Well, what an unusual couple of weeks! When I wrote our last newsletter to you, it was pretty much business as usual and COVID-19 was something mainly occurring in other countries. Now, the real threat of this virus is not only a health threat but also an economic threat. After the initial shock of the situation, I have been very proud of our business clients by how they have taken a practical and long-term perspective to this situation.

With the announcement of the JobKeeper payment, subsidising wages of up to $1,500 per fortnight, for business’ who’s turnover has been affected by 30% or more (non-profit organisations, 15% or more), this flat payment has given business owners an opportunity to plan to make sure that their businesses negotiate the 6-months ahead.

One thing I have learnt from 10 years of hardship after the GFC was that a level head and being fair in your business dealings will ensure that we all, not only survive, but prosper over the next 5-years.

In an effort to assist our clients, until further notice, we are hosting a weekly webinar which will enable you to get all the updates on what the governments are offering to assist small business and some of the announcements, I have summarised below:

1. $1,500 per fortnight JobKeeper payment
2. Cashflow support of between $20,000 and $100,000 in the form of PAYG reduction (tax free payment)
3. Instant asset write off of up to $150,000 before 30 June 2020 (motor vehicles, $57,000)
4. Accelerated depreciation in the next financial year up to 30 June 2021 of 50% of the cost of the asset
5. Wages subsidy for apprentices of 50% of the apprentice’s wage for 9-months from January to September 2020
6. Solvency safety net where statutory demands cannot be issued for under $20,000 debts (was $2,000)
7. Safe harbour provisions allowing directors to temporary trade while insolvent due to the pandemic
8. Ability to reduce PAYG instalments to $nil for the March month/quarter instalment
9. Up to 9-months deferral for income tax, FBT, excise duty as well as payment of activity statements
10. Ability to move from quarterly to monthly reporting to more quickly access PAYG credits
11. Bank support for landlords who do not evict their tenants (loans under $10M)
12. Early release of superannuation of up to $20,000, subject to applications through myGov ($10,000 in FY2020 and $10,000 in FY2021)
13. Bank loans of up to $250,000 being 50% guaranteed by government
14. Various credits and benefits for reducing or eliminating payroll tax in various states

So what might this look like for a business in a practical sense?

1. You will have significant reduction in your March BAS if you employ staff which will assist in cashflowing your business over the coming months
2. Businesses can go to their bank and ask for a $250,000 top-up with no payments needing to be made for 6-months and the government guaranteeing 50% of this loan (please note that the loan is only for 3-years so some conditions apply)
3. The JobKeeper payment has allowed many businesses to work with their employees to keep on the maximum amount of full-time, part-time or long-term casual staff as possible. This meant, that in some situations, some employees have agreed to reduce working hours so that the gap between the JobKeeper payment and the employee’s reduced normal wages allows the business to survive.

I believe that what the government has announced has been extremely constructive and has softened the blow for what is obviously going to be our first recession in nearly 30 years.

My hope is that we can all work together and think of others and not of just our own interests at this time. I am reminded of a story which resinated with me that in 1942 at the height of the Great Depression that the 1,400 workers who built the Sydney Harbour Bridge reduced their wages to allow another 400 workers to be involved in the construction of the bridge. Let’s have that sort of spirit of co-operation at this time.

TAX PLANNING

This year, because of all the various initiatives, tax planning meetings are more important than ever to ensure that you take advantage of all the tax benefits proposed and put off the pain of any non- essential taxes to enable you to be in cash preservation mode at this time. This will be our focus at all our tax planning meetings as we want to ensure that all of our clients come through this difficult time ready to take advantage of the next cycle.

TAX VARIATIONS

For our property investor clients, this is now more important than ever as we will be able to incorporate any decreased rents into cash flowing our shortfall on our investment properties. Remember, even when you are capitalising interest under a 6-month deferral interest, you will still be able to claim this interest provided that you are not seen as diverting rental payments to paying off non-deductible debt.

We are only a phone call away if you need us.