The end of lockdowns across the Eastern States plus better than expected resilience across Australia has seen business confidence increase. The two positives continue to be:
- The Federal Governments continuation of business incentives (including the Instant Asset Write-Off) to June 2023 and
- The ongoing trend for large amounts of manufacturing which was previously performed overseas to be brought back on shore.
There are however negatives:
- The continuation of supply chain disruption and delays which don’t have an immediate end in sight and are likely to continue until at least 2023.
- Labor shortages are starting to have a major impact on many businesses and are likely to become worse with the end of lockdowns in Melbourne and Sydney. It will take an extensive amount of time for open borders and immigration to fill the void – expectations are for this to extend well into 2023-24.
- The major banks are making it incredibly hard for most customers to borrow money. The hurdles keep getting bigger (despite the government backed loans) and the amount of security they want is continually increasing. Fortunately, there are more options to complement and fill the place of the traditional banks.
- The ATO has been incredibly understanding over the last 18 months however this is now changing with new legislation introduced to move to mandatory reporting for businesses with outstanding ATO debt in excess of $100K. If not managed correctly this will impact a business’s credit rating and ability to borrow.
Most businesses have taken the opportunity over the last 18 months to adapt their strategic vision to meet the new “post COVID-19 normal”.
Here’s what we are hearing we will likely see in the next couple of years:
The re-shoring of Manufacturing (return of manufacturing back to Australia from overseas suppliers) will continue with increased opportunities for local manufacturers to increase local production to replace imports.
Businesses looking to purchase new equipment to automate and reduce labor will want assurances from suppliers as to delivery time frames. Equipment suppliers have faced extraordinary obstacles in obtaining components to be able to produce output – starting with computer chips. Toyota for example are signaling 12 month delays for some models.
Supply chain issues will continue to be a problem into 2023 – shipping costs in some cases have doubled and tripled and demand continues to exceed availability.
There continues to be some compelling reasons for businesses to bring forward the purchase decisions of automation equipment:
- The extension of the Instant asset write-off to 30 June 2023 means that any depreciable asset can be 100% tax deductible in the financial year it is installed. There is no ceiling on the equipment value.*
- The Temporary Loss Carry Back continues to June 2023 and enables businesses to potentially redeem tax that they have previously paid. This combined with the Instant asset write-off, may potentially enable profitable businesses to claw back some or all of the taxes paid in prior years. *
- Finance is still cheap. Whilst long term fixed interest rates are increasing finance is still at close to all-time lows.
- The AUD is still reasonably strong relative to the USD and Euro.
- It will take at least another 1-2 years for the skilled labor shortage to be resolved.
- A number of State and Federal Government Grants are available to help with business transformation and growth.
* Please call us or speak to your accountant to confirm eligibility.
Here are some of the ways Halidon Hill can help you and your business:
- Unsecured Equipment Finance which won’t affect your working capital lines
- Automotive finance – Cars, trucks, fleets and fleet management
- Working Capital Finance – A mix of loans, overdrafts and trade finance
- Commercial and Residential Property Finance
- Commercial and General Insurance and Insurance Premium Funding
Customers are more than ever looking for trusted finance experts who understand their needs and who provide them with access to the finance solutions they need for their business to grow and prosper.