Still haven’t found what you’re looking for? Listings to pick up soon

While you were kicking your feet up over the festive season, did you flick open your phone and scroll through real estate listings in your dream location? If so, you might’ve noticed there were fewer properties listed for sale than usual. Here’s why.

If you couldn’t find exactly what you were looking for, don’t stress – it’s actually much harder to find ‘the one’ at this time of year.

That’s because property listings traditionally drop in December, with 2020 no exception.

In fact, according to SQM Research, national residential property listings decreased by 7.9% in December 2020, falling from 296,267 in November 2020 to 272,999.

If you compare that figure to 12 months prior, it was a 5.8% drop (that’s 2020 for you!).

What was really interesting, however, was that new listings (those less than 30 days old) dropped a whopping 17.0% in December, with 13,680 fewer new properties listed for sale than in November.

So why did the overall number of listings drop?

Well for starters, you can’t blame people for not wanting to spend their summer holidays selling their property, particularly after enduring the 2020 COVID-19 lockdown/s.

“The month of December traditionally records falls in properties listed for sale as it is the start of the festive and summer holiday period,” explains Louis Christopher, Managing Director of SQM Research.

Another factor at play could also be that two-thirds of Australians believe it’s a good time to buy property, and thus, demand is outstripping supply.

Indeed, you may have even caught one or two news reports of regional and coastal house prices soaring as city slickers decide to finally make their big escape.

This home buyer activity has been further aided by a number of federal and state government initiatives, including the First Home Loan Deposit Scheme, HomeBuilder and stamp duty exemptions/concessions.

So when can I hope to find ‘the one’?

The good news is that listings are expected to increase again shortly, according to SQM Research.

“Going forward I believe listings activity is going to remain strong in early 2021,” Mr Christopher says.

Furthermore, recent NHFIC research indicates new residential construction supply is expected to exceed demand by 127,000 dwellings in 2021 across Australia, and 68,000 dwellings in 2022 (this is due to the dramatic impact of COVID-19 on net overseas migration).

Got your eye on something?

So, how’d you go with your most recent property search? Anything catch your eye?

If so, don’t let it be “the one that got away”.

Get in touch with us today and we’d be happy to go through your financing options with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Take control of your 2021: 3 quick and easy finance resolutions

Whenever we think of New Year’s resolutions, the first thing that comes to mind is a health kick. But here are three (easy) New Year’s resolutions that’ll help improve your financial wellbeing in 2021.

Below we’ll run you through three straightforward, and most importantly, achievable New Year’s resolutions to set yourself this year.

1. Get a home loan health check

Quick question (no judgement): do you know the interest rate on your home loan?

Don’t stress if you don’t, studies show that about half of mortgage holders can’t recall their home loan interest rate.

But it does beg the question: if you don’t know your rate, how do you know whether or not you’re getting a good deal on your loan? You could very well be paying too much.

This is why making a home loan health check your New Year’s resolution is so important, particularly with interest rates at record low levels after a series of RBA cash rate cuts.

Indeed, a recent RBA study found that for loans written four years ago, borrowers are charged an average of 40 basis points higher interest than new loans.

So if it’s been a while since you’ve refinanced – so long that you can’t recall your rate – then it’s probably time to get in touch for a home loan health check to see if you can get a better deal.

Rest assured we’ll make it quick and painless. Simply get the ball rolling by giving us a call today.

2. Set yourself a financial or lifestyle goal

If you’re not back at work yet, use this precious time to carefully consider what financial goals you want to achieve in 2021.

With renewed post-COVID optimism on the horizon, now might be time to launch that business idea you’ve been thinking about.

Perhaps it’s time to upgrade from an apartment to your first house. Or with international travel on hold for a while, maybe now’s a good opportunity to explore Australia with a new set of wheels.

Whatever your flavour, consider taking stock of what you want to achieve in 2021 so that you can work out a plan to achieve it.

And if you’re unsure about how you’ll finance that goal, we’re here to discuss your funding options. We can help you work out whether you might be able to make them a reality in 2021, or if it’s more realistic to work towards 2022 instead.

3. Cut back on your microtransactions

Once you’ve identified a big financial goal to hit in 2021, you’ll want to start saving towards it.

But micro-transactions – purchases that are low in cost and trivial in nature – can be a real obstacle.

For example, did you know that buying a $4 takeaway coffee each day costs you a whopping $1460 per year, whereas making it yourself using a french press or aeropress costs just $260.

That’s a saving of $1200.

Other micro-transactions that most families can cut back on include alcohol, take-away food such as Uber Eats, and multiple entertainment subscriptions such as Spotify, Netflix and Foxtel.

With a little bit of budget tinkering, you can save yourself hundreds – even thousands – of dollars each month.

So what’s your first step?

That’s easy – get in touch today for resolution #1: a home loan health check.

There’s a reason tens of thousands of families are currently refinancing their home loans: competition among lenders is fierce.

And by getting the ball rolling on resolution #1, you’ll also be contributing towards resolutions #2 and #3 by saving money that you can put towards your 2021 financial goal.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Happy New Year! Here’s to a prosperous 2021!

Well, that was a year for the history books. Time to start looking forward, we reckon! And the good news is 2021 offers plenty of promise. So what’s your New Year’s resolution?

While we saw the national housing market dip throughout the middle of 2020, it’s already started to recover, and many experts predict it’ll rebound even stronger in 2021 as the COVID-19 vaccination is rolled out across the country.

With that optimistic outlook in mind, now’s a great time to sit down and ask yourself: what am I aiming for in 2021?

