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The Australian Federal Budget announced on May 14, 2024, has changes that will impact various segments of society differently, but it certainly will impact each of us. We thought it worthwhile giving you a brief breakdown of some of the key winners and losers from the budget as we viewed it.
The below is designed to be a snapshot, so if you’re wondering how any of the below changes might impact you this coming tax year, reach out to the Attune team for a chat.
Low and Middle-Income Earners: The budget provides considerable relief to low and middle-income earners through Stage 3 tax cuts. These cuts reduce the tax rates for incomes up to $135,000, increasing take-home pay from July 2024.
Some changes to the previously proposed stage 3 tax cuts means that the outcome is a reduction in the 19 per cent tax rate to 16 per cent, a reduction in the 32.5 per cent tax rate to 30 per cent, and a raising of the threshold at which the 37 per cent tax rate applies.
Households: Significant measures have been introduced to ease the cost of living. Over 10 million households will benefit from a $300 rebate on electricity bills. Additionally, there's a freeze on Pharmaceutical Benefits Scheme (PBS) co-payments and increased support for renters, with the Commonwealth Rent Assistance maximum rates increasing by 10%.
Healthcare: The budget allocates $5.7 billion to strengthen Medicare, including higher bulk billing incentives and funding for new Medicare Urgent Care Clinics. This will particularly benefit pensioners, children under 16, and concession card holders.
Students and Recent Graduates: The government will cut $3 billion in student debt, impacting over three million Australians. The annual indexation of HECS-HELP debts will now be limited to the lower of the Consumer Price Index (CPI) or Wage Price Index (WPI), easing financial pressure on graduates.
Veterans: Veterans will see improved support with $64.1 million to address the backlog of claims and $250 million to upgrade veteran services' IT systems. An additional $4.8 billion is allocated for future compensation and support payments.
Small Businesses: Small businesses will benefit from a $290 million support package, including an instant asset write-off of $20,000 for eligible assets, helping to boost cash flow and investment in new equipment.
Environmental Initiatives: Tradies specialising in eco-friendly upgrades will see increased demand, thanks to the $1.3 billion Household Energy Upgrades Fund. This initiative offers low-interest loans for households to install energy-efficient measures like solar panels and double-glazed windows.
High-Income Earners: The budget does not favour high-income earners as much as first suggested in the Stage 3 tax-cuts announced earlier this year, but there are other areas high-income earners will be impacted. Those with superannuation balances over $3 million will lose the ability to make concessional contributions at a reduced tax rate. This move aims to ensure that tax benefits are more evenly distributed.
Vapers and Smokers: Smokers face a 5% annual increase in tobacco taxes over the next three years. Recreational vaping is also being heavily regulated, with new national campaigns highlighting the dangers of smoking and vaping.
Alcohol Consumers: Drinkers will see higher prices for alcohol due to increased taxes on beer and spirits, impacting those who frequently purchase these products.
To conclude, the 2024 Federal Budget is a bit of a mixed bag, offering significant support to lower and middle-income Australians, students, small businesses, and those in need of healthcare improvements, while imposing more stringent measures on higher-income earners, smokers, and alcohol consumers.
If you’d like to discuss how any of the above changes will impact you this year, reach out to the Attune team on 1300 866 113 or contact us via email.
With the flurry of public holidays we see in the first few months of the year here in Australia, we thought it would be of interest to delve more closely into the cost of public holidays from multiple perspectives.
It’s important to note here: we’re certainly not arguing against public holidays – especially when they give us a chance to pause and reflect on important times or people in our collective history, but, while they’re a welcome break for many, they come with financial implications that impact stakeholders in different ways.
From the viewpoint of business owners managing operational costs to employees benefiting from penalty rates, and even the broader impact on the Australian economy, the cost of public holidays is a multifaceted issue we think is worth exploring.
For business owners, public holidays can present a double-edged sword. While they provide an opportunity for employees to rest and recharge, they also come with increased operational costs. Businesses that remain open on public holidays often have to pay penalty rates to employees who work during these times, which can significantly inflate wage expenses.
Moreover, for industries like retail and hospitality, where public holidays often coincide with increased consumer spending, the pressure to remain open and capitalise on potential sales can be intense. However, staying open means incurring additional expenses such as overtime pay, increased staffing levels, and higher utility costs.
