Budget 2024-25: Government & regulators
Budget 2024-25 Article Quicklinks
Modernising Digital Assets and Payments Regulation
Date: From 2024–25
$7.5 million over four years from 2024–25 (and $1.5 million per year ongoing) has been provided to modernise regulatory frameworks for financial services to improve competition and consumer protections for services enabled by new technology.
The Government will:
Develop and consult on legislation to licence and regulate platforms that hold digital assets and progress related reforms, including continuing exploratory work on Central Bank Digital Currencies, asset tokenisation and decentralised finance.
Introduce a new regulatory framework for payment service providers (including digital wallets and electronic stored value providers), including licensing and a mandated ePayments Code.
Extension of Transitional Reporting for Charities
The current charity transitional reporting arrangement will be extended for five years.
The Government will remake the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Regulation 2016 with an extension of the current charity transitional reporting arrangement for five years.
The purpose of the regulation is to reduce the regulatory reporting burden on certain not-for-profit entities (registered entities) under the Australian Charities and Not-for-profits Commission Act 2012 (the ACNC Act) by providing that the ACNC Commissioner may treat a statement, report or other document given under an Australian law to an Australian Government agency by a registered entity as satisfying certain reporting obligations under the ACNC Act.
ATO Counter Fraud Strategy
Date: First income year after Royal Assent of enabling legislation
The Government announced that it will provide $187 million over four years from 1 July 2024 to the ATO to strengthen its ability to detect, prevent and mitigate fraud against the tax and superannuation systems.
Funding includes:
$78.7 million for upgrades to information and communications technologies to enable the ATO to identify and block suspicious activity in real time.
$83.5 million for a new compliance taskforce to recover lost revenue and intervene when attempts to obtain fraudulent refunds are made.
$24.8 million to improve the ATO’s management and governance of its counter-fraud activities, including improving how the ATO assists individuals harmed by fraud.
$0.4 million over four years from 1 July 2024 to the Department of Finance to undertake a Gateway Review process over the life of the proposal to ensure independent assurance, oversight and delivery of the measure.
The Government will also strengthen the ATO’s ability to combat fraud by extending the time the ATO has to notify a taxpayer if it intends to retain a business activity statement (BAS) refund for further investigation. The ATO’s mandatory notification period for BAS refund retention will be increased from 14 days to 30 days to align with time limits for non-BAS refunds.
The extended period will strengthen the ATO’s ability to combat fraud during peak fraud events like the one that triggered Operation Protego. Legitimate refunds will be largely unaffected. Any legitimate refunds retained for over 14 days would result in the ATO paying interest to the taxpayer - as is currently the case. The ATO will publish BAS processing times online.
This measure is estimated to increase receipts by $302.2 million and increase payments by $187.4 million over the five years from 2023–24.
Funding ATO Priority Targets
Specific funding has been provided to the ATO for key targets. These include:
Personal Income Tax
The ATO’s Personal Income Tax Compliance Program will be extended for one year from 1 July 2027. This measure is estimated to increase receipts by $180.3 million and increase payments by $44.3 million over the 5 years from 2023–24.
The Shadow Economy
The ATO’s Shadow Economy Compliance Program will be extended for two years from 1 July 2026. This measure is estimated to increase receipts by $1.9 billion and increase payments by $610.2 million over the 5 years from 2023–24. This includes an increase in GST payments to the states and territories of $429.6 million.
Anti-Avoidance Taskforce
Extend the ATO’s Tax Avoidance Taskforce for two years from 1 July 2026. This measure is estimated to increase receipts by $2.4 billion and increase payments by $1.2 billion over the 5 years from 2023–24.
The Tax Avoidance Taskforce has a strong focus on the top 1,100 public and multinational businesses and the top 500 privately owned groups, but also covers all 5,000 high wealth private groups that control net wealth exceeding $50 million and public and multinational businesses outside of the ATO’s justified trust programs. As of 30 June 2023, the taskforce has assisted the ATO raise $32.7 billion in tax liabilities.
Child Care Providers
$4.8 million over four years from 2024–25 to ensure satisfactory engagement with the Australian tax system regarding fitness and propriety requirements of existing and new child care providers (relating to the Child Care Subsidy Program).
Identity Checking
$155.6 million over two years from 2024–25 to continue operating and improving the Government’s Digital ID, myGovID, and the system which supports authorised access to a range of government business services.
Migrant Workers
$1.9 million in 2024–25 for a data-matching pilot between the Department of Home Affairs and the ATO of income and employment data to mitigate exploitation of migrant workers and abuse of Australia’s labour market and migration system.
E-Invoicing
$23.3 million over four years from 2024–25 to continue to oversee and operate the secure eInvoicing network as part of the Government’s work to combat scams and online fraud through the introduction of mandatory industry codes to be established under a Scams Code Framework and increased use of the secure eInvoicing network.
Military Invalidity Payments
The Government will provide $11.9 million over five years from 2023–24 (and $0.9 million per year ongoing) to implement a social security means test treatment for the military invalidity payments affected by the Federal Court’s decision in FCT v Douglas [2020] FCAFC 220. This approach ensures the Douglas decision does not affect income support payment rates for veterans who receive an invalidity payment from the Military Superannuation and Benefits Scheme and the Defence Force Retirement and Death Benefits Scheme, compared to the pre-Douglas arrangements.
In Douglas, the Full Federal Court found that invalidity pensions paid under the Military Superannuation Benefits and Defence Force Retirement and Death Benefits schemes that commenced after 20 September 2007 were ‘superannuation lump sum payments’ rather than ‘superannuation income stream benefits’ within the meaning of the ITAA 1997.
Decreased Levy for Sweet Potatoes
Date: 1 July 2024
From 1 July 2024, the Government will decrease the overall levy rate on sweet potatoes from 1.5% to 0.5%.
