Just when you thought it was safe to go back in the water…
An anecdote maybe missed on some of those a little younger than me who were traumatised by the thought of Jaws and going swimming!
Luckily business is a little more resilient than I was at the age of 5! And here we all are braving another batch of lockdown, just when we thought we had conquered COVID.
We’ve barely caught our breath from the torrent of legislative changes, guidance and information emanating from the Commonwealth Government’s 2020 economic stimulus measures. Now, COVID-19 Delta style has us in its Jaws!
But this outbreak is different…and it’s showing no signs of easing!
During what now seems to be the almost frivolous days of Job Keeper and Cashflow Boosts, many clients turned to their local bookkeeper and small business accounting provider to help navigate the ever changing landscape.
It was the small business bookkeeper who was left to interpret an offering whose ink had not had chance to dry…and a great job they did. Many bookkeepers lost clients through that time and had to balance and prioritise their own businesses with the needs of their clients. When businesses shut, local bookkeepers lost their clients!
Two of the measures (COVID-19 Disaster Payments and the 2021 COVID-19 JobSaver payments) are co-funded by the Commonwealth and the NSW Government but could easily be available to other states and territories should future extended lockdowns occur elsewhere.
The ‘New Deal’?
An assortment of relief, payroll tax, land tax, and commercial, retail and residential leasing arrangements, but key support measures are:
- COVID-19 Disaster Payment
- 2021 COVID-19 Business Grant (CB Grant)
- 2021 COVID-19 JobSaver payment (JobSaver)
- 2021 COVID-19 Micro-business Grant (MB Grant)
- Small business fees and charges rebate (Rebate)
We have seen the COVID Business Grant now rolled out across many other states, including Victoria and Queensland. It has the same basic rules for eligibility across the sates as follows:
A business that has an aggregated turnover of $75,000 to $50 million (inclusive), total Australian wages of no more than $10 million, maintains its staffing levels as of the start of a lockdown period and has a decline in its GST turnover of at least 30%, may be eligible for a tax-free Grant of up to $15,000. The business must have incurred expenses from 1 June 2021 to 17 July 2021 for which no other government support is available.
The decline in turnover test will determine the size of the grant available:
- a $7,500 grant is available where the business experiences a DIT of 30% or more
- a $10,500 grant is available where the DIT is 50% or more
- a $15,000 grant is available where the DIT is 70% or more
The decline in turnover is determined by a set consecutive period (differs by State) encompassing a ‘lockdown’ period the CB Grant operates for the first three weeks only of a lockdown.
In each case, applicants will be required to obtain a letter from their Accountant (BAS AGENT/TAX AGENT) confirming the decline in revenue.
SME Recovery Loan Scheme
The government’s SME Recovery Loan Scheme has also been widened to include any business with less than $250m of revenue, casting a wide net! The government will work with lenders to ensure that eligible firms will have access to finance to maintain and grow their businesses.
This is great news for those who have been hit 2 or 3 times during the last 18 months, those that may have had to turn to other small business finance options and who might have been unable to access such small business finance options due to a damaged balance sheet and poor trading results.
For any business who has suffered through these unprecedented times; hopefully the rapidly increasing vaccination rates will see an end to long and broad lockdowns. Whilst options such as the SME recovery loans offer some longer term and lower cost options to recapitalise your business, poor cash management or application of funds could have dire consequences.
The uncertainty is likely to remain for some time to come and the recovery in Australia likely to be slower than first anticipated. Planning and forecasting is challenging in the current environment but regular planning and reforecasting helps you to become agile and give you a solid understanding of your business, its cost base and financial drivers.
Timely reporting to assess impact of strategies is vital, it in turn should drive rapid and regular review of your forecast (business plan/assumptions) and is more important now than ever before.
– Go talk to your accountant or small business bookkeeping company!
