New Financial Year Tax and Super Changes

In 2024, Australia is making some changes to taxes and superannuation as a result of the federal budget 2024-25. The income tax rates and thresholds are getting a major overhaul, which means adjustments in how much tax you’ll pay at different income levels. On top of that, there are several important updates to superannuation rules, affecting how much you can contribute and the rates at which contributions are made. These 2025 financial year tax and super changes aim to help Australians save more for retirement and make the tax system more streamlined.

Tax Changes in FY 2024-25

Starting July 1, 2024, Australia’s income tax rates are getting a makeover to help ease the strain of rising living costs. These changes mean everyone will see a bit more money in their pockets as their tax bills shrink. The government’s goal with these tweaks is to help people manage their finances better. While they may be just tweaks, they have been implemented in an attempt to carry the economy by letting everyone preserve more of what they earn.

These new tax changes affect a wide range of taxpayers, with specific impacts on various income groups:

1. Low to Middle-Income Earners: These earners will benefit from the reduction in the 19% tax rate to 16% for income between $18,201 and $45,000.
2. Middle-Income Earners: For those earning between $45,001 and $135,000, the tax rate has been reduced from 32.5% to 30%.
3. High-Income Earners: Individuals with incomes between $135,001 and $190,000.

Generally, all Australian taxpayers will see some benefit from these threshold changes as the adjustments seek to lighten the tax burden and simplify the tax structure, allowing more people to keep a larger portion of their earnings.

New Tax Thresholds and Rates Breakdown:

Here’s the breakdown of the new tax rates:

Income Range	Marginal Tax Rate	Tax Payable
$0-$18,200	0%	Nil
$18,201-$45,000	16%	16% of excess over $18,201
$45,001-$135,000	30%	$4,288 + 30% of excess over $45,000
$135,001-$190,000	37%	$31,288 + 37% of excess over $135,000
$190,001 and over	45%	$51,638 + 45% of excess over $190,000

Superannuation Changes in FY 2024-25

The 2024 Australian budget brings some important updates to superannuation to boost retirement savings and make the system fairer. These changes build on previous improvements to make superannuation more accessible for more people. The key updates include higher contribution caps, a gradual increase in the Superannuation Guarantee rate, and new super contributions for paid parental leave. These changes show the government’s dedication to helping Australians secure their financial future and get the most out of their superannuation savings- the big winners being young families, employees, and retirees. The following is an overview of these changes:

1. New Superannuation Contribution Caps: The before-tax contribution cap has increased from $27,500 to $30,000 per financial year. The after-tax contribution cap has risen from $110,000 to $120,000 per year, with the bring-forward rule allowing up to $360,000 over three years for those eligible. Eligibility is if your total super balance, on 30 June of previous financial year, was less than $1.66 million. All those who maximise their superannuation contributions will be positively affected in the long run.
2. Government-Funded Paid Parental Leave (PPL):  From July 1, 2025, the government will contribute to superannuation for parents on PPL, calculated at 12% of the PPL payments. This change is expected to benefit approximately 180,000 families annually.
3. Superannuation Guarantee Rate: The compulsory employer superannuation contribution rate will increase from 11% to 11.5% starting July 1, 2024, and will rise further to 12% on July 1, 2025. This increase is part of a planned progression to ensure Australians have more savings for retirement. All employees and employers are impacted by this increase.
4. Work Test: For those aged 67 to 74, the work test has been loosened. Individuals in this age group can now make concessional contributions and salary sacrifice contributions without needing to meet the work test, which previously required them to be gainfully employed for at least 40 hours over a 30-day period in the financial year. Meaning you can make contributions without jumping through as many hoops.

Unused Caps and Self-managed Superannuation Funds (SMSF)

1. Unused Cap Amounts: Unused portions of concessional contributions from the 2018-19 financial year will expire on July 1, 2024, due to the five-year carry-forward rule. This encourages individuals to maximise their super contributions within the allowable time frame. Be aware that if you still have made excess concessional contributions, after actualising the unused cap amounts, you may need to pay extra tax.
2. SMSF: Tighter checks are being put in place to ensure self-managed super funds are being properly managed. These checks include:
   1. Enhanced reporting requirements to ensure transparency and accountability.
   1. Increased audit scrutiny with a focus on high-risk areas.
   1. Stricter penalties for non-compliance have been increased.
   1. Emphasis on the need to focus more on investment strategies. Specifically, that they are in the best interest of all fund members.

How These Changes Affect Small Business

While much of the tax and super changes will affect the individual, there are a couple of things that will have a peripheral impact on small business.

1. Administrative Responsibilities: With the strengthening of tax compliance measures there may be an increase in administrative responsibilities.
2. Superannuation Guarantee Rate: The adjustments to the superannuation guarantee rate will affect the contributions that small business employers need to make for their employees, potentially increasing their payroll costs.

Important Dates to Remember

So, let’s get some key dates into your calendar:

For Individuals:

• 31 October 2024: Deadline to lodge your tax return if doing it yourself.
• 15 May 2025: Deadline if you’re using a registered tax agent.

For Businesses:

• 14 July 2024: STP Finalisation deadline.
• 21 July 2024: Monthly BAS for June 24
• 28 July 2024: Q4 FY24 Business Activity Statements (BAS) and SGC are due.
• 21 August 2024: Monthly BAS and IAS for July 24
• 28 August 2024: TPAR (Taxable Payments Annual Reporting) lodgement deadline.
• 21 September 2024: Monthly BAS and IAS for August 24
• 21 October 2024: Monthly BAS for Sept 24
• 28 October 2024: First quarter Business Activity Statements (BAS) and SGC are due.
• 21 November 2024: Monthly BAS and IAS for October 24
• 21 December 2024: Monthly BAS and IAS for November 24
• 28 January 2025: Second quarter SGC lodgements are due
• 28 February 2025: Second quarter Business Activity Statements (BAS) are due.

Remember these dates to avoid any penalties.

Summary

So, that’s the scoop on the latest changes to the 2025 financial year tax and super changes. Make sure you up-to-date with them to maximise your personal and business benefits.

Need a hand with your lodgements or super? Numble are here to help you navigate through it all. Reach out to us, and let’s get your finances sorted this financial year.