Delayed Widening of the General Anti-Avoidance Rules
Date: Royal assent of amending legislation
The 2023-24 Budget measure to extend Part IVA, scheduled to commence on 1 July 2024, has been delayed so that this applies to income years starting on or after the date the amending legislation receives Royal Assent.
Part IVA contains the general anti-avoidance provision that the ATO can use to attack arrangements that are entered into in order to obtain tax benefits.
Under the measure, the scope of Part IVA will be extended so that it can apply to:
Schemes that reduce tax paid in Australia by accessing a lower withholding tax rate on income paid to foreign residents.
Schemes that achieve an Australian income tax benefit, even where the dominant purpose was to reduce foreign income tax.
Delayed Streamlining Fuel and Alcohol Excise Administration
The start dates for the following components of the Streamlining excise administration for fuel and alcohol package will be changed:
Streamlining licence application and renewal requirements — from 1 July 2024 to the later of 1 July 2024 or the day following Royal Assent.
The ATO to publish on its website a public register of excise licences and excise equivalent warehouse licences. Now 30 days following commencement of the legislation.
Removal of regulatory barriers applying to bunker fuels for commercial shipping industries – from 1 July 2024 to 1 January 2025.
Australian Plantation Forestry Entities Exempt from Thin Cap Changes
Australian plantation forestry entities will be exempt from the new thin capitalisation earnings-based rule.
The 2022–23 October Budget measure Multinational Tax Integrity Package amended the thin capitalisation rules to replace the safe harbour and worldwide gearing tests with earnings-based tests to limit debt deductions in line with an entity’s profits.
Instead, Australian plantation forestry entities will be allowed to continue to apply the former asset-based thin capitalisation rules.
Measures Not Proceeding
Australian Business Number: The previous Government’s 2019–20 Budget measure Black Economy — strengthening the Australian Business Number system had proposed start dates of 1 July 2021 and 1 July 2022. This measure will not progress.
Intangibles in Low Tax Jurisdictions: The measure, Denying deductions for payments relating to intangibles held in low- or no-tax jurisdictions – announced in the 2022–23 October Budget will not proceed. The integrity issues will be addressed through the Global Minimum Tax and Domestic Minimum Tax being implemented by the Government. The Government will also introduce a new provision from 1 July 2026 that applies a penalty to taxpayers who are part of a group with more than $1 billion in global turnover annually that are found to have mischaracterised or undervalued royalty payments, to which royalty withholding tax would otherwise apply.
ATO Discretion Not to Use Refunds to Offset Old Debts
Date: Debts ‘on hold’ prior to 1 January 2017
The Government will amend the tax law to give the Commissioner of Taxation the discretion not to use a taxpayer’s refund to offset old tax debts, but only for debts put ‘on hold’ prior to 1 January 2017. This discretion will apply to individuals, small businesses, and not-for-profits, and will maintain the Commissioner’s current administrative approach.
In 2023, the Australian National Audit Office advised the ATO that excluding debt from being offset was inconsistent with the law, regardless of when the debt arose. This amendment resolves an issue for the ATO for older debts but enforces current practice for all debts from 1 January 2017.
Pursuing Entities in Liquidation with Unpaid Superannuation Obligations
Date: From 1 July 2024
The Government has announced that it will recalibrate the Fair Entitlements Guarantee Recovery Program to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
The Fair Entitlements Guarantee Recovery Program aims to improve the recovery of employment entitlements advanced under the Fair Entitlements Guarantee (FEG). The FEG is a legislative safety net scheme of last resort with assistance available for eligible employees.
‘Payday’ Super Compliance
Date: Four years from 2024–25
$60 million has been provided over four years from 2024–25 to increase the Productivity, Education, and Training Fund to support practical activities by employer and worker representatives to boost workplace productivity and engage in tripartite cooperation. This will also support workplaces to implement policy changes such as the introduction of payday superannuation.
Funding Anti-Money Laundering and Counter-Terrorism Financing Reform
Date: Four years from 2024–25
The Government will provide $168 million over four years from 2024–25 to implement reforms to strengthen Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
The Attorney-General’s Department held a first round of consultation on proposed reforms to modernise Australia’s anti-money laundering and counter-terrorism financing regime between April and June 2023, following the release of its first consultation paper. The Department received 142 submissions in response, which were broadly in support of reform, including:
Simplification and modernisation of the regime
Regulation of tranche-two entities — i.e., certain high‑risk services provided by some professions, including lawyers, accountants, trust and company service providers, real estate professionals, and dealers in precious metals and stones.
Funding includes:
$160.8 million over two years from 2024–25 for the Australian Transaction Reports and Analysis Centre to expand its regulatory, intelligence, and data capabilities and provide guidance to newly regulated entities.
$7 million over four years from 2024–25 for the Attorney-General’s Department to support the implementation of the legislative reforms through the provision of policy and legal advice and stakeholder consultation, and to deliver a program of anti-money laundering and counter-terrorism financing capacity building in the Pacific.
Preventing Greenwashing and Managing Sustainable Finance Markets
Greenwashing:
ASIC has been provided with $10 million over 4 years and $1.9 million ongoing to investigate and take enforcement action against market participants engaging in greenwashing and other sustainability-related financial misconduct.
Green Bonds:
$5.3 million over 4 years from 2024-25 and $1.2 million ongoing has been provided to Treasury and APRA to deliver the sustainable finance framework, including issuing green bonds, improving data, and engaging in the development of international regulatory regimes related to sustainable finance.
Labelling Regime:
$1.2 million has been provided to ASIC and Treasury to consult on the design of a labeling regime to regulate the use of sustainability labels on retail investment products.