With merely 6-7 months passed since the latest Federal Budget announcement, and considering a dynamic year filled with stimulus packages and continuous adjustments, business operators are now presented with insights from the 2021/22 Federal Budget. This brings forth additional data and policies that necessitate thorough analysis, absorption, identification of their implications for your business, and seamless integration into your operations.
Amid discussions about deficits amounting to $161 billion, projections for the future, net debt resting at $980 billion, downward revisions, sensitivity assessments, and the extensive content spread across numerous pages of budget documentation – comprehending the Budget can demand a substantial amount of time and expertise. To streamline the process for our truck loan clients, we've distilled the pivotal points and measures that hold notable importance for asset procurement, particularly truck acquisitions and specific truck financing. In essence, here's a brief synopsis of the benefits at your disposal!
Overview: Forecasts, Predictions and Strategy
On Tuesday, 11 May, Treasurer Josh Frydenberg presented the 2021/22 Federal Budget in Parliament. This budget outlines a series of measures and policies that the Government aims to put into action throughout the upcoming fiscal year and beyond. It's important to note that the Budget Bill must undergo approval from both chambers of the Federal Parliament before these policies can take effect.
This budget signifies the Government's next phase in fortifying the nation's recovery from the pandemic's impact. The primary focus remains directed towards fostering economic growth and generating employment opportunities, rather than solely addressing the substantial debt that has accumulated due to the previous stimulus initiatives.
Broadly speaking, the approach centers around achieving these goals via multiple strategies. These include implementing income tax reductions for individual taxpayers, introducing tax incentives to bolster businesses, establishing apprenticeship and training initiatives, allocating funds for infrastructure development, and directing expenditures towards critical sectors such as aged care, healthcare, and the economic and physical well-being of women.
A key objective is to continue reducing unemployment with the rate forecast to be around 5% next year. Economic growth is expected around 4.25% in 21/22 and fall to 2.5% in 22/23. The deficit has been revised down by $51 billion.
Although the budget strategy and economic forecast might seem like a tangle of significant figures and economic terminology, there exists a fundamental significance that directly relates to the priorities of our Jade Truck Loan clientele – specifically, the interest rates for truck loans. The Reserve Bank of Australia (RBA) has consistently emphasized its pursuit of maintaining unemployment levels at 5% or lower and holding inflation within the range of 2-3% as pivotal indicators for potential interest rate adjustments. The overarching objective of the budget is to steer unemployment downwards and amplify economic growth, and the resulting consequences will subsequently influence the trajectory of interest rates.
Asset Investment Tax Relief Measures
A highly positive development within the Budget, particularly beneficial for prospective truck purchasers, involves the expansion of the temporary full expensing initiative targeted at enterprises with a turnover of less than $5 billion. Essentially, this mirrors the widely recognized concept of the Instant Asset Write-Off. Both of these measures were initially introduced in 2020 as integral components of the stimulus programs. Previously confined to the duration encompassing 21/22, this provision has now been extended to span the entire financial year of 22/23.
For truck buyers, it means buying a new truck (subject to eligibility) with the appropriate finance product the full cost can be depreciated in the year of purchase rather than over an extended time period. Delivering a significant tax deduction to the business in that year. For those wanting to take advantage of the measure, we offer Truck Chattel Mortgage loan as the most appropriate form of finance.
The temporary loss carry-back policy has also been extended into the 22/23 financial year. Both extensions are designed to incentivise businesses to invest in assets to grow their business and create jobs.
Tax Cuts
Both households and SMEs are in line for tax cuts. For small business operators, especially sole traders and ABN holders, business and household budgets can be closely entwined. Cuts in household outgoings and increases in income can take pressure off the business.
The low and middle-income tax offset is continuing for another year with those earning $48K - $90K to gain the maximum $1080 tax offset. This is delivered in a person’s income tax refund. For the small and medium businesses, the tax rate reduces to 25% from 1 July this year.
Wage Subsidy Scheme
The JobTrainer Fund is being expanded and extended through the end of December 2022. This may provide your business to employ additional staff to grow your operation. The apprenticeships scheme is also being extended.
Small Business and Self-Employment Support
To assist SMEs in adopting digital technologies, the Budget includes an expansion of the Digital Solutions Australian Small Business Advisory Services which includes an injection of funds to assist businesses with implementing e-invoicing.
If you’re considering moving into your own business, the Budget includes funding for new business assistance programs aimed at making support for self-employment more flexible and easier for micro-businesses to access. A broad range of services including formal business training is included.
Conclusions
Overall, there appear some great incentives and measures for our customers in this Budget. The extension of the temporary full expensing and loss carryback is especially significant to investing in new trucks.
In addition to these specific measures for businesses, massive spending in key industries may present opportunities for your business, and we have covered them in a separate article. Whether you're considering taking advantage of these opportunities or seeking financing for other aspects of your business, we offer a Full Range of Finance Products that can be tailored to your needs, ensuring you have the right financial tools to capitalize on growth opportunities.
If these budget measures have raised your interest in purchasing new trucks, contact Jade Trucks Loans to discuss how we can further sweeten to appeal with our cheap interest rate loans. Alternatively, you may also be interested to compare truck loan interest rates across multiple lenders and banks across Australia.
Call 1300 000 003 to discuss your lending requirements.
DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.
