So much has changed for small businesses so quickly due to the COVID-19 pandemic. While many small businesses have successfully enrolled in the federal government’s JobKeeper program, businesses now have to contend with end of financial year (EOFY) planning.
Australian small business and family enterprise ombudsman, Kate Carnell, shares her tips on how small businesses can make the most of government assistance in the lead up to the EOFY.
Make a post-COVID business plan
Carnell says small businesses emerging from COVID-19 should stay on top of government assistance options and prioritise making a “solid and directional business plan with an underlying cash flow.”
“The smart operators are the ones that will hold onto what’s worked during COVID-19, keep that as part of their business going forward and look at how to integrate that,” she says.
Seek financial advice early
Carnell points out that COVID-19 presents a host of issues for EOFY planning, including the tax treatment of JobKeeper.
“It’s important to plan and get it right,” she says.
“The major message to businesses is to go and see your accountant or your financial advisor.”
“The importance of not leaving tax planning to the last moment in this current environment is real.”
Boosting cash flow for employers’ payment
Carnell says the Federal Government’s cash flow boost payment is a boon for small businesses struggling with lost revenue.
“When you submit your business activity statement in April, you’ll get a 100% credit on all of the withholding tax for salaries and wages you’ve withheld,” says Carnell.
The credit will be applied automatically in the ATO system, so there’s no need for business owners to take any action
“As long as you put in your activity statement it will happen.”
Mandatory Commercial Tenancy Code
“It’s really important for tenants to ensure that their landlord understands what’s in the code,” says Carnell.
She urges small businesses to stand up for their rights to a “rental reduction that’s proportional to your reduction in turnover.”
Carnell encourages small business owners to remind landlords that “half needs to be a rent reduction and half can be deferred,” with a 24-month repayment period.
“If your landlord is trying to say ‘here’s all the rent that you owed us over the last six months, you’ve got to pay us now’… No, that’s straight to mediation.”
Instant asset write-offs
According to Carnell, businesses should “embrace instant asset write-offs” during EOFY planning.
Eligible businesses can write off up to $150,000 (up from $30,000) for each asset this year as an immediate tax deduction.
“I think it’s really important for small businesses to focus on that. To ensure that you have appropriately invested in what you need coming out the other end of COVID-19.”
“Which means, for a farmer, you can actually buy that tractor. For manufacturers, you can actually buy that new piece of kit,” says Carnell.
State government initiatives
“Every state government has a range of initiatives as well.”
State government assistance options include cash grants and payroll tax deferrals or reductions, among other varied initiatives.
“The important bit here is to ensure that small businesses are up to date on what’s available, both federally but also from the state or territory,” says Carnell.
“Particularly at state level, a chunk of these things have evolved and will continue to evolve over time.”