025.
Supporting small businesses
The Government will provide $41.7 million over four years from 2024–25 to support small businesses. Funding includes:
- $25.3 million over four years from 2024–25 to support the Payment Times Reporting Regulator to implement reforms recommended by the statutory review of the Payment Times Reporting Act 2020, including increased resourcing for the Regulator and upgrading the Regulator’s ICT infrastructure
- $10.8 million over two years from 2024–25 to extend the Small Business Debt Helpline and the New Access for Small Business Owners program to continue to provide financial counselling and mental health support for small business owners
- $3.0 million over two years from 2024–25 to implement the Government’s response to the Review of the Franchising Code of Conduct, including by investigating the feasibility of a licensing model and remaking and updating the Franchising Code of Conduct prior to its expiration in April 2025
- $2.6 million over four years from 2024–25 (and $0.7 million per year ongoing) for the Australian Small Business and Family Enterprise Ombudsman to support unrepresented small businesses to navigate business-to-business disputes through alternative dispute resolution.
Strengthening Tax Compliance – ATO Counter Fraud Strategy
The Government will provide $187.0 million over four years from 1 July 2024 to the ATO to strengthen its ability to detect, prevent and mitigate fraud against the tax and superannuation systems. Funding includes:
- $78.7 million for upgrades to information and communications technologies to enable the ATO to identify and block suspicious activity in real time
- $83.5 million for a new compliance taskforce to recover lost revenue and intervene when attempts to obtain fraudulent refunds are made
- $24.8 million to improve the ATO’s management and governance of its counter-fraud activities, including improving how the ATO assists individuals harmed by fraud.
The Government will also provide $0.4 million over four years from 1 July 2024 to the Department of Finance to undertake a Gateway Review process over the life of the proposal to ensure independent assurance, oversight and delivery of the measure.
Further, the Government will strengthen the ATO’s ability to combat fraud by extending the time the ATO has to notify a taxpayer if it intends to retain a business activity statement (BAS) refund for further investigation. The ATO’s mandatory notification period for BAS refund retention will be increased from 14 days to 30 days to align with time limits for non-BAS refunds.
The extended period will strengthen the ATO’s ability to combat fraud during peak fraud events like the one that triggered Operation Protego. Legitimate refunds will be largely unaffected. Any legitimate refunds retained for over 14 days would result in the ATO paying interest to the taxpayer (as is currently the case). The ATO will publish BAS processing times online.
This will have effect from the start of the first financial year after Royal Assent of the enabling legislation.
Workplace relations
The Government will provide $111.8 million over four years from 2024–25 (and $12.4 million per year ongoing) to support the progression of the Government’s workplace relations agenda. Funding includes:
- $20.5 million over four years from 2024–25 (and $5.1 million per year ongoing) to boost funding for the Office of the Fair Work Ombudsman to support small business employers to comply with recent changes to workplace laws.
Establishing a Single Front Door for Major Investors
The Future Made in Australia package seeks to maximise the economic and industrial benefits of the move to net zero and secure Australia’s place in a changing global economic and strategic landscape.
The front door will improve our investment environment by streamlining how investors and business interact with the Government, helping them navigate approvals processes and fast-track major projects where possible.
The front door will:
- Provide a single point of contact for investors and companies with major investment proposals
- Deliver a joined-up approach to investment attraction and facilitation
- Identify priority projects related to the Government’s Future Made in Australia agenda
- Support accelerated and coordinated approvals decisions, and
- Connect investors with the Government's specialist investment vehicles.
Fighting scams
The Government will provide $67.5 million over four years from 2024–25 (and $8.6 million per year ongoing) to continue to combat scams and online fraud through the introduction of mandatory industry codes to be established under a Scams Code Framework and increased use of the secure eInvoicing network. Funding will support:
- Australian Competition and Consumer Commission (ACCC), the Australian Securities and Investments Commission (ASIC) and the Australian Communications and Media Authority (ACMA) to administer and enforce mandatory industry codes for regulated businesses to address scams on their platforms and services, initially targeting telecommunications, banks and digital platforms services relating to social media, paid search engine advertising and direct messaging
- ATO to continue to oversee and operate the secure eInvoicing network
- ACCC to improve public awareness of scams and help the public to identify, avoid and report scams
- Treasury to develop and legislate the overarching Scams Code Framework.
