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Key Changes from the 2024-25 Federal Budget that may affect you

By June 14, 2024July 10th, 2024No Comments

With the new financial year just around the corner, we will soon see a few new taxation changes come into effect. Being formally publicised during the 2024-25 federal budget, some of the new changes that will come into effect include the implementation of stage 3 tax cuts, extending the instant asset write off scheme and increases in ATO compliance activity.

Stage 3 Tax Cuts

From the 1st of July, the previously negotiated stage 3 tax cuts will finally come into effect. Following their legislation in 2018, these amendments were finalised with the announcement of the 2024-25 budget as part of the government’s plans to provide Australians with some financial relief.

From the start of the 2025 financial year, the tax brackets for Australian residents will be adjusted as follows:

  • Taxable income: $0-$18,200 → nil
  • Taxable income: $18,201-$45,000 →16% of amount over $18,200
  • Taxable income: $45,001-$135,000→ $4,288 + 30% of amount over $45,000
  • Taxable income: $135,001-$190,000 → $31,288 + 37% of amount over $135,000
  • Taxable income over $190,001 → $51,638 + 45% of amount over $190,000

So if we were to compare it to the ending financial year:

  • The 19% tax rate has been reduced to 16%
  • The 32.5% tax rate has been reduced to 30%
  • The 37% tax rate threshold has been moved from $120,000 to $135,000
  • The 45% tax rate threshold has been moved from $180,000 to $190,000

Instant asset Write Off Scheme Extension

The instant asset write off scheme has been extended for a further year. Originally developed to help small businesses navigate covid, the scheme will remain in place for another year until July 2025 in a bid to help small businesses manage their cash flow at a time where business costs continue to rise.

Businesses with an annual turnover of less than $10 million will be able to immediately claim the full cost of eligible assets which cost less than $20,000. This threshold is implemented on a per-asset basis, meaning that a small business can write off multiple eligible assets.

Increase in ATO Compliance Activity

The ATO will continue to increase its measures to ensure that lodgments are submitted on time and that debts are collected more efficiently. From the start of the new financial year, the ATO will implement late lodgment fines with increased frequency, being less lenient with the remittance of fines and general interest charges. They will also make it harder for taxpayers to re-set up payment plans once they have defaulted.

Expert Advice

Seeking answers to your tax questions? Embrace a fresh start this new financial year and get your records in order with the help of an accountant! Understand your tax position and maximize your expense opportunities by consulting one of our team members today.

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Thomas Murmylo

Thomas is the Principal Tax Agent at BTMH. Unlike most in the accounting industry, Thomas takes a different approach when it comes to the management of his clients’ taxation and accounting needs. Thomas has helped local and international businesses to grow and prosper for more than 30 years.