May 31, 2024

2024 Budget – Key Takeaways for Business Owners

AUTHOR

Dan Henderson

While this year’s budget does not provide much direct support for businesses, it does commit to investing in healthcare, education, frontline services, and infrastructure. Here are some key takeaways for you as business owners and employers.

Key Points
  • Economic Conditions:
    • The economy is expected to remain subdued in the near term but should gradually strengthen from the second half of 2024.
    • Tax relief measures are aimed at giving people a bit more money in their pockets and hopefully boosting customer spending, even if just a little.
  • Interest Deductions for Residential Property:
    • Phased back in as promised, with 50% deductible in the 2023/2024 tax year, 80% deductible in the 2024/2025 tax year, and fully deductible from the 2025/2026 tax year.
  • Commercial and Industrial Building Depreciation:
    • Depreciation claims on these buildings have been removed again starting from the 2024/25 income year.

What to Expect

  • Modest Tax Relief:
    • Most households will likely use the tax relief for essential expenses like food, rent, and power bills.
    • Some may use it to pay down personal debt or save, which means a limited immediate boost for businesses.
  • Reduced Government Spending:
    • This could mean less money flowing into the economy, affecting business revenue indirectly.

How to Prepare

  1. Stay Updated: Keep an eye on economic forecasts and adjust your business plans accordingly.
  2. Understand New Tax Rules: Make sure your payroll systems and tax planning align with the new thresholds and credits.
  3. Plan for Depreciation Changes: Re-evaluate your investment strategies in light of the removal of commercial and industrial building depreciation.
  4. Get Help: If you need help understanding how these changes impact your business, we are here to help.

Tax Relief for Individuals

From 31 July 2024, there are significant changes to tax brackets and credits designed to ease the burden on taxpayers:

  1. Tax Bracket Increases:
    • For incomes over $14,000 per year.
    • Aims to address fiscal drag caused by wage inflation pushing workers into higher tax brackets.
  2. Independent Earner Tax Credit (IETC):
    • The upper limit was extended from $48,000 to $70,000 per year.
    • Provides up to $20 per fortnight for individuals earning between $24,000 and $70,000.
  3. In-Work Tax Credit:
    • Increased by up to $50 per fortnight for families with dependent children in paid work.
  4. Minimum Family Tax Credit:
    • Increased for low-income working families with dependent children.

From 1 July 2024;

  1. New Childcare Subsidy:
    • For low-to-middle-income families with children aged 5 and under.
    • Reimburses 25% of early childcare costs up to $150 per fortnight.
    • Available for families earning below $140,000, with a complete phase-out at $180,000.

 

For more details, visit the Government Budget website.

Let's chat

If you have any questions or would like to chat about what this means for you, please don’t hesitate to contact us.