When the Federal Treasurer Josh Frydenberg finally brought down the 2020-21 Federal Budget in Parliament on 6 October, it may have felt a little like ‘old news’ as so much had been pre-empted. A number of the key measures were covered in the pre-budget announcements by both the Treasurer and the Prime Minister in the weeks prior and some of the changes to income tax had already been legislated. But there were still new announcements which represent possibly good news for those considering buying a new motorbike.
While the budget was primarily focussed on jobs creation and business initiatives, we have singled out a number of inclusions that effect loans and finance to elaborate on and explain further.
Income Tax Cuts
Music to tax payers’ ears! Who doesn’t want a little extra in their pay packet each week? The tax relief announced by the Treasurer in the budget included some changes which had already been legislated in the 2018 Federal Budget but with a welcome twist – bringing forward and back-dating.
Stage 2 of the Income Tax Plan was due to come into effect in 2022 but that has now been brought forward to commence from 1 July 2020. Yes that date was prior to the budget announcement so the proposed tax relief will be back-dated to 1 July which means additional refunds for some tax payers.
The changes include lifting of some tax bracket thresholds and increases in the offset for low and middle income earners.
- For those eligible for the low income tax offset it is increased to $700 from $445. This is applied/received when the income tax return is lodged after 20 June 2021.
- For low and middle income tax offset, which represents up to $1080 for some workers, stays in place for 2020/21 and that too is claimable when the income tax return is lodged.
Tax bracket thresholds increased:-
- 19% bracket to $45,000 from the current $37,000
- 5% bracket to $120,000 from the current $90,000
This represents a decrease in tax paid by many workers. These measures are to be back-dated to 1 July 2020 meaning that if the changes affect you, you will be entitled to a refund. Initially, as in straight after the announcement, the Treasurer’s wording was taken by some to mean a refund would be issued before the end of this year. But that has been clarified and confirmed that any refunds due will be included when a person lodges their income tax return for 20/21 – that is after 30 June 2021.
If you’re due to receive a tax break, it could be that extra each week that makes your bike purchase a more achievable prospect. Worth a thought? Use our Motorbike Loans calculator to get rough estimates on possible repayments to see if it works for you or call us for a quick quote.
Business Investment Allowances
The strategy behind the 2020/21 Budget is very much about a business-led recovery from COVID and out of recession. The Government has proposed a number of measures to incentivise businesses to invest with asset acquisition.
If your motorbike is to be used primarily in your business, you may be eligible for one of the investment allowances.
The Instant Asset Write-Off scheme which was first introduced in March 2020 has had the deadline extended to 30 June 2021. This means that for eligible businesses, the full cost of eligible asset purchases up to $150,000 can written-off in this tax year.
There are a number of other allowances based on varying business turnover levels but as the legislation is yet to be passed, the official specifics are not available on ATO or Treasury websites for us to quote. More information at this stage can be sourced at www.budget.gov.au
In order to take advantage of these types of accelerate depreciation tax breaks, an asset needs to be acquired either fully purchased with cash or with a suitable finance product. Jade Bike Loans offers the full range of commercial finance facilities for business motorcycle purchases, however, Chattel Mortgage is best suited for asset depreciation purposes.
With Chattel Mortgage, the borrower actually buys the motorcycle so it is entered as an asset on the business balance sheet and depreciated according to ATO regulations. Leasing on the other hand is an off balance sheet finance product and the business does not depreciate the asset.
We advise speaking with your accountant for advice regarding finance types and your business. Your Jade consultant can then provide a quote and handle the finance arrangements for you.
Easing of Consumer Credit
Another inclusion in the Budget is the Government’s intention to pass laws to ease the flow of credit to consumers and small businesses. This was flagged in one of the pre-budget speeches and if passed by the Parliament, is due to come into effect by 1 April 2021.
We have covered this in detail in another article and refer you to that link for more information. The changes will not impact bike loans which are arranged prior to April 2021. So if you’re ready to go now, it won’t affect your Jade Bike Loans quote or any stage of the loan application process.
If the budget announcements have motivated you to proceed with your bike purchase plans, contact Jade Bike Loans for a quote at our cheap interest rates of course.
For a quote on a motorcycle loan just contact Jade Bike Loans 1300 000 003 for a quick quote, fast approvals and prompt settlement.
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