A new home? A caravan to explore Australia in? Or now that you’ve had a taste of working from home, possibly a new business idea?

Because, let’s face it, while we’re all for health-inspired New Year’s resolutions (well, kinda), it doesn’t hurt to have a financial resolution too.

And usually the two work hand-in-hand quite well.

For example, the less you spend on booze, take-away coffees or Uber Eats, the more you can put towards savings to your 2021 financial goal.

So over this New Year’s long weekend have a little think about what you might want to achieve in 2021.

Whatever it is, rest assured that we’ll be here for you to help you achieve it.

And if you just want to enjoy 2021 after enduring the horror show that was 2020, we’re all for that too!

Happy New Year and all the best for the year ahead!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Warning to SMEs: payment times have completely blown out

Small businesses are receiving payments from clients a month late on average – that’s 18 days longer than last year. Make sure your business’s cash flow isn’t adversely impacted this holiday season.

The blow-out in payment times is having a “devastating impact” on small businesses across the country, warns the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).

In October, small businesses were paid 31 days late on average, compared to 13 days late in October 2019, reveals CreditorWatch data published in a recent report.

ASBFEO Kate Carnell says the delay in payments is hitting businesses already under strain due to COVID-19.

“It’s more important than ever to remember that although Small Business Counts is a statistical report, behind every number is a person,” she says.

“Small businesses are the engine room of the Australian economy, but they are also hard-working people who have had to overcome huge obstacles in 2020.”

What businesses are worst impacted?

The transport, postal and warehousing sector has been hit hardest by the blowout in payment times, with those businesses receiving payments an average of 90 days late, compared to 9 days late in October 2019.

Other sectors with average payment delays of over 30 days include:

– financial and insurance services

– professional, scientific and technical services

– construction

– rental, hiring and real estate services

– healthcare and social assistance businesses, and

– many other service-based businesses.

It’s doubtful these figures will improve over the next couple of months, with the summer holidays a notorious period for late payments.

So if you haven’t started invoicing clients yet, you should consider doing so now – especially those who have a history of being tardy.

Silver linings in 2020

It’s worth noting that the ASBFEO report isn’t all bad news.

It also highlights the resilience and agility of Australian small businesses.

It shows 40% of small businesses have pivoted their operations to adapt to the rapidly changing conditions faced in 2020 – whether that be due to the summer bushfires or COVID-19.

“It’s been inspiring to hear the stories of small businesses that made a decade’s worth of change in a matter of days and managed to keep their business afloat,” says Ms Carnell.

Funding options are available

If your business is struggling with cash flow issues due to late payments from clients, or a recent change in direction, then please get in touch sooner rather than later.

We can run you through some financing solutions that may be available to help your business make the transition from 2020 (good riddance!) to 2021 (here we come!).

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Season’s Greetings! Bring on 2021!

To all our wonderful clients: this has been a year like no other, so we can only hope that you’re treated to a relaxing time with family and friends this festive season.

We want to say a huge thank you for your support over these past twelve months. It’s fair to say it’s been an incredibly challenging year for households and businesses alike.

That said, it’s been an absolute pleasure and an honour working with you towards your lifestyle and business goals.

May you feast alongside those you love this Christmas, and enjoy some time off over the New Year period.

We look forward to working with you towards a prosperous 2021! (and leaving 2020 behind us all!).

Merry Christmas and Happy New Year!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Love thy neighbour: how to protect your home these summer holidays

How comfortable do you feel leaving your home unattended when you go on holidays? Turns out that those who know their neighbours best have more peace of mind.

Remember The Wet Bandits from Home Alone?

It was their modus operandi to case out families going on holidays before robbing their homes over Christmas.

When you consider that insurer QBE sees up to 15% more theft claims over the summer holiday period than any other time of year, it was a pretty clever little plotline.

But, it turns out that you don’t have to leave your eight-year-old kid home alone to fend off the hapless crooks.

It’s much simpler (and safer) to get to know your neighbour – which is something Australians have been doing a lot better this year thanks to the COVID-19 lockdowns.

Neighbourhood watch

More than 80% of Australians spent more time at home during 2020 than ever before, and QBE’s research reveals this may have helped us all become better neighbours.

In fact, one in three Australians claim they know their neighbours better now than in previous years, and 61% say they’d like an even better relationship with their neighbour, especially if it could improve their home security.

It’s not surprising then, that three in four Australians say they feel more comfortable going on holidays if they know their neighbours are keeping an eye on things.

Indeed, 71% of neighbours interviewed claim they’d record a vehicle number plate, 60% would call the police, 47% would give their neighbours a call, and (a very bold) 28% would even approach the suspicious party.

How to prepare ahead of your summer trip

With state borders starting to reopen and interstate travel resuming, it’s important to take relevant safety precautions to protect your household belongings this holiday season.

“If you’re not in the habit of letting your neighbours know when you go away, now would be a great time to start,” says QBE’s chief customer officer, personal lines, Eleanor Debelle.

“Aside from increasing the security of your home, it may also strengthen the relationship you’ve built during 2020.”

Here are QBE’s top five tips to secure your home these holidays

1. Ask a neighbour to check on your property, collect the mail, mow your lawn, or put away bins.

2. Walk around your property and check doors, windows and locks.

3. Make sure valuables are out of sight or given to a trusted person to look after. The most common items stolen include jewellery, bags, laptops, phones, rings, keys and tools.

4. Set a burglar alarm.

5. Set timer switches for lighting.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Be careful of loading up on ‘buy now, pay later’ purchases this Xmas

‘Tis the season to be jolly, but it’s important not to get carried away when using ‘buy now, pay later’ providers to fund that festive spirit. That’s because one-in-five users struggle to make their repayments, new research has found.

