Key Tax Changes for 2024-25 Financial Year
The new financial year (FY 2024-25) brings a suite of tax changes that could put more money back in your pocket. From significant stage 3 tax cuts to updates for homeowners and businesses, it's essential to understand how these changes affect you.
At TaxBank, we've broken down the key changes you need to know for your 2024-25 tax return.
1. Personal Income Tax Cuts (Stage 3)
The most prominent change for individuals is the revised Stage 3 Tax Cuts, which came into effect on 1 July 2024. These cuts adjust tax rates and income thresholds, meaning most Australian taxpayers will see a lower tax rate on a portion of their income.
| Income Thresholds 2023-24 | Tax Rate | Income Thresholds 2024-25 | New Tax Rate |
|---|---|---|---|
| $0 - $18,200 | 0% | $0 - $18,200 | 0% |
| $18,201 - $45,000 | 19% | $18,201 - $45,000 | 16% |
| $45,001 - $120,000 | 32.5% | $45,001 - $135,000 | 30% |
| $120,001 - $180,000 | 37% | $135,001 - $190,000 | 37% |
| $180,001 + | 45% | $190,001 + | 45% |
What this means for you: Compared to last year, every taxpayer with an income above $18,200 will receive a tax cut. For example, an individual earning $80,000 will receive a tax cut of $1,679, while someone earning $150,000 will receive a tax cut of $3,729.
2. Superannuation Guarantee Increase
The Superannuation Guarantee (SG) rate has increased from 11% to 11.5% as of 1 July 2024. This means your employer must contribute a larger percentage of your ordinary earnings into your super fund.
- Example: If you earn $100,000, your employer's annual super contribution increases from $11,000 to $11,500.
3. Changes to Superannuation on Paid Parental Leave
From 1 July 2025, the government will start paying superannuation on Paid Parental Leave (PPL). This is a future-dated change to be aware of.
- A 12% super contribution will be paid on top of the government-funded Parental Leave Pay.
- This aims to improve retirement outcomes for primary carers, who are most often women.
4. Instant Asset Write-Off for Small Businesses
The temporary $20,000 instant asset write-off has been extended for the 2024-25 income year.
- Who is eligible: Small businesses with an aggregated annual turnover of less than $10 million.
- What it means: Eligible businesses can immediately deduct the full cost of eligible assets costing less than $20,000. The asset must be first used or installed ready for use by 30 June 2025.
- Assets valued at $20,000 or more can be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
5. Medicare Levy Low-Income Thresholds
The Medicare Levy low-income thresholds have been increased for the 2023-24 financial year (the return you lodge in 2024). This means more low-income earners will be exempt from paying the Medicare Levy or will pay a reduced amount.
| Category | 2023-24 Threshold | 2022-23 Threshold |
|---|---|---|
| Singles | $26,000 (up from $24,276) | $24,276 |
| Families | $43,846 (up from $40,939) | $40,939 |
| Seniors & Pensioners | $41,089 (up from $38,365) | $38,365 |
6. Capital Gains Tax (CGT) Discount for Build-to-Rent
To encourage investment in housing supply, the government has increased the capital gains tax (CGT) discount for eligible Build-to-Rent projects.
- The discount has been increased from 50% to 60% for properties where construction commences after 9 May 2023.
- Specific eligibility criteria apply, including that the project must be held under single ownership for at least 10 years.
Need Help Understanding These Changes?
Our tax experts can help you understand how these changes affect your specific situation.
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