We are facing a difficult and unprecedented time with the Coronavirus affecting all of us.

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.

It is more important than ever that you are communicating with your accountant on how to best manage your cash flow and tax obligations. There are several measures that can be put in place from a tax perspective that could seriously improve cash-flow over the next six months. I encourage all business owners to organise tax planning appointments with their accountant within the next month to ensure you are receiving the necessary advice to ride out this economic disaster and bounce back as quickly as possible.

There are three urgent things you need to be aware of:

1. GOVERNMENT STIMULUS PACKAGE

 The Australian Government has 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.

A second stimulus package is also expected to be announced by the government in the coming days.

The key tax and stimulus measures include:

Business Investment

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. 

Cashflow Assistance

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.

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.

Individual Assistance

Tax-free payments of $750 to social security, veteran and other income support recipients and eligible concession card holders. It is estimated that around half of those who will benefit will be pensioners. These payments will commence to be automatically made from 31 March 2020.

2. 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 everyone is being forced to self-quarantine.

Talk to your business strategists and accountants to get advice on the following matters if required:

• Employees working from home, and workplace obligations
• Should I contact my bank to extending further credit?
• How is my personal asset protection and how can I improve this?
• Have you checked whether you hold business Interruption Insurance?
• 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?

In uncertain times, just having a sounding board to run ideas against can be very beneficial.