As the new financial year dawns upon us, it’s essential to stay informed about the latest updates in the Australian taxation system. The Australian government continuously makes changes to the tax laws to ensure a fair and efficient tax regime. In this article, we will discuss the key changes that individuals and businesses should be aware of for the 2024 new financial year.
1. Changes in Individual Income Tax Rates:
The Australian government has made adjustments to the individual income tax rates to provide relief to low- and middle-income earners. From the 2024 financial year onwards, the following changes will take effect:
– The low-income tax offset (LITO) will increase from $445 to $700. This means that individuals earning below $37,000 will receive a tax offset of up to $700.
– The top threshold of the 19% tax bracket will increase from $45,000 to $47,000.
– The top threshold of the 32.5% tax bracket will increase from $120,000 to $125,000.
These changes aim to reduce the tax burden on lower-income individuals and provide moderate relief for middle-income earners.
2. Expansion of the Single Touch Payroll (STP) System:
The Single Touch Payroll system, which was introduced in 2018, is expanding its coverage in the 2024 financial year. STP requires employers to report payroll information, including wages, superannuation contributions, and PAYG withholding, to the Australian Taxation Office (ATO) in real time.
Starting from July 1, 2024, all employers, regardless of their size, will be required to adopt the STP system. This change will enhance the ATO’s ability to monitor compliance and reduce errors in reporting, ensuring that all employees’ superannuation contributions are accurately recorded.
3. Changes to Capital Gains Tax (CGT) for Investment Properties:
Investors in Australian residential property will face changes to the Capital Gains Tax (CGT) rules. From the 2024 financial year, the following measures will be implemented:
– The CGT discount for individuals and trusts will be reduced from 50% to 25%. This means that only 25% of the capital gain will be eligible for the discount when the property is held for more than 12 months.
– The CGT discount for superannuation funds will remain unchanged at 33.3%.
These changes aim to promote housing affordability by reducing tax concessions for property investors and encouraging the availability of housing for owner-occupiers.
4. Strengthening the Tax Avoidance Measures:
The Australian government is continuing its efforts to combat tax avoidance and aggressive tax planning. The Australian Taxation Office will be granted additional resources and powers to detect and deter tax avoidance schemes.
The Tax Avoidance Taskforce will focus on multinational companies, high-wealth individuals, and large businesses to ensure compliance with the tax laws. These measures aim to maintain the integrity of the tax system and ensure that everyone pays their fair share of tax.
5. Increased Support for Small Businesses:
To provide support to small businesses, several initiatives will be introduced in the 2024 financial year:
– The instant asset write-off threshold will be increased from $150,000 to $200,000. This will allow small businesses to claim an immediate deduction for eligible assets purchased for their business.
– The temporary full expensing measure, which allows businesses to fully deduct the cost of eligible depreciating assets, will be extended for an additional year until June 30, 2024.
These measures aim to stimulate investment and support the growth of small businesses, which play a vital role in the Australian economy.