Jim Chalmers unveiled the 2024 Federal Budget yesterday, and we’ve sifted through the information to offer key takeaways for businesses in the construction industry. And unfortunately… there’s not much to talk about.
Excluding the impact of the Stage 3 Tax cuts which were previously announced, the outcome for small to medium businesses is relatively minor – with initiatives that have promise, like an extension of instant asset write offs, not going far enough to have the impact required in an industry facing significant market challenges.
The Government has followed through on their promise to not adjust the previously re-legislated Stage 3 Tax Cuts from the Labor government, which will give a greater Tax cut to all Australians in all tax paying brackets.
Visualised below, the reforms reduce the 19 per cent tax rate to 16 per cent, reduce the 32.5 per cent tax rate to 30 per cent, raise the threshold at which the 37 per cent tax rate applies from $120,000 to $135,000 and raise the threshold at which the highest rate of 45 per cent applies from $180,000 to $190,000.
These changes have allowed our Tax experts additional planning opportunities for the 2025 Financial year. Get in touch for a free consultation to discuss what Stage 3 and other budget measures means for you.
Slated to reverse the previous cap of $1,000 from 1 July 2024, the government has announced the $20,000 cap will instead be extended for the 2025 financial year as well, with a new end date of 30 June 2025. This will allow assets costing less than $20,000, acquired and installed prior to 30 June 2025 to be fully claimed as an allowable taxable deduction, for businesses with aggregated turnover of under $10million.
There is a current Bill amendment before the House of Representatives to increase the threshold to $30,000 – however for now, the cap is $20,000.
Our view is the cap should be extended to $100,000, with the eligibility ceiling increased to businesses with turnover of up to $50 Million. This would allow small businesses to gain tax relief from more material investments in areas like vehicles and larger equipment.
Lifting these caps would be a passive way of building more capacity in the industry without inflating the cost-to-build in a construction supply market that is struggling to cope with overwhelming demand in a housing crisis.
In a move aimed at addressing the growing labour shortages, the federal government is allocating an additional $90 million to cover educational expenses for an additional 20,000 individuals pursuing studies in housing and construction-related programs. The fee-free TAFE places include an increased access to pre-apprenticeship programs.
Building off the back of increased apprentices, the Government has committed to maintaining the $5,000 support payments to apprentices for a further 12 months (ending 30 June 2025). This measure provides certainty for the next 12 months whilst the Strategic Review of the Apprenticeship Incentive System is underway.
To further assist in the reduction of Labour shortages, the Government will also provide $1.8m to deliver streamlined skills assessments for around 1,900 migrants from comparable countries to work in Australia’s Housing construction industry.
In what could impact the labour resources available to the private building sector, the federal government is earmarking $1 billion from its National Housing Infrastructure Facility to bolster crisis and transitional accommodations for women, children fleeing domestic violence, and youth.
This funding empowers local governments to expedite the construction of social housing and essential infrastructure, potentially alleviating delays.
Furthermore, states and territories will receive an additional $1 billion to finance roads, sewers, energy, and water connections for new residential developments.
From July 2024 onwards, every household will have a $300 credit automatically applied to their electricity bills (over 4 instalments), whilst 1 million Small Businesses will also receive a $325 deduction off their bills in the 2025 financial year.
All in all, this budget is fairly limp when you consider the challenges in the current housing and construction sector. The Stage 3 Tax cuts, which will affect every tax paying individual in Australia and the electricity credits will be welcome relief however, to achieve a better balance of supply and demand in construction more strategic budget policy is required.
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