On Tuesday 9 May, Jim Chalmers handed down the Federal Budget.

The budget focused on cost of living measures, whilst trying not to add increased pressure on inflation.

Below is a summary of the impact of the budget, some of which had already been released and other items being announced for the first time last night.

For Business:

• Small Business Energy Incentive will provide a bonus 20% tax deduction for businesses with spending that supports electrification and efficient use of energy. This will be capped at total expenditure of $100,000 and applies to those with turnover of $50 million or less for the 2024 financial year.
• The instant asset write off threshold has now been capped at $20,000 and only applies to businesses with turnover less than $10 million. This applies for 2024 financial year. Assets over this amount will be placed in small business pool which is depreciated at 30% (or 15% in first year)
• Reduced the uplift factor for PAYG and GST instalments which may help with cashflow for businesses by keeping instalments lower.
• Hybrid electric vehicles will no longer be eligible for the electric car FBT exemption from 1 April 2025
• From 1 July 2026, businesses will be required to make payment of their employee super at the same time as salary and wages.
• Lodgement penalty amnesty to encourage small business that have failed to lodge to reengage with the tax system by waiving lodgement penalties.
• Increased capital works tax deduction to 4% for new build to rent projects.

For individuals:

• Superannuation balances over $3 million will be subject to a 30% tax rate. the additional 15% will start from 2026 financial year.
• No reduction in minimum pension drawdown for 2024 financial year.
• Lump sum payments in arrears will be exempt from Medicare Levy.
• Tax rates for 2025 financial year changed to create 3 levels of tax. This means income between $45,000 – $200,000 will be taxed at 30% and anything over that will be 45%.
• Low and middle income tax offset has now ceased meaning tax refunds may be reduced by between $675 and $1500.
• Medicare levy low income thresholds will be increased.

ATO Targets

• Extra compliance efforts are to placed on reviewing of GST lodgements.
• Engaging with taxpayers with debts over $100,000 and debts older than 2 years.

How Can Alto Help?

If you are unsure of how the budget measures may apply to you, please reach out to discuss in more detail with one of the Alto team.

Author: Donna Bruce