Business Bookkeeping Blog

The Australian Government has introduced its annual budget for the year, with the goal of stimulating economic growth, addressing long-term challenges, and enhancing social services. The budget is primarily focused on assisting with the cost of living by providing tax cuts to middle and low-income earners, while also allocating funds to areas such as health, education, small businesses, and various other sectors. If you have any inquiries regarding the impact of this budget on your personal situation, feel free to reach out for further clarification.

Tax Cuts

One of the main highlights of the budget is the implementation of tax cuts aimed at middle and low-income earners, providing a total relief of $20 billion for taxpayers. The government’s objective is to put more money into the hands of Australians, enabling them to increase spending and boost the overall economy.

Approximately 10 million taxpayers will benefit from these tax cuts, with the greatest advantages going to low and middle-income earners. Individuals earning between $50,000 and $90,000 per year can expect a tax cut of up to $1,080 annually, while those earning less than $50,000 per year will receive up to $690 in tax relief.

Support for Small Businesses:

The government has also introduced a $1.5 billion support package for small businesses, particularly those located in regional areas. This package includes tax breaks, grants, and loans aimed at fostering growth and job creation within small businesses.

Small businesses with an annual turnover of less than $50 million will have the opportunity to claim a 20% tax discount for expenditures related to electrification or energy efficiency. This “Energy Incentive” applies to expenses such as electrified heating and cooling, induction cooktops, more efficient appliances, as well as the installation of batteries and heat pumps. The maximum claimable amount is $20,000, allowing eligible spending of up to $100,000.

Furthermore, the $20,000 instant asset write-off for small businesses will remain in effect until mid-next year. This provision allows businesses to deduct the full cost of assets up to $20,000 that were installed or ready for use before the specified date.

Superannuation

Significant changes are planned for superannuation payments to ensure that workers receive the full amount they are entitled to and improve retirement incomes, particularly for younger employees. Starting from July 2026, employers will be required to make superannuation contributions with each payday instead of quarterly. This change aims to increase the overall amount workers receive due to compounding interest and make it more difficult for businesses to avoid superannuation payments.

According to government estimates, a 25-year-old earning an average wage could benefit by approximately $6,000 at retirement due to this change. However, individuals with larger superannuation accounts will experience an increase in the tax rate for balances exceeding $3 million. Starting from the 2025 financial year, future earnings on super balances over $3 million will be taxed at a rate of 30%, affecting around 80,000 individuals.

Aged Care Workers

In a $11.3 billion package, Australia’s aged care workers, including registered nurses and home care professionals, are set to receive a 15% pay increase. This pay rise will take effect from July, with some workers receiving an annual increase of up to $10,000. The low wages in the aged care sector have contributed to a shortage of workers, and this pay increase aims to address that issue.

The pay increase will result in an annual rise of over $10,000 for registered nurses and over $7,500 for enrolled nurses. Additionally, the federal government plans to redirect some of its aged care spending, resulting in a projected decrease of $2.2 billion in payments for residential aged care over the next three years, as older.

Child care

Commencing on July 1st, the government will implement $4.7 billion in childcare subsidy changes. These changes primarily benefit families with children in childcare and a household income below $530,000. Families earning less than $80,000 will see an increase in subsidy for their first child to 90%, while those earning more than $80,000 will experience a gradual decrease based on their income. Some families may witness up to a 20% increase in their subsidy.

Energy bills

To provide relief, the government will offer up to $500 in energy bill assistance to pensioners, veterans, concession cardholders, and individuals receiving government support payments. Additionally, small businesses will receive up to $650 to offset price increases in 2023 and 2024. Approximately 5.5 million households will benefit from rebates of up to $350 in Western Australia, the Northern Territory, and the ACT, and up to $500 in other states facing higher price increases. Furthermore, a separate fund will be established to offer low-interest loans to homeowners for improving energy efficiency in their homes.

General Practitioners

The government plans to triple the bulk-billing incentive for general practitioners (GPs) for common consultations with children under 16, pensioners, and other concession cardholders. This initiative aims to encourage people to visit GPs rather than relying on hospital care. The increased bulk-billing incentive will allow GPs to offer bulk-billing to around 11.6 million eligible Australians, eliminating out-of-pocket expenses. The incentive will be higher in regional and rural areas, costing the government $3.5 billion over five years.

