As we approach 1 July 2024, several important changes are set to impact Australian taxpayers. These changes will include personal tax cuts, superannuation increases and relief credits designed to combat rising energy costs for both households and businesses. Here’s a detailed look at these updates and how they might affect you.
Personal Income Tax Cuts
One of the most significant updates is the reduction in personal income tax rates, along with adjustments to income thresholds. These tax cuts are designed to provide financial relief to individuals by allowing them to retain more of their earnings, particularly in female-dominated industries such as Nursing, Childcare and Aged Care. All 13.6 million Australian taxpayers will benefit as part of the change, with an average expected tax cut of $1,888 p.a. or $36 a week per person.
Superannuation Guarantee Increase
The superannuation guarantee, which mandates the minimum percentage of earnings that employers must contribute to their eligible employees’ superannuation funds, will increase from 11% to 11.5%. This change is part of a phased approach to ensure Australians have sufficient retirement savings. If you have a salary package arrangement, it’s important to check how this increase might affect your overall compensation.
Superannuation Contribution Caps
The caps on superannuation contributions are also increasing:
- Concessional Contributions Cap: Rising from $27,500 to $30,000. Concessional contributions include employer contributions and any contributions you claim as a tax deduction.
- Non-Concessional Contributions Cap: Increasing from $110,000 to $120,000. Non-concessional contributions are those made from after-tax income and are not taxed when entering your superannuation fund.
Luxury Car Tax Threshold
The luxury car tax threshold is set to increase to:
- $91,387 for fuel-efficient vehicles
- $80,567 for all other vehicles.
If you’re in the market for a new vehicle, understanding these thresholds can help you better manage your purchase costs.
Car Depreciation Limit
The car limit for depreciation, which determines the maximum value of a car on which you can claim depreciation for tax purposes, will increase to $69,674. This adjustment will affect businesses and individuals who use vehicles for work purposes.
Energy Relief Credits
For Households
A $300 energy relief credit for households will come into effect, aimed at combatting rising energy costs. This credit will be applied automatically on a quarterly basis, offering consistent financial relief throughout the year.
For Small Businesses
Small businesses will benefit from an additional $325 energy relief credit, provided they meet relevant eligibility criteria.
Instant Asset Write-Off Extension
The $20,000 instant asset write-off, which allows businesses to immediately deduct the cost of assets up to this value, has been extended to 30 June 2025.
What do these changes mean for you?
The changes coming into effect on 1 July 2024 are designed to provide financial support to both individuals and businesses. From tax cuts and increased superannuation contributions to energy relief credits and updated thresholds for vehicle-related taxes, these measures aim to improve financial wellbeing and stimulate economic activity.
Staying informed about these updates will help you make the most of the new opportunities. Here are a few steps to take to ensure you’re well-prepared for these proposed changes and for the financial year ahead:
- Review your income: Understand changes to your current tax bracket and how the cuts affect your take-home pay.
- Check your superannuation contributions: Adjust your contributions if needed to take advantage of the higher caps.
- Consider vehicle and asset purchases: Be aware of the new thresholds and depreciation limits when purchasing a car or other assets for you or your business.
- Monitor energy bills: Ensure you are receiving the energy relief credits where applicable.
Staying informed and proactive about these changes will help you optimise your financial wellbeing and make the most of the benefits available to you.
Want to know more about the incoming changes come July 1 and how they may affect you? Get in touch with one of our trusted accountants or advisors today!
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The material and contents provided in this publication are general and informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained
