Will it be a winter of discontent or a winter wonderland? After more than 12 months of dealing with the coronavirus pandemic, most people will no doubt be looking forward to increasingly improving economic times. Much of our good news bad news will likely come on 11 May when the Treasurer, Josh Frydenderg, hands the 2021/22 Federal Budget down in Parliament.
Last year's budget was postponed from May to October due to the COVID-19 situation. The October announcement brought extensions and additions to some of the stimulus measures announced earlier in the year as well as extras, including tax cuts for many taxpayers.
Last year’s budget was considered the most significant in Australian history as the nation was expected to experience the depths of a serious and ongoing recession. The budget was seen as not only the key to recovery after the pandemic but needed measures to stave off the worst of possible outcomes.
But this year’s budget faces somewhat equally significant circumstances. Australia has experienced much better than expected growth over the past few quarters, unemployment figures continue to exceed forecasts in a positive way. But uncertainty remains around our vaccination program and key sectors such as tourism face an uncertain future with international borders closed.
No doubt the pre-budget announcements will start flowing shortly to give us some indication of what the Government is including in the Budget. While we await those sneak peeks, at Jade Finance, we’re offering timely reminders of some of the measures still on the table from the last budget.
Personal Tax Measures
Tax cuts for middle income earners were announced in the 2020/21 budget as some stages of already-legislated cuts were brought forward to provide stimulus in response to the coronavirus pandemic. These changes to tax schedules were introduced by businesses in October/November depending on how quickly individual businesses sorted the changes to their payroll software. That means that the reduction in tax that should have been received in July-September pay packets is due to be accounted for when tax returns are submitted after 30 June 2021.
If that includes you, don’t delay getting your personal tax return in this year. The tax cuts, in addition to other rebates in the budget, may result in you receiving a handy refund. A refund could be a down payment on that car, boat or motorbike you’ve been considering. Of course, Jade Finance can arrange no deposit car loans so you wouldn’t necessarily need to use your refund for a deposit, but it could give you a spur on to make that purchase.
Additional changes to personal tax rates have been slated for introduction in 2022 and beyond and it could be expected that firm decisions around proposed changes would be announced in the 2021/22 budget on 11 May.
Budget Initiatives for Business
Businesses have had a number of key measures available since April-May 2020 as part of the Government’s COVID-19 stimulus package and some of those programs are set to continue beyond 30 June 2021. Instant Asset Write-Off was one of the early initiatives introduced in April 2020 and tweaked, expanded and extended over time and morphed into temporary full expensing when the Budget was announced in October 2020. For eligible businesses and eligible asset acquisitions, these measures are available through to June 2022.
Most business owners would be well aware of the benefits of these accelerated asset depreciation measures as they were extremely well covered both in the media and promoted by finance companies, banks and lenders such as Jade Finance. If you’re not across the detail but you do intend to make that purchase and realise the IAWO in this financial year, get in touch with us to discuss a Chattel Car Mortgage or for your, truck or equipment asap.
A less well promoted measure, but one which can be utilised effectively in conjunction with IAWO is Loss Carry Back. This allows businesses that make a loss in designated years (19/20,20/21,21/22) to claim those loss back against profit posted in designated earlier years. If profit was posted and a tax obligation paid, the loss carry back can trigger a cash refund of the tax paid.
Note – losses are usually carried forward to claim against future profits.
The way this can work with IAWO is if by acquiring assets and claiming the IAWO a business posts a loss in the financial year but a profit in earlier years, loss carry back can be implemented and a cash refund realised. This is all subject of course to eligibility under ATO criteria. But basically, you could buy new vehicles, truck or equipment in this financial year which results in your business receiving a cash refund on tax paid last year or the year before.
In order to depreciate an asset, the finance product selected must be one where the asset is entered on the business balance sheet. This is the case with Chattel Mortgage as opposed to Car Leasing where the lender retains ownership.
With our car loan interest rates currently at historic lows and lowest on Chattel Mortgage, it may be highly rewarding to proceed with those purchases. Refer to our online car finance calculators to work up repayment estimates or just give us a call for a quote.
So as we wait for what the Federal Treasurer has in store for the Budget 2021/22 there are programs and measures which can still be taken advantage of in this financial year.
For a cheap interest rate loan quote, contact Jade Finance Call 1300 000 008
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