This year’s Federal Budget focussed on easing cost of living pressures, in the hope of pleasing the majority with next year’s election approaching.

The key announcements which could impact medical professionals include the following:

Personal Tax – Stage 3 Income Tax Cuts

While certainly not a new change, the government recently amended the planned Stage 3 tax cuts which will apply from 1 July 2024.

The government says the new rates have been designed to combat the effects of “bracket creep” and deliver meaningful cost-of-living relief without adding to inflationary pressures. Only time will tell if these tax cuts serve their intended use.

Below is a comparison of the current resident tax rates and those applying from the 2025 financial year and onwards:

*The above rates do not include the Medicare levy.

Superannuation

Although there wasn’t much to be said about Superannuation in the budget, previously announced measures were confirmed as outlined below.

Pay Day Superannuation

The government is sticking to its guns in regard to the proposed introduction of payday superannuation, with $60 million levied to support workplaces in making the necessary policy changes prior to the introduction on 1 July 2026. The proposed scheme was announced last year, outlining a new requirement for employers to pay employees’ superannuation at the same time as salary and wages. This will impose greater cashflow burdens on employers (primarily small businesses) who were previously only required to make said payments on a quarterly basis. However, a welcome change for employees, and hopefully will see a reduction in complacency and non-payments across the board.

High Balance Superannuation Tax

The proposed controversial changes to superannuation ‘earnings’ tax concessions have received support from the Senate this week, despite many submissions highlighting potential unintended consequences. Initially announced in May 2023, the proposed reform will increase the tax rate on super ‘earnings’ to 30% (from 15%) should the super balance exceed $3 million. The main point of contention remains the inclusion of non-discounted unrealised capital gains as ‘earnings’, which was rebuffed by the committee believing this is “the most appropriate way to reduce compliance burden and costs to funds and their members”. The relevant bills now return to the lower house … watch this space.

Superannuation on Paid Parental Leave

To improve women’s retirement outcomes, the government-funded Paid Parental Leave scheme will be enhanced for births or adoptions on or after 1 July 2025 in the form of superannuation contributions. Prior to this initiative, there were no obligations to make super payments on these amounts which has led to inequity in total super balances for parents, primarily women. Once legislated, extra payments will be made for government-funded paid parental leave schemes at the statutory rate for superannuation (2026FY: 12%).

Small Businesses

Instant Asset Write Off

The government has extended the $20,000 instant asset write-off for small businesses for an additional 12 months.  This incentive will continue to apply to small businesses with aggregated turnover of less than $10 million.

The relevant asset must cost less than $20,000 and must be first used or installed ready for use by 30 June 2025 in order for its cost to be immediately deductible.  Under the simplified depreciation measures, assets with costs in excess of this threshold must be placed into the Small Business Depreciation Pool.

Funding to support Small Businesses

In the mere hope of supporting small business the government has proposed to invest $41.7 million over four years from the 2024-25 financial year in a number of somewhat bland incentives. This funding will be directed to the Payment Times Reporting Regulator, Small Business Debt Helpline, implementing a review of the Franchising Code of Conduct, and additional funding for the Australian Small Business and Family Enterprise Ombudsman for business-to-business disputes.

Other measures

• The Budget allocated $90 million for the implementation of health-related recommendations of the Kruk Review.
• Around $71 million will be spent on wraparound care for people with severe or complex needs in primary care settings.
• An extra $29.9 million investment is earmarked for Head to Health services to provide free access to a psychologist and psychiatrist and establish 61 Medicare Mental Health Centres.
• Around $588 million will go towards establishing a free, national low-intensity digital mental health service, while $29.7 million will work towards improving child and youth mental health services.
• The Federal Government confirmed it would allocate $16 million for the implementation of system changes to MyMedicare which will enable the payment of incentives to GPs and practices.
• More than $57 million was promised to extend the Practice Incentive Program Quality Improvement incentive payments, and $17.4 million will be used to extend the General Practice Incentive Fund, both until 30 June 2025.
• The Government announced $227 million for 29 additional Medicare Urgent Care Clinics.
• Around $22 million will be spent to continue support for preventive health and chronic disease research.
• The Budget allocated $47.5 million to expand Healthdirect Australia and $57.4 million to continue updating My Health Record.
• Just over $11 million has been allocated to improve access to PBS-subsidised medicines for Aboriginal and Torres Strait Islander people.
• Around $3.4 billion will be spent on new and amended listings for PBS and the Repatriation Pharmaceutical Benefits Scheme (RPBS).
• More than $600 million will be given to help states and territories invest in initiatives which address long-stay older patient challenges, unique to each jurisdiction.
• Around $1.2 billion will also be allocated for the sustainment of, and essential enhancements to, critical aged care digital systems so they remain legislatively compliant and contemporary and can support the introduction of the new Aged Care Act from July 2025.
• The Federal Government will provide $468.7 million to support people with disability, which will go towards the findings of the Independent NDIS Review, and boosting fraud detecting information technology systems at the National Disability Insurance Agency. The Government will also establish an NDIS Implementation Advisory Committee and NDIS Implementation Working Group, to oversee implementation of reforms recommended by the Independent NDIS Review.
• Beginning 2024-25, The Federal Government will provide $1.4 billion over 13 through the Medical Research Future Fund for medical research in Australia.
• $49.1 million funding has been announced for two new MBS items for extended consultation times and increased rebates for specialist gynaecological care.

Learn more

If you would like to discuss any of this in more detail, please contact Kristy Baxter, Angela Stavropoulos, or your Pilot Advisor on 07 3023 1300.