To be clear, all hours worked on a public holiday are typically “double time and a half” which is calculated at 250% of the normal hourly wage. For salaried staff, employees would generally be offered time in lieu for time worked on a public holiday which may have knock-on effects for future productivity.
As you can tell from a financial standpoint, the cost of public holidays can eat into profit margins, particularly for small businesses operating on tight budgets. Balancing the need to provide employees with fair compensation for working on public holidays while ensuring the business remains financially viable can be a challenging task.
On the flip side, public holidays offer employees the opportunity to earn extra income through penalty rates. For many workers, especially those in industries like hospitality and retail, penalty rates can significantly boost their earnings, making working on public holidays a lucrative option.
From a tax perspective, it's essential for employees to understand the treatment of penalty rates. In Australia, penalty rates are considered part of an employee's ordinary income and are subject to the same tax rates. However, depending on the individual's total income and tax bracket, penalty rates may push them into a higher tax bracket, resulting in a higher tax liability.
Additionally, for employees with families, public holidays can pose logistical challenges, particularly if they have to arrange childcare or take time off to care for children who are out of school. While some employers may offer flexibility or additional leave entitlements to accommodate these situations, for others, taking time off on public holidays may come at the expense of annual leave or unpaid leave.
Beyond the microeconomic impact on individual businesses and employees, the cost of public holidays also has broader implications for the Australian economy. While public holidays stimulate consumer spending in certain sectors, they can also disrupt productivity and economic activity in others.
Industries that rely on continuous operations, such as manufacturing and healthcare, may experience disruptions and increased costs associated with maintaining essential services during public holidays. Moreover, the cumulative effect of multiple public holidays throughout the year can lead to a loss of productivity and output for the economy as a whole. This can be especially true for businesses ‘running a tight ship’ when there are multiple public holidays that fall within a single trading quarter or even month.
If you’re a business owner or employee finding challenges with your public holiday operations or working hours, we get it. Although for the most part they’re an important part of the Australian identity, they can create difficult situations. So, of you’d like to discuss your strategy for approaching public holidays and ensure you’re making the most of what they can offer, get in touch with the Attune team today.
Call us on 1300 866 113 or send us an email to start the conversation. One piece of tailored advice could change your outcome for the better.
Are you maximising your superannuation contributions? With the advent of the unused concessional contributions cap carry forward measure, Australians now possess a golden opportunity to fortify their retirement nest eggs.
So without further ado, let’s dive into to what it all means for you…
The concessional contributions cap signifies the maximum before-tax contributions allowable to your super each year without attracting additional taxes. As of 1 July 2021, this cap sits at $27,500, a step up from the previous financial years' $25,000. This figure escalates in alignment with the Average Weekly Ordinary Time Earnings (AWOTE), and is current for the 2022-23 tax year.
From 1 July 2018, a significant shift was initiated to address the quandaries faced by individuals with fluctuating incomes and to maximise the utility of unused caps for those with lower super balances. This alteration permits individuals with a Total Superannuation Balance (TSB) below $500,000 as of 30th June of the preceding financial year to carry forward any untapped concessional contributions cap from previous years.
Meeting the eligibility criteria empowers you to transport unused concessional cap amounts from up to five preceding financial years, commencing from 2018–19. These surplus amounts can be deployed to augment your contribution caps in forthcoming years, offering a valuable avenue to grow your retirement savings.
Unused cap amounts are automatically deployed upon surpassing the cap in any given year. Nonetheless, it's imperative to bear in mind that these residual cap amounts expire after five years. For instance, any surplus cap amount from 2018–19 would lapse by the conclusion of 2023–24.
Consider James, who has been falling short of his concessional contributions cap over several years, resulting in accrued untapped caps. In the fiscal year 2021-22, James finds himself in a position to make additional contributions. Here's how it unfolds for him:
• In 2020–21, James's TSB surpassed $500,000, rendering him unable to carry forward untapped cap amounts.
• However, in 2021–22, James's TSB dipped below $500,000, rendering him eligible to leverage the untapped cap amounts from preceding years.
By harnessing the carry forward measure, James can inject up to $94,500 into his super in the fiscal year 2021–22, substantially maximising his super contributions and fortifying his retirement.
