Your Loans and the Federal Budget

After weeks of pre-budget previews, the big reveal on Budget night followed by several weeks of analysis and critiquing by the media, interest and community groups, opposing parties and a full range of stakeholders, you're totally across what it all means for you. Specifically in our area of interest, what impact the Federal Budget will have on your personal loans and/or business finance deals. Across it all? Possibly not. We understand and we come to your assistance with this simple explainer of what this big picture budget statement may mean to your every day, weekly, monthly finances.

Quick Catch-Up

With the convenience of catching up with your favourite shows on streaming, we provide a catch-up of what’s happened with the Budget.

  • On 6 October, the Budget was officially presented to Parliament, although many of the big block-bluster items had already been pre-announced or at least hinted at.
  • The Bill was fast-tracked through the Senate and passed on 9 October. No mean feat considering sometimes that process can take months.
  • The measures included in the Budget Bill are now ‘law’ and those eligible, can start enjoying the benefits.
  • For many individual tax-payers the big win is in the Stage 2 tax cuts.
  • For eligible businesses, there are benefits to be realised in the investment allowances.

Now to analyse how these ‘wins’ may relate to your personal loans and business finance.

Personal Loan Upshots

Following the Budget passing, the ATO prepared the new income tax schedules and once your employer has updated their payroll systems, if eligible, you should start receiving more dollars in your pay packet.

The tax cuts announced in the Budget were back-dated to 1 July but you’ll have to wait until the end of the financial year to receive the refund for the July-October period. But that could be good news when you receive that lump sum after submitting your tax return after 30 June 2021.

Now for how this may impact your motorbike. car. boat loans or caravan finance. The tax cuts will give you a higher after-tax income and that is relevant to lenders when assessing your loan application.

  • Current loan holders: if you already have a car, boat, motorcycle or caravan loan through Jade Finance or another lender, a positive change in your income won’t have any impact on your loan. However, Jade Finance arrange Secured Personal Loans with the allowance to make more voluntary payments on your loan. So if you want to use your tax cut to pay off more of your loan, then that is a possibility. Be aware that break fees will apply when you a pay a secured loan out early.
  • Loan being processed: if you’ve already submitted your loan application and now you have a great nett income, this may impact positively on the loan offer you receive. You may choose to contact your Jade Finance consultant and discuss if you should amend your application form.
  • Pre-approved loans: if you have organised your pre-approved loan for that boat, car, caravan or motorcycle but not used it as yet, then you could discuss the options with your Jade consultant now or wait until you proceed with your purchase. Any amendments to the loan based on your increased income may be able to be made at time of loan settlement.
  • Applying for a new loan: if the tax cuts mean you’ll have more income then that could be the incentive to proceed with that purchase. Contact Jade Finance and discuss a quote for a car, boat, bike or caravan loan.

Business Finance Upshots

For businesses considering purchasing new cars, trucks or equipment, the big win in the Budget is the investment allowances. Depending on meeting the eligibility criteria, businesses can realise significant tax deductions on the purchase of new assets under the IAWO or through temporary full expensing in particular.

  • Under IAWO, assets need to be acquired within the eligibility period and up to 30 June 2021. Asset threshold is $150,000 and eligible businesses must have aggregate turnover of up to $500 million.
  • Temporary full expensing applies to businesses with turnover up to $5 billion and there is no threshold for the value of assets being acquired.
  • To claim temporary full expensing, assets need to be purchased post-Budget announcement, that is after 7.30pm on October 6 and prior to 30 June 2022. If you had a finance application and asset purchase ‘in process’ before 6 October, it would be our take that the date the purchase deal is actually settled that is relevant date.

Temporary full expensing may be a new concept to many businesses so we’ll delve into the detail in another article devoted to an explainer on this topic.

In order to appreciate these investment allowances, businesses should consider closely the choice of finance product used for their asset acquisitions. Jade Finance provides the full range of facilities but Chattel Mortgage is most suited to IAWO and full expensing.

The Budget certainly presented some good wins for many individuals and businesses which may be worth considering in terms of purchasing plans.

To discuss a personal loan or business finance, please contact us and speak with one of our Jade Finance consultants. Call 1300 000 008

DISCLAIMER: INFORMATION, DETAILS, SPECIFICS, GENERAL COMMENTS, MATERIAL AND DATA THAT IS POSTED IN THE ARTICLE HAS BEN ACQUIRED THROUGH PUBLICLY ACCESSIBLE SOURCES INCLUDING OFFICIAL WEBSITES AND ANNOUNCEMENTS. THE INFORMATION IN REGARD TO GOVERNMENT POLICIES, THE BUDGET, SCHEMES, MEASURES, MANUFACTUER GOODS AND SERVICES AND OTHER TOPICS IS PROVIDED FOR GENERAL INFORMATION AND NO LIABILITY ACCEPETD FOR ERRORS OR MISREPRESENTATION. INDIVIDUALS ARE DIRECTED TO THEIR OWN FINANCIAL ADVISORS FOR SPECIFIC FINANCIAL ADVICE. THIS ARTICLE IS NOT DESIGNED AS THE SOLE SOURCE FOR MAKING FINANCIAL DECISIONS.