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Federal Budget 2024

Federal Budget Report 2024

Our Budget Report outlines this year’s Federal Budget 2024/ 2025 key economic forecast indicators and key tax and economic measures as announced by the Government on 14 May 2024.

Insights, analysis & key takeaways.

Australian Federal Budget at a Glance

Andersen in Australia’s Budget Report outlines this year’s Federal Budget 2024/25 key economic forecast indicators and key tax and economic measures as announced by the Government on 14 May 2024. Our report provides a reference point, insight, and commentary on what these changes may mean for you, your employees, and your business.

Treasurer Jim Chalmers handed down his third Federal Budget in Canberra, highlighting the Australian Government’s plans for revenue and expenditure in 2024-25 and beyond. The Government has positioned this year’s Budget as one that seeks to balance competing priorities including providing cost of living relief, responsible economic management, and investing in a Future Made in Australia.

In contrast to previous years, tax measures are not a major component of the 2024-25 Budget. Aside from the previously legislated personal tax cuts effective from 1 July 2024, the Government is leveraging the tax system to encourage investment in sectors like hydrogen production and critical minerals as part of its Future Made in Australia initiative. Small businesses will benefit from an additional year of the instant asset write-off for depreciating assets. Additionally, new tax changes have been introduced that impact multinational corporations.

Delivered amidst an uncertain global economic environment, this year’s budget aims to address immediate cost-of-living pressures while investing in long-term sustainable growth. It sets out measures to create jobs, drive innovation, and foster investment through a series of targeted initiatives.

The budget this year is expected to show a surplus of $9.3 billion thanks to a continuing revenue windfall, but it is projected to slip back into larger deficits from 2024-25.

2024/5 EOFY inflation projections < 3%

* year-on-year to March ’24

Corporate & MNE Measures

For MNEs the Budget highlights the Government’s continuing perseverance on ensuring multinational tax integrity with further extension and funding to the ATO’s anti-avoidance tax task force program, introducing new penalties for avoidance of royalty withholding tax (RWT), tightening foreign residents’ capital gains tax (CGT) regime, and postponing the start date of the measure to expand the general anti-avoidance rule (GAAR).

The key measurements for corporate and global tax strongly correlate with the ATO’s increased activities on intangibles and anti-avoidance behaviour demonstrated in the numerous recent tax alerts and rulings, practical compliance guidelines and court cases. In particular, the current PepsiCo court case plays a significant role as it showcases the ATO’s view on embedded royalties and how these could lead to judgement of tax-evasion behaviour.

For MNE’s the key takeaways from the budget are to continue to be extremely diligent when setting up or reviewing international structures and agreements, ensuring these are documented appropriately – not only from a transfer pricing perspective but also from the perspective of the multinational anti-avoidance rules and diverted profits tax.

Deferral of the expansion of the general anti-avoidance rule for income tax

The government will amend the start date of the measure to expand the general anti-avoidance rule (GAAR) for income tax (Part IVA of the Income Tax Assessment Act 1936) to income years commencing on or after the day the amending legislation receives Royal Assent. This is regardless of whether the scheme was entered into before that date. This will effectively be a deferral from the original start date of 1 July 2024.

Businesses should seek advice and review any transactions they have entered, or propose to enter into, to ensure that they have evidence that commercially supports the tax positions adopted.

Andersen in Australia Comment:

The deferral of the extension to the GAAR of the foreign tax purpose test and reduced WHT raises the question of why this will need more time. It would be expected that the reduced WHT rate and foreign tax purpose test would be relatively straightforward law changes. However, complications may arise from how the reduced WHT might impact treaties, and the government might also be holding their breath on the outcome of the PepsiCo case before making this definite.  

Shelving the 2022/23 measure of denying deduction for intangibles in low tax jurisdiction

The Government will not proceed with the measure announced in the 2022/23 October “Mini Budget” to deny deductions to SGE’s (entities with global revenue of at least $1.2 billion) for payments relating to intangibles

Expansion to the proposed foreign residents’ capital gains tax (GGT) regime

The announced amendments to the foreign resident CGT regime for events on or after 1 July 2025 to:

  • clarify and broaden the types of assets that foreign residents are subject to CGT on;
  • amend the point-in-time principal asset test to a 365-day testing period; and
  • require foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, prior to the transaction being executed.

Increased funding to ATO anti-avoidance task force

The government will extend the ATO Tax Avoidance Taskforce for 2 years from 1 July 2026 to pursue key tax avoidance risks, with a focus on multinationals, large public and private businesses, and high-wealth individuals.