Additionally, the government intends to establish eight new Medicare Urgent Care Clinics with extended operating hours. These clinics will provide bulk-billing services and urgent care to patients in need.

Home Owners

A new scheme will be introduced to provide low-interest loans to households seeking to improve their energy efficiency. The program aims to offer 110,000 loans, encouraging investments in energy-efficient appliances, solar panels, and double-glazed windows, among other measures.

Indigenous Australians

An allocation of $1.9 billion has been designated to enhance economic opportunities and living standards for Aboriginal and Torres Strait Islander people. Out of this amount, over $500 million will be used to improve cancer outcomes for First Nations people, including an extension of the Tackling Indigenous Smoking program. Additionally, $410 million is earmarked for remote housing in the Northern Territory, Wreck Bay Village, and Jervis Bay.

$150 million will be allocated to Indigenous education and languages, with an additional $46 million provided to Aboriginal Community Controlled Organisations for skills training and funding for the continuation of the Indigenous ranger program. Another $250 million will be utilized to enhance community safety, services, education, and job creation in Central Australia.

Over a period of three years, the federal government has committed over $360 million for the Indigenous Voice to Parliament referendum, which includes funds for civic campaigns. An additional $10.5 million will support extra mental health services for First Nations people during the referendum. Furthermore, $1.7 million is allocated for the appointment of an interim First Nations Aged Care Commissioner.

Environment

Over the next four years, $355 million will be allocated to Commonwealth national parks and marine reserves. Among this funding, $90 million will be dedicated to enhancing water, sewerage, and electricity services for the Mutitjulu community, the traditional owners of Uluru-Kata Tjuta National Park. The Australian Institute of Marine Science will receive $163 million over four years, along with an additional $43 million per year thereafter, to strengthen their capabilities in science, technology, and staff expansion.

To enforce federal environmental laws, a new agency called Environment Protection Australia will be established, with a budget of $121 million over four years. Additionally, $51 million has been set aside to create “Environment Information Australia,” which aims to be a reliable source of environmental information. Moreover, $104 million will be utilized for the review of the Murray Darling Basin Plan, and $45 million will support basin communities.

Heavy Vehicle Road User Charge

The heavy vehicle road user charge will experience an annual increase of 6% over the next three years, reaching 32.4 cents per litre of diesel by 2025-26, up from the current rate of 27.2 cents.

This decision was made collectively by federal, state, and territory transport ministers, and the revenue generated from the increased charge is commonly allocated to fund road maintenance and repair.

Medication

Starting in September, the cost of hundreds of medications listed on the Pharmaceutical Benefits Scheme will be reduced by nearly half. This will be accomplished by allowing individuals with chronic illnesses to purchase a two-month supply of medicine with a single prescription, thus saving them co-payment fees for each purchase. The initial list of 100 medications includes commonly used medicines for conditions such as type 2 diabetes, depression, heart failure, asthma, and high cholesterol. Overall, 320 medications will benefit from this program, with the final batch set to be included by September of next year.

Arts

$286 million over a five-year period has been pledged to bolster the arts sector. Most of the funding will be directed towards Creative Australia to implement the government’s arts program and establish four new arts bodies, including a First Nations-led body, Music Australia, Writers Australia, and Creative Workplaces.

Additionally, $112 million over four years will be allocated to incentivise big-budget screen productions to Australia by increasing the Location Offset rebate and creating more local job opportunities.

To address the concerns of Australia’s national collecting institutions, the government will provide $535 million in funding. Nine institutions will receive funding to enable them to preserve their collections adequately.

Single Parents

The government has decided to raise the cut-off age for the single parenting payment from 8 to 14 years old. This decision will mostly reverse a previous cut made more than a decade ago during the Gillard and Howard governments. Before this change, single parents were required to apply for JobSeeker once their youngest dependent child reached 8 years of age. With this change, parents will receive an additional $176.90 per fortnight if they are on the base rate, resulting in a total of $922.10 per fortnight. The increase in the cut-off age will benefit around 57,000 parents, mostly women.

Politicians

The federal budget has allocated funds to expand the offices of federal MPs and hire additional staff. Each federal MP will receive funding to hire a new staff member for their electorate office.

