Key Changes:
As part of our commitment to keeping you informed about developments that may impact your financial planning, we want to highlight several key changes announced by the government across various domains. These changes encompass taxation, social security, and job support, aiming to provide clarity on upcoming adjustments and opportunities for our clients.
Budget Measures:
Allocation of $5.4 billion for extended cost-of-living relief, encompassing energy bill subsidies and rent assistance extensions.
Focus on Stage 3 tax cuts benefiting households, averaging $36 per week per person.
A budget surplus of $9.6 billion next year with significate budget deficits predicant in every future year.
Funding initiatives for healthcare, including community pharmacies and Medicare enhancements.
Implementation of "Future Made in Australia" policy through subsidies, tax breaks, and investment in targeted industries.
Taxation Updates:
Personal Income Tax Cuts (Effective July 1, 2024): The government has enacted significant reductions in personal income tax rates, with the 19% rate decreasing to 16% and the 32.5% rate to 30%. Additionally, income thresholds for higher tax brackets will be raised, providing potential tax relief for individuals earning above previous thresholds.
Foreign Resident Capital Gains Tax Regime (Effective July 1, 2025): Amendments to the foreign resident CGT regime will broaden the scope of assets subject to CGT for foreign residents and introduce a 365-day testing period for the principal asset test. Moreover, foreign residents will be required to notify the ATO before disposing of shares or membership interests exceeding $20 million in value.
Superannuation (Effective July 1, 2024): Concessional (tax-deductible) superannuation contributions will increase from the current $27,500 threshold to $30,000 and non-concessional (non-deductible) contributions will increase from $110,000 to $120,000.
Furthermore, From 1 July 2025 tax concessions will be reduced for certain earnings for superannuation with an additional 15% tax on unrealised capital gains on amounts over $3 million.
Social Security Enhancements:
Aged Care Support: The government is bolstering aged care support with the release of an additional 24,100 home care packages and initiatives to address workforce challenges in the sector.
Jobseeker Payment and Carer Payment Reforms: Eligibility criteria for JobSeeker payments will be expanded to include recipients with partial capacity to work, while Carer Payment recipients will benefit from increased flexibility in participation limits and suspension policies.
Commonwealth Government-funded Paid Parental Leave (PPL): Superannuation contributions will be provided for Commonwealth government-funded PPL recipients, enhancing retirement savings for eligible parents.
Commonwealth Rent Assistance: Maximum rates for Commonwealth Rent Assistance will be raised by 10%, offering relief to eligible individuals and families.
Freeze on Social Security Deeming Rates: Social security deeming rates will remain unchanged until June 2025, providing stability for age pensioners and others on income support payments.
Job Support and Creation Initiatives:
Commonwealth Prac Payment: A new payment scheme will be introduced to support tertiary students undertaking mandatory placements in nursing, teaching, or social work studies.
Other Announcements:
Small Business Support: The $20,000 instant asset write-off for small businesses will be extended until June 30, 2025, allowing immediate deductions for eligible assets. Additionally, the Energy Bill Relief Fund will be expanded to provide rebates to households and small businesses.
Higher Education Loan Program: Indexation of student loans will be limited to the lesser of CPI or wage growth, effective 1 July 2023, meaning student debt holders on average will receive a credit of approximately $1,200, providing relief for individuals with Higher Education Loan Program debts.
Winners and Losers:
Beneficiaries of the budget include low and middle-income households, taxpayers, care workers and pensioners.
Conversely, budget measures may disadvantage consultants, universities, and certain international stakeholders due to a crack down on housing and foreign resident taxes. Conclusion:
These updates represent a mix of tax reforms, social security enhancements, and initiatives aimed at supporting businesses and individuals. As your financial planning partner, we remain committed to helping you navigate these changes effectively and optimize your financial strategies in light of evolving regulations and opportunities. If you have any questions or require assistance in adapting your financial plan, please don't hesitate to contact us.
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