Federal Budget 2024-25

The Federal Budget for 2024-25 was handed down on Tuesday 14 May 2024. It contains a range of proposed measures across the areas of income tax, superannuation, tax administration and related cost of living measures.

Some of these may affect you directly or indirectly. We have provided a summary of these measures and what they may mean for you.

Please feel free to contact this office if you have any queries about them or how they may impact you in your circumstances.

Taxation Measures

Instant asset write-off threshold of $20,000 extended

The $20,000 instant asset write-off for small businesses with an aggregated annual turnover of less than $10 million has been extended to expenditure incurred up to 30 June 2025. Without this extension, the threshold would have dropped back to $1,000 as from 1 July 2024. This measure now provides certainty to the issue.

What this means:

Given the extension, there is no longer the same urgency in having depreciating assets used or installed ready for use by 30 June 2024 as items costing less than $20,000 acquired over the following 12 months will still be eligible for an immediate write-off for small businesses using the simplified depreciation rules. However, it might still make sense for unincorporated small businesses to acquire depreciating assets costing less than $20,000 before 1 July 2024 as the Stage 3 tax cuts will make the immediate deduction less valuable in 2024-25 than in 2023- 24 (subject to cashflow considerations).

CGT changes for foreign residents

Changes will be made to the way foreign residents are subject to CGT in Australia by broadening the types of Australian assets that foreign residents will be taxed on in Australia and in tightening the rules that make a foreign resident liable to CGT in respect of interests in “land rich” companies or trusts. In addition, the measures will require foreign residents disposing of shares and other membership interests exceeding $20m in value to notify the ATO, prior to the transaction being executed.

What this means:

Whether these changes will apply to investment shares held on the ASX by foreign investors is not clear. In any event, the proposed measures will only apply to sales occurring from 1 July 2025 – which will, depending on the final form of the legislation, give time to consider any necessary strategies.

No extensions for training and energy efficiency boosts

The additional 20% boosts for expenditure on employee training and energy efficient assets for small businesses with an annual aggregated turnover of less than $50 million are scheduled to expire on 30 June 2024 and these incentives have not been extended in this year’s Budget.

What this means:

There are only about six weeks left to benefit from these incentives, and it may be worthwhile brining forward expenditure you were otherwise planning to incur later in the year, cashflows permitting.

ATO discretion not to offset old tax debts on hold

Last year the ATO began to offset some older tax debts that had been put on hold prior to January 2017 against current BAS refunds. While in some cases the revived tax debts were relatively small, the ATO was not always able to explain what the debts represented. The ATO suspended the practice pending clarification of what its powers were not to collect these older amounts. The Government will now give the ATO the explicit power not to offset debts put on hold before 1 January 2017.

What this means:

If you see any unexplained offsets against a current BAS refund, you should contact us in case we can have the ATO remove the offset.

Refund frauds and likely delays in processing BAS refunds

The Government has now addressed this issue in the Budget by extending the period within which the ATO has to notify a taxpayer that it intends to retain a BAS refund for further investigation from 14 days to 30 days. The measure takes effect in the first income year commencing after enactment of the relevant law (which could be as soon as next month if the government is quick off the mark with its legislation).

What this means:

If necessary, you may need to be prepared to engage with the ATO about what is behind your BAS refund – eg, you are an exporter or you have recently purchased a significant item of equipment.

Student loans repayments to be reduced

The Budget proposes to introduce measures so that indexation of the Higher Education Loan Program (HELP) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index - with effect retrospectively from 1 June 2023.

What this means:

The Budget papers also said that this will also apply to “other student loans”. Presumably, this measure will help lower the cost of living burden on younger Australians – “and for this relief, much thanks!” (Shakespeare, Hamlet)

Instant asset write-off threshold of $20,000 extended to 30 June 2025

As widely expected, the $20,000 instant asset write- off for small businesses with an aggregated annual turnover of less than $10 million has been extended to expenditure incurred up to 30 June 2025. Without this extension, the threshold would have dropped back to $1,000 as from 1 July 2024.

Senate amendments boosting the instant asset write-off regime for 2023-24 to $30,000 for businesses with an annual turnover of less than $50 million are not likely to be accepted by the government in the House of Representatives. It is expected that the measure will eventually be passed in the form originally proposed in last year’s Budget – ie, a $20,000 threshold for entities with an aggregated annual turnover less than $10 million.

What this means:

Given the extension, there is no longer the same urgency in having depreciating assets used or installed ready for use by 30 June 2024 as items costing less than $20,000 acquired over the following 12 months will still be eligible for an immediate write-off for small businesses using the simplified depreciation rules. However, it might still make sense for unincorporated small businesses to acquire depreciating assets costing less than $20,000 before 1 July 2024 as the Stage 3 tax cuts will make the immediate deduction less valuable in 2024-25 than in 2023-24 (subject to cashflow considerations).

No extensions for training and energy efficiency boosts

The additional 20% boosts for expenditure on employee training and energy efficient assets for small businesses with an annual aggregated turnover of less than $50 million are scheduled to expire on 30 June 2024 and these incentives have not been extended in this year’s Budget.