“Christmas is a time for giving” – it’s a line that’s been drummed into us since we popped our first piece of chocolate out of an advent calendar.

But it’s important not to go overboard and spend more than you can afford to pay back if you use ‘buy now, pay later‘ services such as Afterpay and Zip Pay.

That’s because a new report from ASIC shows one-in-five users were late paying their other bills, including home loan repayments, as a result of using the services.

Below we’ll discuss why it’s important to budget properly if you plan on using a ‘buy now, pay later’ service this festive season.

But first, what are ‘buy now, pay later’ services?

‘Buy now, pay later’ arrangements allow you to buy goods and services immediately, and repay the amount over a series of instalments.

If you make a purchase using market leader Afterpay, for example, you’ll pay your first instalment at the time of purchase, and then the remaining three instalments over the next three fortnights.

If you pay on time, there’s no fee for you (that’s charged to the merchant). However, if you’re late to make a repayment, you’ll cop a small fee (usually $10).

On the face of it, it’s a pretty good arrangement. And don’t get us wrong – these are perfectly legitimate companies.

But where you can run into financial trouble is using several ‘buy now, pay later’ services without a plan to pay the money back over the coming fortnights, especially over the holiday season when your focus doesn’t tend to be on the household budget.

One-in-five consumers miss paying other bills on time

As mentioned earlier, 20% of ‘buy now, pay later’ users miss or are late to pay other bills in order to make their ‘buy now, pay later’ payments on time.

The bills most commonly affected are household bills (44%), credit card payments (32%), and, worryingly, home loan repayments (22%).

What’s really surprising though, is that 15% of 1,655 users surveyed by ASIC say they took out an additional loan in order to make their ‘buy now, pay later’ payments on time.

“[Some consumers] are experiencing financial hardship, such as cutting back on or going without essentials (e.g. meals) or taking out additional loans, in order to make their ‘buy now, pay later’ payments on time,” the ASIC report says.

Some final considerations

Look, we’re certainly not trying to play Grinch this Christmas.

But with many families doing it tough right now, it’s important not to take on any debt that you can’t afford to comfortably pay back – no matter how straight forward and low risk it might seem.

It’s also worth noting that while the Afterpay approval process doesn’t (generally) involve credit report checks, Afterpay (and its competitors such as Zip Pay) is still a credit liability that needs to be disclosed when applying for a home loan.

So if you have any doubts about whether a ‘buy now, pay later’ purchase might affect your ability to secure a home loan – or pay off your existing one – then feel free to get in touch.

We’re happy to chat in more detail to help you make this Christmas more jolly, and less folly.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How well do you know your finance jargon? Take our quiz!

The finance industry has a bunch of acronyms and abbreviations that can make the home buying process a little confusing. But they’re not as difficult to understand as you might think. Take our short quiz to see how many you can answer!

Below we’ve listed eight commonly used acronyms and abbreviations in the mortgage and finance industry.

So grab a pen and some paper and test out that noggin of yours!

Quiz time

We’ll give you one point for each acronym you can identify, and an extra point if you know what it means.

1. LVR

2. LMI

3. FHB

4. FHLDS

5. Low Doc

6. DTI

7. ADI

8. FHOG

Once you’ve written down your responses, scroll down for the answers below.

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1. LVR: Loan to Value Ratio

LVR is the percentage of the property’s value, as assessed by the lender, that your loan equates to.

For example, if the property you want to purchase is valued at $500,000, and you need to borrow $400,000 to pay for it, the loan is worth 80% of the property value, making your LVR 80%.

2. LMI: Lenders Mortgage Insurance

LMI is insurance that protects the bank or lender in case you can’t pay your residential mortgage.

It’s usually paid by borrowers with an LVR higher than 80% – that is, borrowers with a deposit of less than 20%.

3. FHB: First Home Buyer

This one is pretty self-explanatory. Basically, a FHB is someone who has never purchased property before but is in the process of doing so.

Being a FHB allows you to take advantage of a number of federal and state government schemes and incentives, which we’ll cover below.

4. FHLDS: First Home Loan Deposit Scheme

The FHLDS is a federal government scheme that allows eligible FHBs with a 5% deposit (aka 95% LVR) to purchase a property without paying for LMI.

This can save FHBs thousands of dollars (sometimes even tens of thousands!) and help them enter the property market sooner.

5. Low Doc: Low Documentation home loan

Low doc home loans are often used by self-employed borrowers who find it difficult to provide conventional proof of income. That’s because many self-employed people try to minimise their taxable income to pay less tax, but this creates problems when they try to borrow.

Fortunately, low doc loans don’t require the same level of “documentation” as normal loans and are specifically designed for self-employed people who are capable of servicing a loan.

6. DTI: Debt-to-Income ratio

Your DTI is used by lenders to determine if you can afford to take on any more debt. Basically, it compares your total debt to your gross income.

The formula is: Total Debt / Gross Income = Debt to Income ratio

So if you have a $500,000 home loan (and no other debt), and $160,000 in gross household income, your DTI is 3.125.

7. ADI: Authorised Deposit-taking Institution

ADIs are financial institutions that are licensed by the Australian Prudential Regulatory Authority (APRA) to carry on banking business, including accepting deposits from the public.

They are generally banks, building societies and credit unions.

8. FHOG: First Home Owners Grant

FHOG are generally state government-run grants available to eligible first home buyers to help them get a leg up into the property market.

Typically, they’re in the vicinity of $10,000 to $20,000, and in many states they’re available alongside stamp duty exemptions and federal government initiatives, such as the $25,000 Homebuilder Grant.

