The federal budget for 2021-22 has been handed down, outlining a range of steps to support home ownership and help small businesses recover from the coronavirus pandemic.
Federal Treasurer Josh Frydenberg has presented tax cuts for more than 10 million people (which will reportedly see low- and middle-income earners benefit by up to $1,080 for individuals or $2,160 for couples) “to put more money in their pockets to spend in small businesses across the country helping to create jobs”, and new spending initiatives, including those to support home buying and small businesses, in the 2021-22 budget.
The government has outlined that some of the measures implemented last year, such as First Home Loan Deposit Scheme and the HomeBuilder scheme, had helped contribute 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.
As announced ahead of the full budget release, the government will introduce a new Family Home Guarantee that 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 without having to pay lender’s mortgage insurance (LMI).
Starting on 1 July 2021, the new guarantee aims to support divorced or separated parents with dependent children by enabling them to purchase a home sooner with a deposit of as little as 2 per cent. The government will guarantee up to a maximum of 18 per cent of the property purchase price, allowing 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.
The FHLDS (New Homes) scheme (also known as the New Homes Guarantee) which was launched last year, 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 said.
It added that it will also increase the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme from $30,000 to $50,000 to enable home buyers to “bolster their deposit”.
“The government recognises the importance of home ownership and the economic and social benefits it provides,” the budget documents read.
“That is why the government is establishing the Family Home Guarantee, creating a pathway to home ownership for single parents to enter or re-enter the housing market.
“From 1 July 2021, the government is providing 10,000 guarantees over four years for eligible single parents with dependants to build a new home or purchase an existing home with a deposit of as little as 2 per cent, regardless of whether that single parent is a first home buyer or previous owner-occupier.
“The Family Home Guarantee is based on the successful First Home Loan Deposit Scheme and New Home Guarantee which are helping more than 26,000 first home buyers to enter the housing market sooner.”
Treasurer Josh Frydenberg said in his budget speech: “[W]hen construction work began to dry up, HomeBuilder came to the rescue.
“New house starts are now the highest in 20 years.
“New loans to first home buyers reached their highest level in nearly 12 years.
“HomeBuilder has been a huge success.
“And our $2 billion investment in affordable housing is bringing on more supply.
“Mr Speaker, in this budget, our housing measures go even further.
“Helping another 10,000 first home buyers build a new home with a 5 per cent deposit.
“Supporting 10,000 single parents to purchase a home with a 2 per cent deposit.
“Increasing the amount that can be released under the First Home Super Saver Scheme from $30,000 to $50,000.
“Under the Coalition, home ownership will always be supported.”
SMEs debt recovery pause
The government also highlighted that it had extended the Small and Medium Enterprise (SME) Recovery Loan Scheme, which builds on the SME Guarantee scheme. As previously announced, this aims 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 government said.
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.
This will allow more than 99 per cent of businesses employing 11.5 million Australians to deduct the full cost of eligible depreciable assets of any value in the year they are installed until 30 June 2023.
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.
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.
It 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.
Small-business entities (including individuals carrying on a business) with an aggregated turnover of less than $10 million per year will be eligible to use this streamlined approach.
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.
‘Small business will always be stronger’
The federal Treasurer commented: “[We will be] extending our small-business loan scheme, which has already helped more than 45,000 businesses access low‑cost finance. We are also providing tax relief for around 1,000 small brewers and distillers.
“Mr Speaker, small and family businesses are the engine room of our economy.
“They are at the heart of every local community.
“As they strive to recover, we need the tax system to work for them, not against them.
“So, tonight we provide small business with peace of mind that an independent umpire will stand between them and the ATO when it comes to debt recovery actions.
“We will take these disputes out of the courts and let small business get on with what they do best.
“Under the Coalition, small business will always be stronger.”
More for women
The budget also includes a range of initiatives targeting women. Indeed, the government released a 'Women's Budget Statement' this year, outlining all the female-centric measures.
These include child support measures, such as the expansion of the Child Care Subsidy.
From 11 July 2022, the Child Care Subsidy for the second and subsequent children in care will be increased by 30 percentage points, up to a maximum of 95 per cent. The annual subsidy cap of $10,560 will also be removed from 1 July 2022 for all families, which is expected to help around 18,000 families.
In combination, the government estimates the increase in Child Care Subsidy for families with multiple young children in centre-based day care and the removal of the annual cap could benefit 250,000 families and add up to 300,000 hours of work per week.
The Budget also includes additional $500 million to expand the JobTrainer Fund by a further 163,000 places and extend the program until 31 December 2022. This aims to help support more women in reskilling and upskilling (as 56 per cent women in the existing scheme were women).
The Boosting Apprenticeship Commencement (BAC) wage subsidyhas also been expanded.
This measure will uncap the number of eligible places and increase the duration of the 50 per cent wage subsidy to 12 months from the date an apprentice or trainee commences with their employer.
From 5 October 2020 to 31 March 2022, businesses of any size can claim the Boosting Apprenticeship Commencements wage subsidy for new apprentices or trainees who commence during this period. Eligible businesses will be reimbursed up to 50 per cent of an apprentice or trainee's wages of up to $7,000 per quarter for 12 months.
The government has said it is also providing $38.3 million over five years to expand the successful Women’s Leadership and Development Program.
Moreover, to further grow the pool of women in STEM, the government is investing $42.4 million over seven years to support more than 230 women to pursue Higher Level STEM Qualifications. These scholarships will be provided in partnership with industry, to build job-ready experience, networks and the cross-cutting capabilities to succeed in modern STEM careers.
This program will complement the Women in STEM Cadetship and Advanced Apprenticeships Program announced in the 2020-21 Budget, which targets women to enter industry-relevant, pre-bachelor study.
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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