The Key Financial Challenges and Influences You Should Care About in 2024

Uncertainty has prevailed in recent years, but may we expect more consistency as we approach 2024? We look at some of the important challenges and factors in the economy, taxation, and employment.

Financial Challenges and Influences of 2024

What will be the major financial challenges in 2024? The rising cost of living, inflation, and potential job market uncertainties can make managing funds and reaching financial goals challenging.

The relationship between Inflation and Labour Supply

While there have been promising signals, uncertainty persists. RBA Governor Michelle Bullock noted, “Inflation is past its peak and heading in the right direction, but it is likely to return to target a bit more slowly than we previously thought.” In the United States, inflation remains persistent, growth has slowed, but the employment market remains tight. Furthermore, the Australian economy remains vulnerable due to concerns about the Chinese economy and ongoing foreign wars. The RBA has not ruled out further interest rate increases at this time.

The unemployment rate is at 3.7%, and the labour market is tight. Wages increased 1.3% in the September 2023 quarter and 4.0% year on year, bringing wages to a 14-year high. High-skilled individuals are especially difficult to find, and it appears that we have reached a stage where businesses are unwilling to pay inflated wages to attract those ready to relocate.

Income Tax Cuts and the Elimination of Some Concessions

The stage 3 tax cuts, which substantially reduce the personal income tax rates, go into effect on July 1, 2024. The tax cuts combine the 32.5% and 37% tax brackets into a single 30% rate for anyone earning between $45,001 and $200,000—if they are not postponed or scrapped in the May Federal Budget!

The superannuation guarantee rate will be raised to 11.5% on July 1, 2024.

A variety of concessions are due to be terminated or reduced for small and medium-sized companies with a group turnover of less than $50 million:

• The Skills and Training Boost will expire on June 30, 2024. The bonus deduction is equal to 20% of qualified expenditure for external training offered to your employees for costs incurred between March 29, 2022, and June 30, 2024.
• The Small Business Energy Incentive is set to expire on June 30, 2024, despite the fact that legislation to implement this concession has yet to come through Parliament. The incentive is designed to provide an additional 20% discount on the cost of qualified depreciating assets that enhance electrification and energy efficiency.

The instant asset write-off for businesses with a group turnover of less than $10 million is slated to return to $1,000 on July 1, 2024. The cost barrier is supposed to be $20,000 for the fiscal year 2024, although legislation relating to this item has not yet been ratified via Parliament.

Employee benefits and rights

Throughout 2023, there were numerous modifications and additions to workplace laws, and employers may expect increased scrutiny in 2024:

• A 5.75% raise in the minimum wage to $23.23 per hour beginning July 1, 2023.
• New rules, as well as a two-year cap on some fixed-term employment contracts (no renewal).
• A seminal case defines whether a worker is a contractor or an employee. The ATO has issued new guidelines to ensure that employers are paying the relevant entitlements. Employers must evaluate contractors to ensure that they are classified accurately.
• There are more options for unpaid parental leave.

Contact us at Success Accounting Group for tax planning advice and tips that can guide you towards financial security.

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