By Optometry Australia
As the nation heads into unprecedented territory we will provide you with relevant accurate information to help you and your practice navigate through the COVID-19 pandemic.
To assist us, we have engaged Optometry Finance Australia to provide regular information and guidance on business continuity management. Today’s communication highlights some practical tips and strategies that you can start to implement now.
1. TAKE ADVANTAGE OF GOVERNMENT INCENTIVES
The latest incentive package announced by the Morrison Government on 22 March, 2020 increased the Boosting Cash Flow for Employers for small to medium business (SMEs) to a maximum of $100,000, with a minimum payment of $20,000.
This is a tax-free payment for practices with a turnover less than $50 million, for PAYG you have withheld as follows:
- practices lodging quarterly BAS can receive a minimum of $10,000 and a maximum of $50,000 for 100% of PAYG withholdings for the March and June 2020 quarters;
- an additional credit equal to the total of all PAYG payments received in the July to October 2020 quarter, up to $100,000 combining both payments.
Those practices that lodge monthly BAS will be eligible to receive the payment as follows:
- for the March 2020 BAS, practices can claim 300% (3x) the tax withheld for March*;
- for the April 2020 BAS, practices can claim 100% of the tax withheld for April*;
- for the May 2020 BAS, practices can claim 100% of the tax withheld for May*;
- for the June 2020 BAS, practices can claim 100% of the tax withheld for June*;
*up to $50,000 limit for the months March through to June.
An additional payment equal to 25% of all the payments received to date (March through to June 2020 BAS) will be paid in the July to October 2020 period. These amounts are not to exceed $100,000 when both payments are combined.
You will receive the payment as a credit against your ATO liabilities when your BAS is lodged. If this results in a net refund position, the ATO will refund this to you within 14 days (and in this instance we suggest submitting this BAS as soon as possible).
A current example
Mary owns an optometry practice in Carlton, with eight employees on average full-time earnings of $73,530 per annum. She reports withholding $10,296 for her employees on each monthly BAS. Under the Government’s changes, Mary will be entitled to receive the payment on lodgement of her BAS. Mary’s practice will receive;
- a credit of $30,888 for the March period, equal to 300% of her total withholding;
- a credit of $10,296 for the April period, before she reaches the $50,000 cap;
- a credit of $8,816 for the May period, as she has reached the $50,000 cap;
- an additional payment of $12,500 for the June period, equal to 25% of her Boosting Cash Flow for Employers payments;
- an additional payment of $12,500 for the July period, equal to 25% of her Boosting Cash Flow for Employers payments;
- an additional payment of $12,500 for the August period, equal to 25% of her Boosting Cash Flow for Employers payments;
- an additional payment of $12,500 for the September period, equal to 25% of her Boosting Cash Flow for Employers payments.
Under the original announcement that Government made, Mary would have received a maximum of $25,000 but under the enhanced package, she will receive a further $75,000 – taking her total to $100,000 – to assist her business, and help retain staff.
Trainees and apprentices support
Small businesses are also being supported by the Government where they employ trainees and apprentices. Where an employer is eligible, you can apply for a wage subsidy of 50% of the trainee’s or apprentice’s wage paid during the nine months from 1 January to 30 September 2020. This claim will be to a maximum of $21,000 per eligible trainee or apprentice ($7,000 per quarter)
2. REVIEW CURRENT LOAN COMMITMENTS
The Australian government and the Australian Banking Association (ABA) recently announced the following support:
- 50% of new unsecured loans for SMEs will be guaranteed by the Government. The maximum loan amount is $250,000 per customer, with loan periods up to three years, and with an initial six months repayment holiday. This will commence in April 2020 and will be available for new loans until September 2020.
These deferred loan repayments should not impact your credit rating with the bank, nor your national credit score on your credit file, and we will confirm this once we know more on this point.
We recommend talking to your bank now regarding this option, or asking your broker to act on your behalf – but be patient as they will be inundated with enquiries from both the commercial, and consumer, sectors.
3. REVIEW PERSONNEL REQUIREMENTS
Salary and wage costs are usually one of the biggest expenses for any business. With a view to keeping your salary and wages bill in check, we suggest having an open discussion with your personnel now. Given the inevitable downturn in patients, your staffing needs will likely change. Until Australia gets through this crisis, you could consider:
- encouraging your staff to take annual and/or sick leave;
- reducing your practice’s opening hours and with this, restructure your staff rosters with reduced hours (and wages).
We are all going to have to make sacrifices at this trying time and as such strategies, worked out in conjunction with your staff, will help keep people in jobs, and businesses in business, whilst lightening the strain on cash flow for your practice.
Remember, this is not permanent. This is a temporary measure.
4. SEEK RELIEF FROM ATO OBLIGATIONS
We suggest that you chat with the ATO, or engage your accountant to do so on your behalf, to discuss relief options. This comes off the back of a recent ATO announcement (12 March 2020) that stated: “Support measures may include deferral of some payments, quicker access to GST refunds, and options to enter low interest payment plans for existing or future tax debts”.
Options that are available to you include:
- deferring by up to four months amounts payable due for your BAS (including PAYG instalments), income tax, FBT and excise;
- for businesses on a quarterly reporting cycle, opting into monthly GST reporting to access GST refunds quicker;
- varying PAYG instalment amounts to nil for the March 2020 quarter (due 28 April), and claiming refunds for instalments for the September 2019 and December 2019 quarters;
- remitting any interest and penalties incurred on or after 21 January 2020, that have been applied to tax liabilities.
Unlike the bushfire relief support, these will not be automatic.
You should contact the ATO on its Emergency Support Infoline on 1800 806 218 to discuss your options, and look at possible tailored solutions.
5. REVIEW RENT COMMITMENTS
Next to your employee costs, your monthly rent commitments are often your largest expense. We suggest that you have another look at your rent agreement and start talking to your landlord now. They will no doubt be receiving relief from mortgage commitments on their property, and that relief could be passed on to you.
It is important to remember that a commercial property owner would still rather have a tenant in place in 3-6 months’ time, than no tenant at all.
Finally, Treasury has established a Coronavirus Business Liaison Unit to work with businesses and to provide regular updates. It may be contacted via email at firstname.lastname@example.org.
For more information on small business solutions that could be applicable to you contact Optometry Finance Australia on 1300 678 346.
Optometry Finance Australia (OFA) offers a free service to Optometry Australia members.
Disclaimer: This advice is provided as general advice only and should not be construed and in no way constitutes, and show not be relied upon as, professional, financial or legal advice. We are not responsible for any loss suffered as a result of or in relation to your reliance or use of our advice. All members should seek their own professional financial advice.