Covid-19 Business Continuity

Our team of experts can help you navigate the current government assistance to mitigate the economic impact of COVID-19.

Resources & Tools

Your Business Continuity Plan

These are unprecedented times for businesses and their people. 

We want to provide you with logical advice to help you minimise the impact of this global pandemic on your business.

We have recorded a complimentary webinar for our clients to:

  • Help you build resilience in your team and family at this time
  • Outline the things you should consider now to minimise the impact on your business
  • Share a process, a guide and a template for creating your Business Continuity Plan
  • Give supporting information to help you engage your suppliers, employees, bank and advisors to drive empathetic and effective conversations
  • Outline some ways we can help you fast track the development of your plan

 

 

Getting Paid Webinar

The impact of Covid-19 and the associated lockdown has made it more important than ever to ensure, where possible, that you’re still getting paid.

We have recorded a complimentary webinar for our clients to:

  • Understand how to approach your debtors in these challenging times
  • Learn best practice credit control process management
  • Discover lessons to take into the future to improve your cashflow
  • Get runs on the board quickly 
  • Understand the support available to you

 

The Business Continuity Planning Session

These are unprecedented times for businesses and their people.  Our facilitated business continuity planning service provides clients with accurate and logical advice to help minimise the impact the Covid-19 pandemic will have on their business. 

This service is designed to support our clients in developing a plan to get through the coming months.  A Business Continuity Plan helps identify the actions to take to prepare for the impact of Covid-19; to maximise entitlements to Government and other support and minimise the downstream impact of a downturn in business.

The approach to develop the plan is collaborative and involves pre-work, either one 4-hour or two 2-hour on-line facilitated planning sessions and developing a plan to implement.  The service is designed for business owners to ensure they build resilience, preserve profitability, cashflow and employment for their team and survive through this difficult time.

The Business Continuity Plan Review

We understand that many business owners will want to develop their own plan in these unprecedented times.  The Business Continuity Plan review allows business owners to use our guide and templates to create their draft Business Continuity Plan and then meet with us online for 90-minutes to review and finalise it.  The review service ensures clients are provided with accurate and logical advice to help minimise the impact the Covid-19 pandemic on their business.

A Business Continuity Plan Review provides accountability and support to identify the actions to take to prepare for the impact of Covid-19; to maximise entitlements to Government and other support and minimise the downstream impact of a downturn in business.

The approach to develop the plan is collaborative and involves pre-work, supplying a plan template and guide for the client to prepare their first draft plan and then a 90-minute on-line meeting to finalise the plan in order to begin implementing it.  The service is designed for business owners to ensure they build resilience, preserve profitability, cashflow and employment for their team and survive through this difficult time.

When the reality of COVID-19 hit home, the first thing Marta said was that she was so thankful we had you in our corner. The results we got today are beyond belief so I just wanted to personally thank you for everything you have done for us over the past year. We really appreciate the hard work and detail we have experienced from everyone in your company.

Dr Kieran and Dr Marta McNamara

We want you to be able to claim your maximum entitlement to government and other support right now and without delay – we are here to help.

It’s really tough for businesses right now. You’ve got Covid-19 support information coming at you from all directions and it’s hard to figure out how some of that support works in practice to ensure your business survives. We have summarised the most important Covid-19 Government support available for you below.

Updated Wednesday, 22 July 2020. The Government support and tax considerations below were current as at 22/07/2020.

JobKeeper extended until March 2021

The government has announced changes to the JobKeeper payment scheme, which will see it continue until March 2021.

The current system will remain unchanged until 27 September 2020 as planned, providing $1,500 per fortnight for employees and eligible business participants.

However, from 28 September the changes will apply.

There are several amendments that business owners need to be aware of, including different tiers of payment that apply over two separate time frames, as well as further eligibility tests. This means that some businesses currently receiving JobKeeper will no longer be eligible after 28 September, and others will continue to be eligible but will receive less subsidy from the government.

