The Federal Budget was released on Tuesday 14 May 2024, and while a number of key changes were already public knowledge, Australians can now begin to understand how these changes will impact them. We view the following points as the most likely to impact the average Australian:
Taxation:
Tax cuts will apply from 1 July 2024, with the tax scale being amended to provide a net tax reduction across the board. The change will be most noticeable for individuals earning up to $135,000.
Superannuation:
From 1 July 25, a proportion of earnings on total super balances exceeding $3 million will attract an additional tax of 15%.
From 1 July 25, 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.
Cost of Living Relief:
From 1 July 2024, households will receive a rebate of $300 on electricity bills throughout the year.
The maximum rates of Commonwealth Rent Assistance will increase by a further 10% over the next five years.
The Government will cap the HELP indexation rate and backdate the interest paid over recent years.
Aged Care:
$531.4 million will be invested to release an additional 24,100 Home Care Packages in 2024–25.
Social Security:
Deeming rates used to assess income under the Income Test, social security recipients will remain at current levels until 30 June 2025.
How does this impact you?
For the everyday Australian, the good news is that this budget provides some cost-of-living relief via tax cuts, new energy rebates, a freezing of the social security deeming rates, and additional aged care funding arrangements.
However, while these short-term cost-of-living reliefs will benefit the majority of Australians, they are not long-term solutions, and will not solve the ongoing economic issues which are leading to a large number of Australian households struggling.
This budget likely will make it harder for the Reserve Bank of Australia (RBA) to bring inflation down to target. The relief measures carry risk of reversing the progress made on inflation to date – the RBA may be forced to consider further interest rate hikes with the intention of directing the surplus funds toward mortgage repayments rather than discretionary expenditures.
As a Financial Planner, our role as professionals is to assist families in planning for long-term wealth maximisation to support and sustain the financial wellbeing of Australian households. If you are interested to learn about how we as advisers can assist you in maximising your long-term wealth and helping you to meet your financial goals, our experienced team is always available and happy to answer any questions you may have.
Porsha Papas B.Com
Authorised Financial Planner 001270130
Morgans Port Macquarie
