2024 Year-End Tax Wrap: What Happened and a Look Ahead (Jan 25 Tax Update)

Relevant For:

Small-medium business owners, not-for-profits, and individuals with student loans or superannuation considerations.

Key Points:

• Stage 3 personal income tax cuts begin 1 July 2024.
• HELP indexation pegged to lower of CPI or WPI.
• Uncertainty for instant asset write-off threshold for 2025FY.
• Bonus 20% energy incentive deduction for eligible assets.
• New annual reporting for Not-For-Profits claiming tax exemption.
• Superannuation guarantee rate rises to 11.5%.
• Foreign resident capital gains withholding rate up to 15%.
• Many proposed changes still pending, such as Division 296 tax and payday super.

Full Article:

At the close of 2024, we step back and reflect on notable tax changes from the past year and prepare for what’s coming in 2025.

What Happened in 2024

• Stage 3 Personal Income Tax Cuts: From 1 July 2024, revised PAYG withholding rates apply.
• Student Loan Indexation Reform: HELP loan indexation is now tied to the lower of CPI or WPI. This shift reduced the 7.1% and 4.7% rates to 3.2% and 4% respectively, potentially saving borrowers billions in total.
• Small Business Instant Asset Write-Off (IAWO): The threshold rose to $20,000 until 30 June 2024 for businesses with a turnover under $10 million.
• Energy Incentive: Businesses with a turnover under $50 million can claim an additional 20% deduction for the cost of eligible energy-efficient assets used or installed by 30 June 2024.
• Reporting for Not-for-Profits (NFPs): NFPs self-assessing as tax exempt must lodge an annual self-review return.
• Superannuation Guarantee Rate: From 1 July 2024 to 30 June 2025, it’s 11.5%.
• myGovID Renamed to myID: Same login and identity strength, just a new name. Watch out for scam emails and texts impersonating myID.
• Penalty Unit Increase: From 7 November 2024, the value of a penalty unit rose to $330, affecting potential fines for tax non-compliance.
• Foreign Resident Capital Gains Withholding: From 1 January 2025, the rate climbs to 15%, and the $750,000 threshold is removed.
• Luxury Car Tax (LCT) Update: The definition of fuel-efficient cars is set to tighten from 1 July 2025 by halving the permissible fuel consumption.
• New Administrative Review Tribunal (ART): The AAT is now the ART. The ART is a newly established federal body responsible for reviewing administrative decisions on their merits, including tax rulings, and has taken over all existing AAT cases.

What’s Still Pending and What to Expect