While capitalising on the benefits of the unused concessional cap carry forward measure is undeniably advantageous, it's imperative to proceed with caution to sidestep potential pitfalls, particularly concerning any excess contributions.
Should you exceed your concessional contributions cap, the excess concessional contributions (ECC) become part of your assessable income. These excess contributions are then subject to taxation at your marginal tax rate, albeit with a 15% tax offset to account for the contributions tax already paid by your super fund. The implications of surpassing your cap extend beyond mere taxation and could impact your PAYG instalments, Medicare levy, Centrelink benefits, and child support obligations.
As we approach a real tax-milestone, we’re dedicated to equipping you with the knowledge and guidance needed to optimise your super contributions. Our approach is always about you, not only helping you maximise your tax position, but also assisting with navigating potential risks with absolute accuracy.
If you're keen on leveraging the unused concessional cap carry forward measure to secure your financial future, or, are looking for strategic advice on how to grow your superannuation for best results and ensure your compliance, reach out to the Attune team today.
You can call us anytime on 1300 866 113 or send us an email to start the conversation – let's collaborate to safeguard your retirement aspirations.
With businesses of all sizes looking to find additional methods of bolstering their bottom line and maximise tax savings, it’s important to stay on top of changes to legislation and ATO policies. With that in mind, we're diving into the reinstatement of the $20,000 instant asset write-off threshold and what it means for SMEs across the country.
Introduced by the Australian government in 2015, the $20,000 instant asset write-off has been somewhat of a lifeline for SMEs, allowing them to invest in their businesses and drive economic growth. Although the temporary full expensing rules, offering an immediate deduction for the full cost of assets acquired, ended on June 30, 2023, the government has taken steps to ensure continued support for SMEs.
The instant asset write-off threshold was set to revert to $1,000 from July 1, 2023. However, the government has introduced a Bill to Parliament to maintain the $20,000 threshold for small business entities for the 2024 income year. This move aims to provide stability and encourage business investment.
The ability to claim the cost of an asset up to $20,000 is a huge help to many when it comes to encouraging growth and well worth understanding fully, so let’s jump into the details …
For SMEs to access the $20,000 instant asset write-off, they must meet specific criteria:
• The entity must be conducting a business under general principles in the 2024 income year.
• Aggregated annual turnover should be less than $10 million, based on either current or previous year figures.
• The entity must opt to apply the simplified depreciation rules for the 2024 income year.
• The asset's cost must be less than $20,000.
• The asset must be first used or installed ready for use for a taxable purpose between July 1, 2023, and June 30, 2024.
It's crucial to note that SMEs must opt-in to the simplified depreciation rules to access the instant asset write-off. Failure to do so will result in ineligibility, regardless of meeting other conditions. You can read the ATO’s breakdown of these rules here.
The $20,000 threshold applies per asset, enabling SMEs to potentially deduct the full cost of multiple assets throughout the 2024 year, as long as each asset's cost remains below $20,000. Additionally, the threshold determines whether the full pool balance is written off for the 2024 income year, offering further opportunities for tax benefits.
Provisions preventing SMEs from re-entering the simplified depreciation regime for five years, if they opt-out, will remain suspended until June 30, 2024. This flexibility provides SMEs with more control over their depreciation strategies.
For details and help assessing your depreciation strategies, get in touch with the Attune Advisory team so we can help ensure you’re setting yourself up correctly.
Assets eligible for the instant asset write-off must fall within the scope of depreciation provisions. Expenditure on capital improvements to buildings, governed by capital works rules, does not qualify. Assets costing $20,000 or more can still be placed into the small business general pool and depreciated at 15% in the first income year and 30% each subsequent year.
Once again, before jumping into an asset purchase for your business, it’s worth discussing the details with the Attune team to ensure we can guide you to the most appropriate course of action when it comes to the tax treatment of the asset for your business.
The reinstatement of the $20,000 instant asset write-off threshold presents SMEs with valuable opportunities to invest in their businesses while enjoying tax benefits. At Attune Advisory, we're here to support you in navigating these changes and maximising your financial outcomes. Reach out to our team via email or call us on 1300 866 113 to explore how you can leverage these incentives to drive growth and success for your business.
We’re here to give you tailored advice that works for your business and financial strategies for success.
