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Motorbike Loans and the Budget

Analysing the annual Federal Budget may not be something that most people look forward to. Preferring to get a quick ‘what’s in it for me’ update from news headlines. But with inflation on the rise and the pressures on costs of living being felt by many, this is a year when more people are more interested in the announcements and the forecasts. Especially for riders, that can mean any impact on their motorbike loans.

Prior to making the Budget announcement, Josh Frydenberg, the Federal Treasurer and Prime Minister Scott Morrison said this would be a budget to address the costs of living. Households are facing pain at the pump with fuel prices and surprises at the supermarket with price increases on many essentials.

Of course many of the reasons as to why these prices are rising are emanating from outside of Australia. As Mr Frydenberg pointed out in the opening of his speech in bringing down the Budget, the invasion of Ukraine and continuing global pandemic are causing uncertain times in Australia.

So what is in it for you? We unpack the basics of the 2022-23 Federal Budget with particular reference to how the measures may affect motorbike loans.

2022-23 Budget Overview

The Federal Budget is usually announced in May each year with measures typically coming effect in the new financial year, unless otherwise stated. However, as the Federal Election will be held in May, the timing for the announcement of the budget was brought forward to the 29th March.

While, as usual, a number of budget measures were teased prior to the official announcement, the Budget in its entirety was launched on 29 March in the night session of Federal Parliament. As noted above, the Treasurer commenced his speech with mention of the negative global impacts on the economy as well as the floods occurring in NSW and Queensland.

On a positive note, he made mention of the how Australia’s pandemic recovery was stronger and notably faster when compared with a number of other countries such as UK, USA, Canada, Japan and Germany.

The Budget is a far-reaching document with measures on a broad and a very specific level. Those looking for detail on specific measures can refer to the Budget site for details.

Individual Budget Measures

For current motorcycle owners, the big relief will likely be the temporary cut to the fuel excise of 22c/litre for 6 months. This is set to reduce the pain at the pump after an extended period of record petrol prices. Less to fill the tank means more in the wallet for other spending.

Another big win for those earning less than $126,000 is the increase in the LMITO of $420. Sometimes referred to as the ‘lamington’, officially this is the Low and Middle Income Tax Offset. It has been in place for the past few years and was introduced as a temporary measure in the wake of the COVID-19 effects on the economy and as a stimulus.

This lifts the total maximum LMITO to $1500. The amount each eligible taxpayer receives varies with the taxable income. Note that this is not a cash hand-out as such. It is received as part of the annual income tax return. So when you submit your tax return, the LMITO is applied and the relevant refund issued. So that is a great incentive to get those receipts and other paperwork in order so you can lodge your return quickly.

For those with an existing motorbike loan, they may consider using any refund from LMITO to make extra payments on their loan. Our Secured Bike Loan allows for extra payments. These extra amounts can be made when desired and considered as additional payments or to cover future monthly repayments. It needs to be noted that in making extra payments on a loan in addition to maintaining the repayment schedule, the loan will be paid out early. Break fees may apply in this situation.

Business Measures

From our perspective as a lender, the extension of the Instant Asset Write-Off measure is of keen interest. For those purchasing a motorcycle with finance as their work vehicle, this measure may be applicable.

For eligible assets by eligible businesses, it allows for the entire cost of the asset to be depreciated, or written-off in the year of acquisition. The usual depreciation process is for small percentages of the value to be depreciated each year over multiple years, in line with ATO schedule.

Depending on the sector, businesses may also benefit from a range of budget measures announced including increase in infrastructure spending; small business tax cuts; manufacturing and agricultural sector support; and subsidies for apprenticeships and training.

Budget Timing

While the cut to the fuel excise and a $250 cash handout to welfare recipients will flow from Budget night, many measures will need to be passed by Parliament before coming into effect. Whether or not the Budget Bill can be passed before the election may impact the timing.

The outcome of the May election may change things also, if there is a change of Government.

Motorbike Loan Impacts

The key element of motorcycle loans is of course the interest rate. The Federal Budget does not address the official interest rates as that is done by the Reserve Bank of Australia. But the measures in the Budget are designed to impact the key issues which the RBA looks at in regard to making a change to the cash rate – inflation and unemployment.

Currently interest rates are at historic levels but its looking very much like rates will rise in 2022. The Treasurer forecasts unemployment to drop further, below 4% which will be key to the RBA’s decision-making process.

If you’re set to gain from the measures included in the Budget, then perhaps that is the motivation you’ve been awaiting to purchase a bike with finance.

For a quote on a motorbike loan contact Jade Bike Loans on 1300 000 003

DISCLAIMER: IN REGARD TO ANY ERRORS OR MISREPRESENTATIONS IN THIS MATERIAL, NO LIABILITY IS ACCEPTED. THE DETAILS, CONTENT AND DATA IS PRESENTED PURELY FOR GENERAL INFORMATIONAL PURPOSES FOR MOTORBIKE BUYERS AND THOSE SEEKING MOTORCYCLE LOANS. THIS IS NOT INENDED AS THE SOLE SOURCE OF INFORMATION FOR FINANCIAL DECISIONS. IF SPECIFIC ADVICE IS REQUIRED AROUND FINANCIAL DECISIONS, READERS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.

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