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Unpacking the 2024 Federal Budget for real estate, homeowners, and tax payers

May 23, 2024

Treasurer Jim Chalmers’ 2024 Federal Budget has captured significant attention over the past week, particularly regarding its implications for the real estate market and the small business community. We’ve unpacked the details for you.

Energy bill relief

One of the headline numbers from the Budget is the $3.5 billion allocated for energy bill relief for Australian households and small businesses. From 1 July 2024, over 10 million households will benefit from a $300 rebate on their electricity bills, distributed throughout the year[i].

Additionally, around one million eligible small businesses will receive an annual rebate of $325, translating to a quarterly saving of $81.25.

Tax cuts confirmed 

A vital component of the Budget is the tax cuts for all 13.6 million Australian taxpayers, effective from 1 July 2024. The specific tax rate changes are:

  • Reduction of the 19% tax rate to 16%.
  • Reduction of the 32.5% tax rate to 30%.
  • Increase in the income threshold above the 37% tax rate from $120,000 to $135,000
  • Increase in the income threshold above the 45% tax rate from $180,000 to $190,000[ii].

On average the government estimates that taxpayers will receive a tax cut of $1,888 or $36 per week, in 2024–25. By 2034–35, someone earning an average income will pay $21,915 less tax[iii]. These savings are aimed at providing cost of living relief and will also be beneficial for those looking to save for a home deposit or make additional mortgage repayments.

Housing and rent assistance

The Government has introduced several measures to address housing pressures. A $1.9 billion allocation over five years will raise the maximum rates of Commonwealth Rent Assistance by an additional 10%[iv]. This announcement builds on the 15% increase implemented in September 2023, resulting in maximum rates over 40% higher than in May 2022.

Additionally, the Government is providing $1 billion to states and territories to develop new housing, including essential services such as water, power, sewerage, and roads. This pledge expands the $500 million Housing Support Program, which supports the necessary infrastructure for more homes.

Further funding is allocated to student accommodation and a new five-year, $9.3 billion National Agreement on Social Housing and Homelessness with states and territories. An additional $1 billion will support better housing for women and children experiencing domestic violence and for youth. Other housing support measures include:

  • $88.8 million for 20,000 new fee-free TAFE places in construction-related courses.
  • $1.9 billion in concessional loans to community housing providers and charities for new social and affordable homes.
  • $4 billion joint investment with the Northern Territory Government to improve remote housing conditions.
  • Allowing foreign investors to purchase established Build-to-Rent developments with a lower foreign investment fee, provided they remain as Build-to-Rent properties.

Infrastructure investment can drive real estate values

Savvy investors aiming to maximise returns often focus on regions experiencing substantial infrastructure development. To this end, the Budget commits $16.5 billion for new and existing infrastructure projects across Australia over the next ten years. Notable projects that have been allocated budget funding include[v]:

  • $1.9 billion for Western Sydney road and rail infrastructure to support the new Western Sydney Airport.
  • $300 million for METRONET’s capacity signalling program in Western Australia.
  • $177 million for bridge and intersection upgrades along the Warrego Highway in Queensland.
  • $80 million for upgrades to the Lyell Highway between Granton and New Norfolk in Tasmania.
  • $120 million for interchange upgrades at Mount Barker and Verdun on the Princes Highway in South Australia.
  • $50 million to plan for Stage 2B of the Canberra Light Rail.
  • $12 million for Victoria's Bridgewater Road and Portland Ring Road intersection upgrade.

[i] https://minister.dcceew.gov.au/bowen/media-releases/new-power-bill-relief#:~:text=From%201%20July%202024%2C%20all,be%20applied%20in%20quarterly%20instalments.
[ii] https://ministers.pmc.gov.au/gallagher/2024/albanese-governments-cost-living-tax-cuts-roll-out-july-1
[iii] https://budget.gov.au/content/factsheets/download/factsheet-col.pdf
[iv] https://budget.gov.au/content/02-building-homes.htm

[v] https://minister.infrastructure.gov.au/c-king/media-release/investment-deliver-future-made-australia
[vi] https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/small-business-support-20000-dollar-instant-asset-write-off