Partial funding for this measure will be held in the Contingency Reserve pending development of the preferred legislative approach for the Scams Code Framework.
Superannuation
Commonwealth Government-Funded Paid Parental Leave – enhancement
The Government will provide $1.1 billion over five years from 2023–24 (and $0.6 billion per year ongoing) to strengthen Australia’s government-funded Paid Parental Leave (PPL) scheme and improve women’s retirement outcomes. Funding includes:
- $1.1 billion over four years from 2024–25 (and $0.6 billion per year ongoing) to pay superannuation on Commonwealth Government-funded PPL for births and adoptions on or after 1 July 2025. Eligible parents will receive an additional payment based on the Superannuation Guarantee (12 per cent of their PPL payments), as a contribution to their superannuation fund
- $10.0 million over two years from 2024–25 to provide additional support for small business employers in administering PPL
- $1.4 million over two years from 2023–24 to update communication products and documents for potential PPL recipients.
Social security
Freeze Social Security Deeming Rates
The Government will freeze social security deeming rates at their current levels for a further 12 months until 30 June 2025, to support Age Pensioners and other income support recipients who rely on income from deemed financial investments, as well as their payment, to manage cost of living pressures.
Impact of the Douglas Decision on Social Security Means Testing
The Government will provide $11.9 million over five years from 2023–24 (and $0.9 million per year ongoing) to implement a social security means test treatment for the military invalidity payments affected by the Federal Court’s decision in Commissioner of Taxation v Douglas [2020] FCAFC 220.
This approach ensures the Douglas decision does not affect income support payment rates for veterans who receive an invalidity payment from the Military Superannuation and Benefits Scheme and the Defence Force Retirement and Death Benefits Scheme, compared to the pre-Douglas arrangements.
A Higher Rate of JobSeeker Payment for Participants with a Partial Capacity to Work (0-14 hours)
The Government will provide $41.2 million over five years from 2023–24 (and $7.0 million per year ongoing from 2028–29) to extend eligibility for the existing higher rate of JobSeeker payment to single recipients with a partial capacity to work of zero to 14 hours per week from 20 September 2024.
The higher JobSeeker payment rate is currently provided to single recipients with dependent children and those aged 55 and over who have been on payment for nine continuous months or more.
This measure builds on the 2023–24 Budget measure titled Increase to Working Age Payments.
Commonwealth Rent Assistance – increase the maximum rates
The Government will provide $1.9 billion over five years from 2023–24 (and $0.5 billion per year ongoing from 2028–29) to increase all Commonwealth Rent Assistance maximum rates by 10 per cent from 20 September 2024 to help address rental affordability challenges for recipients.
Aged care
Improving Aged Care Support
The Government will provide $2.2 billion over five years from 2023–24 to deliver key aged care reforms and to continue to implement recommendations from the Royal Commission into Aged Care Quality and Safety. Funding will support:
- sustainment of, and essential enhancements to, critical aged care digital systems so they remain legislatively compliant and contemporary and can support the introduction of the new Aged Care Act from 1 July 2025
- release of 24,100 additional home care packages in 2024–25
- funding the ICT infrastructure needed to implement the new Support at Home Program and Single Assessment System from 1 July 2025
- increasing the regulatory capability of the Aged Care Quality and Safety Commission as part of the Government’s response to the Final Report of the Capability Review of the Aged Care Quality and Safety Commission, and to implement a new aged care regulatory framework from 1 July 2025
- attracting and retaining aged care workers, collecting more reliable data, and improving the outcomes for people receiving aged care services through existing aged care workforce programs
- reducing wait times for the My Aged Care Contact Centre
- continuation of delivering the Specialist Dementia Care Program
- extending the Home Care Workforce Support Program for an additional three years to facilitate the growth of the care and support workforce in thin markets
- implementing the new Aged Care Act, including governance activities, program management and extension of the Aged Care Approvals Round
- extending the Palliative Aged Care Outcomes Program and the Program of Experience in the Palliative Approach program to continue to upskill the aged care and primary care workforce to further embed palliative care capacity in the aged care workforce
- extending funding to aged care service providers in thin markets as they transition their business operations to accommodate the new Australian National Aged Care Classification (AN-ACC) funding model
- undertaking ICT preparation work to configure the new Basic Care Tariffs in the AN-ACC funding model
- the Australian Dementia Network, continuing to prepare the health system for developments in biomarkers and disease-modifying therapies.
