Recent and Upcoming Tax Changes (Australia - 2024-25 and beyond)

Tax Rate Changes (Stage 3 Tax Cuts): From 1 July 2024, significant changes to individual income tax rates and thresholds took effect:  

• The 19% tax rate reduced to 16% for incomes between $18,200 and $45,000.

• The 32.5% tax rate lowered to 30% for incomes between $45,000 and $135,000.

•  The threshold for the 37% tax rate increased from $120,000 to $135,000.

• The threshold for the 45% tax rate lifted from $180,000 to $190,000.

•  Further minor reductions to the 16% tax rate are planned for 1 July 2026 (to 15%) and 1 July 2027 (to 14%).

Work-related Expenses:

•  Fixed rate method for working from home expenses increased to 70 cents per hour from 1 July 2024.

• A proposed $1,000 automatic deduction for work-related expenses (without substantiation) was announced but is not yet law and would apply from 2026-27.

Foreign Resident Capital Gains Tax (CGT): From 1 January 2025, the foreign resident capital gains tax withholding rate increased to 15%, and the $750,000 property value threshold was removed.

Medicare Levy Low-Income Thresholds: Increased by 4.7% from 1 July 2024.

EV Home Charging Rate: From 1 July 2024, owners of plug-in hybrid electric vehicles (PHEVs) can use the EV home charging rate (4.2 cents per kilometre) to calculate electricity costs for charging at home, similar to zero-emissions electric vehicles.

Important Considerations:

•     Financial Year End: In Australia, the financial year ends on June 30th. Many tax planning strategies are most effective when implemented before this date.

•    Tax Avoidance vs. Tax Planning: It's crucial to distinguish between legitimate tax planning (which is legal and encouraged) and illegal tax avoidance schemes. The ATO actively targets unlawful schemes.

•    Professional Advice: Tax laws are complex and constantly changing. Consulting with a qualified tax professional or accountant is highly recommended to ensure compliance and to develop a tailored tax plan that aligns with your specific financial situation and goals. They can help you identify all eligible deductions, navigate complex rules, and adapt your strategy to any legislative changes.