This measure is estimated to increase receipts by $2.4 billion over 5 years from 2023-24.

Introducing new penalties on avoidance of royalty withholding tax (RWT) for SGEs

In this measure the government has announced that it will also introduce this provision from 1 July 2026. It will apply penalties to SGEs that are found to have mischaracterised or undervalued royalty payments, to which royalty withholding tax would otherwise apply. While details around this measure are yet to be detailed, it is likely to be directed towards cases of “embedded royalties”, where valuable rights to use intellectual property are provided on a royalty free basis together with goods or services.

Small To Medium Enterprises

The measures announced in the Federal Budget pro- vide significant support to small to medium enterprises (SMEs) in Australia with the aim to improve cash flow, reduce operational costs and encourage sustainable business practices. The government is focussed on helping SMEs navigate current economic challenges and investing into their long-term growth. Collectively, the initiatives announced provide immediate financial benefits but also lay the groundwork for sustainable growth and operational efficiency, strengthening the overall economic landscape for SMEs in Australia.

“Small businesses should review its capital expenditure planning and take this opportunity so that its tax deduction can be optimised”

Instant Asset Write Off

Small businesses, with an aggregated annual turnover of less than $10 million, will continue to be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025.

Supporting small business

The Government will provide $41.7 million over four years from 2024–25 to support small businesses.

Funding includes:

  • $25.3 million over four years from 2024–25 to support the Payment Times Reporting Regula- tor to implement reforms recommended by the statutory review of the Payment Times Reporting Act 2020, including increased resourcing for the Regulator and upgrading the Regulator’s ICT infrastructure.
  • $10.8 million over two years from 2024–25 to extend the Small Business Debt Helpline and the NewAccess for Small Business Owners pro- gram to continue to provide financial counselling and mental health support for small business owners.
  • $3.0 million over two years from 2024–25 to implement the Government’s response to the Review of the Franchising Code of Conduct, including by investigating the feasibility of a licensing model and remaking and updating the Franchising Code of Conduct prior to its expiration in April 2025
  • $2.6 million over four years from 2024–25 for the Australian Small Business and Family Enterprise Ombudsman to support unrepresented small businesses to navigate business-to-business disputes through alternative dispute resolution.

In addition, the Government will provide direct bill energy bill relief in the form of $325 rebate to eligible small businesses.

Investments & Incentives

Reforms to strengthen Australia’s Foreign Investment Framework

As announced by the Treasurer May 1, 2024, in the lead-up to the Budget, the Government will reform and renew Australia’s foreign investment framework to better serve investors, boost the economy, and align with the national interest. This initiative aims to enhance Australia’s economic security and attract more investments.

The Government will adopt a risk-based approach to reviewing foreign investment proposals, making the framework stronger, more stream- lined, and more transparent.

In this regard, an updated foreign investment policy document has been recently released and can be accessed on the Treasury website. Additionally, Treasury will provide more details and public guidance on its approach to foreign investment and tax integrity over the coming months.

Film Producer Tax Offset

The Government will remove both the minimum length requirements for content and the above-the-line cap of 20 per cent of total qualifying production expenditure for the Producer Tax Offset.

Under the current Producer Tax Offset, the amount of the refundable offset is:

  • 40% of the company’s qualifying Australian production expenditure (QAPE) on a feature film
  • 20% of the company’s total QAPE on a film that is not a feature film.

Future Made in Australia – Making Australia a Renewable Energy

The Government will invest an estimated $22.7 billion over ten years from 2024–25 to accelerate investment in Future Made in Australia priority industries, including renewable hydrogen, green metals, low carbon liquid fuels, refining and processing of critical minerals and manufacturing of clean energy technologies including in-solar and battery supply chains. This includes the introduction of the following incentives:

•  Critical Minerals Production Tax Incentive – it will provide a production incentive valued at 10% of relevant processing and refining costs for Australia’s 31 critical minerals. This incentive will be applicable for up to 10 years per project, for production between 2027–28 and 2040–41 by projects that reach final investment decisions by 2030.

•  Hydrogen Production Tax Incentive – it will provide a $2 incentive per kilogram of renewable hydrogen produced for up to ten years per project, between 2027–28 and 2040–41 for projects that reach final investment decisions by 2030

Global Mobility & Migration

The Federal Budget has not provided new announce- ments on the tax residency rules for individuals. The level of migration has been reduced to assist with high level of demand for housing. While original aim of the Government was to simplify individual tax residency criteria and stream- line visa processes, limited measures attracting skilled migrants to support economic growth had to be balanced, to reflect a broader strategy to address workforce challenges, and stimulate economic growth through targeted immigration policies.

