COVID-19 Business Update – 22 October 2020
Welcome back to our Weekly Digest. We hope you and your family are safe and doing well.
Lately, economists have been talking about a “K-shaped” recovery from the current recession. As this article in The Conversation explains, this kind of recovery happens when different parts of the economy recover at different rates. White-collar workers who can more easily work remotely may have an easier and faster path to recovery than blue-collar and service workers who must be physically present to do their jobs.
Moving forward is the only option we have to get through this crisis. Read on for this week’s updates and some ideas that will help us all move forward.
Australian Business Growth Fund Launches
The government-backed Australian Business Growth Fund has launched to ensure small- and medium-sized businesses have access to equity finance, as the country recovers from the COVID-19 crisis.
Initially, the Australian Business Growth Fund will have an initial investment capacity of $540 million, with a goal to grow the fund to $1 billion.
The government is making a $100-million investment, while major banks including ANZ, Commonwealth Bank, NAB, and Westpac have also committed $100 million each.
The fund will allow Australian businesses to apply for long-term equity capital investments between $5 million and $15 million, where they have generated annual revenue between $2 million and $100 million and can demonstrate three years of revenue growth and profitability.
If you need help in assessing your eligibility or to consider other financing options, don’t hesitate to contact us for guidance.
Unemployment Rate Increase to 6.9% in September
Australia’s jobless rate edged up 6.9% in September and employment declined by 29,500, indicating that the economy is still struggling despite the significant fiscal and monetary policy stimulus. In August, employment increased a solid 111,000.
Pay Your SG by 23 October
Due to essential ATO system work, the Small Business Superannuation Clearing House will be unavailable between 11.30pm 27 October 2020 and 7.00am 28 October 2020 (AEDT).
The next quarterly due date for SG payments was originally on 28 October 2020, but because of this scheduled outage, the new deadline is on 23 October 2020 (5.30pm) to allow for normal processing.
Need help with the processing of your super guarantee payments? Our registered tax agents can help!
Claiming Motor Vehicle Expenses
The ATO allows you to claim motor vehicle expenses that are part of everyday business operations, including travelling between different business premises and visiting clients.
Common expenses include:
- lease payments
- insurance registration
You may work out your claim using the cents per kilometre method or the logbook method.
For the cents per kilometre method, the rate is 72 cents and applies for a maximum of 5,000 business kilometres per car.
Meanwhile, for the logbook method, you must keep a logbook for at least 12 consecutive weeks and work out the percentage of business use for each car expense.
Remember to claim only the business portion of the expenses and keep records of how you calculated your claim. Alternatively, you may contact us so we can help you with your claims and ensure your compliance.
JobKeeper Key Date: 31 October 2020
For the JobKeeper fortnights starting 28 September and 12 October only, the ATO is allowing employers until 31 October to meet the wage condition for all employees included in the JobKeeper scheme.
New entities enrolling for the JobKeeper will also need to enrol and submit their ‘Check decline in turnover’ form to the ATO online on 31 October. You can find more details on the actual decline in turnover test here.
JobMaker Hiring Credit scheme
While there are no changes to the JobKeeper scheme set to send in March 2021, a fresh wage subsidy program called the JobMaker Hiring Credit has been announced.
The JobMaker Hiring Credit will partially subsidise the wages of young employees who are hired from 7th October 2020. As always, there are some conditions for both employers and employees to meet.
Employers will be able to claim $200 each week for every employee hired after 7th October 2020 aged between 16 and 29, and $100 each week for every employee aged between 30 and 35.
Sole Trader Support Fund
The Victorian Government has announced the Sole Trader Support Fund for eligible non-employing businesses affected by COVID-19 restrictions. Under this scheme, sole traders will receive a grant of $3,000.
Grant applications will open in the coming days and the full list of eligibility criteria will be published soon. We will keep you updated as soon as more information is available.
Government-backed COVID-19 Loans Extended
The government is extending its small business COVID-19 loans scheme until June 2021. If you need help to access these loans or you want to find out if you are eligible, don’t hesitate to drop us a message.
Warning Signs You May Need to Ask for Help
The risks and uncertainties brought by COVID-19 may be taking a toll on your mental health and adversely impacts your ability to run your business. Here are some red flags that may suggest you need to reach out for support:
- finding it hard to concentrate
- avoiding necessary day-to-day tasks and obligations
- feeling irritable, stressed or teary
- constantly thinking of work, even during personal time
- being unable to sleep
- disconnecting from friends and family
- changing eating or drinking habits.
If your current circumstances are affecting your tax and super obligations, reach out to us as early as possible so we can help you out.
Transforming Economic Challenges Into Opportunities
Since early this year, global economies have faced unprecedented challenges due to the COVID-19 crisis. Now, many of the pandemic-ridden countries are experiencing their first recession in decades.
Governments focused on driving economic recovery through business support and cutting of tax rates. Besides these government-backed schemes, here are additional opportunities that you can consider for your business to overcome the current challenges:
- Review your business and revisit contracts which can potentially be renegotiated for a better deal.
- Consolidate your debts to be able to take advantage of growth opportunities.
- Acquire a like-minded business or consider partnerships and joint venture opportunities.
- Up-skill your team during less busy times.
- Innovate and automate your processes. This is the time to explore new revenue streams such as online sales.
- Restructure your business when you see fit.
- Check your expenses, cut down on unessential costs, and outsource if it will lead to cost-savings.
- Slower business activity means you have more time in your hands than normal. Spend your time knowing more about your target market and revamp your marketing.
If you need some guidance in doing all these things, flick us a message so we can work out a plan and share our expert advice tailored specifically to your business.
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