Like many financial industry professionals, we were fairly quick to publish an article on the main components of the 2020/21 Federal Budget after the formal announcement on 6 October. Components that were of particular relevance to our Jade Boat Loans customers and measures which represented a positive for potential boat loan applicants. Following on from our general overview, we’re now providing more detailed information on how key budget measures may impact our borrowers at the different loan application, processing and settlement stages.
Recap and Update
- The 2020/21 Federal Budget was brought down on 6 October with the bringing forward of Stage 2 of the already legislated tax plan a central component. Stage 2 was due to come into effect on 1 July 2022 but will now commence on 1 July 2020. Eligible tax payers will receive an extra two years of tax relief due to this measure.
- Stage 2 involves changes increasing the threshold of the 19% and the 32.5% tax brackets. In addition, the low and middle income tax offset (LAMITO) has been extended to include the current 20/21 tax year.
- While the announcement was made on 6 October, the tax cuts are back-dated to 1 July and the difference owed to tax payers from July to when they start actually receiving the lower rate, will be reconciled when they submit their 20/21 tax return.
- Often it takes the government of the day some time, sometimes a very long time, to negotiate the Budget Bill through Parliament. In this case, the Opposition recognised the importance of getting extra money to tax payers and the bill was fast-tracked and passed by 9 October.
- The ATO had the amended tax schedules in place by 13 October so it was just up to employers to get their systems updated so they could start paying eligible employees at revised levels.
Impact on Boat Loans and Loan Applications
For eligible tax payers, the tax cuts mean an increase in their net income, meaning after-tax income. This is the income level that is of significance when applying for a personal boat loan. This change in net income, in this case a positive change, may have differing impacts at the different stages of applying for a boat loan.
- Existing Boat Loans: If you currently have a boat loan, your change in income should have no effect on that existing loan. Jade Boat Loans arranges Secure Boat Loans with fixed elements – loan term, interest rate, repayments – which remain in place and fixed for the term of the loan. If a borrower defaults on their repayments or requests a deferment of repayments may trigger impacts.
You can opt to pay extra on an existing loan to pay it off earlier – that is a personal choice and break fees should be considered.
- Pre-Approved Boat Loans: If you have arranged a pre-approved boat loan through Jade but are yet to utilise the loan to buy a boat, you may wish to speak with your Jade consultant about possible positive impacts. All our loans are negotiated with lenders individually and lenders consider each application based on individual income and other aspects. If your income has increased only marginally, there may be no change to the interest rate offered on your pre-approved loan. However, you may choose to utilise your income increase to increase the repayment level. Contact your consultant to see if a better offer may be available.
- If you have been rejected for a boat loan based on your pre-tax income level you may choose to re-apply: If your boat loan application was not accepted due to your income level and the tax cut has seen your net income increase, it may place you in a better position now to have your application re-assessed and accepted. Speak with a Jade consultant about the possibilities and probabilities.
- Boat Loan Applications Being Processed: While Jade Boat Loans provides a very prompt service in processing boat loan applications, some applications may still to be finalised. If you do have a boat loan currently being processed and assessed for a final offer, based on your pre-tax cut income and your net income is now increased, you may like to contact your Jade consultant and advise of the change. A positive change in income can have a positive impact on most loan applications.
If you have any doubts or questions around your existing boat loan or current boat loan application in regard to the tax cuts, simply contact your Jade consultant to discuss your individual situation.
If that extra in the pay packet has motivated you to move with your boat buying plans, then welcome aboard! As a major marine finance lender, Jade Boat Loans can offer better interest rates and better boat loans on all types of boats from tinnies to luxury motor cruisers.
Use our boat repayment calculator to start working out roughly how much that boat you’re considering might cost in monthly repayments or call us for a quick quote.
To discuss a boat loan quote on any type of boat, contact Jade Boat Loans 1300 000 003
DISCLAIMER: THE DETAILS, INFORMATION, DATA AND MATERIAL PRESENTED IN THIS ARTICLE HAS BEEN SOURCED, IN FOOD FAITH, FROM REPUTABLE SOURCES IN THE PUBLIC DOMAIN. INFORMATION IN RESPECT OF GOVERNMENT ANNOUNCMENTS, POLICIES, PROGRAMS, MANUFACTURER’S GOODS AND SERVICES AND OTHER SUBJECT MATTER IS OFFERED FOR GENERAL INFORMATIVE PURPOSES ONLY AND NOT IN ANY WAY INTENDED AS A SOLE SOURCE FOR THE PURPOSE OF MAKING FINANCIAL DECISIONS. NO LIABILITY IS ACCEPTABLE FOR ANY ERRORS OR MIS-INTERPRETATION OF FACTS AND MATERIAL. IF A PERSON CONSIDERS THEY REQUIRE FINANCIAL ADVICE IN REGARD TO THEIR SPECIFIC AND INDIVIDUAL CIRCUMSTANCES, THEY SHOULD SEEK INDEPENDENT ADVICE FROM A FINANCIAL ADVISOR.