Edition 2, 2006 - Interest Rates, Tax Planning & Property Finance

Stratton Finance - Finance Focus Newsletter #2 2006 - Interest Rates, Tax Planning & Property Finance
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Finance Focus #2 2006

Interest Rates, Tax Planning
& Property Finance

This issue we're taking a break from our series of articles about the finance process, as we take a few moments to examine the recent Federal Budget and interest rate rise, and consider some potential tax planning opportunities as we approach the end of the financial year.

Interest Rates, and the Budget

A few weeks have now passed and the dust has had time to settle since the recent interest rate hike and budget announcements.

Now that everyone has had time to put things into perspective, it is clear that this budget was mainly about $37 billion of tax cuts for both businesses and families. The majority of business groups have endorsed the budget, with the Australian Industry Group saying it is a positive move, but singling out the lack of extra money for skills training as a negative aspect. The Housing Industry Association praised its good balance between business and families.

While any extra consumer spending from the tax cuts is generally viewed as a good thing for the economy, there is also a down-side: it may fuel inflation, and with that comes the risk of another interest rate rise, in turn taking money away from consumers.

Most analysts who take this view say a further rate rise could happen within the next two quarters. With this in mind, it is probably a good time to consider fixing the interest rates on your major debts, such as your car and home. Luckily, all of our car finance packages have a fixed interest rate for the life of the loan, so if you have your car financed with us you can breathe easy. However, if you are considering the purchase of a new car in the next few months it may be worth bringing the purchase forward slightly to avoid the risk of another potential interest rate hike.

Are Petrol Prices Slowing New Car Sales?

Over the past few years the Australian new car market has posted consecutive record years, almost topping one million new car sales in 2005. However, despite the economy remaining as strong as ever, 2006 has seen sales down almost 10 percent year-to-date, a fact that many analysts blame on rising fuel prices.

What the latest figures do reveal however is that many smaller cars - such as the Mazda 3 - are now rivaling the Ford Falcon and Holden Commodore in the sales race. Smaller, more fuel efficient cars are generally selling well, as are diesel powered vehicles, but it remains to be seen if 2006 will continue the record run for new car sales, fueled by the need for more economical cars... if you'll pardon the pun.

Tax Time Is Coming - Consider Pre-payments on Motor Vehicles and Plant & Equipment

June 30th is almost here, so now is the ideal time to look at funding new assets.

Did you know that you can make pre-payments (up-front rentals) on motor vehicles and plant & equipment before June 30th as part of a tax planning strategy? For example, if a car is under the luxury car tax limit of $57,009.00, you can pay an up-front rental of up to 15% of the asset value in a lease structure, and claim a tax deduction for this in the current financial year.

By funding your purchases this way you can increase your tax deduction on a vehicle or other business asset in this financial year. You can also make a similar pre-payment in next financial year, and so on.

Introducing Stratton Property Finance

As an added service for our clients and their friends and family, we recently launched our own range of highly competitive mortgage products - Stratton Property Finance.

Available for both residential and commercial purchases, Stratton Property Finance offers loans that are competitively priced and highly flexible, with a range of options including:

  • refinance of existing loans (lower your current repayments)
  • full doc
  • low doc (no financials required)
  • no doc (no documentation required)
  • interest only loans
  • equity re-draw

If you would like more information about Stratton Property Finance please click here, or call us on 1300 STRATTON (1300 787 288).

That's it for this issue, we hope you have a successful end to your financial year. Remember, we offer a wide range of products & services, all backed by personal and friendly service. For more information on anything we do, please call us on 1300 STRATTON (1300 787 288) or click on one of the following options:

GENERAL ADVICE WARNING - We must inform you that the information in this e-mail is general advice only and is not specifically based on your own objectives, financial situation or needs. Before you act on this information, you should read any relevent Product Disclosure Statements and consult with a registered tax agent to ensure that this advice is suitable for you.

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