We wanted to share some important updates, coming out of the recently announced 2024 Federal Budget that may impact you, our valued client.
In short, Tuesday’s Budget aims to make life easier by tackling the rising costs we face. This includes things like tax breaks, help with energy bills, better healthcare through Medicare, cheaper medications, and more support for aged care.
These changes could affect the advice we give to both those who are thinking about retiring soon and those who are already retired, especially those with a loved one needing aged care. However, as always, it’s worth remembering that these plans aren’t set in stone yet and might undergo some changes before they’re implemented.
Personal Taxation
Starting from July 1, 2024, there will be significant changes to personal income tax rates and thresholds. These changes aim to provide tax savings for all taxpayers. Here’s what you need to know:
- The 19% tax rate will be reduced to 16%.
- The 32.5% tax rate will be reduced to 30%.
- The thresholds for the 37% and 45% tax rates will be increased.
The table below compares the current and legislated Taxable Income thresholds and Tax Rates:
| Financial Year 2023-24 | Financial Year 2024-25 | ||
| Taxable Income | Tax Rate | Taxable Income | Tax Rate |
| $0 to $18,200 | Nil | $0 to $18,200 | Nil |
| $18,201 -$45,000 | 19% | $18,201 -$45,000 | 16% |
| $45,001 – $120,000 | 32.50% | $45,001 – $135,000 | 30% |
| $120,001 – $180,000 | 37% | $135,001 – $190,000 | 37% |
| $180,001 and over | 45% | $190,001 and over | 45% |
So what does this mean? Below highlights the $ effect these changes have at various income levels:
| Income | Personal Income tax in 2023-24 | Personal Income tax in 2024-25 | Difference in Tax |
| $50,000 | $6,717 | $5,788 | $929 |
| $100,000 | $22,967 | $20,788 | $2,179 |
| $150,000 | $40,567 | $36,838 | $3,729 |
| $200,0000 | $60,667 | $56,138 | $4,529 |
If you qualify for the Low Income Tax Offset (LITO) or the Seniors and Pensioners Tax Offset (SAPTO), the new tax rates and thresholds impact you. Basically, these changes mean you get to keep more of your money before paying taxes. Take a look at the table below to see how it could affect you.
| Effective tax-free threshold | 2023-24 | 2024-25 |
| Client not eligible for LITO/SAPTO | $18,200 | $18,200 |
| Client eligible for LITO | $21,885 | $22,575 |
| Client eligible for LITO and SAPTO (single) | $33,089 | $34,656 |
| Client eligible for LITO and SAPTO (couple each1) | $29,784 | $31,006 |
Our take
Lowering the lowest tax rate from 19% to 16% will have a positive effect on the Seniors and Pensioner tax offset (SAPTO) income thresholds. It’ll also bump up the effective tax-free thresholds, meaning you can earn more money before you have to start paying taxes.
Medicare Levy Low-Income Thresholds
The Government has also increased the Medicare levy low-income thresholds for singles, families, and seniors and pensioners. This change was approved & kicked in from July 1, 2023, so it’s retroactive and aims to ensure that low-income individuals continue to be exempt from paying the Medicare levy or pay a reduced levy rate.
| 2022-23 | 2023-24 | |
| Single | $24,276 | $26,000 |
| Single eligible for SAPTO | $38,365 | $41,089 |
| Family | $40,939 | $43,846 |
| Couple eligible for SAPTO | $53,406 | $57,198 |
| Additional threshold for each dependent child | $3,760 | $4,027 |
Business Taxation
Instant asset write-off
The $20,000 instant asset write-off for small businesses has been extended until June 30, 2025. This allows eligible small businesses to immediately deduct the full cost of eligible assets costing less than $20,000.
Energy Bill Relief for Small Businesses
To help cover electricity bills, the government will provide energy rebates to approximately one million small businesses on small customer electricity plans, with additional relief of $325 in 2024-25.
