Federal budget 2024 for families and individuals - including retirement saving

This budget contains no new tax measures for individuals.  However, with the previously announced (albeit watered down) Stage 3 tax cuts most individuals will see a reduction in their tax liability for next year.  This will be a welcome relief given many have been pushed into higher tax brackets without any growth in real wages.

The key focus of the budget for families and individuals continues to be providing cost-of-living relief without adding to inflationary pressures.

As previously announced and already legislated, the revised Stage 3 personal income tax changes will come into effect from 1 July 2024 providing tax cuts for all Australians.

Here we highlight some of the key measures affecting Australians, which include:

FAMILIES & INDIVIDUALS

RETIREMENT SAVING

If you have any questions as to how this budget impacts you and your family, please contact your local Bentleys advisor. We are here to help you get where you want to be.

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FAMILIES & INDIVIDUALS


There are no new income tax cuts.  The budget highlights the revised Stage 3 tax cuts that were already legislated in March 2024 and will come into effect from 1 July 2024. The Albanese government announced the overhaul of these tax cuts back in January 2024.  The amendments to the Stage 3 tax cuts redistributed the benefits to ensure that all Australians benefited from a tax cut, particularly low- and middle-income taxpayers, and reduced the benefit for higher income earners.

From 1 July 2024, an individual with taxable income of $40,000 will receive a tax cut of $654. While an individual with taxable income of $100,000 will receive a tax cut of $2,179. Those on the top marginal rate will receive a tax cut of up to $4,529 which is approximately half of what was proposed under the previous iteration of these tax cuts introduced by the previous government.

The tax brackets and rates for the current financial year and those that will apply from 1 July 2024 are shown below.

TAX RATE2023-24 2024-25
0% $0 – $18,200 $0 – $18,200 
16% $18,201 – $45,000 
19% $18,201 – $45,000 
30% $45,001 – $135,000 
32.5% $45,001 – $120,000 
37% $120,001 – $180,000 $135,001 – $190,000 
45% >$180,000 >$190,000 

The government is providing energy bill relief for all households and approximately one million small businesses.  From 1 July 2024, households will receive a total rebate of $300 applied to their electricity bills.  Eligible small businesses will receive a $325 rebate on their electricity bills throughout the year in quarterly instalments.


Each year on 1 June indexation is applied to HELP and other student support loans. Previously this indexation was calculated using the Consumer Price Index (CPI). In response to the 7.1% CPI rate for 2023, the Government has announced that the indexation will now be the lower of CPI or the Wage Price Index (WPI) and that this change will apply retrospectively to the indexation added on 1 June 2023. The change will reduce the indexation rate previously applied from 7.1% to 3.2%, representing a saving of $1,190 on the average HELP debt of $26,500.

The government will also introduce a weekly placement payment for students studying to be a teacher, nurse, midwife or social worker to assist with cost-of-living pressures while undertaking mandatory placements.  The Government will also provide 20,000 fee-free TAFE places.


The government is increasing support for those on government support payments, which includes:

  1. Boosting Commonwealth Rent Assistance for nearly 1 million households, increasing payments by a further 10 percent
  2. Freezing social security deeming rates for financial investments at their current levels until 30 June 2025
  3. Extending eligibility for the existing higher rate of JobSeeker Payment to single recipients with an assessed partial capacity to work between zero and 14 hours per week

RETIREMENT SAVING


Starting from 1 July 2026, employers must pay superannuation at the same time they pay salary and wages to employees. This will give employees greater visibility and control over their superannuation entitlements, and assist the ATO in recovering unpaid superannuation.

As announced earlier this year, the government will pay superannuation on Commonwealth government-funded Paid Parental Leave (PPL) on or after 1 July 2025. Eligible parents will receive an additional payment based on the Superannuation Guarantee (12% of their PPL payments), as a contribution to their superannuation fund. This is a welcome measure, that will assist 180,000 families a year, and go towards reducing the gender super gap.

To achieve the above, the proposed integrity measure will treat off-market share buy-backs undertaken by listed companies on the same tax basis as on-market share buy-backs.


As previously announced, the government intends to reduce tax concessions to individuals with a Total Superannuation Balance (TSB) exceeding $3 million, from 1 July 2025. The budget itself has not added any further information to this measure, however we are acutely aware that this change is still planned to go ahead, which is evidenced by the fact that Economic Legislative Committee’s report issued on 10 May 2024 declined to take on board any industry feedback.

As a refresher, individuals with a TSB in excess of $3 million will be subject to an additional tax of 15% on ‘Earnings’. ‘Earnings’ is calculated with reference to the difference in TSB at the start and end of the financial year, adjusted for withdrawals and contributions. Negative ‘Earnings’ can be carried forward to offset against future year ‘Earnings’. Individuals with balances less than $3 million will be unaffected. There are also no provisions for this $3 million threshold to be indexed over time.

Lastly, to reiterate, the proposed tax is not law yet and could change before being finalised.


The government has announced that it will continue to freeze deeming rates on social security for a further 12 months. The lower deeming rate will remain at 0.25% and the upper rate will remain at 2.25% until 30 June 2025. This will benefit around 876,000 income support recipients, including around 450,000 age pensioners.


Although not mentioned in this budget, there are a number of contribution rates and caps set to rise from 1 July 2024.

  • The Super Guarantee rate will rise from 11% to 11.5% from 1 July 2024. This is in line with legislation previously announced and is the second last proposed increase
  • The standard concessional contribution cap, which includes employer, salary sacrifice and personal contributions for which an individual can claim a personal tax deduction, will increase from $27,500 to $30,000 from 1 July 2024
  • The non-concessional contribution (NCC) cap will increase from $110,000 to $120,000 from 1 July 2024. This also means that the maximum non-concessional cap, available under the bring-forward provisions, will increase from $330,000 to $360,000

The government has announced that it will commit $187 million over four years from 1 July 2024 to the ATO to strengthen its ability to detect, prevent and mitigate fraud against the tax and superannuation systems.


Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.

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