With only 6-7 months since the last Federal Budget was delivered and a hectic year of stimulus packages and measures to constantly stay across, business operators now have the 2021/22 Federal Budget. More data and policies to analyse, absorb, identify the significance for your business and implement into your operations.
With talk of $161 billion deficits, forward estimates, net debt of $980 billion, revising down, sensitivity analysis and hundreds of pages of budget papers – the Budget can take a lot of time and expertise to fully comprehend. To assist our truck loan customers cut straight to the chase, we’ve extracted the key points and measures which we see as having major relevance to asset acquisitions including truck purchases and specifically truck finance. In short, here’s a quick overview of what’s in it for you!
Overview: Forecasts, Predictions and Strategy
Treasurer Josh Frydenberg delivered the 2021/22 Federal Budget in Parliament on Tuesday 11 May with measures and policies the Government intends to implement over the coming financial year and beyond. But note that the Budget Bill needs to be passed by both houses of the Federal Parliament before the policies can be implemented.
The Budget represents the Government’s next stage in the plan to secure the country’s recovery from the pandemic. The focus is on economic growth and jobs creation and not on reducing the eye-watering debt racked up through the stimulus packages.
In general, the strategy is to achieve the objectives through income tax cuts for personal taxpayers; tax incentives for business; apprenticeship and training programs; infrastructure spending; and spending in key areas of aged care, health and the economic and physical safety 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.
While the budget strategy and economic outlook may appear to be just a lot of big numbers and economic jargon, there is underlying relevance to what is important to our Jade Truck Loan customers – truck loan interest rates. The RBA has continually said it is looking for unemployment in the 5% or less range and inflation in the 2-3% range as triggers for a rate rise. The Budget is aimed at driving unemployment down and growth up and the outcomes will flow on to impact interest rates.
Asset Investment Tax Relief Measures
The great news in the Budget for truck buyers is the extension of the temporary full expensing measure for businesses with a turnover of under $5billion. This is effectively the same concept as the well-known Instant Asset Write-Off. Both were introduced in 2020 as part of the stimulus packages. Previously the timeframe was through 21/22 but now this s extended through the 22/23 financial year.
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 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.
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.
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.
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.