Latest COVID-19 Govt Assistance for Businesses

Discussion in 'Accounting & Tax' started by Mike A, 30th Mar, 2020.

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  1. Mike A

    Mike A Accountant Business Member

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    Last edited by a moderator: 27th Apr, 2020
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  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I have never been busier. At present we are assisting with what I call "value add".... It adds value to someone else. No fee. Just help. Lots need it even if its just assurance.

    Important milestones
    1. Payroll by today for those seeking stimulus as a employer. Dont try to bring payroll forward but if its due this date is important to avoid missing incentives.
    2. ATO.GOV.AU employers & sole traders affected apply for employee incentive if they are retaining or re-engaging staff and expect a 30% reduction in income (sole traders up to large business) Note this is more than Centrelink and may avoid spouse earning tests (subject to laws).
    Note that this is capped at $1500 per employee per fortnight and will soon / later be repaid by the ATO so there will be catchup here.
    (Details will follow by MikeA or myself when we see the laws - Maybe later today?)
    3. MyGov apply for Centrelink suppport for employees with lost income and needing support (If eligible for 2. they can later withdraw this but cant get BOTH 2 & 3 !!)
    4. BAS Lodgements asap including bank details for refunds and any arrear lodgements. If needed tax agent support can quickly address bank details v's calling the ATO.
    5. Loans ? Apply for concessions to defer if needed. Remember this could include leased vehicles, leased plant or premises.
    6. Payments ? What can be deferred ? eg utilities, taxes etc. Consider who you may impact of course. Dont stop paying contractors. Consider spreading their payment.
     
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  3. JasonC

    JasonC Well-Known Member

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    Paul,

    Could you expand on point 1? I normally run payroll on the 1 or 2nd of the month (with payments on the 4th). Any reason to run it today rather than on my normal schedule?

    Thanks,

    Jason
     
  4. Propagate

    Propagate Well-Known Member

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    @[email protected] I'm interested to see how this part of your point 2 plays out when the rules are published "expect a 30% reduction in income"

    Our business is 4 years old and we've grown in nice ans slow over those years, increasing in revenue generally month on month, quarter on quarter, year on year pretty linearly since we started, that doesn't mean to say we're not affected though but on paper we're more profitable every month since opening.

    Our issue is our revenue is anything up to 3 months behind, so revenue that came in in March is for work done in December & January. April revenue will be February invoicing and May's revenue will be March invoicing, which was again pretty good as we had plenty of work on the booked from early in the year.

    Now, we're running out of that work and our invoicing at end of April will be down by at least 50% but that wont't show as a dip revenue until June/July, by which time all the staff will likely have been let go (approx 4 weeks form now at the rate we're cleaning up current workload), so with no new work coming in our hibernation period will be from around July onwards.

    Once works picks up again we'l be 2-3 months of needing to pay staff to come back to do new work but wont see payment for that work until up to 3 months later, so we'll need money in the bank to float wages for that period, (which the first stimulus should hopefully help with).

    Just think we might miss the $1500 payment stimulus due to timing of revenue.

    I'd imagine any industry that works on up to, or over 90 day accounts will have similar issues?
     
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  5. Mike A

    Mike A Accountant Business Member

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    Will need to wait for the legislation and explanatory memorandum to determine the rules
     
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  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I'm with Mike here and specific rules are yet to be seen and the duration etc. It may apply a invoiced test and a receipts test to assist all types of business (I hope) and I wouldnt assume it is cash based as you are quite correct that timing could be delayed or even become quite uncertain. Maybe the test of decline may apply to orders ? You can have all the orders in the world but if your product uses loo paper (example) then production could slow or stop. The certainty of receipt of income may still be a factor depending on who your customer/s are too. The Govt will have further measures or extended the timing of existing support as this thing may last longer and it was always announced things may be extended. It does make planning and contingency tough.

    Non financial measuers may even include tailored decline of your business to avoid stand-downs as such by reducing hours. This then could fit with the $1500 a FN (or much of it) and preserve both employees and production with delayed supply. This may be a compromise which better supports a longer duration. Your cusotomers could even find it desirable.

    Q : Victoria ? Apply for the $10K grant ? Business Support Fund
     
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  7. Propagate

    Propagate Well-Known Member

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    Thanks Paul & Mike, will sit tight and see what legislation says.

    Yes, VIC but we haven't been substantially impacted..... yet.

    It's difficult for us to slow down and reduce hours as our clients are still demanding we meet contractual deadline, which means would you believe we still have to run overtime. Just means will run off a cliff edge rather than a ramp down.
     
