Australian Budget 2024-25 Tax Summary and Insights for Australian Expats

Navigating the complexities of tax regulations is challenging, especially for Australian expats living abroad. The Australian Budget 2024-25, delivered on 14 May 2024, outlines key priorities, including cost of living, housing, investments, healthcare, and equality.

In this comprehensive guide, we’ll explore the key aspects of the Australian Federal Budget and offer insights specifically tailored for Aussie expats living overseas.

For the specific numbers all compiled into a super succinct version, check out our two-pager Australian Federal Budget 2024/25 Update for Expatriates.

Understanding the 2024-25 Australian Budget

What Is the Australian Budget?

The Australian Budget is an annual financial statement presented by the government, outlining its projected income and expenditure for the upcoming fiscal year. It includes details on tax policies, public spending, and economic forecasts, serving as a blueprint for the nation’s financial planning.

Key Objectives of the 2024-25 Budget

The Australian Federal Budget 2024-25 aims to foster economic recovery, promote sustainable growth, and ensure social equity. Key objectives include supporting small businesses, investing in infrastructure, and enhancing social services, all while maintaining fiscal discipline.

Australian Federal Budget 2024-25: Summary

Cost of Living Relief

  • Tax cuts for all 13.6 million Australian taxpayers.
  • $3.5 billion energy bill relief for households and small businesses.
  • Increasing Commonwealth Rent Assistance by 10%.
  • Waiving $3 billion in student debt for over 3 million Australians.
  • Cheaper medicines through a $3 billion agreement with community pharmacies.

Housing and Infrastructure

  • $6.2 billion new housing investment, totalling $32 billion.
  • Additional $1 billion to aid states and territories in building more homes.
  • $16.5 billion for infrastructure projects to connect cities and towns.

Investing in Australia's Future

  • $22.7 billion to become a renewable energy superpower.
  • $1.1 billion for higher education reform and productivity support.
  • $466.4 million for advancing Australia’s quantum computing capabilities.

Healthcare and Care Economy

  • $2.8 billion to strengthen Medicare, including new clinics.
  • $3.4 billion for new listings on the Pharmaceutical Benefits Scheme.
  • $2.2 billion to improve the aged care system.
  • $888.1 million for mental health care.

Equality and Opportunity

  • $925.2 million for victim-survivors leaving violent relationships.
  • $1.1 billion for superannuation on Government-funded Paid Parental Leave.

Fiscal Management

  • Surplus forecast for 2023-24, aiming for back-to-back surpluses.
  • Improvements in cash balance and debt management.
  • Responsible fiscal strategy to balance inflation, cost-of-living, growth, and public finances.

Australian Federal Budget 2024-25: Key Tax Insights

Personal Income Tax Changes (Australian Tax Residents)

The 2024-25 Australian Federal Budget introduces several adjustments to personal income tax rates and brackets. These changes aim to provide relief to low and middle-income earners while ensuring higher-income earners contribute a fair share.

Taxable Income Updated Rates from 1 July 2024
$0 - $135,000
30%
$135,001 - $190,000
37%
$190,001+
45%

Non-Resident Tax Rates 2024-25

Taxable Income Updated Rates from 1 July 2024
Up to $18,200
0
$18,201 - $45,000
16%
$45,001 - $135,000
30%
$135,001 - $190,000
37%
$190,001+
45%

Resident Tax Rates 2024-25

Low-income earners get an increased tax-free threshold, providing more disposable income. There are slight reductions in marginal tax rates for middle-income earners, easing the tax burden. However, high-income earners need to bear minor increases in tax rates to support the fiscal balance.

Additionally, there is a commitment to funding the Fair Work Commission decisions for aged care workers and early childhood education workforce.

Corporate Tax Adjustments

The budget includes a reduction in the corporate tax rate for small and medium enterprises (SMEs) to stimulate business growth and job creation. Larger corporations will see minimal changes but are encouraged to invest in sustainable practices.

SMEs benefit from lower tax rates, which can be reinvested into business expansion and innovation. This change is particularly advantageous for expat entrepreneurs looking to establish or grow their businesses in Australia.

Changes to Superannuation Contributions

The compulsory Superannuation Guarantee (SG) rate is gradually increasing by law. This means the percentage of your salary going towards super will rise over time. On 1 July 2024, the SG rate will increase from 11% to 11.5%.

You’ll also be able to contribute more of your salary before taxes towards your super. The concessional cap limit is increasing from $27,500 to $30,000 per year. If you choose to make additional contributions using already-taxed money, the maximum amount is also rising as the non-concessional contribution cap is going up from $110,000 to $120,000 per year.

Please note that these changes were legislated earlier and are not part of any recent budget announcement.

Expats should review their superannuation strategies to maximise the benefits of these reforms. Higher contributions can significantly enhance retirement outcomes, particularly for those with irregular income patterns. It’s essential to keep track of their contributions to avoid exceeding the caps and facing excess contributions tax.

