Federal Budget 2024-25: Individuals

Personal income tax cuts confirmed

From: 1 July 2024

As previously announced, the Government has legislated permanent tax cuts for all Australian taxpayers from 1 July 2024.

Relative to the previous Stage 3 plan, the redesigned cuts broaden the benefits of the tax cut by focusing on individuals with taxable income below $150,000.

$300 energy relief for households

From: 1 July 2024

Households will receive a credit of $300 on their energy bills credited as automatic quarterly instalments across 2024-25.

Energy relief will also be provided to eligible small businesses in the form of a $325 rebate.

Costing $3.5bn over three years from 2023-24, the measure extends and expands the Energy Bill Relief Fund.

Capping indexation of HELP debts

From: Loan accounts that existed on 1 June 2023

As previously announced, the Government will cap the HELP indexation rate to be the lower of either the CPI or the Wage Price Index (WPI) with effect from 1 June 2023. The change will apply to all HELP, VET Student Loans, Australian Apprenticeship Support Loans and other student support loan accounts that existed on 1 June 2023.

By changing the calculation of HELP indexation from 1 June 2023, the indexation rate is reduced from:

• 7.1% to 3.2% in 2023, and
• 4.7% to around 4% in 2024.

The change resolves an issue for more than 3 million Australians with a HELP debt when the CPI indexation rate spiked to 7.1% last year.

An individual with an average HELP debt of $26,500 will see around $1,200 wiped from their outstanding HELP loans this year, pending the passage of legislation.

Estimated indexation for HELP debts

*Actual credit amount will vary depending on individual circumstances including repayments made during the year. All HELP debts that were indexed in 2023 and are subject to indexation on 1 June 2024 will receive an indexation credit.

Superannuation on paid parental leave

From: 1 July 2025

As previously announced, from 1 July 2025 superannuation will be paid on Paid Parental Leave payments from 1 July 2025.

Eligible parents will receive an additional payment based on the superannuation guarantee (i.e. 12% of their PPL payments), as a contribution to their superannuation fund.

This payment is in addition to the changes that saw families provided with an extra two weeks of leave (22 weeks total), which will increase to 24 weeks from July 2025 and 26 weeks from July 2026 (see Paid Parental Leave Amendment (More Support for Working Families) Bill 2023, Royal Assent 20 March 2024).

Pharmaceutical Benefits Scheme co-payments

From: 1 January 2024
The Government will ensure that the cost of medicines remains low by freezing indexation:

• PBS general co-payments to not be indexed between 1 January 2025 and 31 December 2025 (inclusive), with indexation resuming on 1 January 2026
• PBS concessional co-payments to not be indexed between 1 January 2025 and 31 December 2029 (inclusive), with indexation resuming on 1 January 2030

The $1 optional discount available on patient co-payments for subsidised prescriptions will be reduced each year by the relevant notional indexation amount until the $1 discount has been reduced from $1 to zero.

From 1 January 2024, you may pay up to $31.60 for most PBS medicines, or $7.70 if you have a concession card. The Australian Government pays the remaining cost (with the exception of brand premiums and certain other allowable charges).

Federal, state and territory governments focus on housing

Housing initiatives address three key areas:

• Private commercial development of future housing supply – the Government has outlined an ambitious goal of building 1.2 million homes by the end of the decade. The 2023-24 Budget announced new measures to encourage investment and development of housing, particularly build-to-rent developments that included affordable housing. However, the draft legislation enabling the announced incentives has only recently been released by Treasury. It is difficult to encourage large scale investment if you do not follow through with legislation which provides certainty. No new measures have been announced to date.
• Support to help ease the path to home ownership for first home buyers – also a policy dominant in the 2023-24 Budget with $5.5bn over a decade committed to the Help to Buy scheme. No new incentives have been announced to date.
• Crisis and social housing support – the Government has announced $1bn directed towards crisis and transitional accommodation for women and children fleeing domestic violence, and youth. This measure is on top of the 15% increase to Commonwealth Rent Assistance in the 2023-24 Budget.

