In broad terms there is to be a surplus of $4.2bn however an underlying cash deficit of $13.9bn. Australia’s growth is estimated to slow to 3.25% in 22/23 to 1.5% in 23/24, with a recovery to 2.25% in 24/25
Inflation is expected to fall to 3.25% in the 23/24 year and further to between 2-3% in the 24/25 year
Here are some highlights from the budget.
- Stage 3 Tax Cuts – there were no tax rate changes for personal tax. The stage 3 tax cuts are still to be implemented from 1st July 2024 with the 32.5% tax rate being reduced to 30% for incomes between $45k to $200k, with the 37% tax bracket being totally removed
- Medicare Levy (ML) Thresholds – the ML have been increased across all categories
- Instant Asset Write-off Threshold – this is set at $20k (up from $1k). This removes the Covid measure of unlimited amount for an asset write off being fully deductible. Assets greater than $20k can be deducted at 15% in the first year and 30% in subsequent years.
- Small business Energy Incentive – businesses will be able to claim an additional 20% deduction on spending that supports electrification and more efficient use of energy.
- Amall business lodgement penalty amnesty – Small businesses with aggregate turnover of less than $10m will be given an amnesty which will remit failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due between 1 December 2019 to 29 February 2022.
- PAYG and GST instalment uplift factor – The GDP uplift factor will be set at 6% (rather than 12% as would otherwise apply under the statutory formula) for instalments with respect to the 2023-24 income year that fall due after the measure is legislated.
Business Taxation Measures
- Build-to-rent properties – For eligible new build-to-rent projects from 9 May 2023, the rate for the capital works tax deduction (depreciation) to 4% per year
- FBT rules for electric vehicles – The Government confirmed that plug-in hybrid electric cars will not be eligible for the FBT exemption for electric cars from 1 April 2025
- Super account balances above $3m – despite pushback from industry, the Government has confirmed its intention to apply an extra 15% tax on total superannuation balances above $3 million from 1 July 2025, including in relation to defined benefit schemes. No further details were released so it is expected the proposed changes will operate as previously announced (ie, unrealised gains will be subject to the extra 15% tax).
- Payday super – employers will be required to pay their employees’ super guarantee at the same time as their salary and wages from 1 July 2026
- Pension drawdowns: no reduction in minimum – the Budget did not announce a further extension to 2023-24 of the temporary 50% reduction in the minimum annual payment amounts for superannuation pensions and annuities.
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