What this means:

There are only about six weeks left to benefit from these incentives, and it may be worthwhile brining forward expenditure you were otherwise planning to incur later in the year, cashflows permitting.

ATO discretion not to offset old tax debts on hold

Last year the ATO began to offset some older tax debts that had been put on hold prior to January 2017 against current BAS refunds. While in some cases the revived tax debts were relatively small, the ATO was not always able to explain what the debts represented.

Following complaints by tax practitioners and others, the ATO suspended the practice pending clarification of what its powers were not to collect these older amounts. The government has now signaled it will give the ATO the explicit power not to offset debts put on hold before 1 January 2017.

What this means:

If you see any unexplained offsets against a current BAS refund, you should contact us in case we can have the ATO remove the offset.

Refund frauds and likely delays in processing BAS refunds

The ATO has come under criticism recently in relation to more than a few cases where people have successfully made claims for fraudulent GST refunds, sometimes for over a period of time and for large amounts. In responding to this criticism, the ATO had pointed out that its processes have been more geared to getting refunds out to the vast majority of honest taxpayers promptly and worrying about cases of fraud after the event. Given the scale of the refund frauds detected, however, the ATO has suggested that it may need to consider taking more time to process refunds so that they can prevent fraudulent claims.

The government has addressed this issue in the Budget by extending the period within which the ATO has to notify a taxpayer that it intends to retain a BAS refund for further investigation from 14 days to 30 days. The measure takes effect in the first income year commencing after enactment of the relevant law, which could be as soon as next month if the government is quick off the mark with its legislation.

What this means:

If necessary, you may need to be prepared to engage with the ATO about what is behind your BAS refund – eg, you are an exporter or you have recently purchased a significant item of equipment.

Superannuation Measures

Super to be paid on paid parental leave

Super guarantee contributions will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025. Eligible parents will receive an additional 12% SG payment on their PPL payments, as a contribution to their superannuation fund. Payments will be made annually to individuals’ superannuation funds from 1 July 2026.

What this means:

To get government-funded PPL, you will need to meet certain criteria such as be caring for your newborn or adopted child, meet an income test, work test and other residency rules.

Social security, cost of living and other measures

Social security deeming rates frozen

Social security deeming rates will be frozen at their current levels for a further 12 months until 30 June 2025. The lower deeming rate will remain at 0.25% and the upper deeming rate will remain at 2.25%.

Flexibility for carer payment recipients

From 20 March 2025, the existing 25 hours per week participation limit for carer payment recipients will be amended to 100 hours over 4 weeks. Also, the participation limit will only apply to employment and will no longer include study, volunteering activities and travel time.

Eligibility for higher rate of Jobseeker payment extended

Eligibility for the higher rate of Jobseeker payment will be extended to single recipients with a partial capacity to work of zero to 14 hours per week from 20 September 2024.

Commonwealth Rent Assistance increase

The maximum rates of the Commonwealth Rent Assistance (CRA) will increase by 10% from 20 September 2024 to help address rental affordability challenges for recipients.

Lower foreign investment fee for build- to-rent properties

Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee. The lower foreign investment fee will be conditional on the property continuing to be operated as a build-to-rent development.

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Can the cost of clothing be tax deductible?

By Brad Dickfos • December 9, 2025

Sometimes it can be, but only in limited circumstances. The tax deductibility of expenditure on clothing is subject to strict ATO guidelines. These cover occupation-specific clothing, compulsory or registered non-compulsory uniforms and protective items. Conventional clothing What you can’t claim is the cost of conventional clothing, even where your employer expects you to observe a particular dress style. You might work in an office environment, and your employer expects you to wear a business suit to work, even though you wouldn’t have even bought the suit but for your employer’s dress requirements. While the cost of the suit might seem like a work related expense, it is not deductible as it is conventional clothing that could also be worn outside of work. This makes it a private expense, even though it relates directly to your employment. Conventional clothing includes business attire, non-monogrammed black trousers and white shirts worn by wait staff, non-protective jeans and drill shirts worn by tradies and athletic clothes and shoes worn by PE teachers. Occupation-specific clothing On the other hand, occupation-specific clothing falls on the deductible side of the line, for example a chef’s distinctive chequered pants or a health worker’s blue uniform, including nurses’ stockings and non-slip shoes. Compulsory uniforms The cost of clothing that forms part of a compulsory uniform is generally deductible. A compulsory uniform is a set of clothing that identifies you as an employee of a particular organisation. Your employer must make it compulsory to wear the uniform and have a strictly enforced workplace policy in place. You can only claim a deduction for shoes, socks and stockings if: They are an essential part of a distinctive compulsory uniform, and The characteristics (the colour, style and type) are an integral and distinctive part of your uniform that your employer specifies in the uniform policy, for example, airline cabin crew members. You can claim for a single item of clothing such as a jumper if it's distinctive and compulsory for you to wear it at work. An item of clothing is unique and distinctive if it: Has been designed and made only for the employer, and Has the employer's logo permanently attached and is not available to the public. Just wearing a jumper of a particular colour is not part of a compulsory uniform, even if your employer requires you to wear it, or you pin a badge to it. Non-compulsory uniforms You can only claim for non-compulsory work uniforms if your employer has registered the design with AusIndustry. This means the uniform has to be on the Register of Approved Occupational Clothing. Your employer will be able to clarify whether your uniform is registered. Protective clothing The cost of protective clothing is deductible, and covers such items as: Fire-resistant clothing Sun protection clothing with a UPF sun protection rating Hi-viz vests Non-slip nurse’s shoes Protective boots, such as steel-capped boots or rubber boots for concreters Gloves and heavy-duty shirts and trousers Occupational heavy duty wet-weather gear Boiler suits, overalls, smocks or aprons you wear to avoid damaging or soiling your ordinary clothes during your work activities. Laundry and dry-cleaning costs and repairs You are entitled to a deduction for the cost of cleaning your deductible clothing. If you launder them at home, the Tax Office will allow you a deduction of $1 per load where the load contains only deductible clothing, or 50 cents per load where deductible clothing is mixed with other items. You are entitled to claim the cost of dry-cleaning deductible clothing, as well as the cost of mending and repairs. Record keeping You should keep receipts or other documentary evidence of your expenditure on buying, laundering or repairing deductible work clothing. Proof of laundering clothing at home can be in the form of diary entries. Allowances If your employer pays you a clothing allowance, this needs to be included in your assessable income, and you can only claim what you have actually spent. Feel free to come and see us for advice as to whether your expenditure on work clothing is deductible.

