2024/25 Federal Budget
Superannuation measures
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.
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.
Other Budget measures
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.
Extending ATO compliance programs
The Government has announced it will extend the following ATO compliance programs:
- Personal Income Tax Compliance ProgramThe Government will extend the ATO’s Personal Income Tax Compliance Program for one year from 1 July 2027. This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including overclaiming of deductions, incorrect reporting of income and inappropriate tax agent influence. This will enable the ATO to continue its focus on emerging risks to the tax system, such as deductions relating to short-term rental properties.
- Shadow Economy Compliance ProgramThe Government will extend the ATO Shadow Economy Compliance Program for two years from 1 July 2026. This extension of the Shadow Economy Compliance Program will enable the ATO to continue to reduce shadow economy activity, thereby protecting revenue and preventing non-compliant businesses from undercutting competition.
- Tax Avoidance TaskforceThe Government will extend the ATO Tax Avoidance Taskforce for two years from 1 July 2026. Extending the Taskforce ensures the ATO continues to be well-resourced to pursue key tax avoidance risks, with a focus on multinationals, large public and private businesses, and high- wealth individuals.
- ATO counter fraud measuresThe Government will provide $187.0 million over four years from 1 July 2024 to the ATO to strengthen its ability to detect, prevent and mitigate fraud against the tax and superannuation systems. This will include funding:
- for upgrades to information and communications technologies to enable the ATO to identify and block suspicious activity in real time
- for a new compliance taskforce to recover lost revenue and intervene when attempts to obtain fraudulent refunds are made
- to improve the ATO’s management and governance of its counter-fraud activities, including improving how the ATO assists individuals harmed by fraud.
Expanding the scope of Part IVA
- schemes that reduce tax paid in Australia by accessing a lower withholding tax rate on income paid to foreign residents; and
- schemes that achieve an Australian income tax benefit, even where the dominant purpose was to reduce foreign income tax.This measure was proposed to apply to income years commencing on or after 1 July 2024.The Government has now announced in the 2024/25 Budget that it will amend the start date of this measure to income years commencing on or after the day the amending legislation receives Royal Assent, regardless of whether the scheme was entered into before that date.
Denying deductions for payments on intangibles in low or no-tax jurisdictions
In the 2022/23 October Budget, the Government announced that it would introduce an anti-avoidance rule to prevent certain entities from claiming tax deductions for payments made directly or indirectly to related parties in relation to intangibles held in ‘low- or no-tax’ jurisdictions.
In the 2024/25 Budget, the Government has announced that it will not continue with this measure as the integrity issues will now be addressed through the Global Minimum Tax and Domestic Minimum Tax being implemented by the Government.
The Government also announced that it will introduce a new provision from 1 July 2026 that applies a penalty to taxpayers who are part of a group with more than $1 billion in global turnover annually that are found to have mischaracterised or undervalued royalty payments, to which royalty withholding tax would otherwise apply.
Freezing social security deeming rates
The Government will freeze social security deeming rates at their current levels for a further 12 months until 30 June 2025 to support age pensioners and other income support recipients who rely on income from deemed financial investments, as well as their payment, to manage cost of living pressures.
Tertiary education system reforms
The Government will provide funding to implement the first stage of reforms to Australia’s tertiary education system. Of note, this includes funding:
- to limit the indexation of the Higher Education Loan Program (and other student loans) debt to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023, subject to the passage of legislation; and
- to establish a new ‘Commonwealth Prac Payment’ of $319.50 per week (benchmarked to the single Austudy rate) from 1 July 2025 for tertiary students undertaking supervised mandatory placements as part of their nursing (including midwifery), teaching or social work studies. This will help alleviate the significant financial impact of mandatory placements and increase retention in courses for careers in sectors experiencing shortages.
Energy bill relief for households
The Government is providing direct energy bill relief for every Australian household. From 1 July 2024, all households will receive a total rebate of $300, which will be automatically applied to their electricity bills in quarterly instalments.
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.
The Carrick Aland team are available to assist you to capitalise on any of the Budget measures or minimise your risk. As always, the detail is important so please let us know if we can assist.
Related reading
Source: NTAA
