What does the Federal Budget 2021/22 mean for you?
The latest Federal Budget has just been released, and outlines a number of steps to support homeowners, first home buyers and SMEs.
As the country continues to grapple with the ongoing effects of the pandemic, the Morrison Government has unveiled a string of support measures that it believes will help those who have been hardest hit by COVID-19.
Here, we explore some of the key measures covered in the announcement, including the introduction of a new Family Home Guarantee and extensions to schemes implemented in last year’s Federal Budget.
Introduction of new Family Home Guarantee
The government has announced it will introduce a new Family Home Guarantee to support 10,000 single parents with dependents over a four-year timeframe.
Under the guarantee, these individuals will be given the opportunity to build a new home or purchase an existing home with a deposit of as low as 2% without having to pay Lender’s Mortgage Insurance (LMI). The Government will guarantee up to a maximum of 18% of the property purchase price.
To be eligible, applicants must:
- Be Australian citizens
- Be at least 18 years of age
- Be a single parent with dependent children under 16 years of age
- Have an annual taxable income not exceeding $125,000 (excluding child support payments)
- Have to demonstrate they do not currently own property. This does not include property that was previously owned, such as when they were married.
“I’ve long been of the view that the challenges for single parent families are not given the prominence they deserve. As Housing Minister I want to ensure that everyone who aspires for the security and stability of home ownership, gets that opportunity. So in developing the Family Home Guarantee, I’m so pleased that more families will be able to realise the dream of home ownership which importantly means more Australian children will be given the additional stability this provides.”Housing Minister Michael Sukkar
Increase in voluntary contribution amount for First Home Super Saver Scheme (FHSSS)
The First Home Super Saver Scheme (FHSSS) was introduced in 2017–18 and allows first home buyers to save money for their first home inside their super fund.
Under the scheme, buyers can make voluntary concessional and non-concessional contributions into their respective super fund, which can then be released to help purchase their first owner-occupied home.
To further help support first home buyers, the Federal Government has increased the maximum amount of voluntary contributions that can be released under the FHSSS from $30,000 to $50,000.
Learn more about the First Home Super Saver Scheme (FHSSS), eligibility criteria, and how to apply to release super savings on the ATO website.
FHLDS New Home Guarantee extended
The Federal Government will roll out another 10,000 places for buyers to access the First Home Loan Deposit Scheme (FHLDS) New Home Guarantee in 2021-22.
This guarantee will be available for both couples and single parents, and allow first home buyers to either build a new home or purchase a newly built home with a deposit of as little as 5% — all without needing to pay LMI.
The eligibility criteria remain the same as the previous year. Read up on everything you need to know about the FHLDS New Home Guarantee here, including the application process and eligibility requirements.
Extension of the Small and Medium Enterprise (SME) Recovery Loan Scheme
In welcome news for SMEs, the Government is also extending the Small and Medium Enterprise (SME) Recovery Loan Scheme. This scheme is designed to support SMEs that were either:
- Recipients of JobKeeper payments in the March quarter of 2021, or
- Were located/operating in eligible Local Government Areas (LGAs) impacted by the floods in March 2021
The scheme enables eligible SMEs to access vital funding by enhancing lenders’ ability to provide cheaper credit, and supports businesses to recover from the impacts of the COVID-19 pandemic and floods — as well as invest for the future.
As part of the scheme:
- The Government guarantees 80% of the loan amount
- Lenders are allowed to offer borrowers a repayment holiday of up to 24 months
- Loans can be used for a number of purposes, including to support investment or refinance pre-existing debt. However, loans cannot be used to buy or refinance a home loan.
- Interest rates will be capped at around 7.5%
“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.”
More about the scheme can be found on the Australian Government Treasury website.
Extension of temporary full expensing and loss carry back
Last year, the Government introduced two temporary measures to support further job creation: temporary full expensing and loss carry back. These have been extended as part of the 2021-22 Federal Budget, and will allow more than 99% of businesses to deduct the full cost of eligible depreciable assets in the year they are installed until 30 June 2023.
Companies will also be able to offset losses for the 2022-23 income years against previously taxed profits from 2018-19 or subsequent years and claim a tax refund. This is in addition to being able to claim losses for the 2019-20, 2020-21 and 2021-22 income years.
** General Advice Warning
The information provided on this website is general in nature only and it does not take into account your personal needs or circumstances into consideration. Before acting on any advice, you should consider whether the information is appropriate to your needs and where appropriate, seek professional advice in relation to legal, financial, taxation, mortgage or other advice.