Australia’s Federal Budget 2024-25

The Federal Treasurer, DR Jim Chalmers, handed down the2024-25 Federal Budget at 7:30pm (AEST) on 14 May 2024.

Described as a “responsible Budget that helps people under pressure today”, the Treasurer has forecast a second consecutive surplus of$9.3 billion. The main priorities of the government, as reflected in the Budget, are helping with the cost of living, building more housing, investing in skills and education, strengthening Medicare and responsible economic management to help fight inflation.

The key tax measures announced in the Budget include extending the $20,000 instant asset write-off for eligible businesses by 12 months until30 June 2025, introducing tax incentives for hydrogen production and critical minerals production, strengthening foreign resident CGT rules and penalising multinationals that seek to avoid paying Australian royalty withholding tax.

The Budget also includes various amendments to previously announced measures, as well as a number of income tax measures that have already been enacted prior to the Budget announcement, including:

• The revised stage 3 personal income tax cuts(enacted by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act2024 (Act No 3 of 2024))
• Medicare levy and surcharge threshold changes(enacted by the Treasury Laws Amendment (Cost of living – Medicare Levy)Act 2024 (Act No 4 of 2024)), and
•  A specific exemption for Australian plantation forestry entities from the new earnings-based rules introduced as part of thin capitalisation reforms (enacted by the Treasury Laws Amendment (MakingMultinationals Pay Their Fair Share – Integrity and Transparency) Act 2024(Act No 23 of 2024)).

These enacted measures have not been discussed in detail in this report.

The government anticipates that the tax measures put forward will collectively improve the Budget position by $3.1 billion over a 5-year period to 2027-28.

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Personal taxation

Personal tax rates from 1 July 2024

The Stage 3 personal tax cuts as enacted on 5 March 2024will result in the following new rates and thresholds from 1 July 2024. No further changes to the rates and thresholds have been announced.

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