The Australian Government's 2024-25 Federal Budget, spearheaded by Treasurer Jim Chalmers, lays out a roadmap aimed at alleviating cost of living pressures and bolstering economic support for individuals and businesses alike. As seasoned financial advisers, it's imperative to dissect the critical elements of the budget that could significantly influence your financial strategies and decision-making processes.
Superannuation for Paid Parental Leave:
A pivotal initiative within the budget involves bolstering support for parents and bridging the superannuation gender gap. Louise Davies, Director and Senior Financial Planner at Fortuna, commends the Government's proposal to institute a 12% superannuation payment on the Paid Parental Leave scheme, effective from 1 July 2025. Louise highlights, "The introduction of superannuation payments on paid parental leave is a significant step towards empowering working mothers to maintain their super contributions while caring for their children, offering them a vital opportunity to augment their superannuation funds."
Energy Bill Relief:
With energy costs on the rise, the Government's proposal to provide relief is a welcome development. Commencing from 1 July 2024, households and eligible small businesses are set to receive a $300 and $325 annual rebate, respectively. This measure is anticipated to ease the immediate financial strain of energy bills on Australians.
Student Loan Indexation Cap:
Recognising the burden of student debt, the Government has introduced a cap on the indexation of student loans to curb their growth beyond wage increases. Effective retrospectively from 1 June 2023, this move ties the indexation rate to the lower of either the Consumer Price Index (CPI) or the Wage Price Index (WPI).
Social Security, Aged Care, and Keeping Women Safe:
The budget extends the freeze on deeming rates until 30 June 2025, providing retirees with a sense of stability amidst economic volatility. Louise Davies notes, "The freezing of deeming rates will ease concerns for many clients, particularly those reliant on the Age Pension and the Commonwealth Seniors Health Card." Additionally, the freeze on Pharmaceutical Benefits Scheme co-payments is hailed for reducing the financial burden of essential medications on Australians.
The Government's substantial investment in safety and support for domestic violence survivors underscores its commitment to societal welfare. Notably, the Leaving Violence Programme and crisis housing initiatives receive significant funding allocations.
Tax Adjustments:
While there are no alterations to the previously legislated tax rates, the effective tax-free thresholds are slated to increase in the 2024-25 financial year. Moreover, the Medicare Levy low-income thresholds will be adjusted upwards from 1 July 2023.
Small Business Support:
Acknowledging the challenges faced by small businesses, the Government extends the $20,000 instant asset write-off until 30 June 2025. This extension is poised to increase cash flow and stimulate investment through immediate deductions on eligible asset purchases.
"The Government's commitment to increasing superannuation caps, implementing tax changes, and modifying Social Security measures bodes well for the financial landscape," Louise adds. These measures align with our commitment to providing tailored financial advice and ensuring our clients navigate these changes with confidence.
We urge you to discuss these updates with your financial adviser to tailor them to your specific circumstances and make informed adjustments to your financial strategy. For personalised guidance and a comprehensive discussion on how the new budget could shape your financial future, please don't hesitate to reach out. We're here to navigate these changes alongside you, ensuring your financial plans remain resilient and adaptable in an ever-evolving economic environment.