How’d you score?

If you scored 1-4: Hey, no worries! We all started out with this score. And to be honest, we enjoy nothing more than helping people embark on their property buying journey.

If you scored 5-8: Have we met before? I’m sure we have. You seem pretty well-versed in the world of property and finance. We should have a chat again soon to discuss your next steps on the property ladder.

If you scored 9-12: You likely either work in the finance industry, are a savvy property investor, or we’ve taught you well! Long story short: you know your stuff!

If you scored 13-16: Ok, so you either work for us, are married to one of us, or you’re one of our competitors sussing us out! If you scored in this range, take a bow!

Last but not least!

If you ever want to clarify anything with us – whether that be acronyms, abbreviations or any other finance topic – then please don’t hesitate to ‘DM’ us (see, we’re down with all kinds of lingo around here!).

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Freedom to move: stamp duty reforms gain momentum

Stamp duty: two of the most dreaded words in the world of property and finance. Fortunately, NSW and Victoria have unveiled some big changes to the inefficient tax this week, and there’s hope it’ll inspire other states to review their own stamp duty arrangements.

If you’re unfamiliar with stamp duty, it’s basically a state/territory government tax you pay on certain transactions, such as a car or piece of real estate.

How much it costs depends on what state you’re buying in, the value of the property you’re buying, and whether you’re eligible for a first home buyer concession.

The problem is that it’s often regarded as an inefficient tax because it requires a large upfront sum (usually tens of thousands of dollars) from home buyers and therefore disincentivises people from buying and selling property.

It particularly tends to restrict young families who want to upgrade from their first home, and downsizers who want to move into a smaller place.

So why does it still exist?

State governments have been slow to overhaul the current system because it’s their biggest source of revenue.

In fact, stamp duty raises about $21 billion a year, including $7.5 billion for NSW and $6 billion for Victoria.

However, with the economy in need of a rebound due to COVID-19, the state governments of NSW and Victoria have made some big stamp duty announcements in their 2020/21 budgets.

NSW has flagged a complete overhaul of the system with a shift towards a property tax, while Victoria has announced short term discounts.

“Reform of the inefficient stamp duty system could create and support thousands of jobs to boost the economy and kick-start our recovery for a prosperous, post-pandemic NSW,” explained NSW Treasurer Dominic Perrottet during the announcement.

And make no mistake: this isn’t just good news for NSW and Victoria.

As the two most populated states in Australia, a move in these property markets may put pressure on other state governments to follow suit sooner rather than later.

Below we’ll outline the announcements in NSW and Victoria, as well as the current state of play around the nation.

New South Wales

The NSW state government will open for public consultation a property tax model that it says will make homeownership more achievable.

NSW Treasury says stamp duty adds $34,000 to the upfront cost of buying the average home, and takes an average 2.5 years to save (compared to one year in 1990).

The consultation will begin with a proposed model that would include giving property purchasers the choice between paying stamp duty upfront or opting to pay an annual property tax.

Victoria

The Victorian government announced it will be waiving 50% of stamp duty on newly-built and off-the-plan homes valued below $1 million.

Existing homes will also be eligible for a 25% stamp duty discount.

The discounts will apply to contracts signed on or after 25 November 2020 and before 1 July 2021.

Elsewhere around the country

The ACT has already started phasing out stamp duty and replacing it with a land tax as part of its 20-year tax reform program.

And in Queensland, the Property Council of Australia says it’s time to review property taxes following NSW’s bold move.

Queensland Treasurer Cameron Dick, however, has ruled out announcing a similar scheme ahead of this year’s state budget on December 1.

In the meantime, most states are offering concessions and exemptions for first home buyers, and some may even follow Victoria’s broader discount waiver over the short term.

Here’s where you can go to find out more about first homeowner concessions and exemptions for NSW, Victoria, Queensland, Western Australia, and Tasmania.

Get in touch

If you’re interested in further exploring some of the stamp duty exemptions, concessions, waivers or discounts, please don’t hesitate to reach out.

Obviously, the less stamp duty you pay, the more of your money you can put towards a home loan deposit.

So for a hand figuring it all out, please get in touch – we’re happy to help you crunch the numbers.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

8 ideas to improve your business’s cash flow over the festive season

The festive season is fast approaching and this year, more than ever, it’s important for businesses to ensure they have their cash flow management in order. Here are our top 8 ideas to help you through the upcoming period.

While the holiday period is usually a boon for retailers, cash flow problems still hamper many businesses, as accounts departments across the country take a much needed holiday.

With COVID-19 causing all sorts of headaches and heartaches for businesses big and small in 2020, you’ll want to make sure you’re transitioning into 2021 with your best foot forward.

So, with the festive season just around the corner, below are 8 cash flow tips for navigating the silly season.

Top tips

1. Invoice now: Begin sending out your invoices now, and start with clients who have a history of being tardy.

2. Discounts: If you want invoices paid super fast, consider offering a 10% discount to clients who pay within 7 days.

3. Extension, please? Chat to your major suppliers about possibly extending your terms over the upcoming period to 30 days (or more, if possible).

4. Outsource: If you don’t want to personally ask clients to pay overdue invoices for fear of getting them offside, use accounting software such as Xero, or hire a third-party bookkeeper, to chase up the payments on your behalf.

5. Invoice Financing: If you don’t want to hassle your clients to pay you promptly, another option is Invoice Financing, which is a line of credit secured by unpaid sales invoices (get in touch to find out more).

