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The 2024-2025 Federal Budget – Tax Changes

On Tuesday the 14th of May, Treasurer Jim Chalmers releases the 2024-25 Australian Federal Budget, with new changes to key economic forecasts.

We have flipped through the pages of the new Federal Budget and have deciphered the new tax benefits and changes for the 2024 tax year. With our full analysis, the Federal Budget has provided economical support to the following:

Personal Income Tax Rates:

The Federal Budget has confirmed the new stage three tax cuts, which reflect the governments intentions to target the tax cuts to low and middle income earners. Comparing the previous announcements, the new tax rates retain the five marginal thresholds with a 19% tax rate reduced to 16% and the 32.5% tax rate reduced to 30%. The government has also addressed the bracket creep by increasing the taxable income thresholds for the 37% and 45% tax rates.

Taxable Income

Current tax rates to 30 June 2024

Taxable income

Tax rates form 30 June 2024

Up to $18,200


Up to $18,200


$18,201 – $45,000


$18,201 – $45,000


$45,001 – $120,000


$45,001 – $135,000


$120,001 – $180,000


$135,001- %190,000


From $190,000


These new brackets and tax rates have been implemented to assist Australians with the current cost of living crisis. To help mediate the current cost of living crisis, the Federal budget has also included $3.5 billion for energy bill relief to all Australian households to provide a rebate of $300 for 2024-2025 energy bills.

Medicare Levy and Surcharge

The Government has increased the Medicare levy surcharge for low-income thresholds, effective from July 1 2023, to reflect the increase in inflation. Individuals will see the impact of these changes when they lodge their 2024 individual tax returns.

Updates and Changes to the HECS/HELP Indexation

Following from last years Federal Budget, the increase of unpaid HECS-HELP debts increased by 7.1% from the 1st of June 2023. The Federal Budget has confirmed that the annual indexation will now be limited to the lower of either the Consumer Price Index (CPI) or the Wage Price index (WPI). These changes will be effective on a retrospective basis from the 1st of June 2023, with the Federal Budget allocating the removal of $3 billion, resulting in an immediate impact on the current amount of debt that would be repayable.

Extension of the Individual Income Tax Compliance Program

The government’s focus on addressing non-compliance by individual tax payers was raised in the previous Federal Budget and it continues to be a key factor in this years Federal Budget. The Australian Government has provided the ATO Personal Income Tax Compliance Program with an extension till the 1st of July 2027, for the 2024 tax individual tax returns. As well as an increase of $This extension I to assist the ATO to deliver targeted proactive, preventative and corrective activities in required areas to assist in the tax compliance for individuals. The ATO has also including in their emerging non-compliance is deductions relating to short-term rental properties to ensure they are genuinely available to rent.