Early last month the Treasurer Jim Chalmers handed down the federal budget for the 2023-24 financial year. The budget was framed as aiming to build stronger foundations for a better future by delivering cost-of-living relief, growing the economy, strengthening the budget, strengthening Medicare and broadening opportunity.

Now that we’ve digested the measures announced and how they aim to address cost-of-living pressures, we’ve compiled a list of the key takeaways for you to keep in mind:

1. Homeownership support: The expansion of the First Home Guarantee Scheme and Regional First Home Buyers schemes are good news. Eligibility will be expanded to any 2 eligible borrowers beyond married and de facto couples, and non‑first home buyers who have not owned a property in Australia in the preceding 10 years. Australian Permanent Residents, in addition to Australian citizens, will be eligible for the Home Guarantee Scheme. This is good news and may increase the pool of potential customers for you.
   
   
   
2. Limited lender panel: We hope that participation in all of the government funding schemes, including the loans to improve energy efficiency for homeowners will be opened up to a broad panel of lenders. For example, the NHFIC has currently authorised 32 participating lenders to offer the Home Guarantee Scheme to home buyers.
   
   
   
3. Easing pressure on renters: The Government increased the maximum rates of Commonwealth Rent Assistance by 15 per cent which is the largest increase in over 30 years.
   
   
   
4. Build-to-rent encouragement: The Government is offering new incentives to encourage the supply of housing by:

• reducing the withholding tax rate for eligible fund payments from managed investment trusts attributed to newly constructed build‑to‑rent developments from 30 to 15 per cent; and
• increasing the capital works tax deduction (depreciation) rate from 2.5 per cent to 4 per cent per year, increasing the after-tax returns for newly constructed build‑to‑rent developments.
  
  These incentives will be interesting to watch to see the impact they have on increasing housing supply. With significant numbers of new migrants expected over the next two years we hope this will help ease the pressure on the housing sector.
  
  

5. Small business instant asset write-off: There was good news for small businesses interested in the extension of the instant asset write-off program. The Government is providing $290 million in cash flow support through the $20,000 instant asset write‑ This could be beneficial to your own business and an excellent opportunity for you to help your small business clients with their asset finance.
   
   
   
6. Small Business Energy Incentive: The Small Business Energy Incentive will support up to 3.8 million businesses make investments like electrifying their heating and cooling systems, installing batteries and upgrading to high efficiency electrical goods. Businesses with annual turnover of less than $50 million will have access to a bonus 20 per cent tax deduction for eligible assets supporting electrification and more efficient use of energy, from 1 July 2023 until 30 June 2024. Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum‑ bonus tax deduction being $20,000 per business.
   
   
   
7. Social impact investing: It’s pleasing to see the support for social impact investing through the provision of $100m over 5 years in the Impact Investing Fund. Impact investing uses the discipline of market-based activity to transform the availability of capital, and by directing investment to organisations that are delivering genuine, measurable outcomes. AFG is Principal Partner of the Foyer Foundation and their FoyerInvest model, where the Federal Government invests in community-led solutions to provide learning and accommodation centres for young people who are experiencing or are at risk of homelessness, would fall into that category.

The Federal Budget presents opportunities for brokers and their customers. The emphasis on homeownership support and increasing housing supply will go some way to aid the cost-of-living pressures.

You should stay proactive in adapting to the changing landscape. By staying informed, you can help your customers navigate the evolving market, continue to act in their best interests and support them in achieving their homeownership and investment goals.

Useful resources for you and your clients:

• gov.au | Budget 2023–24
• Support to buy a home | The National Housing Finance & Investment Corporation (NHFIC)
• Small Business Support – $20,000 instant asset write-off | Australian Taxation Office (ato.gov.au)
• Small business energy incentive | Australian Taxation Office (ato.gov.au)

The information provided in this document is a selection of information taken from publicly available sources and is current as at the date specified in the information. It does not contain all information or all public websites that may be relevant to our brokers and their customers. Please note AFG does not provide tax, legal or accounting advice. Any information provided is of a general nature and/or for illustrative purposes. It does not take into account our broker’s or their customer’s objectives, financial situation or needs and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. AFG encourages our brokers and their customers to consult their own tax, legal and accounting advisors before engaging in or considering the appropriateness of any transaction.