  8. Jeffb

    Jeffb Well-Known Member

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    Great info @Mike A and @[email protected]

    I have a scenario, which I am guessing is common, however I am not sure whether I am eligible.

    I have a business with ABN where I am the only employee (weddings and events supplier). This business has gone to zero income due to Covid (basically effective of the F1 weekend).

    I also have a PAYG job which is still going at this stage.

    I rely on both incomes to pay mortgage, bills, etc.

    If anyone had any advice on this, that would be much appreciated.

    Thanks,
     
  9. Mike A

    Mike A Accountant Business Member

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    @Jeffb when you say business what type of entity ? sole trader, trust, company ? have you ever paid yourself a wage or directors fees in the past ?
     
  10. Jeffb

    Jeffb Well-Known Member

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    I believe it is sole trader. Never paid myself a wage, I just provide a service and keep what is left over after materials.
     
  11. Mike A

    Mike A Accountant Business Member

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    ok we need to wait on the legislation and explanatory memorandum to see how sole traders might be compensated. the fact sheet isn't that clear.
     
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  12. LeeM

    LeeM Well-Known Member

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    Thanks @Mike A for starting this thread. We really need yours, @[email protected] and other real professionals on guidances & advices to get out this mazes unharmed and alive.
    Really appreciate you. Thanks
     
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  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    perhaps people could reach out to Mike and Paul if looking for a new accountant or upgrading the existing one.
     
  14. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I am swamped but we are open. Just got off the phone from Mike and we are sharing ideas to ensure communication to all affected is clear. I reckon the current scenario is a good example of why you want to retain good advisers. It wont cost any extra. We arent increasing prices. We arent going to bill you for picking our brain if you are a client but we are here to assist.
    A few tips

    1. Dont dust your broker now. Refinancing for .2% and cutting them loose will claw back and hurt a family somewhere. And you lose the advice and support. Use your broker !!! Credit applications are on the increase at present.
    2. Dont skimp on quality. Paying a cheap price will get you cheap advice (or even just bad advice). But using a great adviser may not even cost extra. They likely know the issues and the response. Legal, tax, broker, buyers agent, real estate etc
    3. Retain your tax adviser. Things are going to get hairy real fast. And with the ATO being focus of many issues I know I can login in 1 min v's a client who told me they waited 2 hrs for the call response.
    4. Many people will want to lodge asap this June 30. Organised, systematic and property savvy advisers will be running before you are. I can see a range of issues DIYs will get really wrong this year.

    If things fell so quickly they will bounce just as fast
     
  15. Mike A

    Mike A Accountant Business Member

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    Agree and dont change how you do things just to get the boost or increase it. This is really critical as you may lose out on the entire boost for changing something to get more money.

    The question you need to ask

    1. Is this how i did things before ?
    2. Do the same reasons exist for doing it the same as before ?

    Then you get into safe territory
     
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  16. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    As we discussed earlier Mike the ATO will shoot fish in barrels when they see PAYGW reporting spikes. Such an obvious audit focus. There may be reasons that are valid but...
    1. Book entries v actual payments a concern for such spikes.
    2. Past history
    3. Motivators and reasoning supporting a spike. It may be quite genuine. eg Redundancies or layoffs a week before announcements. Sales performance bonus. New staff etc
    4. One of the highest risk categories for missing this is the PSI or small family business company that seeks to do annual reported wages or "Directors fees". This could be really foolish to leave it to year end. Really really foolish. Tax law may already impose obligations that should be correct and met at 31/3 and 30/6 and thereafter.
     
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  17. paulF

    paulF Well-Known Member

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    Thank you both @Mike A and @[email protected] , great advice/info all around.

    Many are panicking and jumping the gun on too many issues. I think it pays to listen to people in the know otherwise many will lose more than they will gain...
     
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  18. Mike A

    Mike A Accountant Business Member

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    And clients need to understand the legislation hasnt been drafted nor has the explanatory memorandum been issued as yet for the latest round so some questions cannot be answered with certainty
     
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  19. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I spoke with HCF today. Premium rises are not proceeding and all premiums frozen for all funds for 6months at least. Some complaints from members concern why they are paying for benefits not available. Its expected after this pandemic a surge in private hospital use will occur and extensive wait lists so the premium today likely reflects more claims later. So it balances out.

    Tip - To save a little you can dump extra cover (only) and it wont impact Medicare Levy Surcharge. Can be reinstated later BUT...wait periods apply. Unless you also later switch funds to a fund that may waive them at a future date. Conditions may apply to these waivers !!
     
  20. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Childcare assistance information for those interested as announced today (Thursday 2 April)
     

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