The Federal Budget comes around each year in May, with the exception of 2020 when it was pushed back to October due to the coronavirus pandemic. For both businesses and individuals, it can be an interesting, hopeful or anticipative event – what’s in it for me? After the massive COVID-19 stimulus measures introduced by the Government through 2020 and the current position of the economy, 2021/22 Federal Budget is attracted a lot of interest on a number of fronts. https://budget.gov.au/
Chiefly in economic circles, will this conservative Government, known for avoiding budget deficits and being ‘back in the black’ take to repairing the massive deficit racked up through the stimulus spending spree? This is of importance as it could mean spending cuts. The Treasurer, Josh Frydenberg, allayed any fears of that scenario in pre-budget comments, clearly stating this would not be an austerity budget. Indicating the approach would be a ‘repair the economy to repair the budget’. Effectively embracing the current deficit situation as some commentators have described it.
So what could be in the upcoming budget for your business or your household budget? The complete budget will be delivered in a speech by the Treasurer in Parliament on the evening of Tuesday 11 May. However, it is traditional for key measures to be unveiled in the lead-up.
As lenders across many markets, at Jade Finance we need to keep a close eye on multiple economic indicators for potential effects on lending interest rates and the lending market in general. At the moment, the RBA has held rates on hold, waiting for inflation to rising and unemployment to fall before considering an increase of the official cash rate. Both of which can be impacted significantly by measures introduced in a Federal Budget.
On Thursday 29 April, the Treasurer delivered his official pre-budget speech to a business group and we’ve reviewed the content to bring you this update on the lead-up. View the Budget Speech 2020/21 here.
Treasurer Pre-Budget Official Speech: Summary
The pre-budget speech by the Treasurer was more focused on the big picture and laying out the Government’s fiscal strategy for its next phase in the plan for economic recovery in the wake of the impacts of the pandemic. There were no specific measures or detail included so that will have to wait.
What was clearly communicated was the approach would be on jobs and on continuing the approach taken in the economic response to COVID-19 being with targeted and temporary measures and using the ‘existing delivery mechanisms’.
He said that getting Australians back into work and businesses back into business would require continued support. He said the despite the success of the stimulus measures cushioning Australia from the COVID-19 impact, the crisis would have long-lasting effects on the economy.
In outlining the budget strategy, the Treasurer said the Government would be continuing to provide proportionate, temporary and targeted support. He said that leveraging jobs and investment in the private sector through taxation measures.
As a suggestion or indication as to what could be in the Budget, the speech included specifics around:
- Locking in secured, reliable, affordable energy, cutting green and the red tape to drive down business costs.
- Investment in next-gen energy technologies for lower costs increased jobs and lower emissions.
- Transport infrastructure spends, $10b, brought forward to create jobs.
- Investing in the workforce through training, skills and education systems.
- IR reform.
There is a lot more of course explanation of the fiscal strategy and approach in the Treasurer’s speech which you can read in full at https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/speeches/speech-australian-chamber-commerce-and-industry-canberra but the specific detail of individual measures and ‘what’s in it for me’ content is yet to be revealed.
Due to the delayed 2020/21 budget not being announced until October 2020, many of the measures introduced 6 months ago are still available to businesses, subject to criteria. These include the Instant Asset Write-off, temporary full expensing and Loss Carry Back which were extended through 2021/22 for eligible businesses and purchase of eligible assets.
These can represent significant tax deductions on purchases of business assets such as cars, vehicles, trucks and equipment. For these purposes, Car Chattel Mortgage is the most suitable form of finance to realised benefits from accelerated asset depreciation.
If you want to get the tax deduction in this financial year, you will need to get moving on that purchase and speaking with us refinance – not long to 30 June!
For individual taxpayers, changes to the personal income tax schedule were brought forward in the 2020/21 budget which delivered a tax cut to many workers. In addition, it has been announced that the low to middle-income tax offset will be continued for another year. So individuals in that bracket may get a handy tax return.
Further Detail to Come
As with many others, Jade Finance will be keenly watching and waiting for more detail on the 2021/22 Federal Budget and will provide further updates.
To discuss lending requirements contact us today on 1300 000 008
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.