The Albanese Labor Government is delivering a tax cut for every taxpayer because we want hardworking Australians to keep more of what they earn.
This Budget continues our government’s methodical approach to tax reform and includes measures to make meaningful tax changes to benefit all Australians, support investment, build a Future Made in Australia and strengthen compliance.
It also builds on the Albanese Government’s significant reform agenda to ensure multinationals pay their fair share of tax in Australia, to help fund vital services like Medicare.
The Budget position will improve by $3.1 billion over the 5 years to 2027–28 thanks to these tax policy measures, which strengthen the fairness and sustainability of the tax system.
Tax cuts for every taxpayer
From the first of July, all 13.6 million taxpayers will receive a tax cut. The average annual tax cut is $1,888, or $36 a week.
11.5 million taxpayers will receive a bigger tax cut than under previously legislated settings, meaning more Australians will keep more of what they earn.
The Government’s changes provide greater support to those who need it most in a way that doesn’t add to inflation.
The Government’s tax cuts return bracket creep, with someone earning an average income paying $21,915 less in tax by 2034–35.
They are also expected to boost labour supply by around 930,000 hours per week, equivalent to 25,000 full time jobs.
This increase is primarily driven by increases in hours worked and participation of women and individuals in the low‑ to middle‑income range.
Measures to support investment, enhance integrity and strengthen compliance
Broader tax reform measures in the Budget include:
Changes to support a Future Made in Australia, investment and small business
- Implementing a Hydrogen Production Tax Incentive and Critical Minerals Production Tax Incentive, providing $6.7 billion and $7 billion of support respectively over the decade, as part of the Future Made in Australia package, to help Australia succeed and remain an indispensable part of the global economy;
- Extending the $20,000 instant asset write‑off by 12 months, until 30 June 2025, to provide $290 million in cash flow support and reduce compliance costs for small businesses; and
- Abolishing 457 nuisance tariffs from 1 July 2024 to boost productivity, reduce red tape, cut compliance costs, and simplify the trade system.
Strengthening tax integrity and combatting fraud
- Extending the Tax Avoidance Taskforce, Personal Income Tax Compliance Program and Shadow Economy Compliance Program to level the playing field for those who do the right thing, which will improve the Budget by $2.7 billion over the forward estimates; and
- Providing $187 million to the Australian Taxation Office from 1 July 2024 to strengthen its ability to detect, prevent and address fraud committed against the tax and superannuation systems.
Enhancing multinational tax and foreign resident tax integrity
- Strengthening the foreign resident capital gains tax rules to ensure foreign residents pay their fair share of tax in Australia and bring our rules into line with international best practice, which will improve the Budget by $592 million over the forward estimates; and
- Introducing a new penalty for multinationals that attempt to avoid Australian royalty withholding tax by understating royalty payments or seeking to disguise them as something else, to ensure they pay their fair share of tax.
The new multinational penalty will be supported by reforms to strengthen transparency about the use of subsidiaries and stop multinationals from claiming excessive debt deductions to reduce or wipe out tax in Australia, which have passed Parliament.
The Albanese Government will soon introduce legislation to implement reforms relating to public country by country reporting and a Global Minimum Tax and Domestic Minimum Tax.
Tax reform measures in this Budget will boost the bottom line and make the tax system fairer, and the tax cuts will help families, communities, women, and young people as well as business and the economy.