Budget 2024-25 Summary: The Price is Right
Last night, Treasurer Jim Chalmers unveiled his third Federal Budget, emphasising immediate inflation concerns and medium-term economic growth. The budget anticipates a modest surplus of $9.3 billion for the 2023-24 fiscal year.
The Federal Government is tasked with supporting Australians amidst rising living costs while avoiding actions that could exacerbate inflation. Additionally, economic productivity needs to be enhanced to sustainably increase real incomes. This budget lays the groundwork for addressing these challenges as the nation heads towards an election within the next year.
Budget Highlights
- Surplus Projection: The budget projects an underlying cash surplus of $9.3 billion for 2023-24, a $10.4 billion improvement from the mid-year forecast, driven largely by higher commodity prices and personal income tax receipts.
- Cost of living relief: The budget introduces additional measures to help families and small businesses cope with cost of living pressures. Measures include energy bill relief, rental relief, and student debt relief. Like the Price is Right gameshow, it will all come down to the price paid at the checkout.
- Inflation Forecast: The Treasury forecasts inflation to fall below 3% per annum for 2024-25 and the subsequent years.
- Future Made in Australia: This initiative allocates over $13 billion through 2034 for tax incentives aimed at clean energy and critical minerals production.
Tax-Related Announcements
- Personal Tax Rates: Changes to personal tax rates will proceed as planned from 1 July 2024.
- Capital Gains Tax: There will be significant expansions in the application of Capital Gains Tax to non-residents.
- Intangible Payments: The measure to deny deductions for intangible-related payments after 1 July 2023 will not proceed.
- Royalty Arrangements: A new penalty regime for mischaracterised and undervalued royalty arrangements has been introduced.
- Anti-Avoidance Provisions: The start date for the expanded anti-avoidance provisions has been deferred.
- Small Business Write-Off: The Small Business Instant Asset write-off is extended for another year.
- Renewable Energy Incentives: Under the “Making Australia a Renewable Energy Superpower” initiative, the government has announced future tax incentives for critical minerals and hydrogen production.