The 2024 federal budget was unveiled on Tuesday by treasurer Jim Chalmers. There were minimal changes or reforms to the taxation system, especially concerning small and medium-sized enterprises (SMEs). Below is a breakdown of the key highlights affecting small businesses in North Queensland:
Extension of $20,000 Instant Asset Write-Off: The budget extends the $20,000 instant asset write-off for businesses with a turnover of less than $10 million until 30 June 2025. This provision allows immediate tax deductions for assets costing up to $20,000, which provides some relief for small businesses. We do note however, that this measure initially enacted in the 2023 budget, is yet to be legislated.
Energy Bill Relief Measures: Households and small businesses can expect relief through energy bill credits. All households will receive a $300 energy credit payable in quarterly instalments over the next 12 months. This measure aims to alleviate the burden of rising energy costs.
Support for Primary Producers: A notable provision in the budget is the establishment of the Future Drought Fund to support farmers and communities in managing drought and adapting to climate change. While the headline figure for this fund is $519.1 million, the allocation over eight years seems modest, with only $11.1 million allocated for the 2024-2025 financial year. We are yet to see details of how this will operate and benefit primary producers.
Stage Three Tax Cuts: Scheduled to commence on 1st July 2024, the previously announced stage three tax cuts for individuals will come into effect. These tax cuts will benefit both individuals and businesses. A summary of the changes is contained in the table below.
| Current rates | |||
|---|---|---|---|
| Bracket | Income Range | Marginal Tax Rate | Tax Payable |
| 1 | $0 - $18,200 | 0% | NIL |
| 2 | $18,201 - $45,000 | 19% | 19% of excess over $18,200 |
| 3 | $45,001 - $120,000 | 32.5% | $5,092 + 32.5% of excess over $45,000 |
| 4 | $120,001 - $180,000 | 37% | $29,467 + 37% of excess over $120,000 |
| 5 | $180,001+ | 45% | $51,667 + 45% of excess over $180,000 |
| Tax rates from 1 July 2024 | |||
| Bracket | Income Range | Marginal Tax Rate | Tax Payable |
| 1 | $0 - $19,000 | 0% | NIL |
| 2 | $19,001 - $45,000 | 16% | 16% of excess over $19,000 |
| 3 | $45,001 - $135,000 | 30% | $4,160 + 30% of excess over $45,000 |
| 4 | $135,001 - $190,000 | 37% | $31,160 + 37% of excess over $135,000 |
| 5 | $190,001+ | 45% | $51,509 + 45% of excess over $190,000 |
Changes to Superannuation Contribution Caps: Whilst not a budget measure, changes to superannuation contribution caps will take effect from 1st July 2024. Both concessional and non-concessional contribution caps are set to increase, along with adjustments to indexation rules. These changes are detailed below.
Concessional
From 1 July 2024, the concessional contribution cap will increase from $27,500 to $30,000.
Non-concessional
The non-concessional contribution cap, which is calculated at 4 times the concessional cap, will increase from $110,000 to $120,000. For those utilising the bring forward rules, the caps will be adjusted to $240,000 and $360,000 respectively. These caps are dependent on your member balance at 30 June 2024. Please see the below table for further information:
| New Thresholds and Caps | |
|---|---|
| TSB at 30 June 2024 | Maximum NCC Cap |
| $1.9m or more | NIL |
| $1.78m - less than $1.9m | $120,000 |
| $1.66m - less than $1.78m | $240,000 (2 years) |
| Less than $1.66m | $360,000 (3 years) |
Changes to Superannuation Contribution Caps: Whilst not a budget measure, changes to superannuation contribution caps will take effect from 1st July 2024. Both concessional and non-concessional contribution caps are set to increase, along with adjustments to indexation rules. These changes are detailed below.
Concessional
From 1 July 2024, the concessional contribution cap will increase from $27,500 to $30,000.
Non-concessional
The non-concessional contribution cap, which is calculated at 4 times the concessional cap, will increase from $110,000 to $120,000. For those utilising the bring forward rules, the caps will be adjusted to $240,000 and $360,000 respectively. These caps are dependent on your member balance at 30 June 2024. Please see the below table for further information:
Overall Implications: While the budget may not have significant taxation implications for small businesses, it’s crucial to note the broader political and economic outlook. The potential implications for inflation and interest rates, along with the lack of specific infrastructure measures for North Queensland infrastructure, are likely to be of interest to businesses in the region.
If you have any questions on the above, please reach out to your Client Manager on (07) 4052 0800.
Shaun Donaldson,
Director
