EOFY CountdownWe’re now into the home stretch or sprint to the end of the current financial year. 30 June is a key date in the business calendar for many reasons but rather than focus on that date, the weeks leading up are more critical. That is time that you actually have to put those EOFY plans into action. Many dealers will be offering the traditional EOFY and stocktake sales on business vehicles, trucks and machinery. They want to run their stocks down to improve their balance sheets before 30 June and are usually prepared to offer very attractive discounts. Getting a good deal now can be good timing. To speed up the process, speak with Business Finance about arranging pre-approved finance. This is also a timing issue. Having your finance confirmed prior to attending the showroom or dealership can place you in a prime position to quickly place your order and ensure delivery to meet your schedule. The big deal about 30 June is taking advantage of tax deductions in the current financial year. For businesses, this year that is particularly relevant due to the generous taxation measures introduced as stimulus measures by the Federal Government through 2020. We’re talking IAWO and temporary full expensing which allow the eligible business to write off the full value of eligible asset acquisitions in the year of purchase rather than depreciate in small amounts over multiple years. The outcome – a reduction in taxes payable and hence greater capability to further invest in your business or just reduce the usual outgoings. These taxation measures are available through 2021/22 so you could realise the tax benefit in the next financial year. That would mean buying after 1 July. To work out what is the best timing for your business, speak with your accountant. Choice of business finance facility is critical to realising the benefits of IAWO and temporary full expensing. Business Chattel Mortgage is the most suitable as the ownership is immediately taken by the borrower, you have that asset in your balance sheet so it can be depreciated. Chattel Mortgage also attracts the lowest interest rate in the business finance selection and we are currently achieving exceptionally low rates on this type of loan for cars, trucks and equipment.
State and Federal BudgetsBusinesses can stand to benefit from measures announced in both the Federal and their individual state or territory budgets. All these budgets will be rolled out over the coming months with pre-budget announcements already reported. By paying attention to what your business can potentially gain from the relevant budget may influence your decision to purchase equipment finance. Government spending on construction and infrastructure projects can be a green flag for businesses in those sectors to get on with upgrading their equipment and machinery. Having a well-equipped machinery fleet can be significant in the tendering process. While it can be challenging to understand all the economic terminology in budgets, reading analysis in mainstream media or in your industry publications may be a quick and easy way to get a grasp on what’s on offer for your operation.
Economic OutlookAstute business owners will be looking at the overall forecasts for the economy before making major investments in assets. According to the latest economic data, Australia continues to perform better than forecasted at the time of the October 2020 budget and at MYEFO earlier this year. The RBA also lifted its outlook for the economy at its May meeting. Unemployment figures have continued their downward trajectory over several months and GDP is above forecasts. Issues in the global economy may also be relevant to your business. Global supply chain delays were prevalent throughout the coronavirus crisis and this impacted many businesses in Australia. Assessing how that situation has now improved and how the current COVID-19 situation in India and other countries may affect your business could be advisable. There are reports of a global shortage of chips which is affecting production for tech companies and automotive vehicle manufacturers especially.
Finance PositionAt Business Finance, we focus on consistently delivering cheaper interest rates on all our commercial loan products. Now is a particularly advantageous time as the RBA has kept the official cash rate at the historic low rate of 0.1% since November 2020. View statistic data here. While the RBA has, on a number of occasions recently, rejected calls to raise the official cash rate due to the surge in house prices, there has been some talk in the media that rates could be raised sooner than expected. The RBA insists it is waiting for unemployment and inflation to reach its targets before they will increase rates. But economic commentators are entitled to their opinion or view and readily express it. Our view is, rates are currently very low and through our vast connections with many banks and non-bank lenders, Business Finance is always well-positioned to offer great finance deals and competitive business loan interest rates for asset acquisitions. To discuss your lending requirements contact us on 1300 000 033 DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.
Related blog articles
Is now the time to take on...
With a further drop in unemployment in July and more RBA rate rises ahead, operators...Read More