Strategizing for significant asset acquisitions, such as acquiring heavy vehicles, often necessitates initiating the planning process well in advance of the final purchase determination. This comprehensive approach entails making projections and approximations regarding various factors, including the exact vehicle cost, the array of choices available for truck financing, and notably, the future outlook for the business throughout the truck finance tenure.
The past few years have seen a number of significant announcements, policies and decisions which have had effects for business in general and truck finance interest rates and tax benefits. Many of course, in response to or as a result of the coronavirus pandemic. Some of these decisions such as the introduction of Instant Asset Write-off and temporary full expensing in April 2020 and the RBA slashing interest rates were made effectively without warning. Other announcements, such as the RBA then starting to hike rates from May 2022, were more predictable due to soaring inflation.
When making any plans for major acquisitions, whether long-term of last minute, being aware of relevant conditions and data may assist buyers to achieve better finance solution. Buyers planning vehicle purchases with truck finance should earmark significant 2023 dates, announcements and data releases which could impact the acquisition. We’ve collated a list of some of the 2023 dates and events which may have implications – positive and negative, for business prospects and for finance.
Truck Finance Products – Tax Benefits
Before getting into what could change, first, we confirm what does not change – the types of truck loans. The selection of truck loan products – Chattel Mortgage, Truck Leasing, Rent to Own and Commercial Hire Purchase will not change. The structure and format of finance products are relatively set in stone. But what can change as a result of Government policy is the tax deductions allowed.
The Federal Government may introduce new taxation laws which alter, either temporarily or permanently, the tax benefits for major asset acquisitions. Case in point, Instant Asset Write-off and temporary full expensing. Chattel Mortgage is best suited to take advantage of the benefits available.
Key date to note – 30 June 2023 – temporary full expensing ends. Operators looking to take advantage of this measure need to have the vehicles operating in the business before that date. There have been reports that some industry associations have requested Government extend this date to allow for the delays experienced via supply chain disruptions for many of the trucks on order.
Will that happen? Any decision around that would likely be made in the May Budget. But the economic conditions that prevailed at the time this temporary tax measure was introduced are very different from the conditions prevailing in 2023.
Reserve Bank Board Meetings
The meetings of the RBA Board are must-note dates. These meetings are when decisions are made on the cash rate, which then can have an effect on truck finance interest rates. These Board meetings are held on the first Tuesday of each month of the year with the exception of January. The interest rate decision comes out around 2.30 pm that day. It is reported in the media and via a media release on the Bank’s website.
A few weeks after the meeting, the Minutes of each meeting are released, and these can give further insights into the Board’s thinking. Insights that may be beneficial to business owners developing their own development and acquisition plans.
Note that when it comes to Truck Lease & Financing Rates, the lenders providing truck finance do not inherently adjust their interest rates in direct correlation with any changes in the RBA cash rate, nor do they necessarily synchronize their adjustments with its timing. Lenders autonomously arrive at their decisions regarding interest rates. As a result, substantial rate disparities can exist across the sector.
But, if it looks like further rate rises are ahead, which is the indication given by the RBA Board following its December meeting, securing finance before a rate decision may be advantageous. The next Board meeting is 7 February.
Data Releases – ABS
The Australian Bureau of Statistics (ABS)release a plethora of data every week. These data sets cover an extensive range of economic topics as well as statistics for individual industry sectors.
The key data that is of major interest at the moment from the ABS is the inflation and unemployment figure. Inflation in particular is key to the current rate rise scenario. Figures are currently released monthly as well as quarterly. Tip - if inflation continues its upward trend, the RBA may continue with further rate hikes.
Both federal and state and territory governments release an annual budget which can have impacts for business prospects, tax benefits, and decisions around acquisitions. May is the timing for the annual Federal Budget, and that will be one to watch for any possible tax changes as well as new benefits for key industries as well as investment in infrastructure. The Federal Government also delivers MYEFO – mid-year economic and fiscal outlook, around the end of the year. This may include some minor tweaks to policies.
The state budgets also tend to be brought down between March and May – timing varies with the jurisdiction. State budgets can be relevant to business in regard to state-based taxes such as payroll tax as well as business prospects with investment in large projects. For businesses looking to expand or update their fleets, it's also a good time to explore options to lease commercial vehicles and take advantage of potential tax incentives.
Other dates for the diary:-
- End of financial year 30 June, tax time but also possible good deals on vehicles.
- Brisbane Truck Show 18-21 May
- Temporary full expensing ends – 30 June 2023
For those without the time to stay across everything, just stay in touch with us. We’re adding new articles to our News section each week which cover many of these issues.
Contact Jade Truck Loans on 1300 000 003 to discuss truck finance solutions.
DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.