2024-25 Federal Budget Summary

Federal Budget introduction

This is a commentary on the 2024/25 Budget which was delivered by the Federal Treasurer Jim Chalmers.

Federal Budget key points

• The Federal Treasurer indicated that the Budget will deliver a $9.3 billion surplus in 2023/24 being the first back-to-back surpluses in two decades but these surpluses are then followed by a decade of deficits.
• There does not appear to be any attempt to start repairing the Budget buffers and repaying the pandemic debt during this forecast cycle.
• The Treasurer continually emphasised that the government’s priority is cost of living relief.
• The 2025/25 Budget features tax cuts for every taxpayer that are already legislated for and will commence from 1 July 2024.  The government has allocated $22.7 billion on a “green future” encompassed within the “Future Made In Australia Fund”.
• Unemployment is forecast to rise to 4% during 2024/25 and to increase to 4.5% in 2025/26.
• The Treasurer indicated that he expects CPI to be well ahead of the Reserve Bank’s 3.8% forecast for December 2024.

The Budget in summary

Taxation Cuts

• The Stage Three Tax Cut changes that have already been legislated for and will commence on 1 July 2024 will give 13.6 million taxpayers an average benefit of $1,888 a year, or $36 a week, forming the centrepiece of the Government’s cost of living relief.

Small Business Initiatives

• Energy Bill Relief – Small Businesses

Small business energy relief of $325 will be available to approximately 1 million businesses that are on the small customer electricity plans.

• Instant Asset Right Off

The government will extend the instant asset right off for small businesses with a turnover of less than $10 million will be able to deduct assets costing less than $20,000 until June 30, 2025.

• Future Made in Australia – Innovation Fund

The Government has allocated $1.7 billion over the next ten years to the Innovation Fund, aimed at supporting innovation, commercialisation, pilot, demonstration projects and early stage development in the priority sectors. The Future Made in Australia agenda is designed to foster investment into priority industries in Australia.  These include quantum computing, renewable hydrogen, green metals, low-carbon liquid fuels, solar power, critical minerals, clean energy manufacturing such as batteries and more.

• Industry Growth Program

Whilst not specifically mentioned in this year’s Budget, in last year’s Budget the Government allocated $392.4 million over four years for the Industry Growth Program.  This was to support Australian start-ups and SMBs in commercialising their ideas and growing their operations.  Nearly one year since this initiative was announced the government announced on 2 May 2024 that the Industry Growth Program was now open for applications.

• Building Women’s Careers

$55.6 million is being invested into launching a “Building Women’s Careers Program”.  This program aims to deliver ten large scale projects (and several small ones) that will support the access of women to flexible training in key industries such as clean energy, construction, tech and advanced manufacturing.

• STEM Workforce

$38.2 million will be allocated over eight years and $1.3 million ongoing – towards supporting diversity in the STEM workforce. The funding will go towards women in STEM and Engagement Programs that are “creating positive change to attract and retain more women, and other under representative groups in STEM education and jobs”.

• Tradies – Housing Industry

The Government has allocated $4.3 billion for new housing expenditure which will benefit Tradies working in the housing industry.  This initiative includes an extra $1 billion to State Governments to build infrastructure for new homes and $1.9 billion in extra concessional financing for providers and charities to help deliver new social and affordable dwellings.

• Visas For Migrants To Work In The Housing Industry

The government has indicated that Visas will be fast-tracked for 1,900 migrants to work in housing construction.

• Local Pharmacies

The government has indicated that local pharmacies will benefit from the removal of a $1 option or co-payment on PBS medicine sales.

• Agribusiness

The Government has allocated $625 million to help farmers in rural communities better prepare for the effects of climate change and drought.

• Small Business Operators Health

The Government will provide $10.8 million over two years to extend the small business debt helpline and the new access for small business owners program.

• Fraud Detection

SMBs are potential beneficiaries of a $67.5 million funding package to help fight digital scams with the ATO to receive $23.3 million to continue operating the nation’s e-invoicing network.

• Fair Work Compliance By SMBs

The Government has recognised that SMBs may need help complying with the Government’s ongoing industrial reform program and has allocated $20.5 million in the Budget for that purpose.

