INDIVIDUALS
TAX CUTS
The redesigned stage 3 tax cuts have been passed by Parliament and will apply from 1 July 2024. The amendments broadened the benefits of the tax cut by focusing on individuals with taxable income below $150,000. Tax cuts reduce personal income tax rates and change the thresholds.
SUPERANNUATION GUARANTEE RATE
Superannuation guarantee rate increases from 11% to 11.5%. Check the impact on any salary package arrangements.
SUPERANNUATION CAPS
From 1 July 2024, superannuation caps increase from $27,500 to $30,000 for concessional super contributions and from $110,000 to $120,000 for non-concessional contributions. The concessional super contributions cap includes superannuation guarantee paid by your employer, amounts you have salary sacrificed into super, and any amounts you have contributed personally that will be claimed as a tax deduction.
And, if your superannuation balance on 30 June 2023 was below $500,000 you might be able to access any unused concessional cap amounts from the last five years in 2023-2024 as a personal contribution. For example, if you were $8,000 under the cap in each of the last 5 years, you could contribute an additional $40,000 and take the tax deduction in this financial year at the higher personal tax rate.
CAR LIMIT DEPRECIATION
There is a limit on the cost you can use to work out the depreciation of passenger vehicles. The maximum value you can use for calculating your claim is the car limit in the year in which you first used or leased the car. From 1 July 2024 the car limit for depreciation increases to $69,674.
ELIGIBLE CAR EXPENSES
The cents per kilometre rate is 85 cents for the 2023–2024 income year. This all-inclusive rate covers claims for decline in value, registration and insurance, repairs, maintenance, and fuel costs. You can claim a maximum of 5,000 work-related kilometres per car. You need records to show how you have calculated your work-related kilometres.
LUXURY CAR TAX THRESHOLD
Luxury car tax threshold increases to $91,387 for fuel-efficient vehicles and $80,567 for all others from 1 July 2024.
ENERGY BILL RELIEF
To help with cost of living, Australian households will receive a credit of $300 on their energy bills credited as automatic quarterly instalments across the 2024-2025 year.
SELF-EDUCATION EXPENSES
The ATO has advised that for 2024 tax year, item D4 – Work related self-education expense now includes education from professional organizations, for example seminars from CPA Australia, and not just places of education like universities. You no longer claim these expenses in item D5 – Other work-related expenses.
CGT REGIME FOR FOREIGN RESIDENTS
Foreign resident capital gains withholding (FRCGW) of 12.5% applies for all property sales of $750,000 or more by foreign residents. At a minimum, that is $93,750 being withheld from the sale and paid to the ATO, unless there is an approved variation. The main residence exemption doesn't apply to foreign residents. Australian residents for tax purposes must have a clearance certificate before settlement to prove their residency for tax purposes, so no withholding occurs.
The Capital Gains Tax (CGT) regime will be amended from 1 July 2025 to broaden the type of assets subject to CGT for foreign residents and introduce a modified 365-day principal asset testing period. Also, foreign residents disposing of shares and other membership interests exceeding $20 million in value will be required notify the ATO prior to the transaction.
BUSINESS
INVESTMENT INCENTIVES FOR SMALL BUSINESS
The Government has announced an extension of the $20,000 instant asset write-off for depreciating assets until 30 June 2025 for small businesses with an aggregated turnover of less than $10 million. The write-off applies per asset, so a small business can deduct the cost of multiple assets.
While there’s also an existing proposal from the last Budget to increase the instant asset write-off threshold to $20,000 for the current 2024 year, it is important to note that legislation dealing with this measure is currently stalled in Parliament.
Assuming the measure passes Parliament by 30 June 2024, any assets need to be first used or installed ready for use, or the improvement costs incurred, between 1 July 2023 and 30 June 2024 to be written off in 2023-2024.
SUPERANNUATION GUARANTEE RATE
The superannuation guarantee rate increases from 11% to 11.5% from 1 July 2024 which means it is important to take this into account to ensure superannuation guarantee amounts are calculated correctly. The superannuation guarantee for the June 2024 quarter is also due to be paid by 28 July.
TAX CUTS
The individual tax rates and thresholds will change from 1 July 2024. This in turn will impact on the PAYG withholding rates of employers for the 2025 income year. Check you're using the correct PAYG withholding tax table and that your payroll software is using the new withholding rates from 1 July 2024.
ENERGY BILL RELIEF
$325 energy relief credit for small business commences (for small businesses that meet the relevant State or Territory definition of a ‘small customer’).
TRAINING BOOST
A bonus of 20% deduction for eligible expenditure for external training provided to your employees. The ‘skills and training boost’ is available to businesses with an aggregated annual turnover of less than $50 million. To claim the boost, the training needs to have been provided by a registered training provider and registered and paid for between 29 March 2022 and 30 June 2024. Typically, this is vocational training to learn a trade or courses that count towards a qualification rather than professional development
NOT-FOR-PROFITS (NFP)
From 1 July 2024, non-charitable not-for-profits (NFPs) with an active Australian Business Number (ABN) will be required to lodge a new annual NFP self-review return to the ATO to confirm their income tax exemption status. The first return is for the 2023–2024 tax year and NFPs will need to prepare and submit their annual self-review between July and October 2024. This applies to around 150,000 NFPs who currently self-assess as income tax exempt.