Back in May 2024, the Australian Government revealed the Federal Budget 2024-25, outlining the nation’s economic course.
Backed by a $9.3 billion surplus, Treasurer Jim Chalmers introduced several initiatives aimed at assisting Australians in managing their finances, whether it’s repaying a student loan, seeking employment, or covering rent.
Included in the budget are a $300 energy bill rebate, reduced medicine costs, and superannuation benefits for paid parental leave.
However, amidst historically high interest rates, the ongoing debate over housing affordability, and the pressures of everyday expenses, it’s essential to consider how these proposals might impact your household budget and financial prospects.
It’s worth noting that the details of these proposals may evolve as they undergo parliamentary approval.
Relieving cost of living pressures
Relief for energy bill
In a bid to alleviate the burden of energy expenses, all households are set to receive a $300 yearly rebate, distributed in quarterly installments. Additionally, eligible small businesses will benefit from a $325 annual rebate.
The proposed effective date for energy bill relief is 1 July 2024.
Facilitating Student Loan Management
A significant change is on the horizon for students managing their loans. The Government proposes to cap the indexation rate for student loans, pegged it to the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI).
This adjustment, applicable across all Higher Education Loan Program (HELP), vocational education and training (VET) Student Loans, Australian Apprenticeship Support Loans, and other student loan accounts, aims to curb the growth of student debts, ensuring they don’t outpace wage increases in the future.
With this proposal, the indexation rate is expected to drop from 7.1% to 3.2% in 2023 and further to approximately 4% in 2024.
The proposed effective date for this is 1 June 2023. (backdated)
Superannuation
The Government intends to incorporate superannuation payments into the scheme, calculated at 12% of the PPL rate, which is aligned with the national minimum wage (currently $882.75 per week). This contribution rate will mirror the new super guarantee rate scheduled for 1 July 2025.
This proposal aims to standardise parental leave as a workplace entitlement, addressing the gender gap in superannuation and mitigating the impact of parental leave on retirement savings. It complements ongoing legislative efforts to gradually extend PPL to 26 weeks by July 2026.
Contributions will be subject to the super tax rate of 15% and will count towards the concessional contributions cap. The Australian Tax Office (ATO) will handle the payments directly to the recipients’ super accounts.
The proposed effective date for this is 1 July 2025.
Social Security and aged care
Supporting Retirees: Extending Help with Living Costs
To make life easier for retirees, the Government plans to keep the current freeze on deeming rates going for another year.
This means the rates—0.25% for the lower bracket and 2.25% for the upper one—will stay the same until 30 June 2025.
Deeming rates help decide how much pension retirees get based on their investments.
By keeping these rates frozen, the Government wants to give retirees some stability, especially with rising interest rates, to ease their financial worries. It’s all part of the Government’s plan to help folks with fixed incomes during uncertain economic times.
The proposed effective date for this is 1 July 2024.
Boosting Rent Assistance
To tackle rental affordability issues, the Government plans to raise the maximum Rent Assistance rate by 10%.
This increase comes on top of the 15% hike implemented in September 2023.
Proposed Effective Date: 20 September 2024
Securing Affordable Medications
To make medicines more affordable, the Government plans to temporarily halt the indexing of co-payments for the Pharmaceutical Benefits Scheme (PBS).
Currently, in 2024, the co-payments stand at $31.60 for general patients and $7.70 for concessional patients.
Starting 1 January, 2025, the Government will implement:
- A one-year freeze on co-payment indexation for general patients.
- Up to a five-year freeze for concessional patients.
Additionally, the gradual removal of the $1 discount will be carried out without disadvantaging patients.
Proposed Effective Date: 1 January, 2025
Increasing JobSeeker Payments for Those with Limited Work Capacity
The Government plans to broaden the eligibility criteria for the higher rate of JobSeeker Payment to include single recipients who can work for up to 14 hours per week. Currently, this higher rate stands at $816.90 per fortnight.
Eligible recipients will see an increase of at least $54.90 per fortnight, which includes the Energy Supplement.
This adjustment aims to offer additional support to individuals with limited work capacity due to physical, intellectual, or psychiatric impairments who do not qualify for the Disability Support Pension.
Proposed Effective Date: 20 September, 2024
Flexibility for Carers in Work and Study
The Government aims to empower Carer Payment recipients by offering them increased flexibility to manage their work and study commitments alongside their caregiving responsibilities.
Under this initiative:
- Recipients will have the freedom to work for up to 100 hours within a four-week period.
- Time spent on travel, education, and volunteering will not be included in this count.
- A six-month suspension period will be introduced for recipients who exceed the work limit. This means they won’t need to reapply if their circumstances change.
- Temporary Cessation of Care days can be utilised for occasional instances of surpassing the limit.
These measures are designed to assist carers in effectively balancing their work, study, volunteering, and caregiving duties, particularly for those residing in regional and remote areas who may require additional travel time.
Proposed Effective Date: 20 March, 2025
Boosting Funding for Aged Care
The Government plans to allocate $2.2 billion over five years, beginning in 2023–24, to implement crucial reforms in aged care.
Additionally, the Government will allocate funding for an extra 24,100 Home Care packages in 2024–25, aimed at reducing wait times for individuals in need.
Proposed Effective Date: Starting from 2023-24
Tax- Personal
Revised Tax Cuts Starting 1 July, 2024
The Government’s updated Stage 3 tax changes, introduced on 25 January, 2024, and put into effect by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024, will kick in from 1 July, 2024.
These tax cuts aim to ease the cost of living, address bracket creep, and encourage people to work more hours. Here’s what they entail:
- The 19% tax rate will drop to 16%.
- The 32.5% tax rate will decrease to 30%.
- The income level where the 37% rate applies will rise from $120,000 to $135,000.
- The income level where the 45% tax rate applies will increase from $180,000 to $190,000.
This change is projected to reduce government revenue by $1.3 billion over the next five years, starting from 2023–24.
Boosting Medicare Levy Low-Income Thresholds
Starting from 1 July 2023, the Medicare levy low-income thresholds have been raised. This adjustment aims to ensure that over a million low-income taxpayers remain exempt from the Medicare levy or pay a reduced rate.
Here are the new thresholds for singles, families, seniors, and pensioners:
- The threshold for singles has gone up from $24,276 to $26,000.
- The family threshold has increased from $40,939 to $43,846.
- The threshold for single seniors and pensioners has been raised from $38,365 to $41,089.
- The family threshold for seniors and pensioners has been lifted from $53,406 to $57,198.
- Family income thresholds will now rise by $4,027 for each dependent child, up from $3,760.
These adjustments factor in recent CPI changes and are expected to decrease government revenue by $640 million over the four years until 2026–27.
Tax- Small Business
Extending the $20,000 Instant Asset Write-Off for Small Businesses
To help small businesses save money and encourage them to invest in their businesses, the Government wants to keep the instant asset write-off going for another year until 30 June 2025.
This means small businesses with yearly earnings under $10 million can deduct the full cost of certain assets worth less than $20,000 right away.
Proposed Effective Date: 1 July, 2024
Ensuring Safety for Women
The Government has committed $925.2 million over five years to the Leaving Violence Program, aimed at aiding victim-survivors in departing from violent intimate partner relationships.
Starting 1 July 2025, victims of domestic violence will have access to up to $5,000 annually in financial assistance, adjusted to match inflation.
Additionally, the Government has earmarked $1 billion for crisis housing to support women and children fleeing domestic violence situations.
Proposed Effective Date: 1 July, 2023
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