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The Budget Buzz…

The Treasurer has committed to reducing inflation by 0.75% through the 2024-25 Federal Budget initiatives, which include providing energy relief for all households, increasing Commonwealth Rent Assistance, and freezing the maximum co-payment under the Pharmaceutical Benefits Scheme.

This budget, presented before the election, aims to provide some relief to everyone in terms of cost of living. Much like the game show “The Price is Right,” the outcome will depend on the prices consumers see at checkout. If the Consumer Price Index (CPI) aligns with the government’s expectations and returns to target by the end of 2024 due to these budget measures, the Reserve Bank of Australia (RBA) might lower interest rates. However, the RBA currently does not foresee inflation falling back to the target range of 2-3% until the latter half of 2025, reaching the midpoint in 2026.

The 2023-24 surplus has grown to $9.3 billion but is projected to shift to a $28.3 billion deficit in 2024-25, mainly due to the Stage 3 tax cuts.

For businesses, the government is making strategic public investments through the Future Made in Australia Framework, which they hope will encourage private investment in net-zero initiatives and bolster Australia’s economic resilience.

For small and medium-sized businesses, there are some benefits, though limited. These include an extension of the $20,000 instant asset write-off until June 30, 2025, and a $325 rebate for eligible businesses towards their 2024-25 energy bills.

Key measures include:

  • Previously announced Stage 3 tax cuts.
  • A $300 energy bill relief for all Australian households and a $325 rebate for eligible small businesses, automatically applied quarterly.
  • Adjustments to Student HELP debts by changing the indexation calculation method to use the lower of the CPI or Wage Price Index (WPI) from June 1, 2023, benefiting over 3 million Australians when the CPI spiked to 7.1%.
  • A 10% increase in Commonwealth rent assistance maximum rates from September 20, 2024.
  • A one-year freeze on the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment for Medicare cardholders and a five-year freeze for pensioners and other concession cardholders.

Those with large superannuation balances will find the 30% tax on earnings above $3 million still in place, set to start from July 1, 2025.

For businesses, some key points of interest include:

  • The instant asset write-off threshold will remain at $20,000 for small businesses until June 30, 2025.
  • Removal of the minimum length requirements for content and the 20% cap for total qualifying production expenditure for the producer tax offset.
  • The ATO will have discretion to not use a taxpayer’s refund to offset old tax debts on hold.
  • Limiting indexation of Higher Education Loan Program (and other student loans) debts to the lower of the CPI or Wage Price Index, effective June 1, 2023.
  • A $300 rebate for every Australian household on their power bills and a $325 rebate for eligible small businesses, continuing from previous agreements with states and territories.
  • Superannuation contributions will be included on top of Commonwealth-funded paid parental leave starting from July next year.

TGG Federal Budget Timeline of Initiatives FY25

R&D Incentives & Grants Update

There were a number of things to review from an R&D Tax Incentives and Grants front.

Click here for the R&D Incentives & Grants Federal Budget Summary

If you would like to know how more on how this budget will impact you or your business, please contact your Customer Relationship Manager.

As always, the details are crucial, so please reach out if you need assistance.