business

JobKeeper Payments – A Summary

April 15, 2020

The JobKeeper scheme was organised so quickly so there was always going to be tricky questions of how it was going to operate and who it will apply to.

When they first announced the Scheme, the Government did not have all the details worked out. So, when businesses and Tax Agents like us, started to ask a lot of questions there was nothing provided except ‘wait and see what we give you when we have worked it out ourselves, and oh, don’t forgot to register for updates so it looks like we are doing something.’

In the last few weeks many people have been working overtime to keep their businesses afloat and trying to get their head around our new world. The Accountants, Lawyers, HR Consultants, IT specialists. The list goes on.

There is one main point in the JobKeeper Scheme that is going to hurt many businesses. The ATO are insisting that $1,500 is paid to all employees before they (The ATO) will pay businesses the “wage subsidy”. If you are still operating at a decent level, then it might be achievable.

But I have a client in the Medical Profession that has completely shut down with 2 staff plus themself. That means the business needs to pay $4,500 this week and another $4,500 in the final week of April (every fortnight). Then in May the ATO will pay him $9,000.

It’s a short term cashflow issue but if you do not have the cash what do you do?

What period will JobKeeper scheme cover?

The JobKeeper scheme will be available for the period 30 March 2020 until 27 September 2020.

Turnover

The ATO have confirmed that it is based on estimated GST turnover. This means the ATO will be looking at your Business Activity Statement and if it is estimated to have fallen or will fall by 30 per cent or more relative to a comparable period.

What does this mean exactly?

Well it means income which is declared on your BAS quarter or BAS income for a month which must be compared to the same period last year.

The test compares the GST turnover of any of the months from March 2020 to September 2020 or the quarters that starts on 1 April 2020 or 1 July 2020 with the corresponding period in 2019, with a business satisfying the test where there is a shortfall of 30 per cent or more.

E.g. a business can make the comparison by comparing the whole of the month of March 2020 with March 2019, or by comparing the quarter beginning on 1 April 2020 with the quarter beginning on 1 April 2019.

Once an entity satisfies the decline in turnover test, it does not need to retest its turnover in later months but you will need to notify the ATO of its current GST turnover for the reporting month and its projected GST turnover for the following month on a monthly basis. This is for their information only.

Which employees are eligible?

Employees can only claim once with one employer. Business owners are confused how to claim for themselves. If you are paid a salary or a wage by your business, you claim as an employee. If you do not get paid a salary or a wage you can claim as a business owner. But you cannot claim both.

In order to claim you should register and pay wages via Single Touch Payroll. Payroll payments should be made using your payroll system and reported to the ATO.

If you do not report through Single Touch Payroll, you can still claim the JobKeeper scheme however, there will be a manual claim process but we have not been given details.

Once you decide to participate in the JobKeeper scheme, all eligible employees must be covered by the scheme and you will have to tell your employees whether you have nominated them as an eligible employee.

How often will the ATO pay me?

The payments will be made by the ATO monthly in arrears. This means you have to pay your employee and then collect from the ATO later. You will have to ensure your cashflow allows this. You could be out of pocket for a number of weeks.

The ATO is aware that this will present cash flow difficulties but has stated that they expect payments to be made to employees before the ATO will make payment to the business. If businesses do not have the cash to make payment they have advised that businesses should talk to their bank to discuss ‘their options’.

The banks have said businesses may be able to use the upcoming JobKeeper scheme as a basis to seek credit in order to pay their employees until the scheme is making its first payments.

We do not believe this is a viable option.

Trying to get a bank to organise finance in the next few days may be almost impossible and at the moment the banks are not picking up the phone as they are so busy working on deferrals and payment holidays.

Employers will need to ‘satisfy payment requirements for their eligible employees in respect of each 14 day period covered by the scheme.

Basically this means the ATO can confirm you have made the payment before paying you which will delay payment even more.

The first period starts on Monday 30 March 2020 and ends on Sunday 12 April 2020. That was three days ago so you need to organise payment in the next week or so.

The final period will start on Monday 14 September 2020 and end on Sunday 27 September 2020.

If I have stood down employees with the intention of keeping them when things get back to normal do I pay them?

Yes, you need to pay them as long as they are not claiming Jobseekers Allowance.

You can claim the JobKeeper scheme for employees that were stood down after 1 March 2020. To be eligible in relation to these employees, you will need to pay them a minimum of $1,500 per fortnight (before tax).

