2024 Tax Planning

With the end of the financial year fast approaching, there are some important considerations to keep in mind when reviewing your tax planning strategies for 2024.

Trust Distributions

The ATO has recently released guidance on its compliance approach and viewed on the tax treatment of income from family trusts.

In particular, it is proposing to take a stricter view on income distributions made to low-income taxpayers where other family members benefit from trusts’ funds.

It will therefore be crucial to review trust distributions for 2024 to minimise the risk of ATO review.

Superannuation Contributions

The concessional contributions cap for 2024 remains at $27,500.

For those with superannuation balances below $500,000, unused concessional caps from prior years can be applied as carry forward concessional contributions.

A review of prior years may assist in maximising tax deductions for superannuation contributions and increasing superannuation balances.

Instant Asset Write-Off and Temporary Full Expensing

The instant asset write-off and temporary full expensing ended on 30 June 2023.

Small businesses, with aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed read for use between 1 July 2023 and 30 June 2024.

For assets that are priced at $20,000 or above, which do not qualify for immediate deduction, there is still a provision. These assets can be added to the small business simplified depreciation pool. In the first year of income, these assets can be depreciated at a rate of 15%, and in subsequent years, the depreciation rate will be 30%.

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CoggerGurry Sponsorships

By CoggerGurry • 16 May, 2024

Proud sponsors of Branxholme Wallacedale Football Netball Club in 2024.

2024 Budget - Personal Tax Rates

By CoggerGurry • 16 May, 2024

In the 2024–2025 Federal Budget, the Government did not announce any further changes to the personal tax rates. The Government’s revised Stage 3 tax changes (as announced on 25 January 2024 and enacted into law by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 ) commence from 1 July 2024. The Treasurer said all 13.6 million taxpayers will receive a tax cut from 1 July 2024. The average annual tax cut is $1,888 (or $36 a week). The tax rates and income thresholds from the 2024-25 for residents (as already legislated) are: • taxable income up to $18,200 – nil; • taxable income of $18,201 to $45,000 – nil plus 16% of excess over $18,200; • taxable income of $45,001 to $135,000 – $4,288 plus 30% of excess over $45,000; • taxable income of $135,001 to $190,000 – $31,288 plus 37% of excess over $135,000; and • taxable income of more than $190,001 – $51,638 plus 45% of excess over $190,000. This means, when compared to 2023–2024, that for 2024–2025 the 19% tax rate has been reduced to 16%; the 32.5% tax rate has been reduced to 30%; the 37% tax rate threshold has been increased from $120,000 to $135,000; and the 45% tax rate threshold has been increased from $180,000 to $190,000.

2024 Budget - HECS/HELP debt

By CoggerGurry • 16 May, 2024

The Government recently proposed changes to HECS/HELP debt contained in the budget papers. A student who receives a HELP loan under any of the student loan schemes has an “accumulated HELP debt” with the ATO. The loan is subject to yearly indexation but is otherwise interest-free. Loans that are covered by the system include the following: • HECS-HELP; • FEE-HELP; • OS-HELP; • SA-HELP; • Student Start-up Loan (SSL) Scheme; • ABSTUDY Start-up Loan (ABSTUDY SSL) Scheme; and • Australian apprenticeship support loan (AASL) scheme (renamed from the Trade Support Loan (TSL) Scheme). HELP debts are repaid through the tax system (voluntary repayments can be made at any time). The amount to be repaid each year is a percentage of the taxpayer’s HELP repayment income (and is notified on the income tax assessment for the year). The percentage increases as the HELP repayment income increases. Indexation is applied to any HECS/HELP debt that’s older than 11 months, once a year on 1 June. The CPI number is currently used to index debts and it was recently announced that debts will increase by 4.7% on 1 June 2024. In addition, inflation pushed the indexation rate for 2022–2023 debts to 7.1%, the highest since 1990. This generated much negativity and the Prime Minister subsequently announced that “there’d be help on HECS” as part of the Budget. Indexation changes The Government has flagged two proposed changes (which require legislative amendments to the Higher Education Support Act 2003 ). First, the indexation factor will be the lower of the CPI or the Wages Price Index (WPI). The quarterly WPI measures change in the price of wages and salaries in the Australian labour market over time. In a similar way to the CPI, it follows changes in the hourly rate paid to a fixed group (or “basket”) of jobs. More can be found about it on the ABS website. Second, the change will be backdated to 2022–2023, meaning the new system will apply to the 2022–2023, 2023–2024 and following years (noting again that the factor is applied to debts on 1 June, not 1 July). As the WPI was lower than the CPI in 2022–2023, the indexation that was applied on 1 June 2023 will be retrospectively cut from 7.1% to 3.2%. This means that students with an outstanding debt will have it reduced with effect from 1 June 2023. Those students who have subsequently paid off their debt based on the 7.1% rate presumably will be eligible for some sort of refund. If you would like to know more or want to make a voluntary repayment please contact us at CoggerGurry.