6. Request deposits: For new projects over this period, consider requesting a 20% to 50% deposit from the client.

7. Minimise expenses: Minimise unneeded expenses where possible. For example, if you don’t have the personnel to onboard new clients during the holiday period, consider switching off or dialling back your Google and/or Facebook ads.

8. Last but not least, get in touch

If you think you’ll still have a gap in your business’s funding over the months ahead – especially with JobKeeper winding down – then it’s important to start considering your financing options as soon as possible.

It’s worth noting that the RBA recently cut the official cash rate to record low levels, and many lenders are offering competitive financing options to businesses as a result.

So to find out more about what financing options are available to you and your business, get in touch today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Want to know how much your neighbours paid for their first homes?

First home buyers wanting to crack into the property market can now use an interactive map to see how much their neighbours spent on average for their first home.

Snoopy snoop! Everyone loves having a bit of a sticky-beak. After all, we’re only human.

And this interactive map, which is being run by the federal government’s NHFIC, allows you to see how much your neighbours spent on average for their first home.

It also shows how much your first-home-buying neighbours generally earn and how much they saved for a deposit.

It then provides a snapshot of the median debt-to-income (DTI) ratio and loan-to-value (LVR) ratio in each local government area across the country, which may seem a little less thrilling, but they’re both very important indicators when applying for finance.

The map is based on statistics from first home buyers who participated in the First Home Loan Deposit Scheme (FHLDS) between 1 January and 30 June 2020.

What’s the First Home Loan Deposit Scheme?

The FHLDS allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI).

This can save you anywhere between $4,000 and $40,000, depending on the property price and the deposit amount you’ve saved.

There have been two successful runs of the scheme in January and July, when the 10,000 available spots were snatched up within months.

And another 10,000 spots opened up in early November as part of the federal government’s attempts to kick-start the economy following the COVID-19 crisis.

So if you’re keen on nabbing a spot this time around, you’ll want to get in quick!

How to find out more

Check out the interactive map here to see how you compare to your neighbours in your local government area.

If you think you’re in the ballpark of being able to take advantage of the scheme yourself then get in touch with us today.

We can help you run some quick calculations (including your possible DTI and LVR) to see whether you’re ready to keep up with the Joneses and purchase a first home of your own.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Australia is building the biggest houses in the world once again

We dream big in Australia. So it’s little surprise that when the Great Australian Dream becomes a reality it means bigger houses than anywhere else in the world, according to a new report.

In 2019/20, the average new house built measured a whopping 236m2, up 2.9% on the year before and the biggest size increase in 11 years.

That’s according to data commissioned by CommSec from the Australian Bureau of Statistics, which shows our houses are now being built bigger than anywhere else in the world.

In fact, we just reclaimed the number one spot from the US, which saw their new house size fall for the fourth consecutive year in 2019 (latest data) to 233m2.

Apartment sizes have grown too, with the average new apartment increasing 6% in the last year to hit a decade high of 137m2.

The jostle for the number 1 spot

It’s important to note that new houses aren’t the biggest they’ve ever been.

That time was 11 years ago, when the average new free-standing house was about 244m2 – then the biggest in the world by far.

Australia relinquished the number one spot to the US a few years later in 2013.

But despite the average new house size shrinking throughout the majority of the 2010s, new houses are still a whopping 27% bigger than they were 30 years ago.

And last year Australian new-builds jumped up in size as US house sizes dipped – putting us back in number one spot.

“Over the past year there appears to have been a perception that Australian homes had shrunk a little too much,” explains CommSec chief economist Craig James.

So what’s next for Australian houses?

There have been numerous shifting trends in terms of house sizes and styles over the past decade, and COVID-19 is sure to throw another element into the mix.

More people could embrace working from home – opting to move away from apartments in, or near, the CBD in preference for larger homes in regional or suburban areas.

Another factor that could increase the size of new homes over the year to come is the federal government’s $25,000 HomeBuilder grant.

The federal government scheme aims to assist owner-occupiers (including first home buyers) who want to buy a new home, or begin work on eligible renovations, by providing them with a $25,000 tax-free grant.

It’s available to people building a new home for less than $750,000, or to those who spend between $150,000 and $750,000 renovating an existing home, subject to an eligibility criteria.

The $25,000 grant has led to a recent surge in new builds and renos, and will no doubt also assist in helping Aussie families build bigger and better new homes.

So if you’re thinking of fulfilling your own Great Australian Dream in the near future, then get in touch today. We’d love to help you make it become a reality.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Switch lenders if rate cut is not passed on: RBA

Mortgage holders and business operators are being encouraged by the RBA to switch lenders if their bank doesn’t pass on the latest cash rate cut.

The Reserve Bank of Australia (RBA) delivered mortgage holders and business operators a Melbourne Cup Day win by cutting the official cash rate by 15 basis points to a new record low of 0.10%.

Better yet, the RBA board says it’s “not expecting to increase the cash rate for at least three years”.

However, there are concerns that not all the banks will pass the rate cut on to borrowers across all of their products.

For example, within 24 hours of the RBA rate cut several of the big banks announced cuts to their fixed rates and business rates, but not their variable rates.

RBA Governor Philip Lowe says if the banks don’t lower their standard variable rates, “ask them for a better deal”.

“And if they don’t give it to you, switch to a bank that will,” Governor Lowe adds.

Federal Treasurer Josh Frydenberg is also urging lenders to pass on the RBA rate cut to reduce the cost of borrowing for households and small businesses.

“It’s my expectation that the banks will now look for ways to pass on those rate cuts. Pass it on to small businesses and pass it on to mortgage holders,” he says.

How we can help you play hardball

Now, here’s the important part.

