2024 Federal Budget proposals - what they mean for you.
On Tuesday 14 May, Treasurer Jim Chalmers delivered the government’s Federal Budget for the 2024–25 financial year.
One of the government’s main priorities for this year’s Budget was to provide cost-of-living relief, including expanded tax cuts, energy bill rebates and student debt assistance, without adding to inflation.
It’s important to note that some of these announcements are currently just proposals. They’ll need to be passed through parliament before becoming law. However, other announcements came out before the Budget, and some have already been legislated.
If you’re really keen, you can download your own copy of the budget papers here (it’s well over 700 pages!). The more easily digested Budget overview document is here.
What does the budget mean for Individuals and families?
Medicare Levy Low-income thresholds increased
The income thresholds for both the Private Health Insurance (PHI) rebate and Medicare Levy Surcharge (MLS) are increasing from 1 July 2024.When you lodge your tax return, the tax office calculates your income for surcharge purposes and to determine your PHI rebate entitlement. Once you work out your income for MLS purposes, you can use the threshold tables to work out which rates apply to you.
Household energy rebate
The government will provide a $300 rebate on 2024-25 energy bills to all Australian households for cost-of living relief. All households will receive a $300 a year rebate in quarterly instalments on their energy bills. Eligible small businesses will receive $325 a year.Welfare
Increased Commonwealth Rent assistance support
The Government will increase the maximum Rent Assistance rate by 10% to help address rental affordability challenges. You can find out more about Rent Assistance here.Deeming rate to stay the same for the next 12 months
Individuals may qualify for a larger income support payment. More details here.
Extension and expansion of tax measures
Confirms implementation of the Revised Stage 3 tax cuts from 1 July 2024 (see our recent LinkedIn post for details).
HECs and student loan repayments
Proposed effective date: 1 June 2023 (backdated)The Government will cap the indexation rate for student loans at the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI).
This will apply to all Higher Education Loan Program (HELP), vocational education and training (VET) Student Loans, Australian Apprenticeship Support Loans and other student loan accounts.
It means the indexation rate will be reduced from 7.1% to 3.2% in 2023 and from 4.7% to around 4% in 2024, and the ATO will automatically apply an indexation credit to reduce the outstanding loan.
You can estimate the amount of credit you’ll receive using this handy credit calculator here.
For more details, check my LinkedIn post here.
But wait! There’s more…
Improvements to the system not mentioned in the Budget
Super guarantee increasing to 12% from 1 July 2024
Concessional contribution caps (C caps) increase to $ 30,000 from 1 July 2024
Transfer Balance Cap increase to $ 1.9 m
Superannuation
Super guarantee to be paid on government – funded paid parental leave scheme superannuation at 12% of the PPL rate, which is set at the national minimum wage (currently $882.75 per week). The contribution rate will be the same as the new super guarantee rate, come 1 July 2025.
Sustainability
While the Federal Budget has a focus on clean energy, it doesn’t address conservation, gas regulation, electrification, and the use of carbon credits (ACCU’s).
Mooted Investments:
65 billion in renewables by 2030 through the Capacity Investment Scheme. Key funding includes:
$1 billion for Solar SunShot
$466 million for PsiQuantum (quantum computing on a commercial scale)
$500 million for the Battery Breakthrough Initiative (battery and solar panel supply chains)
$3.2 billion for the Australian Renewable Energy Agency (to improve competition and supply of renewable energy in Australia)
$6.7 billion Hydrogen Production Tax Incentive (to promote accelerate investment in renewable hydrogen)
$1.3 billion for Hydrogen Headstart (revenue support for large -scale renewable hydrogen projects).
That’s a whole lot of major new investment proposals to take in!
Where does nature fit into the budget?
$40.9m has been allocated over two years to continue implementing the Nature Positive Plan, and $50m in 2024-25 for the Great Barrier Reef Marine Park Authority to engage tourism operators to conduct reef monitoring, protection and other stewardship activities.
Aside from this funding, the Australian Conservation Foundation considers budget allocations toward nature are sparse and completely inadequate.
Future Made In Australia Act
The Future Made in Australia Act (FMIA), worth over $21 billion, is in response to the US Inflation Reduction Act.
Critical minerals boost
Canberra will invest $8.8 billion over a decade, and introduce a $7 billion Critical Minerals Production Tax Incentive starting in 2027 (this is a tax offset).Other allocations include:
$17.3 million will be used to expand Australia's sustainable finance guidelines, and
create a labelling system for sustainable products (Hooray!!)
Tim Buckley, Founder & Director, Climate Energy Finance
Sustainability experts’ opinions:
Tim Buckley, Founder and Director at Climate Energy Finance, and other experts in the Sustainability field, have opinions on the 2024 Budget.
The Budget is seen as a significant investment opportunity that will attract both local and international capital, with a focus on private investments in electrification, however there needs to be a larger investment in ACCUs and the Nature Repair Market.
See Tim Buckley’s most informative and detailed post here.
Experts are also calling for:
prompt action on the Critical Minerals Production Tax Incentive, and
question the continued lack of gas taxation until 2050.
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