Federal Budget 2024-25 Tax Aspects

Small business support – $20,000 instant asset write-off

Small businesses with an aggregated turnover of less than $10 million will be eligible for the $20,000 instant asset write-off for an additional year. This will enable small businesses to immediately deduct eligible depreciating assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025. From 1 July 2025, the asset cost threshold will revert to $1,000. 

The $20,000 threshold will apply on a per-asset basis, so small businesses can instantly deduct the cost of 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 (i.e. it is permissible to re-enter the simplified depreciation regime until 30 June 2025).

Changes to superannuation guarantee entitlements

All employees will receive the benefit of an already-legislated increase in the minimum superannuation guarantee (SG) entitlement. Specifically, the minimum SG rate will increase from 11 per cent to 11.5 per cent from 1 July 2024.

Individual tax cuts

The Government reaffirmed that from 1 July 2024, the amended Stage 3 tax cuts will come into effect, which will deliver tax relief to all Australian individual taxpayers.

Under the already-legislated measures, from 1 July 2024 there is a reduction in the lower marginal tax rates and thresholds such that no individual with taxable income of $135,000 or less will have a marginal tax rate of more than 30 per cent. The top marginal tax rate of 45 per cent rate will apply to taxable income above $190,000.

The rate at which employers deduct Pay-As-You-Go (PAYG) withholding amounts are expected to be adjusted to take into account the revised tax rates from salary and wage payments made from 1 July 2024.

For a summary of the changes, refer to the table below.

Table 1: Income tax rates for Australian tax residents

Taxable Income ($) 1 July 2020 - 30 June 2024	Marginal Tax Rate (%)	Taxable Income ($) From 1 July 2024	Marginal Tax Rate (%)
0 - 18,200	Nil	0 - 18,200	Nil
18,201 - 45,000	19	18,201 - 45,000	16
45,001 - 120,000	32.5	45,001 - 135,000	30
120,001 - 180,000	37	135,001 - 190,000	37
Above 180,000	45	Above 190,000	45

The above rates do not include the Medicare Levy which remains at 2 per cent.

Funding and additional powers for the ATO

Continuing a theme from recent years, the Budget contains additional funding for the Australian Taxation Office (ATO) to extend the following compliance programs: 

• the Personal Income Tax Compliance Program for one year from 1 July 2027

• the Shadow Economy Compliance program for two years from 1 July 2026, and

• the Tax Avoidance Taskforce for two years from 1 July 2026 which has a focus on multinationals, large public and private businesses, and high-wealth individuals. 

The ATO will also receive funding to strengthen its ability to detect, prevent and mitigate fraud against the tax and superannuation system over four years from 1 July 2024. 

In addition, to strengthen the ATO’s ability to combat fraud, the ATO will be given an extended time to notify a taxpayer if it intends to retain a business activity statement (BAS) refund for further investigation, increasing the current notification period from 14 days to 30 days. This measure will take effect from the start of the first financial year after the enactment of the enabling legislation. 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 also publish BAS processing times online. 

The Government will also amend the tax law to give the Commissioner of Taxation the discretion to not use a taxpayer’s refund to offset outstanding tax debts where the Commissioner has put that old tax debt on hold prior to 1 January 2017. This discretion will apply to individuals, small businesses and not-for-profits only.