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Forecasting During a Pandemic

How do you plan for uncertainty when every assumption is subject to change?

Now, more than ever, business operators should have a plan in place to manage during uncertain times. Even if your business is not directly impacted, it's likely your customers, your supply chain, and your workforce will be to some extent.

Understand where you stand now

Businesses fail (or fail to thrive) for a myriad of reasons, but the precursor is often a failure to understand what is occurring and what to monitor. Strategically, managers need to be on top of their numbers to identify and manage problems before they get out of hand. If you do not know what the key drivers of your business are - the things that make the difference between doing well and going under - then it's time to find out.

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My business received a grant from the State Government. Do I pay tax on it?

Short answer; probably.

Income tax - Grants are likely to be taxable unless they are specifically excluded from tax.

If the grant relates to your continuing business activities, then it is likely to be included in assessable income for income tax purposes. The position can be different in cases where the payment is made so that the entity can commence a new business or cease carrying on a business.

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New JobKeeper test date for employees and additional flexibility

On Friday 14 August 2020, the Treasurer released updated the JobKeeper Rules dealing with eligible employees which apply from 3 August 2020 onwards. Specific rules dealing with JobKeeper 2.0 have not yet been released.

New test date for employees

Under the original JobKeeper rules, an employee generally needed to have been employed by the entity at 1 March 2020 and to have met certain conditions as at that date to qualify as an eligible employee. However, the Government has updated the rules to ensure that 1 July 2020 will be relevant test date rather than 1 March 2020 from 3 August 2020 onwards, which means that some additional employees might become eligible for JobKeeper from the 10th JobKeeper fortnight onwards. Employees who met the conditions at 1 March 2020 will continue to be eligible assuming they are still employed by the entity etc. In practical terms this means:

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JobKeeper Alert

With the employee test date for JobKeeper moved to 1 July 2020, some additional employees might have become eligible for JobKeeper. The August JobKeeper monthly business declaration is due by 14 September and is different to the previous form as it covers three JobKeeper fortnights. Employers need to ensure that they identify all additional employees who could be eligible for JobKeeper to ensure that they comply with the "one in, all in" principle and that they meet the nomination requirements.

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Has COVID-19 Devalued Your Business?

If you are selling your business, merging, acquiring, or inviting in new investors, you need to understand the value of your business. But, to what degree does the pandemic impact on value? Should you discount or hold firm to pre COVID-19 performance on the basis that 'we're going to come out of it eventually'?

Fair market value is the price that would be negotiated in an open market between a knowledgeable, willing but not too anxious buyer and a knowledgeable, willing but not too anxious seller dealing at arm's length within a reasonable time frame. Value and price may not be the same thing. The price you are offered (or offer), will often depend on the anxiousness of the parties. For example, a seller that does not need to sell where the business being sold adds synergy value to the purchaser, may look to obtain a premium on value. And, even where a quick sale is required it may not be discounted if the liquidated asset value of the business remains high (i.e., the assets of the business are worth more broken up and sold off than as a whole).

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COVID-19 and Your SMSF

COVID-19 has had an impact on many SMSFs. We look at the key issues.

Early release of superannuation

When a member of your fund wants to access up to $10,000 of their superannuation early under the COVID-19 measures, there are some additional steps that trustees need to take. Trustees will need to ensure their deed allows for early release, the member has met the eligibility criteria for release, and ensure that no funds have been released until the release authority from the ATO has been received. This will be a 2019-20 audit area of focus.

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Your Questions Answered

During lock down I have had to work from home. I've set up a full home office with paintings, plants, a desk, computer equipment, a water tower and a sculpture. I presume I can claim everything I have purchased for this office and claim part of my mortgage and running costs?

In general, home office expenses are designed for those who run their business out of home. If you are merely working from home and not running a business at home, then it's unlikely you will be able to claim occupancy expenses such as mortgage interest or rent. Keep in mind that if you claim occupancy costs, this will impact on your access to the CGT main residence exemption.

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What Now? Where to Get Help if You Need It

Help for business

JobKeeper 2.0

The Government has announced further changes to the JobKeeper scheme. The good news is that employees that missed out on JobKeeper because they were not employed on 1 March 2020 might now be eligible. The proposed changes would enable employees employed on 1 July 2020 to receive JobKeeper payments from 3 August if they meet the other eligibility criteria. If you have employees impacted by this change, you will still need to work through the eligibility requirements including providing JobKeeper Payment Employee Nomination, but just remember that these changes are not yet law.

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Introduction

The NSW Government is gradually lifting the restrictions on movement and business trading that were designed to reduce the spread of COVID-19. This means some businesses can now reopen.

If your small business or not-for-profit organisation has experienced a decline in turnover as a result of COVID-19, you may be eligible for a small business recovery grant of between $500 and $3000.

This grant helps small businesses meet the costs of safely reopening or up-scaling operations. These expenses include, but are not limited to:

  • fit-out changes and temporary physical changes (for example, plastic barriers at checkouts)
  • staff training and counselling
  • business advice and continuity planning
  • cleaning products and additional cleaning services
  • additional equipment necessary to comply with social distancing or other public health measures
  • marketing, communications and advertising
  • digital solutions (for example, e-commerce or business websites).

This grant can only be used for purchases of eligible expenses made from 1 July 2020, and only where no other government support is available.

Note: Applications close 11:59pm Monday 31 August 2020.

For further information go to http://www.wrightpartners.com.au/resources/downloadable_forms

The New Flexible Parental Leave Pay Rules

From 1 July 2020, parents accessing the Government's parental leave pay (PPL) scheme will have greater flexibility and options.

Targeting the self-employed and small business owners, the changes introduce a new 30 day flexible paid parental leave pay period.

Previously, new parents could apply for PPL for a continuous block of up to 18 weeks. The changes split this time period into two:

  • A continuous period of up to 12 weeks, and
  • 30 flexible days.

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