Capital Gains Tax (CGT) Updates

Notable among the Australian Budget changes is the expansion of the non-resident CGT regime, aimed at clarifying and broadening the assets subject to CGT for foreign residents.

Current rules exempt non-residents from tax on capital gains unless the asset is “taxable Australian property” (TAP), which includes real property, mining rights, and certain membership interests. Changes effective from 1 July 2025 will broaden the types of assets subject to CGT, introduce a 365-day look-back test, and require notification for transactions exceeding AUD 20 million.

These reforms align Australia’s non-resident CGT treatment more closely with OECD standards and international best practices, improving certainty for non-resident investors.

Medicare Levy Adjustments

The Government increased the Medicare levy low-income thresholds, meaning over a million low-income earners will either be exempt or see their rates reduced. It’s important to assess how these changes impact your overall tax obligations.

GST and Consumption Tax Revisions

The budget proposes minor adjustments to the Goods and Services Tax (GST), aimed at simplifying compliance and increasing revenue.

Consumers may see slight price increases on goods and services. Businesses need to adapt to these changes to ensure compliance and maintain profitability.

Furthermore, supermarket sector pricing and competition is being reviewed and CHOICE is being funded for three years for accurate price comparison reports to help consumers make informed choices.

Tax Offsets and Rebates

From July 1, 2024, all 13.6 million Australian taxpayers will receive tax cuts, which will reduce tax rates and increase income thresholds. It’s aimed at easing cost-of-living pressures, returning bracket creep, and boosting labour supply.

Expats should explore these offsets to reduce their tax burden. Eligibility criteria vary, so it’s crucial to understand which offsets apply to your situation.

Housing and Property Tax Implications

Several measures target housing affordability, including increased funding for public housing and incentives for first-time homebuyers. $1.9 billion in support will be provided to renters over five years to boost Commonwealth Rent Assistance.

Property investors need to consider how these measures affect market dynamics. Changes in demand and supply can influence rental yields and property values.

Other Takeaways

Healthcare and Social Services Funding

Under the Eighth Community Pharmacy Agreement, up to $3 billion in funding is being finalised for cheaper medicines. Pharmaceutical Benefits Scheme (PBS) co-payments are frozen.

Expats should stay informed about healthcare entitlements and any changes that may affect their access to services while abroad.

Education and Skills Development

Significant investments in education aim to improve access and quality. These include funding for schools, vocational training, and higher education. The AU government will be cutting $3 billion in student debt, which will affect over 3 million Australians. There will also be a cap on the HELP indexation rate in response to the Australian Universities Accord.

Expats with children or those pursuing further education can benefit from these investments. Improved education systems provide better opportunities and outcomes.

Environmental and Sustainability Initiatives

The budget emphasises sustainability with increased funding for renewable energy projects and environmental conservation. The AU Government committed $27.7 million for priority reforms in consumer energy resources. From 1 July 2024, over 10 million Australian households will be receiving $300 energy rebates, which is expected to directly reduce headline inflation.

Expats passionate about sustainability can take advantage of incentives for green investments and eco-friendly practices.

Digital Economy and Innovation

The budget supports the digital economy through tax incentives and funding for innovation.

Expats involved in tech industries can benefit from these incentives, fostering growth and innovation in the digital space.

Enhanced Support Services

$138 million is set aside for crisis support, including emergency relief and financial support services. Social security deeming rates are frozen until June 30, 2025. Paid placements have been announced for students in critical fields like nursing, teaching, and social work.

Conclusion: Australian Budget 2024-25 Tax Summary and Insights for Australian Expats

The Australian Budget 2024-25 introduces a range of tax changes and financial measures designed to support economic recovery and growth. For Australian expats, understanding these changes is crucial for effective financial planning and maximising opportunities.

Stay informed and consult with expat tax professionals to navigate the complexities of the new budget. Our expat tax advisors are always happy to provide you with expert guidance and support in any of your Australian tax issues. We provide specialised services to help ensure you can easily navigate the Aussie property tax system despite your overseas expatriate status.

FAQs about the 2024-25 Australian Budget

The budget impacts expats through changes in personal income tax, superannuation contributions, and capital gains tax. Expats should review their financial plans to align with these changes.

The new tax rates vary by income bracket, with increased thresholds for low-income earners and slight reductions for middle-income earners. High-income earners may see minor rate increases. Here are the new personal income tax rates in Australia updated from 1 July 2024:

  • Up to $18,200: 0
  • From $18,201 to $45,000: 16%
  • From $45,001 to $135,000: 30%
  • From $135,000 – $190,000: 37%
  • Above $190,001: 45%

Increased superannuation contributions can enhance retirement savings. Expats should adjust their contributions to take full advantage of these changes.

Yes, the budget introduces new tax offsets and rebates for specific groups, including low-income earners and seniors. Expats should check their eligibility for these benefits.

Property investors should note changes in capital gains tax rates and housing measures that could impact market dynamics and investment returns.

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