Social Security
The freeze on social security deeming rates has been extended until June 30, 2025. This is aimed at supporting Age Pensioners and other income support recipients during these challenging times. Specifically:
| Threshold | Lower deeming rate | Upper deeming rate | |
| Single | $60,400 | 0.25% | 2.25% |
| Couple | $100,200 | 0.25% | 2.25% |
Our take
Great news if your receiving income support from Centrelink and the Department of Veterans Affairs, as well as those holding concession cards like the Commonwealth Seniors Health Card: the freeze on deeming rates is extended for another year.
If this freeze had ended on June 30, 2024, many would have seen their payments drop significantly. For instance, a single Age Pensioner who owns their home and has $300,000 in financial investments could have lost $5,625 per year from their Age Pension if deeming rates went up to 4% and 6%.
The extension gives some relief for now, but it’s something to keep an eye on. Will deeming rates shoot up come July 1, 2025? We’ll have to wait and see.
Increased Flexibility for Carer Payment Recipients
Starting from March 20, 2025, there’s good news for carers who want more flexibility in balancing their caregiving duties with other commitments. Currently, if a carer spends more than 25 hours per week (including travel and meal breaks) away from caregiving for training, education, work, or voluntary activities, their eligibility for Carer Payment is reviewed.
But things are changing. Instead of a weekly limit, carers will now have a total of 100 hours over four weeks for these activities. And here’s the kicker: this limit won’t apply to studying, volunteering, or factoring in travel time. It’ll only apply to paid work.
If a Carer Payment recipient exceeds this limit or uses up their allowed temporary breaks from caregiving, their payments won’t be cancelled right away. Instead, they might be suspended for up to six months. Plus, they can now take single days off from caregiving if they exceed the limit, rather than having to take a minimum of seven days off as before.
Our take
The start date for the new Aged Care Act was initially set for July 1, 2024, but the Government decided to push it back. Now, they’ve confirmed a new start date of July 1, 2025. However, we’re still waiting on specifics about how fees and charges will operate for aged care residents and home care recipients under this new act.
Services Australia
Additional funding will be provided to improve the delivery of services by Services Australia, including frontline staff support, enhanced safety measures, and cybersecurity improvements.
Over the next three years starting from 2023-24, the Government will put $1.8 billion towards hiring extra staff. It’s expected that around 7,500 new staff members will be brought on board to improve service quality, handle emergencies, and boost cybersecurity.
Our take
We know all too well the difficulties of dealing with Services Australia and the Department of Veteran Affairs lately. Wait times, paperwork problems and simply talking to a human have been real headaches. Any funding boost here is a plus – its ultimately the execution we are most concerned about.
Improving Aged Care Support
The Government has decided to push back the start date of the new Aged Care Act to July 1, 2025. They’ve also unveiled plans to invest in various aged care reforms over five years starting from 2023–24, in line with recommendations from the Royal Commission into Aged Care Quality and Safety.
Here’s what they’re proposing:
- Releasing an additional 24,100 home care packages in 2024–25.
- Making changes to enhance the regulatory capabilities of the Aged Care Quality and Safety Commission and introducing a new regulatory framework for aged care starting July 1, 2025.
- Allocating more funds to attract and retain aged care workers and improve outcomes for those receiving aged care services through existing workforce programs.
- Investing in reducing wait times for the My Aged Care Contact Centre, given the growing demand and complexity of services.
- Extending the Home Care Workforce Support Program for another three years to help boost the care and support workforce in areas with limited resources.
Our take
The start date for the new Aged Care Act was set for July 1, 2024, but the Government decided to postpone it. Now, they’ve confirmed that it will begin on July 1, 2025. However, they haven’t given any specifics yet on how fees and charges for aged care residents and home care recipients will operate under this new act.
Securing Cheaper Medicines
To reduce the cost of medicines, there will be a freeze on the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment for up to five years.
These updates aim to provide support and relief for individuals, families, small businesses, and seniors.
If you have any questions or need further assistance, please don’t hesitate to reach out or book a virtual coffee.
Forrest Private Wealth
Forrest Private Wealth is a Perth based financial planning, retirement planning, and wealth management firm, with a focus on navigating super and divorce. Book a free 15-minute virtual coffee with our Perth team of financial planners to discuss your circumstances. We’ll guide you through the process of managing your super during divorce proceedings, ensuring you have the retirement you want through personalized financial guidance. Let’s make your financial life better together.