Contact: Louise Denver
Deloitte
FSI Communication Consultant
02 9322 7615

Contact: Vivian Chang
Deloitte
Partner
+61 2 9322 7585

The Government’s decision to allow accelerated depreciation for businesses will stimulate business investment and significantly increase demand for commercial borrowings from finance providers, says Deloitte Financial Services Tax partner Vivian Chang.

“The difference between tax and accounting depreciation reintroduced by yesterday’s Budget could also open the door to a new generation of structured finance products resembling the leveraged leasing products that were so popular in the 80s and 90s,” she said.

“This means the banks and other financiers can now offer more cost efficient financing to clients.

“This type of financing is particularly attractive to clients with tax losses who may have otherwise been unable to take advantage of the savings from higher depreciation rates.  For example, it is expected to be attractive to companies in such sectors as mining, energy and technology, as well as start-up businesses.

“The structured finance market has had few opportunities to be innovative in the last few years and this announcement from the Treasurer has the potential to stimulate innovation in the very competitive business borrowing sector of the financial services industry.

“We expect that there will be integrity measures associated with the concession which the industry will need to keep a close eye.

“However this concession was not anticipated and overall is a positive outcome from the budget for the financial services industry,” said Ms Chang.