The Value Add
Special COVID-19 Update
You have no doubt read and heard a lot on the worldwide pandemic of corona virus (COVID-19), which has and continues to impact us all in various ways.
As a precaution, Value Beyond has closed its office to client visits to implement the Government’s recommendations on social distancing, but we will be continuing to operate and assist you, and we can be contacted by phone or email.
Beyond the health impacts, the general slow down in economic activity and even the forced shut down of some businesses due to this outbreak is likely to have a financial impact on everyone over the coming months.
What can you do now to minimise any longer term impact on your finances?
The Federal Government has announced its “economic response to the coronavirus” which will assist businesses and pensioners:
- Funding to the health system to asses, diagnose and treat people with corona virus
- Increasing instant asset write-off from $30,000 to $150,000 until 30 June 2020 for businesses with turnover less than $500 million for asset purchased from 12 March 2020
- Accelerated depreciation – ability to deduct 50% of any asset purchase on installation, and normal depreciation rules apply to the balance. This incentive is available from 12 March 2020 until 30 June 2021
- Repayment of 50% of the PAYG withholding reported by businesses with a turnover less than $50 million, from 1 January 2020 to 30 June 2020 – minimum payment of $2,000 and maximum payment of $25,000
- Eligible employers can apply for a wages subsidy of 50% of an apprentice or trainee’s wages for up to 9 months from 1 January 2020 to 30 September 2020
- Stimulus payments of $750 to social security, veteran and other income support recipients and eligible concession card holders.
- The government has set aside $1 billion to support regions and communities disproportionately affected the economic impacts
The Queensland government has also announced initiatives to assist businesses:
- Payroll tax deferral will be available to all affected businesses in Queensland, which will defer payroll tax for a period of six months
- $500 million to be provisioned for loans of up to $250,000 with an initial 12 month interest free period, for businesses to retain staff
We are waiting on Commonwealth legislation to learn the finer details of these packages, but if you would like to register your interest for the Queensland Government loans, please visit this page:
Fair Work has a number of information sheets about your entitlements and obligations if you are affected by the outbreak of corona virus. This includes what to do if an employee is stuck overseas, isolated/self-quarantined or has contracted the virus and may have impacted the workplace.
These relief options are not automatic, so an application will need to be made to the ATO:
- Payment deferrals – If your business has been affected by COVID-19 the ATO will defer some payments by up to 4 months and vary instalments that are due such as income tax, activity statement (including PAYG instalments), FBT and excise
- Businesses can elect to change to a monthly reporting cycle for GST in order to be able to claim GST refunds sooner – please note that taking up this option will lock the business into monthly activity statements for a minimum of 12 months
- You can vary your PAYG instalment on the March 2020 quarter activity statement – please note that this is for circumstances where the total tax for the 2020 financial year will be less than the instalments estimated by the ATO
- The ATO will consider remitting interset and penalties if your business is affected by COVID-19
- Low interest rate plans are available for eligible businesses
Superannuation must continue to be paid in full and on time – there is no flexibility allowed to the ATO to vary this date.
Financial management during this period
As is prudent at any time, but more so during uncertain times like we are facing now, reviewing your financial position is vitally important.
The most important message we can offer is:
“Make a decision about your financial situation while you have the ability to do so, before someone else makes it for you.”
If you are struggling financially, speak to your bank about any ability to defer or reduce mortgage repayments and/or credit card repayments.
Assess your cash position – how long will your money last you at your current spending rate?
Whether it is for your business or for your personal situation, if that spending rate does not allow you to survive for long enough, make the tough decisions early so that you give yourself the most amount time to improve your financial position.
The steps are:
- Acknowledge that there is a problem
- Quantify the problem and the timeframe in which it needs to be resolved
- Talk to your providers, banks, staff etc. about the options available and any hard decisions which need to be made
- Take action to improve your position – this might mean selling investments, doubling your efforts on getting sales or chasing unpaid invoices to customers, actions that will improve your cash flow in the short term and long term.
If you have any questions about the above government announcements, or your business’ financial position, contact us to discuss.