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

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.

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.

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.

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.

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. 

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.

Immigration: Key Highlights

Migration Program Planning

Net overseas migration is forecast to decrease from 528,000 in 2022-23 to 260,000 in 2024-25.  Levels for the permanent migration program have been set at 185,000 places with 132,200 (70 percent) places allocated to the Skilled stream.  From 2025-26, the government will extend the planning horizon for the permanent Migration Program from one year to four years.

From 23 November 2024, the government will reduce the work experience requirement for the Temporary Skill Shortage (Subclass 482) visa from two years to one year.  This change will result in more foreign nationals being eligible to apply for this visa, including recent graduates.  

As foreshadowed in the government’s Migration Strategy (released in December 2023) (for prior coverage, see GMS Flash Alert 2023-240, 11 December 2023), there is a strong focus on reforming Australia’s migration system to drive greater economic prosperity and restore migration program integrity.  Key measures include:

• $100 million will be provided to the Department of Home Affairs in 2024-25 to support Australian Border Force operations and immigration compliance activities;
• $15 million over three years from 2024-25 for information and education activities to provide migrant workers with accurate and appropriate information about workplace safeguards, protections, and migration compliance measures;
• $1.9 million in 2024-25 to conduct a data-matching pilot between the Department of Home Affairs and the Australian Taxation Office focusing on income and employment data to mitigate exploitation of migrant workers and abuse of Australia’s labour market and migration system.

The government will introduce a new National Innovation visa in late 2024 to attract exceptionally talented migrants and replace the Global Talent visa and the Business Innovation and Investment Program (BIIP).  The Business Innovation and Investment visa program (BIIP) will cease, with refunds of the visa application charge provided from September 2024 for those who wish to withdraw their BIIP application.

Funding of $1.1 million over two years from 2023-24 will be invested to improve visa access and provide long validity business and frequent traveller visas for ASEAN member countries and Timor-Leste.

As part of the Migration and Mobility Partnership Arrangement (MMPA) between Australia and India, the government will:

• implement the new Mobility Arrangement for Talented Early-professionals Scheme (MATES) program for Indian nationals from 1 November 2024; and
• lengthen the validity of the Visitor (Subclass 600) visa under the Business Visitor stream for Indian nationals from up to three years to up to five years.

According to industry feedback, there has been a significant shortage of construction workers in recent years due to closed borders and skilled construction workers leaving the industry during the COVID-19 pandemic, as well as competition from infrastructure projects.  This has impacted the construction of more homes quickly and driven up the cost of labour.

The government’s response to this challenge is to invest $88.8 million to grow the pipeline of construction workers through 20,000 additional fee-free TAFE and pre-apprenticeship places.  The government will provide $1.8 million to deliver streamlined skills assessments for around 1,900 migrants from comparable countries to work in Australia’s housing construction industry.

The 2024-25 permanent Migration Program planning level is set at 185,000 places, with 33,000 of these places allocated for permanent regional visas.  This is a significant increase from the 11,200 places in 2020 -21, reflecting the government’s commitment to supporting regional development and growth.

Skilled regional migration addresses critical skill shortages by filling skills gaps and transferring specialist skills and knowledge that are difficult to develop locally, which supports continued growth of essential services infrastructure and regional industries.

There is also an ongoing commitment by the government to integrate migrants into regional communities and continue to enhance efforts to combat the exploitation of migrant workers.  

From 2024-25, the government will introduce a visa ballot process for the capped Work and Holiday (Subclass 462) visa program for applicants from the People’s Republic of China, Vietnam, and India.  The ballot process will help to manage program demand and application processing times for these countries.  A ballot charge of $25 (indexed for CPI each year) will apply.

Australia’s growing international education sector requires an adequate supply of purpose-built student accommodation to foster its ongoing sustainability.  To deliver more accommodation for students and to reduce pressure on the private rental market, the government will work with the higher education sector to develop regulations that will require universities to increase their supply of student accommodation.

Following consultation with the sector, the government will set limits for how many international students can be enrolled by each university based on factors including how much student accommodation they provide.  The government will require universities to establish new, purpose-built student accommodation should they wish to increase international student enrolments above their initial allocation.  Any new accommodation built will be available to both local and international students.

This reform is designed to create more student housing, reduce pressure on house prices and rents in Australian cities, and help universities to continue to benefit from the overseas student market.

The government will provide $1 billion over five years from 2023-24 to establish and support the sustainable operation of the new Administrative Review Tribunal (ART), replacing the Administrative Appeals Tribunal (AAT), and to address court backlogs associated with high numbers of applications for judicial review of migration decisions.

The government will progress a business case to develop a modern Information Communications Technology (“ICT”) solution for the assessment of trade skills for skilled migrants by Trades Recognition Australia.  A modern ICT solution will make skilled workers more rapidly available to employers and support delivery of the government’s migration and skilled workforce objectives.

The Department of Home Affairs has negotiated arrangements with some state and territory governments for the provision of various services (including health, corrective, and policing services) to immigration detention facilities and people in immigration detention.

The government will provide funding over three years from 2024-25 (including capital funding) to improve security at the Yongah Hill Immigration Detention Centre.

Temporary visa holders will continue to be able to access legal support services for migration and family law issues with funding being extended for a further five years.

The government will provide $15 million over three years from 2024-25 for information and education activities to provide migrant workers with accurate and appropriate information about workplace safeguards, protections and migration compliance measures.  This will empower migrant women, who are over-represented in insecure work, to report allegations of worker exploitation without fear of reprisals.  The government also will provide $3.8 million over four years from 2024-25 to continue conversational English classes in Community Hubs.  These classes remove a barrier for many migrant women accessing English-language support through the provision of on-site child-minding facilities.

Contacts