This is a pre-election budget for the people with everyone getting a little something to ease cost of living pressures.
Like the Price is Right gameshow, it will all come down to the price paid at the checkout. If the consumer price index (CPI) returns to target by the end of 2024 off the back of the Budget initiatives as the Government anticipates, the Reserve Bank of Australia (RBA) may be inclined to reduce interest rates.
However, at this stage, the RBA is not expecting inflation to return to the target range of 2-3% until the second half of 2025, and to the midpoint in 2026.
The Treasurer is promising that inflation will decline by 0.75% as a direct result of this Budget which includes energy relief for all households, a boost to Commonwealth Rent Assistance, and the freezing of the maximum co-payment on the Pharmaceutical Benefits Scheme.
Surplus?
The 2023-24 surplus has increased to $9.3 billion but is expected to decline to a deficit of $28.3 billion in 2024-25, driven primarily by the Stage 3 tax cuts.
For business, the Government is picking winners through targeted public investment with its Future Made in Australia Framework that they are betting will pave the way for private investment in net zero transformation and the strengthening of Australia’s domestic economic resilience.
What’s in it for small-medium businesses?
For small and medium business, there is a little but not a lot – an extension of the $20k instant asset write-off until 30 June 2025 and a $325 rebate to eligible businesses towards 2024-25 energy bills.
For foreign residents, the capital gains tax (CGT) regime will be amended to broaden the type of assets subject to CGT and introduce a modified 365-day principal asset testing period.
Those with large superannuation balances will be disappointed that the 30% tax on super earnings on balances above $3 million remains in place, this is set to commence from 1 July 2025.
What’s in it for individuals?
- Previously announced Stage 3 tax cuts
- $300 energy bill relief for all Australian households
- Student HELP debts will be cut by changing the way indexation is calculated
- Increase to the Commonwealth rent assistance maximum rates by 10% from 20 September 2024
- The Medicare levy low-income thresholds will be increased for singles, families, and seniors and pensioners from 1 July 2023
- One year freeze on the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment for Medicare card holders
- CGT regime for foreign residents to be expanded
For further information please contact us on 1300 878 876 or send us an email to contact@upturn.com.au
