Will it be a Christmas in July celebration or winter of discontent for your business? Timing the acquisition of new equipment can be critical to ROI, costs, productivity and profitability for a business. Knowing when the time is best to proceed with that machinery or equipment purchase can involve watching the economic signs, announcements and other movements in the economy. The end of the financial year is the traditional time for a lot of movement so we’re covering off a range of factors that could be relevant to your business.
Last year’s state and federal budgets were packed with gains for business in response to the effect on business and the economy of the pandemic. But a year on and the economy has been in and out of a technical recession and has outperformed forecasts. While there is a way to go to get the economy back into full swing, it would be an unrealistic expectation to be relying on the same level or type of handouts and subsidies that were offered in last year’s budgets. The support for business could be expected to be more targeted to those sectors still struggling the greatest due to international border closures and other ongoing pandemic-related impacts.
What to Watch
May and June are the months to watch for both state and federal budget announcements and to get your own business balance sheet in order. Due to the pandemic, last year’s budget delivery schedule was changed. So this year’s round follows in more of a half year cycle. As such, many of the policies, measures and business benefits announced in 2020/21 budgets are still currently active and available.
Here’s your guide to budget watching over the coming weeks and months:-
- The Northern Territory was quick out of the blocks with a 4 May Budget. The point to note for those in the earthmoving, excavation and home building sector is the investment commitment inland releases over the next few years. Read more here.
- The Federal Treasurer, Josh Frydenberg, will bring down the biggie – the Federal Budget – on 11 May. A few reveals have been announced in recent days including cuts to excise taxes for small brewers and distillers; childcare cost gains for some families; and another round of grants for shovel-ready local infrastructure and other regional projects and events. More information.
- NSW Treasurer Dominic Perrottet will deliver the state’s budget in mid-June with pre-budget unveils and pre-cursors already being at least eluded to. NSW has been on a major infrastructure spend over many years and that looks likely to continue. So construction businesses, be prepared,
- The Victoria state budget is also due mid-June and hopefully, Premier Daniel Andrews has recovered from his back injury and back in Parliament for the announcement. With the state election scheduled for late 2022, the budget may include some aspects with that in mind.
- For Queenslanders, the budget day is 3 August, in the next financial year. The timing could be a consideration for equipment acquisitions. https://budget.qld.gov.au/
- Post-election, the Tasmanian state budget is also due in August.
- Other states and territories TBA
State and territory budgets are sometimes more relevant to individual business activity than the Federal Budget. Especially in regard to infrastructure and other construction activity, it is the states that are particularly active in this area and projects in your locale will be ones to note.
The states also control payroll tax and they all either deferred or waived that cost to business as part of their stimulus responses. But check the dates. That generosity may be coming to an end and you may have to factor that cost back into your balance sheet this coming financial year.
When watching budget announcements be mindful not to have total tunnel vision and focus only on yourself. Sure, everyone wants to know ‘what’s in it for me it’s only natural. But take a minute and a broader viewpoint. Assess how your customers and suppliers may fare from the announcements. If your customers are in line for a boost you may need to scale up your operation with new machinery to meet their demand.
Interest Rate Watch
It’s always time to watch interest rates at Jade Equipment Finance and for many Australians. At the May board meeting, the RBA once again held the official cash rate at 0.1%, the historic low level where it has been since November 2020.
While the bank upgraded its outlook for the economy and stands by its previous statements that it was not expecting to raise rates for some time, there is conjecture in some circles that rates may rise sooner. We stress conjecture as some observers and commentators do have their own opinions on interest rates. But there is talk!
Taking advantage of the current low rates now with a Jade finance deal will assure you of having that same low rate over the full finance term. We provide fixed equipment finance interest rates for all types of equipment so you will be covered if rates due rise during your loan term.
30 June is the deadline for getting your balance sheet in order to minimise tax obligations by taking advantage of tax-deductible expenditure.
It’s been highly promoted over the past year but IAWO and temporary full expensing do have the potential to deliver significant returns to the business. If you always intended to take advantage of this in the current financial year, then the time for hesitating is fast running out. To be eligible for the benefits in the current financial year, the asset needs to be purchased and operational by the deadline date. There have been supplying delays in equipment, your machinery may take time to be installed and commissioned.
Our consultants are ready to act quickly in securing the finance you need to acquire that equipment with no deposit equipment loans and pre-approved finance. Ensure you’re celebrating this new financial year and not regretting you delayed that equipment investment decision.
Contact 1300 000 003 to discuss how we can assist you with your acquisition plans.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.