Federal Budget big win for mortgage industry

by Julia Corderoy14 May 2015
The 2015 Federal Budget, the second federal budget released by the Abbott Government, is a win for the mortgage and finance industry.

In the announcement of the Budget on Tuesday evening, Treasurer Joe Hockey unveiled the biggest small business package in Australia’s history – a $5.5 billion Jobs and Small Business package.

From 1 July this year, small companies with annual turnover of less than $2 million will have their tax lowered from 30% to 28.5%. Unincorporated business will get an annual 5% tax discount up to $1,000. Small businesses will also be able to immediately deduct new assets up to $20,000.

Mortgage Choice CEO, John Flavell has praised the announcement, saying it will encourage more small businesses to invest in growth.

“This stream of tax breaks and incentives will help small businesses to grow and flourish. It will give small business owners the opportunity to reinvest in their businesses and take their companies to the next level.”

With more small businesses investing in growth, brokers can benefit from an increase in commercial lending.

The Federal Budget has also announced a $3.5 billion reform package to make child care more affordable and accessible. According to the Treasurer, investing this money in childcare should help approximately 165,000 parents who are currently unable to work due to high cost of childcare re-enter the workforce.

Peter White, FBAA CEO says this announcement is a big win for mortgage holders. 

“…[T]reasurer Joe Hockey’s ‘Jobs for Families’ should help ease the burden of the household budget and relieve pressure on mortgage repayments,” he said.

Changes will also be made to Australia’s foreign investment framework as a part of the new budget. Under the proposed changes, foreign investors will be charged an application fee – on a sliding scale starting at $5,000 – to invest in Australian real estate.

Whilst this has caused some concern for brokers, who fear that the tougher guidelines will curb lucrative foreign investment deals, Flavell says brokers shouldn’t expect any significant deterioration in their businesses. 

“While this application fee may be high enough to deter some foreign investors, we do not believe it is high enough to significantly impact the current level of foreign investment activity within Australia.”