It’s all well and good for our nation’s leaders to urge the banks to pass rate cuts on to you, but whether or not your lender will actually do so is another matter altogether.

The good news is, the power is with you – the borrower. And we can help you harness that power.

That’s because competition amongst lenders is fierce right now, so if your lender won’t budge, there’s a good chance another lender will.

We’re keeping a keen eye on which lenders are passing the rate cut on to their customers, and which lenders aren’t.

So if you’re keen to explore your options during this time of record-low interest rates, get in touch today.

We’d love to help you pay less interest on your mortgage each month.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

RBA trims cash rate to new record low 0.10%

If you didn’t back a winner on Melbourne Cup Day then fret not: the Reserve Bank of Australia (RBA) has delivered mortgage holders a win by cutting the official cash rate by 15 basis points to a new record low of 0.10%.

RBA Governor Philip Lowe says the cash rate cut is part of a package of measures to support job creation and economic recovery from the COVID-19 pandemic.

“Given the outlook for both employment and inflation, monetary and fiscal support will be required for some time,” Governor Lowe said in a statement.

As such, Governor Lowe added the low cash rate is likely here to stay until actual inflation is sustainably within the 2 to 3% target range.

“Given the outlook, the board is not expecting to increase the cash rate for at least three years,” Governor Lowe said.

Want to know what this rate cut means for your home loan?

This is the last rate cut the RBA is able to make before venturing into negative territory (which it’s previously indicated it won’t do).

It’s also the sixth RBA rate cut since June 2019, which means if you haven’t had a home loan health check in the past year, there’s a good chance you’re paying more interest than you need to on your home loan each month.

So if you’d like to explore your options – whether that be refinancing with another lender or renegotiating with your current one – then get in touch today.

We’re here and ready to work through your options with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Housing affordability best it’s been in a decade: report

Great news for homeowners and prospective buyers: housing affordability is at its best level in a decade and should continue to improve throughout 2021.

Housing affordability improved in all major Australian cities over the year to September 2020 despite the ongoing global pandemic, according to a new report by investor service Moody’s.

“Owning a house was the most affordable it’s been in a decade in most major capital cities during the last six months,” Moody’s says.

What is housing affordability?

Put simply, improved housing affordability means that households are spending a smaller portion of their monthly income on their mortgage.

Two-income households, for example, needed 23% of monthly income to repay new mortgages in September 2020, down from 25.1% a year earlier.

Better yet, Moody’s predicts that housing affordability will continue to improve moderately over the next 12 months because of low mortgage interest rates and a continuation of the mild dip in housing prices.

How is housing affordability measured?

Alrighty, so Moody’s measures housing affordability based on three things: median housing sales prices, average discounted variable mortgage interest rates, and average household income.

Let’s start with median housing sales prices.

Australian median housing sales price fell 1.5% over the six months to September 2020, according to Moody’s.

With a number of economists predicting housing values will continue on a mild downward trajectory until about mid-2021 (before going on a two-year surge), that would continue to assist housing affordability over the next year.

Next, interest rates.

At present, the RBA’s official cash rate is at historically low levels, and competition amongst lenders for borrowers is fierce.

That all spells extremely low interest rates for borrowers, which allows for lower monthly mortgage repayments.

And the good news is that most experts expect interest rates to stay low for the next few years while the economy gets itself back on track.

Finally, let’s look at income.

As mentioned earlier, the report found two-income households needed 23% of their monthly income to repay new mortgage loans in September 2020, down from 25.1% a year earlier.

How is this possible during COVID-19?

Well, no doubt a big factor in keeping the nation’s average household income buoyant was the federal government schemes JobKeeper and JobSeeker.

And although household incomes will come under pressure as these support measures come to an end, Moody’s says “this should not outweigh low mortgage interest rates and lower housing prices”.

So is now a good time to buy?

With all of this positive housing affordability news in mind, is now a good time to buy?

Well, more than a quarter of Australians (26%) believe now is the time to invest in property to safeguard their future, according to the latest ING Bank survey of 2,000 people.

And Tim Lawless, head of research at leading property expert group CoreLogic, agrees:

“For people with confidence in their own financial circumstances and household balance sheets, arguably this is a good time to be considering a home purchase thanks to the low cost of debt and certainty that rates will remain low for at least the next few years.”

There is also a raft of federal and state government incentives you could take advantage of, including the $25,000 HomeBuilder scheme, first home buyer grants and stamp duty exemptions.

So if you’re looking to buy your first home, or add to your existing portfolio, get in touch today.

As mentioned above, competition amongst lenders is fierce, and we’re here to help you use those competitive conditions to your advantage.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Housing market confidence ‘booms’, cash rate cut expected

Consumer sentiment is surging, confidence in the housing market is booming, and the number of experts tipping a Melbourne Cup Day cash rate cut is increasing. Let’s look at why households and businesses are becoming increasingly optimistic.

Ahh, spring. It’s fair to say we love it around here.

Not only do we usually see an uptick in property market activity (houses always look much nicer in spring), but this year – in particular – we’re seeing consumers more upbeat about what lies ahead.

This can be seen in the latest Westpac-Melbourne Institute Index of Consumer Sentiment survey, which saw consumer sentiment increase by 11.9% to 105.0 in October (up from 93.8 in September).

“This is an extraordinary result,” says Westpac’s chief economist Bill Evans.

“The index has now lifted by 32% over the last two months to the highest level since July 2018.”

Confidence in the housing market is also high

One of the biggest takeaways from the latest consumer sentiment survey is that more and more people believe now is a good time to purchase property.

