The recent 2020/21 Federal Budget has ushered in a series of investment allowances pertinent to all businesses, with specific emphasis on the trucking and transportation industry. As tax incentives beckon, it's imperative for truck owners and operators to consider the full ramifications of their next acquisition.
Decisions revolving around new trucks aren't just about the financial incentives. An analytical approach is required, considering future prospects in their specific sector, given the various incentives and benefits introduced in the budget.
Manufacturing Strategy
In a pre-budget speech to the National Press Club, the Prime Minister, Scott Morrison announced measures to be included in the budget to support the manufacturing sector. Under the overall JobMaker banner, this Modern Manufacturing Strategy targets 6 priority sectors: medical, defence, space, clean energy and recycling, food and beverage and mining and resources.
In addition to tax incentives and general support, eligible businesses in these sectors will be offered grants under the Manufacturing Modernisation Fund of $100,000-$1 million. The overall intention is to create jobs, establish sovereignty in key areas, open international channels to Australian businesses and providing opportunities for businesses to scale up to be competitive.
Support goes beyond the actual manufacturers and extends through the supply chain. A major priority is protecting the country against supply chain disruption. This support is under the Resilience Initiative and you can review the detail and see if your business is eligible for support.
Trucks and the transport sector in general play a crucial role in maintaining supply chains across industry and these initiatives may represent opportunities for your business. Either directly from the grants and support or indirectly through new work contracts.
Housing Sector Support
Construction has long been tagged and flagged as a key economic driver and a major source of work for operators of a wide range of trucks. The budget included measures to stimulate especially the housing sector with an expansion to the first home buyers grant scheme.
This is applicable to new homes as a measure to stimulate work in housing construction. Many truck operators depend on the housing construction as their major source of income with their trucks specifically set-up for this type of work. Owners of concrete pumpers, tippers and dump trucks, materials movers and crane trucks may all be interested in the support for the housing sector and be motivate to invest in new trucks. Such initiatives might resonate with truck finance with no deposit down operators, enticing them to expand or modernize their fleet.
Infrastructure Spending
Many truck operators have built their businesses around working on major infrastructure projects. The contract and tender process can be highly competitive but the investment by the state and federal governments in recent times has meant a significant number of projects in the pipeline for truck businesses to pursue.
Infrastructure spending was flagged early in the COVID crisis as a major economic driver and the Federal Budget confirms that continued focus.
$10 billion has been earmarked for the 10 year infrastructure plan which includes roads, bridges and rail projects across most states. In addition an extra $2 billion is earmarked for shovel ready road safety projects and an additional $1 billion to go to local councils for their road, street lighting and footpath projects.
Water infrastructure was also included with a $2 billion earmarked for pipelines, dams and weirs in a new 10 year plan.
We covered off on the specific details of the Bridges Renewal Program and the latest round of grants in the Heavy Vehicle Safety and Productivity Program in another article after they were flagged in pre-budget discussions. Worth a read if you operate in these areas and want to weigh up your prospects for future work opportunities.
Which businesses are included?
Apart from industry, many may be wondering if their particular business set-up is included in all these budget supports. At Jade Truck Loans we work with the full range of business structures – sole traders, SMEs, family companies and large fleet operators.
The eligibility criteria for some measures announced in the budget are clearly determined by turnover. We await additional detail on all budget measures to be issued by Treasury and the ATO to analyse. Your accountant is likely to be across the budget details also and it is always advisable to consult with them in making asset acquisition decisions.
Seizing the Opportunities on Offer
In order to take advantage of many of the budget measures and the prospects for new work on offer, many businesses will be looking at acquiring new trucks. Making the most of tax benefits through the investment allowance is one advantage to cash flow. Another high priority is ensuring you buy those trucks with the cheapest truck finance interest rate deal possible.
Jade Truck Loans is committed to supporting truck owners and operators to expanding their business to take advantage of opportunities with cheap interest rate loans, individually structured to meet your business set-up.
If you sense the budget opening new avenues requiring a fleet upgrade, reach out to discuss your truck loan refinance and other loan options.
To discuss how we can support your business with a cheap loan offer, speak with a Jade Truck Loans consultant on 1300 000 003
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