The Government will also reprioritise unspent funds from the Commonwealth Home Support Programme to other sub-programs within aged care services.
The Government has also agreed to defer the commencement date of the new Aged Care Act to 1 July 2025.
Carer Payment – increased flexibility
The Government will provide $18.6 million over five years from 2023–24 (and $3.1 million per year ongoing) to support Carer Payment recipients through increased flexibility to undertake work, study and volunteering activities.
From 20 March 2025, the existing 25 hour per week participation limit for Carer Payment recipients will be amended to 100 hours over four weeks. The participation limit will no longer capture study, volunteering activities and travel time and will only apply to employment.
Carer Payment recipients exceeding the participation limit or their allowable temporary cessation of care days will have their payments suspended for up to six months, rather than cancelled. Recipients will also be able to use single temporary cessation of care days where they exceed the participation limit, rather than the current seven day minimum.
Housing crisis and Cost of living measures
Housing Support
The Government will provide additional funding to build more homes for Australians sooner, invest in more housing enabling infrastructure, train more construction workers and support social and affordable housing and homelessness services. Funding includes:
- subject to states and territories signing the new National Agreement on Social Housing and Homelessness:
- $423.1 million over five years from 2024–25 in additional funding to support the provision of social housing and homelessness services by states and territories under a new National Agreement on Social Housing and Homelessness. The additional funding will increase the annual funding under the new agreement to $1.8 billion per year from 2024–25, with over $9.28 billion provided to states and territories over the life of the agreement
- $1.0 billion in 2023–24 for states and territories to support enabling infrastructure for new housing through a new Housing Support Program – Priority Works Stream
- supporting more community housing providers to access finance through the Affordable Housing Bond Aggregator by increasing the cap on the Government’s guarantee of Housing Australia’s liabilities by $2.5 billion to $10.0 billion, with an associated increase in the line of credit that supports the Affordable Housing Bond Aggregator of $3.0 billion to $4.0 billion
- $88.8 million over three years from 2024–25 to support 20,000 new fee-free training places, including increased access to pre-apprenticeship programs, in courses relevant to the construction sector and delivered through TAFEs and industry registered training organisations
- $19.7 million over six years from 2024–25 to support housing research, fast-track feasibility studies on the release of Commonwealth land to support social and affordable housing and maintain Treasury’s capability to develop, advise on and implement housing policy and programs
- $7.0 million over three years from 2023–24 to provide targeted assistance to residential builders seeking to obtain accreditation under the Work Health and Safety Accreditation Scheme
- $6.2 million over two years from 2024–25 to support building industry peak employer associations to assist residential builders in obtaining accreditation under the Work Health and Safety Accreditation Scheme
- $2.0 million over three years from 2024–25 to build the financial capability of community housing providers and Aboriginal and Torres Strait Islander community controlled housing organisations
- $1.8 million over two years from 2024–25 for the Department of Employment and Workplace Relations to deliver streamlined skills assessments for migrants from comparable countries who wish to work in Australia’s housing construction industry
- support to increase available rental housing by allowing foreign investors to purchase established Build to Rent properties with a lower foreign investment fee, conditional on the property continuing to be operated as a build to rent development.
In addition, the Government will:
- target the $1.0 billion for social housing under the National Housing Infrastructure Facility in the 2023–24 Mid-Year Economic and Fiscal Outlook towards crisis and transitional accommodation for women and children fleeing domestic violence, and youth, including redistributing the mix of concessional loans and grants to increase the proportion of grants to $700.0 million
- provide $1.9 billion in concessional finance to support community housing providers to deliver social and affordable.
Energy Bill Relief Fund – extension and expansion
The Government will provide $3.5 billion over three years from 2023–24 to extend and expand the Energy Bill Relief Fund to provide a $300 rebate to all Australian households and a $325 rebate to eligible small businesses on 2024–25 bills to provide cost of living relief.