【KPMG Global】Australia – Highlights of Federal Budget 2024-25_ Tax, Superannuation, and Immigration

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2024-115 | May 17, 2024

GMS Flash Alert

2024-115 | May 17, 2024

Australia – Highlights of Federal Budget 2024-25: Tax,

Superannuation, and Immigration

The Federal Budget 2024-25 was delivered by Australia’s government on 14 May 2024.1

The Budget contains several tax, superannuation, and immigration measures, including the highly

anticipated Stage 3 of personal income tax cuts (originally announced in 2018).

To access analysis of the key measures and financial announcements from the 2024-25 Federal

Budget and what it means for businesses and the economy, see “Australian Federal Budget 2024,”

a website of the KPMG International member firm in Australia dedicated to the Federal Budget.

The government’s full budget papers are available here.

(For coverage of last year’s Budget, see GMS Flash Alert 2023-098, 12 May 2023.)

WHY THIS MATTERS

Changes to personal income tax and superannuation guarantee rates may require manual amendments to

existing payroll processes and calculators for globally mobile employees.

Several migration announcements target cost-of-living relief for students and apprentices while investing in

skills needed for the child-care, housing, construction, and energy sectors.

Employers should take care that tax and immigration aspects are considered as part of recruiting and

retaining talent from overseas, in order to take full advantage of concessions and exemptions available.

Careful planning can result in an increase in the value provided to employees with a reduction in costs borne

by the employer.

Given the impact of the superannuation changes to the operation of Australian payroll/shadow payroll, these

changes should be communicated to relevant stakeholders as soon as possible, to help ensure that payroll

processes and software can be updated in a timely fashion.

2024-115 | May 17, 2024

Tax and Superannuation Key Highlights

Personal Income Tax Rates and Changes to Medicare Levy and Surcharge Income

Thresholds

Stage 3 of the cost-of-living tax cuts initially announced in 2018 received Royal Assent on 5 March 2024 and

featured in the Budget as planned.2

The legislated rate changes are such that from 1 July 2024, the tax cuts will:

(All dollar figures expressed are Australian dollars)

• reduce the 19 percent tax rate to 16 percent;

• reduce the 32.5 percent tax rate to 30 percent;

• increase the threshold above which the 37 percent tax rate applies from $120,000 to $135,000;

• increase the threshold above which the 45 percent tax rate applies from $180,000 to $190,000.

Taxable income

Current tax rates

Taxable income

Tax rates from 1 July 2024

Up to $18,200

$18,201 to $45,000

19%

$18,201 to $45,000

16%

$45,001 to $120,000

32.5%

$45,001 to $135,000

30%

$120,001 to $180,000

37%

$135,001 to $190,000

37%

From $180,001

45%

From $190,001

45%

Source: KPMG, Australia

The following table shows the tax savings arising for taxpayers following implementation of the revisions to

the Stage 3 tax cuts. Individuals will start to see an increase in their take-home pay from July 2024.

Taxable

income

Tax liability

FY24

Tax liability

FY25

Tax reduction

$100,000

$22,967

$20,788

$2,179

$150,000

$40,567

$36,838

$3,729

$200,000

$60,667

$56,138

$4,529

Source: KPMG, Australia

In addition, the government has increased the Medicare levy and surcharge income thresholds to reflect the

increase in inflation. These legislative changes received Royal Assent on 5 March 2024, and were noted in

the Budget.

2024-115 | May 17, 2024

KPMG INSIGHTS

In the case of tax-equalised/-protected employees on assignment in Australia, subject to Australian tax law,

these changes should reduce the cost to the employer in respect of those assignees in the medium-to-high-

income-earning range.

Global-mobility teams will need to be ready to update for the rate changes from 1 July 2024, and income

threshold changes from 1 July 2023, including amendment of cost estimates and gross-up calculations.

Superannuation on Government-Funded Paid Parental Leave

Greater economic inclusion for women is a focus of the Labor government’s agenda and the Budget has

confirmed announcements made in March 2024 regarding $1.1 billion of funding over five years to pay

superannuation on government-funded Paid Parental Leave. This will apply to births and adoptions on or

after 1 July 2025.

KPMG INSIGHTS

Further detail is to be provided on the mechanism for the delivery of the benefit, but there is a potential impact

to payroll system configuration.

Superannuation Changes (Not Part of This Year’s Federal Budget)

While not a Budget announcement from this year, it is worth remembering that the compulsory

Superannuation Guarantee rate is currently legislated to gradually increase 12 percent via incremental

increases each financial year.3 The next increase in the rate will be from 11 percent to 11.5 percent from 1

July 2024.

Additionally, the maximum super contributions base is set to increase from $62,270 per quarter to $65,070

per quarter from 1 July 2024.

Finally, note that the concessional contributions cap is set to increase to $30,000 from 1 July 2024.

Previously, from 1 July 2021 to 30 June 2024, the cap for each year was $27,500.

KPMG INSIGHTS

These higher contribution levels may increase assignment costs for employers depending on the structure of

the international assignment package. As with the tax cuts above, global-mobility teams may need to adjust

manual calculators and payroll systems for changes.

Payday Superannuation (not part of this year’s Federal Budget)

In 2023 it was announced that from 1 July 2026, employers will be required to pay their employees’

superannuation at the same time as their salaries and wages.4 Currently, compliance with mandatory

superannuation contribution requirements is assessed on a quarterly basis.

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©2024KPMG,anAustralianpartnershipandamemberfirmoftheKPMGglobalorganisationofindependentmemberfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.PrintedintheU.S.A.2024-115|May17,20241GMSFlashAlert2024-115|May17,2024Australia–HighlightsofFederalBudge...

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