• Taxation Debts

The Government has announced that it will change the laws about how “on hold” tax debts are handled.  This Budget measure comes months after the Tax Office paused a letter campaign that involved telling small business owners that it may seek to recover “on hold” historical tax debts.

• Getting Paid On Time

The Government has allocated around $25 million over four years to improve payment times for small businesses.  The funding will go to the “Payment Times Reporting Regulator” in order to implement reforms recommended by the statutory review of the “Payment Times Reporting Act 2020”.

• Right to Disconnect

The Fair Work Ombudsman is to receive $20.5 million to enhance the Employer Advisory Service, part of this funding will be to help employers implement the new “right to disconnect law”.

• Tech Start-Ups

Landing pads: The government has allocated $4.8 million across four years for two additional “landing pads” for Australian Tech start-ups. These landing pads will be located in Jakarta and Ho Chi Minh City and will be run through Austrade’s Landing Pads Program.

• Support for Franchisees and Dispute Resolution

The Government will provide $2.6 million over four years and $700,000 per year on an ongoing basis for the Australian Small Business and Family Enterprise Ombudsman to help businesses without legal representation to access alternative dispute resolution services.

• Digital ID Funding

The Government plans to spend $288 million to bolster its Digital ID System. The Government has indicated that once the expanded system is operational it will “lower the administrative burden on small businesses by reducing the amount of ID data they need to store and protect for their customers and their employees”.

• Defence Industry Grants

The Budget also refers to $183 million to go towards “Defence Industry Grants” to support SMBs. This will include a new “Defence Industry Development Grant Program” which the government says will “reduce the administration burden on small and medium businesses and provide greater opportunities for tailored financial support”.

• Funding to Help Veterans Operate Small Businesses

Self-employed veterans will be eligible to apply for $400,000 over three years via an extension of the “Supporting Veteran Owned Business Grant Program”. This program is run through “The King’s Trust Australia Enterprise Program”.

• Support for Paid Parental Leave

Services Australia will receive $10 million to help small businesses administer the expanded “Paid Parental Leave Scheme”.

Housing

• $11.3 billion has been allocated to build 1.2 million homes by the end of the decade for women in crisis, low income families and the homeless.

Health

• $531.4 million for an extra 24,100 home care packages.
• The Government will freeze the maximum co-payment for medicine on the pharmaceutical benefits scheme at $31.60 for all Australians with a Medicare card.

Pensioners

• The maximum co-payment for a medicine on the pharmaceutical benefits scheme will be $7.70 for pensioners and concession cardholders.
• The Government has announced that the “Age Pension Deeming Rate” (the figure used to estimate how much money financial investments are earning) will be frozen at a maximum of 2.25% for another twelve months. Deeming rates are used to determine aged care and other social service payments. A deeming rate of 0.35% applies to the first $60,400 held by a single age pensioner, and $100,200 held by a couple, with the higher 2.25% kicking in on financial investments above those thresholds.
• The Commonwealth rent assistance payment will be increased by 10%

All Households

• The Government will extend its Energy Bill Relief to every household in the country by making a one-off rebate of $300.

Universities

• Students will get some relief from their HECS debt with the Government wiping $3 billion from the debts for 3 million university students.
• The Government has allocated funding for free courses to get people ready for university at a cost of $350 million.
• The technical education sector will benefit, with $89 million for 20,000 more fee free TAFE and VET places for Tradie trainees.

Reserve Funding

• The Government has set aside $26 billion over the next four years as a “contingency reserve” to fund existing policies, which includes an expected minimum wage rise for aged care and early childhood workers.

Future Made In Australia

• Businesses involved in the “green transition” could be winners with major loans, investments and incentives going to the sector. The government has allocated $19.7 billion to chase the ambitious goal of turning Australia into a renewable energy superpower.

Please note that the Government’s Budget will now be debated in the House of Representatives and when it is passed by the House of Representatives it then moves to the Senate for debate and approval before any of these items become law. However, the personal income tax cuts are legislated to commence from 1 July 2024.

If you would like to discuss with us any of the matters that were included in the Government’s Budget, please do not hesitate to contact your OBT accountant in Gatton or Esk for personalised assistance on 07 5462 2277.

Source: ESSBizTools