Division 296 Tax Revisited

By Brad Dickfos • December 1, 2025

Big news for anyone with a large super balance – the government has gone back to the drawing board on the controversial Division 296 tax , and the changes are a big step toward fairness and common sense. A quick recap When the Division 296 tax was first announced in 2023, it caused an uproar. The main problem? It would have taxed unrealised gains, that is, paper profits you haven’t actually made yet and set a $3 million threshold that wasn’t indexed meaning it wouldn’t rise with inflation. After a wave of feedback from the industry, the government has listened. The Treasurer’s new announcement, made in October 2025, fixes some of the biggest issues. The revamped version is designed to be fairer, simpler, and more in line with how tax usually works. The plan is to start the new system from 1 July 2026, with the first tax bills expected in 2027–28. What’s changing Here’s what’s new under the revised Division 296 tax: · Only real earnings will be taxed. No more tax on unrealised gains as you’ll only pay on earnings you’ve actually made. · Super funds will work out members’ real earnings and report this to the ATO. · The $3 million threshold will be indexed to inflation in $150,000 increments, keeping pace with rising costs. · A new $10 million threshold will be introduced. Earnings above that will be taxed at a higher rate of 40%, and that threshold will also rise with inflation. · The start date is pushed back to 1 July 2026, giving everyone more time to prepare. · Defined benefit pensions are included, so all types of super funds are treated the same. So what does this mean in practice? Think of it as a tiered tax system: · Up to $3 million – normal super tax of 15%. · Between $3 million and $10 million – taxed at 30%. · Over $10 million – taxed at 40%. Basically, the more you have in super, the higher the tax rate on your earnings above those thresholds. How it will work Super funds will continue reporting members’ balances to the ATO, which will figure out who’s over the $3 million mark. If you are, your fund will tell the ATO your actual earnings (not paper gains). The ATO will then calculate how much extra tax you owe. We don’t yet have the fine print on what exactly counts as “realised earnings,” but it’s likely to mean profits you’ve actually made, similar to how taxable income is treated now. What’s still up in the air While these updates make the system much fairer, there are still a few unanswered questions: · What exactly counts as “earnings”? Will it only include profits made after 1 July 2026, or could older gains that are sold later be included too? · What happens with capital gains? Super funds usually get a one-third discount on capital gains for assets held over a year, but it’s unclear whether that will still apply. · How will pension-phase income be handled? Some super income is tax-free when you’re in the pension phase, and we don’t yet know how that will interact with the new rules. · Can people with over $10 million move money out? If your earnings above $10 million are taxed at 40%, you might want to shift funds elsewhere but the government hasn’t said if that’ll be allowed. What it means for you If your super balance is over $10 million, the proposed rules mean that a portion of your superannuation earnings could attract a higher tax rate of up to 40%. For people with between $3 million and $10 million, the new system could also change how much tax applies to their super earnings, depending on how the final legislation defines “realised gains.” But don’t rush. These rules aren’t law yet, and if you take your super out, it’s hard to put it back because of contribution limits. It’s best to wait for the final legislation and get professional advice before making any decision to withdraw benefits from super.

Christmas and Tax

By Brad Dickfos • November 18, 2025

( ) Knowing the rules around Fringe Benefits Tax (FBT), GST credits and what is or isn’t tax deductible can help keep tax costs to a minimum. Holiday celebrations generally take the form of Christmas parties and/or gift giving. (<->)