“..the Government has signalled changes to the individual tax residency rules to better align with the current mobility of the modern workforce.”

No further reforms to Individual Tax Residency rules

There was no indication in this Budget on whether the current Government intends to proceed with previously announced changes to the tax residency rules for individuals.

Based on the original recommendations from the 2019 Board of Taxation, in 2021-2022 Budget, the Government has signalled changes to the individual tax residency rules to better align with the current mobility of the modern workforce. While extensive consultations took place late last year, there were no further announcements in this Budget. The Australian Taxation Office’s current approach and guidance in determining the tax residency of individuals is provided in Taxation Ruling TR 2023/1.

Migration System Reforms

The Government will provide $18.3 million over four years from 2024 – 25 to further reform Australia’s migration system to drive greater economic prosperity and restore its integrity.

Funding includes:

  • $15.0 million over three years from 2024- 25 for information and education activities to provide migrant workers with accurate and appropriate information about workplace safeguards, protections and compliance measures related to migration laws.
  • $1.9 million in 2024- 25 to conduct a data- matching pilot between the Department of Home Affairs and the Australian Taxation Office of income and employment data to mitigate the exploitation of migrant workers and abuse of Australia’s labour market and migration system.

The Government will implement a new National Innovation visa, replacing the current Global Talent visa (subclass 858) from late 2024, to target exceptionally talented migrants who will drive growth in sectors of national importance.

The Business Innovation and Investment visa pro- gram (BIIP) will cease, with refunds of the visa ap- plication charge provided from September 2024 for those who wish to withdraw their BIIP application.

The Government will also reduce the work experience requirement for the Temporary Skill Shortage (subclass 482) visa from two years to one year for all applicants from 23 November 2024 onwards.

This measure builds on the 2023-24 MYEFO measures titled Migration System Reforms and Migration System Integrity.

Permanent Migration Program 2024-25 planning levels and multi-year planning.

The Government will set the 2024-25 permanent Migration Program planning level at 185,000 places and allocate 132,200 places (around 70 per cent) to the Skill stream. From 2025- 26, the Government will extend the planning horizon for the permanent Migration Program from one year to four years. Maintaining around 70% of places for Skill stream will help address Australia’s long-term skill needs. Extending the planning for the permanent Migration Program from one year to four years will enable better cross-government planning in the future.

Mobility Arrangement for Talented Early-professionals Scheme (MATES) and extending the validity of the Business Visitor visa for Indian nationals.

The Government will implement a new Mobility Arrangement for Talented Early-professionals Scheme (MATES) program for Indian nationals from 1 November 2024. MATES will provide a new mobility pathway for 3,000 Indian graduates and early career professionals (aged 18 to 30 years at the time of application), with knowledge and skills in targeted fields of study to live and work in Australia for up to two years.

This measure is part of the Australia-India Migration and Mobility Partnership Arrangement (MMPA).

The Government is proposing to lengthen the validity of the Visitor visa (subclass 600) Business Visitor stream for Indian nationals from up to three years to up to five years.

Work and Holiday visa – visa pre-application process for certain Working Holiday Maker programs

The Government will introduce a visa pre-application (ballot) process for the capped Work and Holiday (subclass 462) visa program for China, Vietnam and India from 2024- 25. The ballot process will help to manage program demand and application processing times for these countries.

ATO compliance measures

Strengthening Tax Compliance

Extending the Personal Income Tax Compliance Program

The Government will extend the ATO Personal Income Tax Compliance Program for one year from 1 July 2027.

This extension will enable the ATO to continue delivering a combination of proactive, preventative, and corrective activities in key areas of non-compliance, including overclaiming of deductions, incorrect reporting of income, and inappropriate tax agent influence. It will also allow the ATO to maintain its focus on emerging risks to the tax system, such as deductions relating to short-term rental properties.

The government has proposed to increase the amount of the Commonwealth penalty unit from A$313 to A$330, with effect from 1 July 2024, which is currently before the Parliament

Australian Taxation Office Counter Fraud Strategy

The Government will provide $187.0 million over four years from 1 July 2024 to the ATO to strengthen its ability to detect, prevent and mitigate fraud against the tax and superannuation systems.

Funding includes:

•  $78.7 million for upgrades to information and communications technologies to enable the ATO to identify and block suspicious activity in real time.

