Like the rest of Australian businesses we are setting down our responses to Covid19
There is a fine line between panic and being proactive. Note the situation changes daily
Most of our team have already been able to work from home and regularly do. We have thus made sure that everyone is set up and able to do so. We have team members sitting in 4 different locations, one of which is overseas in Bangalore India. We did have some movement between offices but this was terminated last week. Our offices are large enough so that 1.5m social distancing is not a problem. It is rare for our offices to have visitors. So this is not an issue either. Monday last week we issued all staff protocols on hand washing and ensured sanitisers are in all offices. We have been able to communicate and been able to get documents signed by clients electronically for a couple of years but have stuck to paper and seeing clients in person as this is the personal relationship that we want to foster with clients. However in these times we are ready to switch completely to electronic commerce.
One of the big worries about shutting down a city or country is the financial effect on businesses and their employees.
We are business advisers and we are able to give you advice on how to handle situations. We also know our current clients very well and have access to your documents like accounts and tax returns and can log into the ATO computer to manage and inquire on your tax affairs. No other person is able to assist you better than us.
In a time of crises YOU need to manage your business. Self reliance is what will get the country through this. Not help from government. YOU need to run your business WELL.
A business needs cash to survive. You need to
Get extra funds from investors or family
Your suppliers and your landlord are in the same position as you. If they do not get paid or are paid late then they may collapse. Thus it is not in your interests to rely on suppliers as a banking service. Continue to pay everyone on time
TAX and Instalments of Income Tax
Quarterly payments of income tax can be varied if you expect your income to go done this financial year. Till mid March commerce was not affected by Covid19 but this week there is a noticeable slow down with public events being cancelled. We can prepare an estimated profit and loss for the 2019/20 year and estimate the likely tax and thus apply for a lowering of your quarterly payments
If your aggregated turnover is below $50mil, then your business will receive a minimum of $2,000 to a maximum of $25,000, calculated as 50% of your PAYG withholding amounts for wages paid from 1 January to 30 June. This amount will be calculated and deducted from your required payment via BAS or PAYG lodgements from March to June. If you report wages but don’t report any withholding amounts, then you will receive a payment of $2,000.
The write off threshold for new assets has been increased from $30,000 to $150,000 if your turnover is under $500 million previously $50 million. But the equipment must be used or installed and ready to be used, between 12 March and 30 June 2020. Like other incentives you only spend the money if you really need the asset. If you will have tax payable this year and you would have purchase the equipment next year then bringing forward the purchase is worthwhile.
Also if your aggregated turnover is less than $500 million you will be able to deduct 50% of the cost of the asset on installation with the remaining 50% being depreciated on current rules. This applies to new assets rather than second hand assets and is also for 12 March to 30 June 2020.
If you have short term cash issues then we can talk to the ATO for you. However the problem with this is that you still ultimately need to pay the ATO. This is only a very temporary fix. It is expected that the economic collapse due to Coved19 will last at least 6 months.
Payroll tax for the June quarter has been waived for businesses with payrolls up to $10 million. However this still means that the payroll tax for March is still payable by the 7th April. The threshold has been raised to $1million for the 20/21 year
The share market was going very well till 20 February and then it got the infection also. We have had these downturns previously in 1987 and the GFC in 2007/08. The lessons from these serious collapses is that you are never able to recover if you sell on the downturn. With the GFC there was NO commentator that predicted it. So no matter how many PhDs you have somethings are just unknown. In hindsight if you bought in 2009 you still have done very very well even after this current sell down. Some clients after the GFC put a lot of money into cash and thus have lost a lot from this opportunity. Some time this year there will come a time to start buying shares. Our advice is get your mind ready to be a buyer.
The important conclusion from this update is that we know you and your business and have your affairs at hand.
Our team is there to help you get through the current serious problems and we are still here but at the end of our computers.
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Peter Vickers Insurance Brokers is part of the Steadfast broker network.