The 2020-21 federal budget has been handed down. On top of tax cuts for more than 10 million people, it also outlines a range of steps to support home ownership and help small businesses recover from the coronavirus pandemic.
Home Ownership
Measures implemented last year, such as the First Home Loan Deposit Scheme and the HomeBuilder scheme, would appear to have contributed to the highest levels of first home buyer activity in 15 years. However, as part of a move to help people surmount “the deposit hurdle”, new initiatives have been announced that will help more Australians own their own home.
Single parent families:
From July 1st 2021, the new Family Home Guarantee aims to give (over four years) 10,000 single parents with dependants the opportunity to build a new home or purchase an existing home with a deposit of 2 per cent. The government will guarantee up to a maximum of 18 per cent of the property purchase price. This will allow the applicant to get a loan without paying lender’s mortgage insurance.
Applicants must be Australian citizens, at least 18 years of age and have an annual taxable income of no more than $125,000.
First home buyers:
The FHLDS (New Homes) scheme (also known as the New Homes Guarantee), will be expanded for a second year, providing an additional 10,000 places in 2021-22.
“The New Home Guarantees will be made available from 1 July 2021 to 30 June 2022, enabling more first home buyers to build a new home or purchase a newly built home and enter the housing market sooner with a deposit of as little as 5 per cent”
“The government recognises the importance of home ownership and the economic and social benefits it provides”
The Australian Government
What’s in it for Small Business?
SME Debt Recovery Pause
The government is also extending the Small and Medium Enterprise (SME) Recovery Loan Scheme, which builds on the SME Guarantee scheme, to support SMEs with a turnover of up to $250 million that were recipients of JobKeeper payments in the March quarter of 2021, or were affected by the floods in March 2021 and were located or operating in eligible Local Government Areas.
“By increasing lenders’ ability to provide cheaper credit, the new scheme allows many otherwise-viable SMEs to access additional funding, thereby helping businesses manage their cash flows and invest for the future”
The Australian Government
The Treasurer said government will also be enabling small businesses to apply to the Administrative Appeals Tribunal (AAT) to pause or modify ATO debt recovery actions, such as garnishee notices and the recovery of General Interest Charge or related penalties until the underlying dispute is resolved by the AAT. This aims to help small businesses save at least several thousands of dollars in court and legal fees and as much as 60 days of waiting for a decision.
To “support further job creation”, the government said it will also extend temporary full expensing and the loss carry back measure announced in last year’s budget for another year.
It will also allow companies with turnover up to $5 billion to offset losses for the 2019‑20, 2020‑21, 2021‑22 and now 2022‑23 income years against previously taxed profits from 2018‑19 or subsequent years to generate a refund.
Instant Asset Write-off
Contrary to whispers in the market, small business will welcome the one year extension to the Instant Asset Write Off measures. The “full expensing” scheme now allows businesses with a turnover or income of less than $5 billion to immediately write-off the cost of assets they first use or install by June 30, 2023.
An instant write-off simply allows businesses to claim deductions upfront, rather than spread over several years through depreciation.
Digital Solutions
SMEs will also be able to build their digital capacity through a $12.7 million expansion of the Digital Solutions – Australian Small Business Advisory Service, and $15.3 million to drive business uptake of e‑Invoicing.
Whether you want to buy a new home, need to finance a new asset to make the most of the 100% instant asset write-off or would like support to find financial solutions that will improve your business cashflow – we can help! Get in touch with the Style Finance team today.
Style Finance CEO, Bernadine Geary – as featured in MPA Magazine May 2021