•  $83.5 million for a new compliance taskforce to recover lost revenue and intervene when attempts to obtain fraudulent refunds are made.

•  $24.8 million to improve the ATO’s management and governance of its counter-fraud activities, including improving how the ATO aids individuals harmed by fraud.

This will have effect from the start of the first financial year after Royal Assent.

Amendments to existing measures

government will amend the tax law to give the Commissioner of Taxation a discretion to not use the taxpayer’s refund to offset old tax debts, where the Commissioner had put that old tax debt on hold prior to 1 January 2017.

This discretion will apply to individuals, small businesses and not-for profit organisations.


The Federal Budget unveiled meaningful measures to the country’s superannuation landscape. Already legislated reforms aim to enhance the efficiency, simplicity, and effectiveness of the superannuation system. The combination of already legislated and new measures reflect a broader effort to strengthen retirement savings and bolster financial security for all Australians, narrowing superannuation gender gap for those taking parental leave.

“Paid Parental Leave (PPL) is the measure, which is expected to close the superannuation gap, predominantly for women who take time out of the workforce to raise the family.”

Superannuation payments

Under the existing proposals, employers will be required to pay their employees’ superannuation guarantee entitlements on the same day when they pay salary and wages. Subject to the passage of legislation, this measure is expected to apply from 1 July 2026.

Superannuation is to be paid on paid parental leave scheme payments from 1 July 2025

The government will provide $1.1 billion over four years from 2024- 25 (and $0.6 billion per year on- going) to pay superannuation on Commonwealth government-funded PPL for births and adoptions on or after 1 July 2025.

Eligible parents will receive an additional payment based on the Superannuation Guarantee (12 per cent of their PPL payments), as a contribution to their superannuation fund. The proposed reforms are further expanding the PPL scheme by increasing the maximum period of flexible paid PPL by two weeks each year from 1 July 2024 to 26 weeks from 1 July 2026.

Changes to superannuation guarantee entitlements

The Government has already legislated an increase in minimum superannuation guarantee (SG) payment, which will increase from 11% to 11.5% from 1 July 2024.


Personal tax rates: Revised Stage 3 tax cuts confirmed from 2024-25

On 25 January 2024, the Australian government made an announcement on the revision of the Stage 3 tax cuts that will apply from 1 July 2024. The revised stage 3 tax cuts have been legislated prior to the 2024/2025 Budget and no further changes were announced in the Budget.

The tax cut highlight includes:

  • lowering the 19% tax rate to 16%
  • reducing the income threshold for the 32.5% rate to 30%,
  • raising the $120,000 threshold for the 37% rate to $135,000, and
  • increasing the $180,000 threshold for the 45% rate to $190,000.

The revised tax rates and income thresholds that would apply from the 2024/2025 financial year as follows:


Taxable Income ($) Tax Payable ($)
0 – 18,200 NIL
18,201 – 45,000 NIL + 16% of excess over $18,200
45,000 – 135,000 4,288 + 30% excess over 45,000
135,001 – 190,000 31,288 + 37% of excess over 135,000
> 190,001 51,638 + 45% excess over 190,000

Foreign Resident:

Taxable Income ($) Tax Payable ($)
0 – 135,000 30%
135,001 – 190,000 37%
> 190,001 45%

Working Holiday Visa Holders:

Taxable Income ($) Tax Payable ($)
0 – 45,000 15%
45,001 – 135,000 30%
135,001 – 190,000 37%
> 190,001 45%

No changes were announced for the low-income tax offset (LITO) in the 2024/2025 Budget. Individuals earning below $66,667 will continue to qualify for the LITO for a maximum tax offset of up to $700.

Medicare levy low-income thresholds for 2023-24

The changes to the Medicare Levy thresholds were announced on 25 January 2024 when they announced the changes to on the re- vised Stage 3 tax cuts (as above). No further changes were made in the 2024/2025 Budget.

From July 1, 2023, the Government has raised the Medicare Levy low-income thresholds for singles, families, seniors, and pensioners. This adjustment aims to offer relief from the rising cost of living.

The changes for the Medicare levy low-income threshold which will apply from the 2023/2024 income year are as follows:

  2023/24   2024/25
Singles $24,276   $26,000
Families (no children) $40,939 $43,846
Families (per dependent) $3,760   $4,027
Single Seniors (+ SAPTO eligible pensioners) $38,365   $41,089
Seniors (+pensioners) $53,406   $57,198

For any enquiries related to this update, contact us today.

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