With End of Financial Year just around the corner, and following last night’s 24/25 Federal Budget update, we’d like to bring some important reminders to your attention.

In this post:

  • Federal Budget Summary
    • An update on the Instant Asset Write Off
    • Cashflow planning – BAS Refunds
    • Changes to HECS indexation
  • Important dates for superannuation payments
  • Payroll: Changes to the Super Guarantee rate, PAYG Withholding rates, & STP finalisation declarations
  • Director Identification Numbers – a reminder and cautionary tale

As always, please don’t hesitate to contact your client manager should you have any questions.

Federal Budget 2024-2025

The TL/DR: No substantive tax changes for small business or individuals

Last night, Treasurer Jim Chalmers handed down the 2024-2025 Federal Budget, calling it a “responsible and restrained” budget that seeks to balance competing priorities,  including providing cost of living relief and responsible economic management whilst investing in a Future Made in Australia. Compared to recent years, tax measures do not form a large part of this year’s Budget. Besides the already legislated personal tax cuts – which will apply from 1 July 2024 and are included in this Budget’s estimates – the Government has used the tax system to incentivise investment in certain areas (hydrogen production and critical minerals) under its Future Made in Australia.

The points below summarise the key tax elements, provided by Chartered Accountants Australia and New Zealand.

Instant Asset Write-Off

The instant asset write-off scheme for small business will be extended for another year to 30 June 2025. This means small businesses will continue to be able to access the instant asset write off for depreciating assets costing less than $20,000 if they are used or installed ready for use between 1 July 2023 and 30 June 2025. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

NOTE that we are still waiting for the House of Representatives to confirm this week on any further changes to the write-off limit for FY24 to be legislated. Last year’s federal budget proposed to increase the threshold to $30k and apply to businesses with aggregated turnover of $50m and under. However it is important to note that these proposed amendments have not been reflected in the 2024-25 Budget announcement, which indicates that the Government may not be supporting them in the House.

BAS Notification period extended

The ATO’s mandatory notification period for BAS refund retention will be increased from 14 days to 30 days to align with time limits for non-BAS refunds.

The extended period will strengthen the ATO’s ability to combat fraud during peak fraud events like the one that triggered Operation Protego. While legitimate refunds will be largely unaffected, it is worth noting for future BAS’s that if you are expecting a refund you should lodge your BAS as soon as practical to avoid cash flow issues. Any legitimate refunds retained for over 14 days would result in the ATO paying interest to the taxpayer (as is currently the case). The ATO will publish BAS processing times online.

Personal Tax Changes – HECS Indexation

The Government will change the way it indexes HECS. It will now choose whichever is lower between the Consumer Price Index (inflation) or the Wage Price Index (the figure measuring rising wages). This will be back-dated from 1 June 2023 reducing the previous rate from 7.1% to 3.2%, so you/your children may receive a refund on any indexation that may have been applied to HECS loans at 1 June 2023. The estimated indexation factor to be applied on existing HECS loans on 1 June 2024 is currently 4%. You can read more about these changes and FAQs about the indexation credit here.

For detailed information and further related announcements, you can access the Thomson Reuters Federal Budget Report HERE, or the full Budget papers are available at www.budget.gov.au.

Other EOFY Reminders

IMPORTANT REMINDER – Dates for processing superannuation payments

To claim a deduction on superannuation accruals submitted via auto super for the current financial year, Xero have indicated that super batches should be approved no later than 2:00pm AEST, on 18 June 2024.

Even if you do not use Xero for your payroll and auto super, we recommend processing your payment by this date to allow ample processing time and ensure you can claim a deduction in this financial year.


Changes in Super Guarantee Rate

As you would be aware, the super guarantee rate rises from 11% to 11.5% on 1 July 2024. Please ensure your payroll and accounting systems have been updated to incorporate the rate increase for any pay runs made on or after 1 July 2024.

Where you have staff on a salary package that includes super, you have the option on how you implement the SG increase: whether you reduce their hourly rate so their overall package remains the same, or simply apply the new SG rate to their current hourly rate and therefore increasing their overall package by the extra 0.5%.

If you need help to work out how much super you need to pay for your employees after the rate increases, you can use the ATO’s super guarantee contributions calculator.

Changes to PAYG Withholding Rates

From 1 July 2024, the individual income tax rate thresholds and tax tables will change, which will impact your PAYG withholding for the 2025 tax year. While these changes will likely be implemented in your payroll platform automatically, you should be on notice to see new PAYG Withholding amounts in your payroll reports from 1 July onwards.

Single touch payroll (STP) reporting

Remember to make STP finalisation declarations by 14 July 2024 for all employees you’ve paid during the financial year. Make sure to:

  • check your employees’ year-to-date amounts are correct
  • ensure your declaration is for the 2023–24 financial year.

If you realise you’ve made a mistake, fix your STP data as soon as possible and re-finalise. Remember to use good record keeping practices and review your payroll policies and procedures to account for any changes that could impact your business.

Are you a company director? A cautionary tale regarding the Director Identification Number Regime

Director Identification Numbers (DINs) have been required by all company directors since 2022, and we are now starting to see enforcement of criminal and civil penalties for non-compliance. Two Western Australian directors have been convicted and fined $5,000 each for failing to comply with director identification requirements, while a third is facing a maximum penalty of $13,320.

If you would like more information on DINs and how to apply for one, please read our article here.  

The articles, templates, and media posted on this blog do not give business, accounting, taxation or financial planning advice and should not be relied upon as such. The articles are intended to provide information in a summary form and are general in nature. Formal business, accounting, taxation or financial planning advice should be sought in particular matters. O’Connells OBM Pty Ltd accepts no liability in respect of this information and any person acting solely on the information contained within does so entirely at their own risk.