New Rates for 28 September 2020 to 3 January 2021

  • $1,200 per fortnight – this rate applies to eligible employees and business participants who, in the four weeks prior to 1 March 2020, were working 20 hours or more per week.
  • $750 per fortnight – this rate applies to employees and business participants who, in the four weeks prior to 1 March 2020, worked less than 20 hours per week.

New Rates for 3 January 2021 to 28 March 2021

  • $1,000 per fortnight – this rate applies to eligible employees and business participants who, in the four weeks prior to 1 March 2020, were working 20 hours or more per week.
  • $650 per fortnight – this rate applies to employees and business participants who, in the four weeks prior to 1 March 2020, worked less than 20 hours per week.

Business eligibility

To continue to receive JobKeeper payments, businesses will be required to prove an actual reduction in turnover of 30% or more for both the June and September quarters to continue to receive the subsidy from September 2020 to January 2021.

Businesses will then be required to again satisfy a reduction in turnover test for all three quarters of June, September and December, to receive the subsidy from January 2021 to March 2021.

The eligibility rules have not changed – check the ATO Eligible Employers webpage for details of proving reduction in turnover.

Businesses that have not satisfied the reduction in turnover tests in previous months can still enter the system any time upon meeting the eligibility requirements.

Plan now for the reduced rates

Although we have another couple of months before the changes apply, now is the time to start planning for the reduced JobKeeper rates, both for employees and business participants. We can help you assess your eligibility for remaining in the system beyond September 2020.

Updated Wednesday, 20 May 2020. The Government support and tax considerations below were current as at 20/05/2020.

JobKeeper payment
  • Wage subsidy to cover cost of employees’ wages
  • Available to businesses, not-for-profits and self-employed who have been affected by coronavirus
  • $1,500 per fortnight per employee until 27 September 2020
  • Employees normally earning $1,500+ per fortnight continue receiving their regular income
  • Employees normally earning less than $1,500 per fortnight receive the full $1,500

The JobKeeper Payment is a wage subsidy designed to help businesses and not-for-profits, including self-employed, affected by coronavirus to cover the costs of their employees’ wages so that more employees can retain their jobs.

A payment of $1,500 per fortnight, before tax, per employee will be made to the employer, paid monthly in arrears.

If an employee normally earns $1,500 or more per fortnight, they will continue receiving their regular income.  If an employee normally earns less than $1,500, the employer must pay them the full $1,500.

JobKeeper Application Process
  1. Determine employer eligibility.
  2. Determine employee eligibility.
  3. Provide eligible employees with the JobKeeper Employee Nomination Notice to complete.
  4. Obtain advice from your tax or BAS agent if needed.
  5. Enrol for the JobKeeper payment using the ATO Business Portal.
  6. Identify and maintain your eligible employees.
  7. Pay eligible employees at least $1,500 for each JobKeeper fortnight.
  8. Make a business monthly declaration.

Before enrolling for the JobKeeper payment, employers must determine if they’re eligible to receive the payments, including meeting the turnover test.  Employers also must determine whether their employees are eligible and notify those who are eligible. 

We strongly recommend obtaining our advice to ensure your business will meet the turnover test.

From 20 April, employers have been able to enrol for the JobKeeper payment.  From 4 May, employers can complete the identify and maintain your eligible employees section of the application.  By 8 May, employers must pay their eligible employees at least $1,500 (before tax) for each JobKeeper fortnight to claim JobKeeper payments for April.

Note that employers must enrol and identify their eligible employees by 31 May to be able to claim for JobKeeper fortnights in April and May.

Each month, employers must make a business monthly declaration.

JobKeeper Employer Eligibility
  • Businesses with less than $1 billion in annual turnover with an estimated reduction in revenue of 30% or more
  • Businesses with over $1 billion in annual turnover with an estimated reduction in revenue of 50% or more
  • Charities and not-for-profits with an estimated reduction in revenue of 15% or more
  • Excludes federal, state & local government agencies, entities subject to the Major Bank Levy and entities in liquidation or bankruptcy

The turnover test is based on GST turnover and applies even if an entity is not registered for GST.

