Update on Dealing with the Coronavirus for your Business

It's still business as usual...

In light of the recent developments around the Coronavirus (or COVID-19) and the uncertainty we are all facing day to day, we felt it important to assure you that we expect no major interruptions to the services that we provide to you.

It is business as usual.

While we don’t know if we’ll be working from our office or working from our homes in coming weeks, we have invested heavily in the latest technology over the past years, and this means we can keep assisting you no matter what may happen.

Our office phone number and emails will remain active and we will be taking calls as usual, and all members of our team are able to work remotely and have access to all the technology systems and resources / tools and secure electronic client files they use daily to assist our clients.

Please keep emailing or phoning when you need us and we will be here to help you!

GOOD ADVICE IS NEEDED NOW MORE THAN EVER AND WE ARE HERE TO HELP YOUR BUSINESS

If you have any general queries, requests for bookings for meetings or requests for documents, please feel free to call, email or text.

Across Australia we have been hit by devastating natural disasters including drought, fires, floods and now, the global outbreak of Coronavirus (COVID-19). Governments, businesses and communities all around the world are facing unprecedented challenges.

In the midst of these difficult times, the importance of maintaining stability, minimising disruption and ensuring that cash keeps flowing effectively through economies cannot be overlooked.

We like to remain positive and look for opportunities for our clients however it’s clear that the economy will definitely get worse before it gets better and the government will continue to tighten up on movements, gatherings, travel, business activity and self-isolation.

In the next few days, you should take time to actively plan ahead and take defensive actions quickly to strengthen your business model. Think laterally and aggressively for other revenue opportunities to keep the business moving forward. Whilst this crisis may turn around and pass quickly, the chances are high it will not and so we need to be proactive and pre-emptive.

Each business is different and you should start thinking laterally about your particular business however some key areas relevant to most businesses are:

  1. Focus on getting your invoices out promptly
  2. Chase payments
  3. Step up your marketing
  4. Keep your accounts / bookkeeping up to date so you have your finger on the pulse and can run regular reports.
  5. Look at measuring and monitoring your business more closely than ever through KPIs, both financial and non-financial
  6. Seek help from experts
  7. Keep up to date

We are in a position to help you with advice in a number of areas on how to best deal with this major disruption to business. We recognise when businesses are not doing so good, they need an accountant more than ever to help them keep afloat and diversify their offerings or maximise and monitor and predict their cash flow. There are also businesses that will experience an unprecedented surge in demand at this time and will need guidance to manage this sudden increase in trade.

The Government have announced round one of their Economic Response to help businesses deal with the Coronavirus.

The yet to be legislated four part package focuses on business investment, sustaining employers and driving cash into the economy. Parliament sits on 23 March. The Prime Minister has stated, “we have no plans to change the parliamentary sitting schedule.” Here’s what we know so far:

  •  Increase and extension of the instant asset write-off
  • Accelerated depreciation deductions
  • Cash flow assistance for small and medium sized business:
  • Tax-free payments up to $25,000 for employers
  • Wage subsidy of up to 50% of an apprentice or trainee wage
  • Targeted support for severely affected sectors, regions and communities

For individuals

  • Household stimulus payments to drive cash into the economy
  • Tax-free $750 payment to social welfare recipients

Increase and extension of the instant asset write-off

From 12 March 2020, the instant asset write-off threshold will increase from $30,000 to $150,000, and access to the write-off will be expanded to include businesses with aggregated annual turnover of less than $500 million until 30 June 2020.

The instant asset write-off is a tax deduction that reduces the tax liability of your business. It enables your business to claim an upfront deduction for depreciating assets in the year the asset was purchased and used (or installed ready to use).

This is the fourth increase or extension to the instant asset write-off and businesses will need to be wary of what they are claiming and when:

Instant asset write-off thresholds

1 July 2018 – 28 January 2019     $20,000

29 January – 2 April 2019              $25,000

2 April – 12 March 2020                 $30,000

12 March – 30 June 2020              $150,000

You will also need ensure that there is a relationship between the asset purchased by the business and how the business generates income.

There are some assets that don’t qualify such as horticultural plants, capital works (building construction costs etc.)

Tax-free payments up to $25,000 for employers

Tax-free cash flow support between $2,000 and $25,000 will be available to eligible businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020.

This is not a direct cash payment but a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees. The employer will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.

If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $2,000 will still be made.

Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020.

Eligibility for the measure will be based on prior year turnover. We will have to wait for the legislation for the finer details.

Wage subsidy of up to 50% of an apprentice or trainee wage

Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020. The payments are accessible to businesses with less than 20 employees. Employers will receive up to $21,000 per apprentice ($7,000 per quarter).

Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.

In order to qualify for this payment, the apprentice or trainee must have been in training with the business as at 1 March 2020. Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will also be eligible for the subsidy.

It is expected that employers will be able to register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

Targeted support for severely affected sectors, regions and communities

$1 billion has been committed to support sectors, regions and communities disproportionately affected by the economic impact of the Coronavirus. Tourism, agriculture and education are specifically mentioned.

Administrative relief for certain tax obligations will also be provided, including deferred tax payments up to four months. Other initiatives to bring support to the communities are being considered.

Household stimulus payments to drive cash into the economy

  • Tax-free $750 payment to social welfare recipients
  • A one-off, $750 cash payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Payments will be from 31 March 2020 on a progressive basis, 90% are expected to be made by mid-April.
  • The payment will be tax-free and will not count as income for Social Security, Farm Household Allowance and Veteran payments.
  • There will be one payment per eligible recipient even if they qualify in multiple ways.
  • Casual employees able to access the Newstart ‘sickness payment’

While not part of the stimulus package, the Prime Minister has stated that casual employees required to self-isolate or who contract the Coronavirus will be eligible for a sickness payment (jobseeker payment) through Newstart. The normal waiting period for this payment will be waived.

We’re here to help

Remember, we’re all in this together. Feel free to contact us if you have any queries and stay well.

Dean & The Team

KENNEDYS ACCOUNTANTS

Get In Touch

5 Hamilton Street, Gisborne

Macedon Ranges  Victoria  3437

dean@kennedysaccountants.com.au

0418 566 635

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