From a Wealth Management perspective, this Budget is a non-event. Any significant announcements have already been made, particularly in relation to taxation and superannuation. Feedback to the government from Industry and Associations has largely been ignored. Nothing to see here.
In Summary
Taxation
The amended Stage Three tax cuts legislated earlier this year will apply from 1 July 2024. The original (Coalition) Stage 3 tax scale was amended to:
- Reduce the 19% rate to 16% on income up to $45,000
- Reinsert a 37% rate on income between $135,000 and $190,000 (previously 30%)
- Bring the top rate of 45% to apply from $190,000 (previously $200,000)
Superannuation
- From 1 July 25, under the previously announced “Better Targeted Superannuation Concessions” legislation – also known as Div296 tax - a proportion of earnings on total super balances exceeding $3 million will attract an additional tax of 15%. Refer to our Morgans technical paper on how this tax will apply.
- Announced in last year’s 2023 Federal Budget, employers must pay superannuation at the same time they pay salary and wages to employees.
Small Business
- The instant asset write-off asset threshold of $20,000 will be extended for another year to 30 June 2025.
- Eligible small businesses will receive $325 in electricity bill relief throughout the year via an electricity rebate.
- In addition to the instant asset write-off, small and medium businesses switching to energy-efficient equipment or facilities can obtain additional (accelerated) depreciation deductions of 20%.
Cost of Living Relief
- From 1 July 2024, households will receive a total rebate of $300 on their electricity bills throughout the year.
- The maximum rates of Commonwealth Rent Assistance will increase by a further 10% over the next five years. This is in addition to the 15% increase delivered in September last year.
- In response to the Australian Universities Accord, the Government will cap the HELP indexation rate to be the lower of either the Consumer Price Index or the Wage Price Index. This relief will be backdated to 1 June 2023. Changing the calculation of HELP indexation applied from 1 June 2023 means that the indexation rate is reduced from 7.1% to 3.2% in 2023 and from 4.7% to around 4% in 2024.
Aged Care
- The Government has committed to funding the Fair Work Commission decision to increase award wages for aged care workers. This is on top of $11.3 billion already allocated for the interim 15% increase.
- The Government will invest $531.4 million to release an additional 24,100 Home Care Packages in 2024–25.
- The My Aged Care Contact Centre will receive $37 million to reduce call-waiting times for people seeking information and access to aged care.
Welfare Recipients
- The deeming rates (currently 0.25% and 2.25%) used to assess income under the Income Test for welfare recipients will remain at current levels until 30 June 2025.
- The government intends to boost assistance for Veterans by providing funding for additional staffing resources and to protect against cyber risk. Funding will also be provided for Veterans’ compensation and rehabilitation legislation.
- In addition, $48.4 million will be available for Veterans’ Home Care and Community Nursing programs and $10.2 million to provide access to funded medical treatment for ill and injured veterans while their claims for liability are processed.
Paid Parental Leave Scheme
- From 1 July 2025, superannuation will be paid on the 20 weeks of government-funded parental leave. Parents of babies born on or after 1 July 2025 will receive 12% superannuation on top of their government-funded parental leave.
Working for Women
- The government is introducing a national strategy to achieve gender equality titled “Working for Women: A Strategy for Gender Equality”.
- The strategy is intended to drive action on women’s safety, sharing and valuing care, economic equality, women’s health and leadership, representation and decision making.
The Omissions
The wish lists from industry participants were ignored, which as we have come to expect is disappointing but not surprising. No mention of improved tax deductibility on financial advice. Nor any mention of advisers having access to the Australian Tax Office portal to better help their clients. Once again, financial advisers have been left on the bench in relation to easy solutions that can better equip them to support and sustain the financial wealth of Australians.
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