After a week of budget leaks, the Federal Budget was finally delivered in a speech by Treasurer Josh Frydenberg in Parliament on the evening of Tuesday 11 May. Click here for the 2021/2022 Budget Overview.
The leaks revealed a lot of what was included with massive spending in many key areas. But what potential boat buyers will no doubt be wondering – what’s in it for me? Our team have been covering the announcements and bring you this overview of how the proposed Budget measures may be an incentive to action your boat owning aspirations. Whether it’s your first boat or your next boat, there are possible signs that now could be the time to buy.
Income Tax Gains
For personal taxpayers, there are winners in some tax brackets with the extension of LMITO – low and middle-income tax offset. This was introduced a few years back and has been extended for another year but no indication was given as to whether this could be made permanent.
LMITO is an offset that means tax relief for the estimated over 10 million taxpayers in the relevant categories with those earning $48,000 through $90,000 to potentially gain the maximum $1080. Those with lower incomes receive a lesser amount. This is accounted for when the income tax return is assessed at the end of the financial year and can result in a cash tax return.
How could you spend that tax return? Possibly as a down payment on a new boat, as backup or just an incentive to buy.
Taxpayers in the brackets that received an overall tax rate reduction in the October budget also stand to receive a further cash tax refund. To refresh your memory: back in October 2020 the delayed 2020/21 budget was announced and the Treasurer brought forward tax cuts that were supposed to come into effect this year. The tax cuts were announced in October but back-dated to July. But many employers needed time to implement the new tax schedules into their payroll systems. Those that received those cuts are entitled to the difference in tax payable from 1 July to the time when their employer started paying them at the new rates. So that will also come through when the individual submits their tax return. More information on tax amendments here.
International Border Decisions
Another announcement was the expectation that international borders would not reopen until 2022, possibly late in that year. The closure of borders due to COVID-19 throughout 2020 led to a massive spike in boat sales as many Australians opted to buy a boat as they couldn’t travel overseas.
A further closure of the borders could be your incentive to move on that boat purchase. Possibly upgrading to a larger boat to accommodate more family and friends for longer times and longer boating holidays.
The increase in boat sales over the past year has led to shortages of supply from some manufacturers. To ensure you secure the boat you want, getting in asap with your order could be advisable. We can assist with pre-approved finance and secured boat loans to potentially expedite the process.
Interest rates as such are not included in the Federal Budget. The rates which apply to both lending and savings are set by banks, finance companies and other lenders based on the official cash rate which is the domain of the RBA.
But there is a connection between the Budget and the official cash rate or more specifically the RBA’s decisions on cutting or increasing the rate. That connection is the performance of the Australian economy in regard to growth and inflation and unemployment.
The RBA has publicly stated the targets they are seeking in these areas before moving on rates. The Budget focus is on job creation to reduce unemployment and stimulate growth. So over time when measures are implemented and the effects start to take hold that flows on to impact interest rate decisions.
The Budget is forecasting unemployment to fall to 5% in 2022 and to around 4.75% in 2022/23. But for now, interest rates remain at current low levels across our Jade Boat Loan products.
Commercial Marine Businesses Gains
For those operating in the marine industry or purchasing vessels through a business, the Budget has good news for business investments. The IAWO and temporary full expensing have been extended through another year, through 2022/23. Allowing eligible businesses acquiring eligible assets to write off the full cost in the year of purchase. If considering this option, we can assist with Chattel Mortgage Boat Finance.
For business owners not operating in the marine sector or buying a boat for business purposes, these measures may still be significant to your private boat purchase. If they mean you can realise improved financial conditions for your business that could mean an improved personal position also to proceed with that boat purchase.
Overall, the 2021/22 Federal Budget is being well-received across many sectors but the Budget Bill still needs to be passed by both houses before being implemented.
Contact us on 1300 000 003 for a boat loan quote.
DISCLAIMER: THE INFORMATION AND SPECIFIC DETAILS CONTAINED IN THE CONTENT OF THIS ARTICLE HAVE BEEN PREPARED AND ARE PRESENTED PURELY AS GENERAL INFORMATION AND NOT INTENDED AS THE ONLY SOURCE OF FINANCIAL ADVICE FOR BOAT BUYERS AND LOAN BORROWERS. FOR THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE, THEY SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED IN REGARD TO ERRORS AND MISPRESENTED DATA AND DETAILS HEREIN.