Assistance for your Business to Cope with the Coronavirus Effects
We have drafted a memo with some insights to help you during this difficult time with the Coronavirus (or COVID-19) affecting all of us. So take a moment to make yourself a cup of tea, then read through this memo with an open mind.
As a business owner, you need to face the possibility of team members being absent from your workplace, product supply issues and demand for your services and products reducing over the short term. Cashflow may be tight. We understand this. While we are helping you we are working through exactly the same issues with our families, our staff, our business – we’re confident that Porters CA will see you through this.
Support, clear thinking and old fashioned community ethics will get us through.
There are 3 urgent things you need to be aware of:
- Government Stimulus Packages – Our Tax Planning meeting with you this year will be VITAL!
- Business Continuity Planning
- Get your Will and Enduring Power of Attorney updated / set up NOW
- GOVERNMENT STIMULUS PACKAGES – OUR TAX PLANNING MEETING WITH YOU THIS YEAR WILL BE VITAL!
The Australian Government has just released a $17.6 billion economic stimulus package. The package has been marketed as a measure to protect the economy by maintaining confidence, supporting investment and keeping people in their jobs.
The key tax and stimulus measures include:
- From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
- A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions. This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.
We recommend caution. This accelerates a tax deduction that you would have received over time with depreciation claims. You will not get cash back and you will spend cash you may need. If you have cash reserves and this fits in with your business plans – great, go for it. If you are making an investment in order to get an instant asset write-off thinking the government is about to write you out a big refund cheque for everything you spent and more, you might like to think again or talk with us further. Fringe benefits tax is still with us, so while it seems a great opportunity to buy a new “company car” to cash in on the immediate write off the reality is more complicated than that.
- Tax-free payments of up to $25,000 for eligible small and medium businesses (i.e., with a turnover of less than $50 million that employ staff) based on their PAYG withholding obligations. This is not a cash payment, but it is a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees.
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. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.
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. The minimum $2,000 payment will be applied to the first activity statement lodgement.
For business owners considering paying yourself wages or a consultant / contractor earning Personal Services Income we don’t yet have an answer as to how this will apply and will need to wait to see an update from Treasury or the release of legislation (23 March is our earliest guess of an update).
- Wage subsidies to support the retention of apprentices and trainees – Employers with less than 20 full-time employees may be entitled to apply for Government funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000.
When we have our 2020 Tax Planning discussions with you, if the clarification on the stimulus package is positive we will assist you with opportunities to restructure how you pay yourself to that you can receive the maximum cashflow assistance amounts from the Government.
In addition to Federal stimulus is a package from the WA government to support households and small businesses.
Payroll tax support
- Small businesses with a payroll of $1 million to $4 million per year will receive a one-off grant of $17,500
- The increase in the payroll tax threshold up to $1 million will be brought forward to 1 July 2020
- Businesses impacted can defer payroll tax payments until 21 July 2020
- All government charges would have increased by inflation on 1 July 2020. This won’t happen. A freeze will apply to entire ‘household basket’, including electricity, water, motor vehicle charges, emergency services levy and public transport fares
- Energy Assistance Payment (EAP) doubled to support vulnerable Western Australians, including pensioners
The ATO have also provided support options. We will be working with our clients to access this support as required to protect your cashflow.
Contact us TODAY if you would like to meet with us earlier to ensure you receive your maximum cashflow assistance from the Government.
- BUSINESS CONTINUITY PLANNING
As a business owner, now is the time to plan for employees being away from your workplace, shortages of supply, reduction in sales, and the possibility of your workplace being closed for a short period of time if self-quarantine requirements become more strict.
We will provide you with separate communications regarding a Business Continuity Plan pack we have created for you:
- Employees working from home, and workplace obligations
- How do you pay your bills in the short term if your sales start to dry up
- How to communicate in a reassuring way with your clients and customers
- How to keep things moving with your business
We realise times are challenging, which is why we have invested time and resources to deliver the information and support you need. This pack may be the most valuable investment you make this year. It could be the difference between your business continuing or failing.
We’re not suggesting in any way that we have all the answers, but it is important for us to work with you and help you and plan for what will happen in the weeks and months ahead.
- GET YOUR WILL AND ENDURING POWER OF ATTORNEY UPDATED / SET UP NOW
If you have to self-quarantine or are admitted to hospital, if you don’t have an EPOA then no-one else can make important business or financial decisions on your behalf.
As a business owner, it is 100% essential that you have an up to date EPOA and Will, and that your family know where these are stored.
We’ve teamed up with external law firms to offer you a fast, easy and professional way to get these documents prepared quickly.
An EPOA can usually be turned around quickly at a cost of ~$320 (plus GST). A will comes in two types: (1) a holding will that you draw up to deal with an emergency where you are getting something in place but you haven’t dealt with all the complexities that may arise, and; (2) a detailed will that reviews your position in detail such as resolving continuity for any business structure, support for children, a testamentary trust if required and more. A holding will costs ~$650 (plus GST). A detailed estate plan is something every business owner or parent with children should have, however needs a longer discussion with a lawyer and review of your affairs to get it right.
Simply email or phone our office on 08 6436 0900 and we will email you a “Will and EPOA Data Capture Form” to get started.
These are times when we need to stay calm and rely on reliable news sources and information from State and Australian Government websites. What you see on social media may be panicky and unreliable information – stay away from this!
Our team at Porters CA are here to help you. Please email or phone us on 08 6436 0900 or 08 9842 2511 if you need any assistance!