This year’s 2023/24 Federal Budget reflected a more sombre economic environment. There are fewer bells and whistles this time around. A summary of the main points can be found here.
Superannuation – new caps.
- From 2025, earnings from super funds with balances of more than $3 million will now be taxed at 30%. This is an increase from the usual tax rate of 15% on super earnings. From 1 July 2025, if your superannuation balance reaches $3 million, earnings generated from the balance above this amount will now attract an additional tax.
- However, the ‘transfer balance cap’ (which is the amount of super that can become your ‘retirement phase’ income i.e., pensions/annuities) has increased to reflect the higher cost of living. This means the total amount of money that you can transfer to your tax-free income stream upon retirement has now increased to $1.9 million from 1 July 2023. This will allow eligible retirees leaving the workforce to assess more of their super in a tax-free mode.
- Changes have also been legislated for an increase in the super guarantee contribution from employers. This is set to increase to 11 per cent from 1 July 2023, up to 12 per cent from 1 July 2025.
Small Business
- The popular instant asset tax write-off stays, however the threshold has been re-introduced being $20,000 (per asset) from 1 July 2023 until 30 June 2024 for businesses with an aggregated annual turnover of less than $10 million.
- Small and medium businesses will be encouraged to invest in energy-efficient systems. This includes things like greener refrigeration, batteries, or solar energy. Doing this will make SMEs eligible for a 20 per cent bonus tax deduction, with expenditure capped at $100,000, This could provide up to $20,000 in deductions.
- Accountants and tax agents will now be able to file multiple Single Touch Payroll forms on their clients’ behalf from mid-2024, rather than employers having to complete the process each month.
Households
- Rent assistance increases by 15 per cent for those eligible for the Commonwealth Rent Assistance program.
- Cheaper power bills for around 5 million low-income households.
Please note that the above measures have not yet been legislated, however we anticipate they will be over the coming months.