The 2024 Australian Federal Budget introduces several measures aimed at supporting small businesses and enhancing tax compliance, with significant implications for small business and taxation generally.
Individual income tax amendments
A significant highlight of the budget is the introduction of tax cuts for all 13.6 million Australian taxpayers, designed to ease the cost-of-living pressure. Below is a summary of the changes for individual income tax rates.
Australian tax resident individual income tax rates
2024 Financial Year | 2025 Financial Year Onwards | ||
Tax rate | Threshold | Tax rate | Threshold |
0% | $0 – $18,200 | 0% | $0 – $18,200 |
19% | $18,201 – $45,000 | 16% | $18,200 – $45,000 |
32.5% | $45,001 – $120,000 | 30% | $45,001 – $135,000 |
37% | $120,001 – $180,000 | 37% | $135,001 – $190,000 |
45% | $180,001+ | 45% | $190,001+ |
Non-resident individual tax rates
2024 Financial Year | 2025 Financial Year Onwards | ||
Tax rate | Threshold | Tax rate | Threshold |
32.5% | $0 – $120,000 | 30% | $0 – $135,000 |
37% | $120,001 – $180,000 | 37% | $135,001 – $190,000 |
45% | $180,001+ | 45% | $190,001+ |
Instant asset write off
One of the standout features is the extension of the $20,000 instant asset write-off for small businesses. This initiative allows small businesses with an aggregated annual turnover of less than $10 million to immediately deduct the full cost of eligible assets costing less than $20,000, first used or installed ready for use by June 30, 2025. This measure is designed to improve cash flow for small businesses, enabling them to invest in necessary equipment and growth. Additionally, assets valued at $20,000 or more can be placed into the small business simplified depreciation pool, depreciated at 15% in the first year and 30% each subsequent year, which continues to support substantial investments.
BAS refunds
In terms of tax compliance, the budget strengthens the Australian Taxation Office’s (ATO) capabilities to retain Business Activity Statement (BAS) refunds for further investigation. The ATO’s mandatory notification period for BAS refund retention will be increased from 14 days to 30 days. This change aims to enhance the ATO’s ability to detect and prevent fraudulent activities, especially during peak periods of fraudulent claims. The extension provides the ATO with a better framework to manage and review claims thoroughly before releasing funds, thereby safeguarding public resources. Legitimate refunds delayed beyond 14 days will accrue interest payable to the taxpayer, ensuring fairness in the process.
Higher education loan program
The budget also addresses the Higher Education Loan Program (HELP), proposing reforms to support the sustainability of student loans. The government plans to adjust the repayment thresholds and rates for HELP debts, aiming to ensure that higher earners contribute a fairer share towards their education costs. These changes are intended to help maintain the viability of the HELP scheme while ensuring it remains accessible for future students. Additionally, the budget introduces a subsidy for energy costs, providing immediate relief to households and small businesses struggling with rising energy prices.
Energy rebate
A $300 rebate will be offered to all Australian households and a $325 rebate to eligible small businesses for the 2024-25 bills. This measure is part of a broader $3.5 billion Energy Bill Relief Fund aimed at mitigating the impact of high energy costs on the Australian community.
