After struggling with rising prices at the supermarket, the fuel bowser and in general costs of living for some time, millions of Australians will sighing with relief with news of some of the measures coming their way in the Federal Budget. Dubbed a cost of living budget, the 2022-23 Budget includes tax breaks for some taxpayers and some businesses, opportunities for business as well as immediate relief with petrol prices. From a lending perspective we take a look at the Federal Budget announcement in regard to personal loans and business finance and interest rates.
The Federal Budget has come early this year and for some it could be seen as Christmas has come early. The timing of the Federal Election in May meant the Budget announcement needed to be moved from May to March. The Treasurer brought down the annual Budget on 29 March 2022. While many of the initiatives, policies and measures which are announced at this stage of the budget process have to go through the sometimes drawn-out parliamentary process, one key announcement comes into immediate and welcome effect. The reduction in the fuel excise which will reduce the cost of petrol.
Mr Frydenberg announced that the 44c fuel excise on each litre of fuel would be dropped to 22c for a 6 month period, effective from the announcement, 29 March. This will take some time to flow through to individual bowsers as suppliers need to first use all the fuel they purchased at the previous pricing. But many are already seeing a drop in prices. A drop which should see relief for household budgets and for businesses that rely heavily on transport.
Personal Budget Benefits
Individual taxpayers in what is described as the low and middle income bracket stand to receive another significant tax refund this year. The budget includes an increase in the LMITO – the Low and Middle Income Tax Offset.
The increase is $420 which takes the maximum offset to $1500. The offset is scaled across the low and middle income range which tops out at incomes of $126,000. For those expecting a cash deposit straight away, sorry, you’ll have to wait. A tax offset is not a hand out such as some of the other supports offered through the COVID emergency. And unlike the $250 cash hand out announced for pensioners and welfare recipients.
A tax offset is an amount which is deducted from the annual taxable income when assessing the annual personal income tax return. It effectively reduces the taxable income and as such the tax payable. If the right amount of tax has been deducted from wages by the employer throughout the year and no additional taxable income is relevant, many taxpayers will receive a tax refund.
This refund would be received after 1 July and after the income tax return is submitted. For those with personal loans for say cars, boats, caravans or motorbikes, the money could be used to make an extra payment on the loan balance. Secured Personal Loans allow for these types of payments. They will mean the loan is paid out earlier so minimal break fees would apply.
Opportunities also exist for individuals to upskill and train for new jobs through the Budget incentive for small businesses to invest in training and through the apprenticeships initiative.
Business Budget Benefits
A number of key measures are included in the budget for business owners:-
- Extension of IAWO through to 30 June 2023. Instant Asset Write-Off has been extremely popular since being introduced in 2020 as an economic stimulus measure. It allows eligible business to write-off the full cost of new (eligible) plant, machinery and equipment ‘instantly’ meaning in the same year. Normally this would take a number of years. For those interested, speak with us regarding a quote for Chattel Mortgage finance for cars, trucks or equipment which is seen as best suited to IAWO.
- Small business to receive a tax cut on the 30% corporate rate to 25%
- Small business to receive $120 tax break on every $100 spent on digital tech. Speak to us about a range of finance options depending on type of purchase. Such purchases may come under Asset Acquisition Finance or Secured or Unsecured Business Loans.
- Small business receive additional tax benefit on training: $120 for every $100. This comes into effect from Budget night, 29 March. To assist with the cost, speak with us about Business Loans or Overdrafts.
- Additional investment in infrastructure and manufacturing sector.
These are just the key points in the Federal Budget and full details can be reviewed at the Federal Budget site.
Interest Rate Outcomes
For those with personal loans or business finance, the Budget does not directly address interest rates. That is the RBA’s role. But one of the key objectives of the budget is create jobs and drive unemployment even lower than the current 4%.
Inflation and unemployment figures are keys to the RBA’s decisions on the official cash rate. As inflation continues to rise and unemployment falls, the probability of the RBA lifting rates this year is extremely high.
The message for anyone considering purchase vehicles, boats, caravans, motorbikes, trucks or business equipment with finance is to act now before rates increase.
Contact Jade Finance 1300 000 008 for personal loans and business finance
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.