As previously announced, much of the Budget funding however flows to the States and Territories to increase housing stock, increase social housing, and provide crisis accommodation. New measures include:

• $1bn for states and territories to build the roads, sewers, energy, water and community infrastructure; and
• A new $9.3 billion 5‑year National Agreement on Social Housing and Homelessness – for states and territories to combat homelessness, provide crisis support and build and repair social housing. This includes a doubling of Commonwealth homelessness funding to $400 million every year, matched by states and territories.

Domestic violence

Date: From mid-2025

As previously announced, the Government has committed almost $1bn over 5 years to permanently establish the Leaving Violence Program – so those escaping violence can receive financial support, safety assessments and referrals to support pathways. Those eligible will be able to access up to $5,000 in financial support along with referral services, risk assessments and safety planning.

Expanding CGT regime for foreign residents

Date: CGT events commencing on or after 1 July 2025

The foreign resident capital gains tax (CGT) regime will be expanded by:

• Clarifying and broadening the types of assets on which foreign residents are subject to CGT
• Amending the point-in-time principal asset test to a 365-day testing period
• Requiring foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, prior to the transaction being executed.

Under current law, foreign residents are subject to CGT when they sell an asset that is classified as ‘taxable Australian property’ (TAP). The rules seek to ensure that non-residents are subject to Australian CGT on the disposal of assets that have a sufficient with Australian land and assets that have been used in business activities in Australia..

Shares in a company and units in a trust can be classified as TAP if the taxpayer and certain related parties hold at least a 10% interest in the entity and where more than 50% of the gross market value of the assets held by the entity is attributable to real property located in Australia and similar assets.

The measure is intended to ensure that Australia can tax foreign residents on direct and indirect sales of assets with a close economic connection to Australian land, bringing the treatment more in line with the tax treatment that already applies to Australian residents.

The new ATO notification process will improve oversight and compliance with the foreign resident CGT withholding rules, where a vendor self-assesses the sale doesn’t involve TAP.

The proposed reforms will also align Australia’s tax law for foreign resident capital gains more closely with OECD standards and international best practice.

The Government will consult on the implementation details of the measure, which is estimated to increase receipts by $600 million and increase payments by $8 million over the five years from 2023–24.

Women’s budget statement

This year, the Government launched Australia’s first national strategy with an explicit focus on achieving gender equality. Working for Women: A Strategy for Gender Equality (Working for Women) is the Government’s ten-year commitment to ‘shift the dial’ on gender equality.

The Women’s Budget Statement is now a reporting mechanism for Working for Women. From this Budget onward, the Women’s Budget Statement will report on the Government’s investments to implement Working for Women.

The 2024–25 Women’s Budget Statement focuses on five priorities, which mirror the priority areas of Working for Women:

1. Gender-based violence
2. Unpaid and paid care
3. Economic equality and security
4. Health
5. Leadership, representation and decision making.

The Government has announced measures as part of the Federal Budget to:

• Take urgent action through the National Plan to End Violence against Women and Children 2022–2032 to address the epidemic rates of violence in Australia.
• Permanently establish ongoing financial support through the Leaving Violence Program for victim-survivors leaving a violent intimate partner relationship.
• Increase funding to assist women and children fleeing domestic violence with crisis and transitional accommodation.
• Provide cost-of-living relief to all women taxpayers and reduce disincentives to their workforce participation via the legislated tax cuts.
• Deliver additional energy bill relief and increase the maximum rates of Commonwealth Rent Assistance.
• Invest in women’s health to address the higher health costs faced by women, while ensuring greater choice, access and support.
• Reform the HELP debt indexation and introduce a new Commonwealth Prac Payment.
• Introduce a superannuation guarantee equivalent payment on Government-funded Paid Parental Leave from 1 July 2025.
• Provide funding towards wage increases for aged care workers and early childhood educators.
• Introduce the Building Women’s Careers program that will boost women’s participation in construction, clean energy and advanced manufacturing industries, and technology and digital sectors (as part of the Future Made in Australia initiative to reduce industry gender segregation).