Businesses with less than $1 billion in annual turnover for income tax purposes will qualify for the subsidy if they estimate their GST turnover has fallen or will likely fall by 30% or more.  Those with over $1 billion will qualify if they estimate their turnover has fallen or will likely fall by 50% or more.

Charities and not-for-profits will qualify if they estimate their turnover has or will likely fall by 15%.

The reduction in turnover must be proved by comparing revenue with a corresponding prior period in 2019 and is designed to mirror your BAS reporting periods, e.g. June quarter of 2020 should be compared to the June quarter of 2019.  Alternatively, you can calculate GST turnover for March 2020 and compare with March 2019 or estimate GST turnover for April 2020 and compare with April 2019.

Once tested and qualified, there’s no need to retest.

JobKeeper Payment - Commissioner Discretion
  • Not in operation a year earlier
  • Turnover a year earlier isn’t representative of their usual or average turnover
  • Alternative tests to establish eligibility in specific circumstances
  • Allowance where estimate is wrong at the margin

If a business or not-for-profit wasn’t in operation a year earlier or their turnover isn’t representative of their usual or average turnover, the Tax Commissioner has discretion to consider additional information to establish that they have been significantly affected by the impacts of coronavirus.

The Commissioner also has discretion to set out alternative tests that would establish eligibility in specific circumstances, for example, eligibility may be established as soon as a business has ceased or significantly curtails its operations.

Where a business or not-for-profit estimates, in good faith, the required reduction in turnover but actually experiences a slightly smaller reduction, the Commissioner has some tolerance to make an allowance for this.  For example, if turnover reduced by 20% rather than the required 30%.  The tolerance level is not fixed and the Commissioner has discretion.

JobKeeper Employee Eligibility
  • All employees, employed at 1 March 2020, other than those employees who are ineligible
  • Eligibility is on an ‘one in, all in’ basis
  • Ineligible:
    • Under 16 years old
    • Casuals with less than 12 months regular service or permanent employee of another employer
    • Employees on non-prescribed visas
    • Foreign employees (other than NZers on a sub class 444 visa)
    • Employees nominated for JobKeeper by another employer
    • Employees paid less than $1,500 per fortnight (gross)
  • Genuine contractors may be eligible to claim in their own right as sole trader
  • Employees cease to be eligible if they cease employment during the period of the scheme

Apart from those employees who fall under the ineligible category, all employees who were employed at 1 March 2020 are eligble.

The ineligible category includes those who are:

  • Under 16 years old
  • Casuals with less than 12 months regular service or permanent employee of another employer
  • Employees on non-prescribed visas
  • Foreign employees (other than NZers on a sub class 444 visa)
  • Employees nominated for JobKeeper by another employer
  • Employees paid less than $1,500 per fortnight (gross)

Employees who meet the general eligibility criteria are not precluded from JobKeeper eligibility because they’re

  • On personal leave
  • On workers compensation and working a reduced load/hours – but not eligible if not working
  • On parental leave from their employer – but not if they are being paid Parental Leave by Services Australia

Genuine contractors are not employees and may be eligible to claim in their own right as a sole trader.  Contractors trading through an entity are likely to be able to claim through their entity.  Be careful not to include them by error as there is a risk of exposing the employer to other employee liabilities.  Remember that employees on fixed term contracts are still employees.

JobKeeper and Superannuation Guarantee
  • If an employee isn’t working but is receiving the JobKeeper payment, Superannuation Guarantee (SG) doesn’t have to be paid
  • If an employee is working and is receiving $1,500 per fortnight or more, SG is payable
  • If employee is working but being paid less than $1,500 per fortnight but are receiving the additional top up payment to $1,500 under the JobKeeper payment, SG is payable on the amount attributed to work
    • Employer has the option to pay SG on full payment amount
JobKeeper Monthly Reporting
  • JobKeeper Declaration Report
  • Every month the employer must report:
    • GST turnover for the reporting month
    • Projected GST turnover for the following month
  • Doesn’t affect turnover test eligibility
    • But does provide updated information to test the reasonableness of projected turnover at the time of nomination
  • Real time source of data for audit activity

Employers claiming the JobKeeper payment are required to report monthly to the Commissioner to show payments have been made to their employees and provide information as to their current and projected turnover and other matters relevant to their entitlement and the operation of the JobKeeper payment.