“Confidence in the housing market has boomed,” explains Mr Evans.

“The ‘time to buy a dwelling’ index increased 10.6% to its highest level since September 2019.”

House price expectation sentiments also rose strongly, up 31.5% to 117.3 (from 89.2), with all states registering impressive recoveries.

Why is consumer sentiment soaring?

While leaving the doom and gloom of a COVID winter behind and entering spring sure doesn’t hurt, it’s not the only reason for the uptick in consumer sentiment.

This latest survey came right off the back of the federal government’s October Federal Budget, which allocated a record amount of spending and support measures to businesses and households.

There’s also an increasing “expectation that the Reserve Bank (RBA) board is likely to further cut interest rates at its next meeting on November 3”, says Mr Evans.

In fact, according to financial market pricing, there’s now around a 75% chance that it will happen.

That’s because, while previous communications from the RBA indicated that the “effective lower bound” of its official cash rate was 0.25%, in recent weeks it’s changed its tune, hinting at a willingness to cut it to 0.10% on Melbourne Cup Day.

“Recently, we have detected a change in attitude (from the RBA) indicating more confidence that the plumbing of the financial system can operate effectively at an even lower set of policy rates,” says Mr Evans.

“With that in mind, and the commitment towards full employment and the target for inflation, there seems to be no reason for the board to delay its decision.”

How’s your outlook at the moment?

So, how about you? Have things on the financial and property front started to look a little rosier recently?

If so, feel free to get in touch with us today. We’d love to run you through some of the financing options that may available to you in the current financial landscape.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Flow of credit to small businesses remains strong

Small business owners in need of credit will be buoyed by new data that shows the approval rate for loans has remained strong throughout the coronavirus crisis.

In fact, about 70% of SME business loan applications received by lenders have been approved since early February, according to Australian Banking Association (ABA) statistics.

That’s resulted in more than 128,000 Australian sole traders, small businesses and medium-sized businesses receiving loans, with an average loan size of $320,000.

Breaking it down further, that’s 500 new SME loans a day for more than 250 days.

The ABA data is in line with the latest Sensis Business Index, which shows 26% of businesses that applied for finance over the past three months were knocked back.

Why the flow of credit remains strong despite COVID-19

The figures have no doubt been assisted by the relaxation of business lending rules, the federal government’s Instant Asset Write-off Scheme (now expanded to “temporary full expensing”), and the Coronavirus SME Loan Guarantee Scheme.

Temporary full expensing allows businesses, both big and small, to immediately write off any eligible depreciable asset, at any cost, up until 30 June 2022.

This can help improve your business’s cash flow by allowing you to reinvest the funds back into your business sooner.

The Coronavirus SME Loan Guarantee Scheme, meanwhile, allows businesses with a turnover of up to $50 million to apply for loans of up to $1 million with participating lenders.

The loans can generally be offered by lenders “more cheaply and more freely” compared to ordinary business loans, as the government will guarantee 50% of the new loans.

How we can help

While 70% of loans being approved is great news, it’s obviously not quite a done deal when you apply for finance in the current financial landscape.

So, to help avoid being among the unfortunate remaining 30% of businesses, get in touch with us today.

Our job is to act as a conduit between you and the lender, which allows you to focus on your business while we focus on getting you the finance that your business needs.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

HomeBuilder sparks surge in home loans, new builds and renos

Thousands of families across the country who had been thinking about a new build, or tackling an overdue renovation project, have rolled up their sleeves and committed to it, according to latest ABS data.

And to be honest, we’re not overly surprised. The federal government’s $25,000 HomeBuilder grant is nothing to sneeze at.

But the Australian Bureau of Statistics’ (ABS) Lending Indicators data makes for very encouraging reading nonetheless.

It shows the total value of new loan commitments for housing rose 12.6% in August to $21.3 billion.

There was also a big increase in people seeking to renovate their homes. ABS building approval data shows the value of alterations and additions to residential buildings (‘renos’) increased by 7% to $784 million in August.

That’s the highest level recorded since April 2016.

But before we get into HomeBuilder, let’s look at the home lending figures in a little more detail.

Borrowers seeking new home loans

Of that $21.3 billion in new housing loan approvals we mentioned earlier, $16.3 billion was comprised of owner-occupier home loans, and there was $5 billion worth of investor loans.

That means owner-occupier home loan commitments increased by 13.6% in August, which is the largest month-on-month rise recorded by the ABS, and eclipses the previous record of 10.7% set in July.

The Housing Industry Association (HIA), which is the official peak body of Australia’s home building industry, says that HomeBuilder is to thank for the surge in demand.

They point out that in August the number of loans for the construction of a new dwelling increased by 22.9% to 4,679 – the highest level in over a decade.

“The short-term stimulus from HomeBuilder is emerging in the housing finance data released by the ABS,” says HIA’s Chief Economist, Tim Reardon.

“There has been a substantial improvement in sentiment and confidence in the housing market.”

So, what’s the HomeBuilder scheme again?

The federal government scheme aims to assist owner-occupiers (including first home buyers) who want to buy a new home, or begin work on eligible renovations, by providing them with a $25,000 tax-free grant.

It’s available to people building a new home for less than $750,000, or to those who spend between $150,000 and $750,000 renovating an existing home, subject to certain eligibility criteria.

You can find out more about the scheme and eligibility here, but here’s the big catch: applications for the HomeBuilder grant must be received no later than 31 December 2020.

So if you’re interested in applying for the scheme, you’ll want to get in touch with us asap.

Not only can we walk you through how to apply for it before the deadline but, just as importantly, we can assist you when it comes to applying for finance.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The First Home Loan Deposit Scheme is back; bigger and better!

