Key measures for taxpayers, small business and superannuation
1. Personal income tax measures
1.1 Stage three personal tax cuts
The Government has confirmed the revised stage three personal tax cuts that were announced prior to the Federal Budget being handed down and which have already been enacted into law. Refer to the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024.
The following tables outline the marginal income tax rates and thresholds that apply for resident and foreign resident individuals under the revised stage three personal tax cuts from 1 July 2024 (i.e., from the 2025 income year). The tax rates and thresholds that apply for the 2024 income year are included for comparative purposes.
Australian resident individual income tax rates
| 2024 income year | From the 2025 income year | ||
| Tax rate % | Thresholds | Tax rate % | Thresholds |
| 0 | $0 – $18,200 | 0 | $0 – $18,200 |
| 19 | $18,201 – $45,000 | 16 | $18,201 – $45,000 |
| 32.5 | $45,001 – $120,000 | 30 | $45,001 – $135,000 |
| 37 | $120,001 – $180,000 | 37 | $135,001 – $190,000 |
| 45 | $180,001+ | 45 | $190,001+ |
Foreign resident individual income tax rates
| 2024 income year | From the 2025 income year | ||
| Tax rate % | Thresholds | Tax rate % | Thresholds |
| 32.5 | $0 – $120,000 | 30 | $0 – $135,000 |
| 37 | $120,001 – $180,000 | 37 | $135,001 – $190,000 |
| 45 | $180,001+ | 45 | $190,001+ |
1.2 Increased Medicare levy low-income thresholds
The Government has increased the Medicare levy low-income threshold amounts and phase-in ranges for singles, families and seniors and pensioners that apply from 1 July 2023.
The increased Medicare levy low-income threshold amounts and phase-in ranges were announced prior to the Federal Budget being handed down and have already been enacted into law. Refer to the Treasury Laws Amendment (Cost of Living – Medicare Levy) Act 2024.
The Medicare Levy low-income thresholds for individuals and families for the 2024 income year are as follows:
| Category of taxpayer | No Medicare levy payable at or below: | Reduced Medicare levy payable within: | Full Medicare levy payable at or above: |
| Individual taxpayer | $26,000 | $26,001 – $32,500 | $32,501 |
| Individual taxpayer eligible for the SAPTO | $41,089 | $41,090 – $51,361 | $51,362 |
| Families eligible for the SAPTO | $57,198 | $57,199 – $71,497 | $71,498 |
| Families not eligible for the SAPTO with no dependent child or student | $43,846 | $43,847 – $54,807 | $54,808 |
For each dependent child or student, the family income thresholds will increase by a further $4,027.
2. Small business measures
2.1 Temporary increase to the instant asset write-off
Under current law, the small business instant asset write-off threshold is (less than) $1,000 for the 2025 income year.
However, the Government has announced that it will temporarily set the instant asset write-off threshold for small business entities at (less than) $20,000 for the 2025 income year.
Small businesses with an aggregated annual turnover of less than $10 million will generally be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025. The asset threshold applies on a ‘per asset’ basis, so small businesses can instantly write off multiple assets.
Assets valued at $20,000 or more (i.e., which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2025.
From 1 July 2025, the instant asset write-off threshold will revert back to (less than) $1,000.
2.2 Retaining Business Activity Statement (‘BAS’) refunds
The Government will strengthen the ATO’s ability to combat fraud by extending the time the ATO has to notify a taxpayer if it intends to retain a BAS refund for further investigation. The ATO’s mandatory notification period for BAS refund retention will be increased from 14 days to 30 days to align with time limits for non-BAS refunds.
Legitimate refunds will be largely unaffected. Any legitimate refunds retained for over 14 days would result in the ATO paying interest to the taxpayer. The ATO will publish BAS processing times online.
This change will have effect from the start of the first income year after Royal Assent of the enabling legislation.
2.3 Relieving energy bill pressures
The Government is providing certain direct energy bill relief for small businesses. Of note, the Energy Bill Relief Fund is providing energy rebates to each of the approximately one million businesses on small customer electricity plans to help cover their electricity bills. This Budget will provide additional energy bill relief of $325 to eligible small businesses.
2.4 Expanding the Digital ID System
The Government is expanding the Digital ID System. The expanded system will lower the administrative burden on small businesses by reducing the amount of ID data they need to store and protect for their customers and their employees.
2.5 Building cyber resilience for small businesses
The Government is supporting small businesses to be secure online while they adopt and harness digital opportunities, including through funding the following:
Cyber Wardens program to provide free, online training for small business owners and their staff to help drive cultural change and a cyber-safe mindset in Australian small businesses.
Small Business Cyber Resilience Service to help small businesses build their cyber resilience and provide support when affected by a cyber incident.
Cyber Health Check online interactive tool to enable small and medium businesses to self-assess their cyber security maturity.
The Government is also developing a ransomware playbook to provide guidance on how to prepare for, respond to and recover from, a ransomware or cyber extortion incident.
3. Foreign residents
3.1 Strengthening the foreign resident CGT regime
The Government will strengthen the foreign resident CGT regime to ensure foreign residents pay their fair share of tax in Australia and to provide greater certainty about the operation of the rules.
The amendments will apply to CGT events commencing on or after 1 July 2025 to:
clarify and broaden the types of assets that foreign residents are subject to CGT on;
amend the point-in-time principal asset test to a 365-day testing period; and
require foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, prior to the transaction being executed.
This measure will ensure that Australia can tax foreign residents on direct and indirect sales of assets with a close economic connection to Australian land, more in line with the tax treatment that already applies to Australian residents.
The new ATO notification process will improve oversight and compliance with the foreign resident CGT withholding rules, where a vendor self-assesses their sale is not taxable real property.
4. Superannuation
4.1 Superannuation on Paid Parental Leave
The Government has announced that it will pay superannuation on Commonwealth government-funded Paid Parental Leave for births and adoptions on or after 1 July 2025.
Eligible parents will receive an additional payment based on the Superannuation Guarantee (12% of their Paid Parental Leave payments), as a contribution to their superannuation fund.
4.2 Unpaid superannuation entitlements
The Government will recalibrate the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
5. Other budget measures
5.1 Discretion to not offset a refund against old tax debts
The Government has proposed to amend the tax law to give the Commissioner a discretion to not use a taxpayer’s refund to offset old tax debts, where the Commissioner had put that old tax debt on hold prior to 1 January 2017.
This discretion will apply to individuals, small businesses and not-for-profits, and will maintain the Commissioner’s current administrative approach.
5.2 Extending ATO compliance programs
The Government has announced it will extend the following ATO compliance programs:
- Personal Income Tax Compliance Program
- Shadow Economy Compliance Program
- Tax Avoidance Taskforce
- ATO counter fraud measures
5.3 Expanding the scope of Part IVA
The Government previously announced in the 2023/24 Budget that it would expand the scope of Part IVA of the ITAA 1936 (the general anti-avoidance rule for income tax).