This isn’t a retest of the employer’s eligibility, but does help test the reasonableness of the turnover projected at the time of nomination.

If any eligible employees change or leave, the employer must notify the ATO in their monthly declaration.

JobKeeper Risks
  • Employer certifies the facts provided and the claim made
    • Joint and several liability
  • Significant amounts of money involved over a six month period
    • 10 employees = $195,000
    • 20 employees = $390,000
  • If the employer gets it wrong and turnover isn’t reduced by the amount required, they may have to repay
  • Penalty provisions under the ATO
  • Breach of Criminal Code for obtaining financial advantage by deception

You must understand the risks of obtaining the JobKeeper payments as well as your obligations.  The framework for the JobKeeper payment has robust features to ensure integrity and allow swift and effective action to be taken against fraud and other abuse.

The ATO will conduct compliance and audit activities to ensure the JobKeeper payment is passed on to employees and effectively address attempted fraud and any other abuse of the scheme.

The Tax Commissioner may make an entity that has made a false statement or engaged in fraud liable to repay the amount.

An entity that doesn’t comply with its obligations can also be liable for a wide range of significant administrative and criminal sanctions under the tax law and general criminal law.  These penalties won’t affect entities that act honestly and with reasonable care.

We can provide you with advice on obtaining JobKeeper payments to reduce your risk and ensure compliance with the requirements.

Cashflow support for SMEs.
    • Refundable tax credits of $20,000 – $100,000
    • Delivered through credits in the activity statement system in two stages
    • Aggregated turnover must be less than $50 million
    • Eligible employers that withhold tax on salary and wages receive payment equal to 100% of amount withheld, up to $50,000
    • Minimum credit will be $10,000 even if amount required to be withheld is zero

To assist the cashflow in small and medium sized businesses and not-for-profits that employ people, the government announced a tax-free cashflow boost of between $20,000 and $100,000 to eligible businesses.  The payment aims to help businesses to keep operating, pay their rent and other bills and retain staff.

The payment is delivered through credits in the activity statement system when eligible businesses lodge their activity statements.  The cashflow boost will be made in two stages, with the first automatically credited to the business’s account upon lodgment of their activity statement from the 28 April.

The initial cashflow boost is based on the amount of a business’s PAYG withholding.

Eligible employers that withhold tax on employees’ salary and wages receive credit equal to 100% of the amount withheld, up to a maximum payment of $50,000.  The minimum credit will be $10,000, even if the amount required to be withheld is zero.

Increased asset write-off provisions
    • Increased from $30,000 to $150,000 per asset
    • Expanded to include businesses with aggregated annual turnover of less than $500 million (up from $50 million)
    • Applies from 12 March to 30 June 2020
    • Applies on a per asset basis
    • Claim an immediate deduction for depreciating assets costing less than $150,000
    • Claim an immediate deduction for improvements and existing asset balances
    • Seek advice from your accountant to ensure write-offs satisfy requirements

The instant asset write-off threshold has been increased from $30,000 to $150,000 to provide cashflow benefits for businesses that will be able to immediately deduct purchases of eligible assets.

It now includes businesses with aggregated annual turnover of less than $500 million (up from $50 million).

This increase will apply until 30 June 2020.

Eligibility to use instant asset write-off depends on:

  • Your aggregated turnover
  • The date the asset was purchased and it was first used or installed ready for use
  • The cost of each asset being less than the threshold

Claiming immediate deductions for improvements and existing asset balances is likely to require advice from your accountant.

Accelerated Depreciation for New Assets
  • Available for new assets that don’t qualify for the instant asset write-off
  • Businesses with turnover under $500 million able to deduct 50% of the cost of an eligible asset on installation
  • Existing depreciation rules apply to the balance of the asset cost
  • Applies to eligible assets acquired from 12 March 2020 and first used or installed by 30 June 2021
  • SBEs using the general small business pool can deduct 57.5% instead of 15% in the year the asset is allocated to the pool

Under the Backing Business Investment scheme, businesses with a turnover of less than $500 million are able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset cost.

