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Budget Update 2024-25: A Focus on Cost of Living Relief with limited impact on SMSFs

May 15, 2024, 16:04 PM
Craig Stone

By Craig Stone
General Manager, Quality & Technical Services


The 2024-25 Federal Budget, unveiled by the Australian Government, places a strong emphasis on easing the burden of rising living costs for individuals and businesses across the nation. While the Budget doesn’t directly impact the SMSF sector, it introduces several measures aimed at providing financial relief and supporting economic growth.

Personal Income Tax Cuts and Cost of Living Assistance

In line with previously legislated changes, the Budget confirms the implementation of permanent personal income tax cuts effective from July 1, 2024. These tax cuts are expected to provide relief to individuals by increasing their disposable income and helping them manage the escalating cost of living.
Additionally, the Government has announced a one-off "Power Bill Relief" initiative, providing a $300 energy rebate to every Australian household and a $325 rebate to eligible small businesses. These rebates will be automatically applied to electricity bills in quarterly instalments, starting from July 1, 2024, offering immediate relief from rising energy costs.

Superannuation on Paid Parental Leave

In a move to support new parents and address the gender gap in superannuation balances, the Government will introduce superannuation contributions on paid parental leave payments (effective July 1, 2026).  Eligible parents will receive an additional payment based on the Superannuation Guarantee rate (will be increased to 12% by then) of their paid parental leave payments, with contributions made directly to their superannuation funds.
This initiative aims to reduce the impact of career breaks on retirement savings and promote greater financial security for parents.

Strengthening Tax Compliance and Combating Fraud

The Budget allocates $187 million over four years to enhance the Australian Taxation Office's (ATO) capabilities in combating fraud within the tax and superannuation systems. A significant portion of this funding, $78.7 million, will be dedicated to upgrading the ATO's information and communication technologies, enabling more efficient detection and prevention of suspicious activities in real time.
The allocation of resources will strengthen the ATO's risk profiling capabilities for prospective SMSF trustees. This initiative can effectively target instances of fraudulent activity and illegal early release of superannuation benefits, helping to preserve the integrity of the SMSF sector.

Payday Superannuation and SuperStream Enhancements

To enhance workplace productivity and support the transition to payday superannuation, the Government has allocated funding to assist employers in adopting and complying with the proposed changes. Under the payday superannuation system, employers will be required to pay their employees' superannuation contributions simultaneously with their salary and wages, departing from the traditional quarterly payment system.
Additionally, the Budget includes funding for the SuperStream Gateway Network Governance Body, which plays a crucial role in maintaining the integrity of the Superannuation Transaction Network.
While the 2024-25 Federal Budget does not introduce major reforms specific to the SMSF sector, it delivers targeted measures to alleviate the cost of living pressures and support economic growth. The initiatives aimed at personal income tax cuts, energy bill relief, superannuation contributions on paid parental leave, and small business support are expected to have a positive impact on individuals and businesses across the country. Additionally, the Government's commitment to strengthening tax compliance and combating fraud within the superannuation system is a welcome step towards indirectly preserving the integrity of the SMSF sector.