With the beginning of a new financial year, now is the perfect time to reset and revisit the financial requirements for both you and your practice.
Income tax rate changes
From 1 July 2024, the revised Stage 3 tax cuts will take effect. The new personal income thresholds and marginal tax rates will be:
| Income Threshold | Marginal Tax Rate |
| Nil – $18,200 | Tax free |
| $18,201 – $45,000 | 16% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| > $190,000 | 45% |
Superannuation guarantee
For those employing staff, the rate of superannuation guarantee continues to increase towards the higher final target rate of 12%.
From 1 July 2024, the applicable superannuation guarantee rate will now be 11.5%.
From 1 July 2025, the applicable superannuation guarantee rate will be 12%.
Superannuation contribution caps
Since their introduction, superannuation contribution caps have periodically increased as a result of indexation.
For the 2025 financial year, the available contribution caps will be:
- Concessional (before tax)Â Â Â Â Â Â Â Â $30,000
- Non-concessional (after tax) $120,000Â Â /Â Â Â $360,000 using the 3 year bring-forward rule
Superannuation – unused concessional cap carry forward
From 1 July 2018, the ATO has allowed for additional contributions for unused contribution caps from previous years as a means of maximizing your superannuation contributions.
To be eligible to make additional contributions for unused contribution caps, you must have a total superannuation balance of less than $500,000 (as at 30 June 2024). You can make additional contributions going back for a maximum period of 5 years, after which they expire.
For the 2025 financial year, this will allow you to make contributions for unused contributions dating back to 1 July 2019.
Instant asset write off
Under the recent Budget announcement, the Government has committed to the extension of the instant asset write off until 30 June 2025.
The key requirements for immediate deductibility on any new asset acquisitions include:
- Small business turnover of less than $10 million
- Assets cost less than $20,000 (on a per asset basis)
- Assets must be installed and ready for use on or before 30 June 2025
A notable exception to the instant asset write off is motor vehicles. Whilst motor vehicles costing less than $20,000 can be immediately deducted, for motor vehicles costing more than $20,000, you will need to continue to consider the ATO car limit to determine what amounts are or are not deductible.
From 1 July 2024, the ATO car limit is $69,674.
Division 293 tax
Has your practice income increased this year? Have you sold an asset or investment and realized a one-off capital gain? Beware you could be up for extra tax.
Division 293 tax is a personal tax applied when your Division 293 income exceeds a certain threshold. For the 2025 financial year, the threshold is $250,000.
Your Division 293 income is made up of taxable income, reportable fringe benefits and net investment losses.
Division 293 tax is assessed on your annual concessional superannuation contributions at a tax rate of 15%. This is in addition to the existing superannuation tax rate of 15% already applied to your contributions.
You can pay your Division 293 tax personally or you make an election with the Australian Taxation Office to pay it from your superannuation account.
Author
Jakin Loke
Chartered Accountant & Director
This article first appeared in the July 2024 issues of the News Bulletin, published by the Australian Dental Association https://www.ada.org.au/Dental-Professionals/Publications/News-Bulletin