To be eligible, the depreciating asset must:

  • Be new and not previously held by another entity (other than as trading stock)
  • Not be an asset to which an entity has applied depreciation deductions or the instant asset write-off rules
  • Be first held on or after 12 March 2020
  • First used or first installed ready for use for a taxable purpose on or after 12 March 2020 until 30 June 2021

Note that a depreciating asset is not an eligible asset where a commitment to acquire or construct the asset was entered into before 12 March 2020.

Different rules apply where an SBE is using the general small business pool for assets not qualifying for the instant asset write-off.  In this case, an SBE may deduct an amount equal to 57.5% of the business-use portion of the cost of an eligible depreciating asset in the year it’s allocated to the pool rather than 15%.

Early access to superannuation
  • Eligible individuals can access up to $10,000 of their superannuation entitlements before 1 July 2020 and a further $10,000 from 1 July 2020 (subject to a 6 month timeframe)
  • Must satisfy one or more of the following requirements:
    • You’re unemployed
    • You’re eligible to receive the Jobseeker Payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), Special Benefit or Farm Household Allowance
    • On or after 1 January 2020 either:
      • You were made redundant; or
      • Your working hours were reduced by at least 20%; or
      • If a sole trader, business was suspended or there was a reduction in turnover of at least 20%

Individuals affected by coronavirus can access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.

To be eligible for the early access to superannuation, an individual must:

  • Be unemployed; or
  • Be eligible to receive the Jobseeker Payment, Youth Allowance for jobseekers, Parenting Payment (which includes the single and partnered payments), Special Benefit or Farm Household Allowance
  • On or after 1 January 2020, either:
    • Have been made redundant
    • Have had working hours reduced by at least 20%
    • For sole traders, business was suspended or there was a reduction in turnover of at least 20%

Individuals can apply directly to the ATO for early release from 20 April 2020.

Bank assistance
  • Coronavirus SME guarantee scheme to support up to $40 billion of lending to SMEs
  • Government guarantees 50% of new loans issued by eligible lenders to SMEs with turnover of up to $50 million
  • Maximum loan of $250,000 per borrower
  • Loans of up to three years
  • Initial six month repayment holiday
  • Available for new loans until 30 September 2020

The Coronavirus SME Guarantee Scheme will support up to $40 billion of lending to SMEs (including sole traders and not-for-profits).

Under the Scheme, the Government will guarantee 50% of new loans issued by eligible lenders to SMEs.

The Government will provide eligible lenders with a guarantee for loans with the following terms:

  • Maximum total size of loans of $250,000 per borrower
  • The loans will be up to three years, with an initial six month repayment holiday
  • The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan

Loans will be subject to lenders’ credit assessment processes with the expectation that lenders will look through the cycle to sensibly take into account the uncertainty of the current economic conditions.

Supporting apprentices and trainees

Wage subsidy of 50% of the apprentice’s or trainee’s wage

Available to small businesses employing fewer than 20 employees who retain an apprentice or trainee

Applies to wages paid during 9 months from 1 Jan 2020 – 30 Sep 2020

Employers reimbursed up to a maximum of $21,000 per eligible apprentice/trainee

Eligible employers can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020.

The subsidy is available to small businesses employing fewer than 20 employees who retain an apprentice or trainee.  Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy provided the apprentice or trainee was in training with a small business as at 1 March 2020.

Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.

Maximising your cash reserves

Maximising your cash reserves

If the Covid-19 crisis highlighted the inadequacy of the cash reserves in your business, you must implement strategies replenish your reserves and ensure you have enough cash to sustain your business. We can help!

What do you want from your business?

What do you want from your business?

Temporarily trimming what you take personally from your business will boost your #BusinessRecovery. #ContactUs for our free personal budgeting template to reduce the strain and improve your cashflow as you rebuild #PostCovid