Federal Budget 2024-25: Overview
On Tuesday night, Treasurer Jim Chalmers handed down the 2024-2025 Budget.
The Treasurer promises that inflation will decline by 0.75% due to the 2024-25 Federal Budget initiatives, including energy relief for all households, a boost to Commonwealth Rent Assistance, and the freezing of the maximum co-payment on the Pharmaceutical Benefits Scheme.
This is a pre-election budget for the people, with everyone getting a little something to ease the 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.
The 2023-24 surplus has increased to $9.3bn but is expected to decline to a deficit of $28.3bn 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.
For small and medium businesses, 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.
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.
KEY BUDGET MEASURES
- Previously announced Stage 3 tax cuts
- $300 energy bill relief for all Australian households and $325 for eligible small businesses – applied as an automatic quarterly credit.
- Student HELP debts will be cut by changing the way indexation is calculated. From 1 June 2023, it will be the lower of the CPI or the Wage Price Index (WPI), reducing the debt accumulated by more than 3 million Australians when the CPI spiked to 7.1%.
- Increase to the Commonwealth rent assistance maximum rates by 10% from 20 September 2024.
- One-year freeze on the maximum Pharmaceutical Benefits Scheme (PBS) patient co-payment for Medicare cardholders and a five-year freeze for pensioners and other concession cardholders.
Download our comprehensive Federal Budget Overview.
To discuss how this Federal Budget may impact your circumstances, contact your PPT advisor at (03) 5331 3711 or ppt@ppt.com.au.