The First Home Loan Deposit Scheme is back; bigger, better and more buyer-friendly than before. If you’re a first home buyer who missed out on the first two rounds, then here’s how to make it a case of third time’s a charm!

It’s federal budget week, and this year’s big winners in the world of property and finance are first home buyers, with the federal government announcing a fresh extension to the First Home Loan Deposit scheme (FHLDS).

Today we’ll look at why the third iteration of this super popular scheme might be a better fit for your first home-buying prospects than the previous two versions.

Why’s this scheme so popular?

The FHLDS allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI) – which can save you up to $10,000.

When the scheme was launched in January, and then again in July, the 10,000 available spots filled up within a few months both times.

That means if you’re a first home buyer who’s interested in participating in round three then you’ll want to get the ball rolling on your application sooner rather than later to beat the crowds.

Bigger and better than before

Now, the scheme comes with a small catch this time around: it’s only available for first home buyers who purchase new builds.

But the good news is the scheme is available alongside other state and federal government first home buyer schemes and stamp duty concessions.

That now includes the recently launched $25,000 HomeBuilder grant. And in some states – including Queensland, Tasmania and South Australia – you can reportedly even put that $25,000 grant towards your initial deposit.

When combined with those particular states’ first homeowner grants ($15,000 to $20,000), that’s basically the deposit for your first home right there.

Also, under the latest extension, first home buyers can now purchase more expensive properties, reflecting the fact that new builds are generally more expensive.

Indeed, the caps for properties eligible under the latest iteration of the scheme have been lifted across the country. New caps are below.

Sydney: $950,000 (up from $700,000)
Melbourne: $850,000 (up from $600,000)
Brisbane: $650,000 (up from $475,000)
Perth: $550,000 (up from $400,000)
Adelaide: $550,000 (up from $400,000)
Hobart: $550,000 (up from $400,000)
Canberra: $600,000 (up from $500,000)
Darwin: $550,000 (up from $375,000).

Areas outside capital cities and major regional centres in each state have different price caps, so be sure to check out the full list.

There are other important eligibility details worth checking out too, such as income tests, prior property ownership tests and an owner-occupier requirement.

Time’s ticking!

It’s important to note that round three of the FHLDS began on Tuesday (October 6) – so the race for new openings has already begun.

And while 10,000 spots might sound like a lot, they’ve filled up very quickly in the past.

So if you’re thinking about purchasing your first home soon, give us a call today and we’ll help you get the ball rolling on applying with one of the scheme’s 27 participating lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Turbocharged instant asset write-off scheme unveiled

There was one big-ticket initiative in the federal budget that really caught our eye, and that was the turbocharged version of the instant asset write-off scheme. Today we’ll look at how it could improve your business’s cash flow moving forward.

Did you catch the announcement that businesses, both big and small, can now immediately write off any eligible depreciable asset, at any cost, up until 30 June 2022?

Well, that’s any business with a turnover of up to $5 billion (and I don’t know about you, but I don’t rub shoulders with many businesses that size).

Treasurer Josh Frydenberg says the initiative will unlock investment opportunities for businesses by freeing up their cash flow.

“A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a good manufacturing business will be able to expand its production line,” Mr Frydenberg says.

Let’s look at the scheme in a little more detail

The government is calling the new initiative “temporary full expensing”.

But to put it more simply, it looks like an expanded version of the popular instant asset write-off scheme, which was previously only available for small and medium-sized businesses (SMEs) and for assets up to $150,000.

Now, however, any business with a turnover of up to $5 billion can immediately deduct the full cost of any depreciable asset purchased from 6 October 2020 and first used or installed by 30 June 2022.

The cost of improvements made during this period to existing eligible depreciable assets can also be fully deducted.

There are a few other key details you should be aware of, however, especially when it comes to the purchasing of second-hand assets, including:

– Full expensing also applies to second-hand assets for SMEs (with an aggregated annual turnover of less than $50 million).

– Businesses with aggregated annual turnover between $50 million and $500 million can still deduct the full cost of eligible second-hand assets costing less than $150,000 that are purchased by 31 December 2020 under the existing instant asset write-off scheme.

– SMEs that acquire eligible new or second-hand assets under the $150,000 instant asset write-off by 31 December 2020 will also have an extra six months, until 30 June 2021, to first use or install those assets.

To help explain things further, below is a brief case study provided by the ATO.

Case study: Grace’s Grains

Grace owns an agricultural company, Grace’s Grains Pty Ltd, which has an aggregated annual turnover of $20 million for the 2021-22 income year.

Grace’s Grains Pty Ltd purchases a combine harvester for $600,000, exclusive of GST, on 1 July 2021.

Without temporary full expensing, Grace’s Grains Pty Ltd would claim a total tax deduction of around $180,000 for 2021–22, with the remainder of the cost being depreciated over future years.

Under temporary full expensing, however, Grace’s Grains Pty Ltd will instead claim a deduction of $600,000 for the full cost of the combine harvester in 2021–22, approximately $420,000 more than before.

At the 2021–22 tax rate for small and medium companies of 25%, Grace’s Grains Pty Ltd will pay around $105,000 less tax in 2021–22.

This will improve the company’s cash flow and help Grace reinvest and grow her business.

Your next step

Being able to write-off assets purchased is all well and good, but if you don’t have access to the funds to purchase them, then the scheme won’t be of much use to your business.

So if you’d like help obtaining finance to make the most of temporary full expensing for your business, get in touch with us today.

We can present you with financing options for the scheme that are well suited to your business’s needs now, and into the future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.