The hiring of new staff and changes to travel entitlements will amount to a cost of $40 million annually.

Furthermore, there is a $15 million budget allocation for renovations to Parliament House.

NDIS

The budget has allocated a significant amount of funding to the National Disability Insurance Scheme (NDIS), which is one of the fastest-growing areas of spending.

While the NDIS will continue to expand in the coming years, the federal government aims to control its growth. Starting from mid-2026, the government plans to cap the annual growth of the scheme at 8 percent.

However, Treasury projections indicate that the growth of the scheme may exceed this target. It’s important to note that the NDIS is demand-driven and will remain as such, which means that it will continue to provide the necessary support to its participants regardless of its size.

Vaping

In an effort to prevent a “new generation” of nicotine addiction, the health minister will heavily regulate vapes and ban disposable vapes, making them accessible only through pharmacies with a prescription. Those who want to use vapes to quit smoking will be able to get prescriptions through their doctors rather than the Therapeutic Goods Administration.

Women

The rules for eligibility for the single parenting payment are changing, which will primarily benefit women.

The new rules raise the eligibility age to include single parents with a child up to 14 years of age, up from the current cut-off of 8 years.

As 91% of recipients are women, this change is particularly beneficial to them.

Although the eligibility for the payment is expanding, the rate will not be increased.

Furthermore, $327 million is being allocated towards women’s safety, including $160 million to support frontline services in partnership with state and territory governments, and $194 million towards various Indigenous women’s safety programs.

Disaster Response

The federal government has committed to establishing a National Messaging System to deliver instant emergency warnings to all mobile devices in a geographic area. It will be operational by late 2024.

Young people

Income support payments for young people will increase by $40 per fortnight for both Austudy and Youth Allowance to help with rising living costs. Additionally, Commonwealth Rent Assistance will see a 15% increase in the maximum rate, costing the government approximately $700 million per year.

The government has allocated $127.3 million over the next four years to create 4,000 additional Commonwealth-supported places at universities, particularly for courses related to the nuclear-powered submarine program, including STEM and management disciplines.

Sport

The budget allocates a significant amount of funds for the 2032 Brisbane Olympics preparations.

Over the next decade, $3.4 billion will be invested, with $2.5 billion designated for the Brisbane Arena and $935 million for 16 new or refurbished venues. However, most of the expenditure will be incurred later this decade.

In addition, the budget includes $240 million for a new stadium on Hobart’s waterfront, known as the Macquarie Point stadium, which was pivotal in the AFL’s efforts to bring a 19th team to Tasmania.

Defence

$11 billion has been allocated to defence spending over the next four years, on top of the already planned increase. The funds will be used to acquire long-range missiles, upgrade bases and ports in the north, and expand the workforce. Additionally, the government will invest $4.5 billion over the next decade, and half a billion annually thereafter, in a nuclear-powered submarine program. The Australian Secret Intelligence Service will also get a $470 million funding boost to “modernise” the agency.

Ukraine

Another $200 million will be spent over two years on additional support for Ukraine during the ongoing war with Russia.

Agriculture

The government has allocated an additional $1 billion over four years to enhance biosecurity, which includes greater regulation, surveillance, and international engagement.

To partially offset the cost of the measure, a “biosecurity protection levy” will be imposed on Australian producers of agricultural, forestry, and fishery products from the middle of next year.

The Pacific

$1.9 billion will be spent to enhance relationships with Pacific nations through various programs over five years. Of the total, $1.4 billion will be utilised to improve Australia’s defence and security presence in the Pacific region.

A sum of $370 million will be spent over four years to extend the Pacific Australia Mobility Scheme, which offers seasonal work visas for Pacific country citizens.

The remaining $114 million will be used to finance humanitarian relief and disaster preparedness projects.

New Migrants

The cost of visa applications will increase by 6 per cent. The move is expected to generate an additional $660 million, which will be utilised to improve visa processing times and reduce the backlog of immigration applications. Working holiday and short-stay visa applicants will experience a more significant increase in fees, with a total hike of 21 per cent on application charges.

Got a question?

If you have any questions about how this budget affects you, please get in touch.

For more information, visit https://budget.gov.au.