My business was not in existence 12 months ago or my monthly income is not consistent. What happens now?

The Tax Commissioner will have discretion to consider additional information that the business can provide to establish that they have been adversely affected by the impacts of the Coronavirus.

The ATO realise that there will be some businesses that do not have all the information available but will still claim. The ATO has said there will be ‘some tolerance’ where employers, in good faith, estimate a 30 per cent but actually experience a slightly smaller fall.

My Turnover has not gone down 30% yet but I think it will happen later. Can I still claim?

Yes, but you can only apply when you reasonably expect that your GST turnover will fall by 30 per cent. The ATO will provide guidance about self-assessment of actual and anticipated falls in turnover at a later date so we do not know how this will operate at the moment.

If you claim JobKeeper scheme at a later date it will not be backdated to 30 March 2020.

I operate a business but do not pay a salary or wage to myself. Can I claim?

Yes. People who are self-employed will be eligible for the payment provided:

they were actively engaged in the business;
are not entitled to another JobKeeper scheme
are not a permanent employee of any other employer;

What about partnerships?

You can claim but only one partner can be nominated to receive a JobKeeper scheme along with any eligible employees provided.

they were actively engaged in the business;
are not entitled to another JobKeeper scheme
are not a permanent employee of any other employer;

What about Trusts?

Trusts can receive the JobKeeper schemes for any eligible employees.

If you receive a distribution and not a salary one individual beneficiary can be nominated to receive the JobKeeper scheme provided:

they were actively engaged in the business;
are not entitled to another JobKeeper scheme
are not a permanent employee of any other employer;

Technically, a trust that is loss making cannot pay distributions which means a loss making trust cannot claim.

What about company directors?

An eligible business can nominate only one director to receive the payment, as well as any eligible employees provided:

they were actively engaged in the business;
are not entitled to another JobKeeper scheme
are not a permanent employee of any other employer;

I have and Apprentice. Do I get the JobKeepers and the Training Subsidy?

No.

Eligible small businesses can receive the 50 per cent wage subsidy for apprentices and trainees in the Supporting Apprentices and Trainees measure from 1 January to 31 March 2020, and the JobKeeper scheme.

Where small businesses receive the JobKeeper scheme, they are not eligible to receive the apprentice and trainee wage subsidy from 1 April 2020 onwards.

business

Things to consider before making changes to payroll during Coronavirus

By admin on

April 7, 2020

- business

We pride ourselves in supporting small businesses during the current COVID-19 crisis.

Helping navigate the various stimulus packages to maximise the entitled benefits businesses may receive, whilst also, at times, protecting people from themselves. Sometimes that means we will need to say no.

The Tax Practitioners Board (TPB) in partnership with the ATO yesterday released a joint statement titled Working together in response to the impacts of COVID-19. It serves as a reminder to accountants and bookkeepers of our responsibilities in the profession during this troublesome time.

Working together in response to the impacts of COVID-19

As the Australian community confronts the unprecedented COVID-19 crisis, you will have seen impacts to your clients and your own business. We know you are working hard to support your clients while dealing with the impacts to your own business.

These are trying times, and we at the Tax Practitioners Board (TPB), Australian Taxation Office (ATO) and your professional associations are committed to supporting you through this difficult period.

The Commissioner has highlighted that tax professionals have always been a vital part of Australia’s tax and super systems. Now, as we work together in response to the impacts of COVID-19, our partnership is more important than ever. We all play an essential role in helping the community respond to this crisis and supporting our clients.

As you know, the intent of the Government’s relief measures is to help the economy withstand and recover from the economic impact of COVID-19 by supporting businesses to manage cash flow challenges and retain employees.

Some advisors may be grappling with the tax consequences associated with the stimulus payments, and wondering what will attract our attention. We also know that some businesses are already making changes to their business structures and employment arrangements following the stimulus announcements.

We ask that tax agents and businesses be mindful that it is not acceptable to backdate or artificially change a business structure or employment arrangements, including changing the characterisation of payments, in order to obtain a benefit or payment that would not otherwise have been paid. The TPB and ATO will take firm and swift action should this be the case.

We understand these situations can be difficult to navigate and we encourage anyone who needs advice to seek assistance from us. If you become aware of someone doing the wrong thing, report them to the TPB or the ATO or call 1300 362 829. All reports will be treated in the strictest confidence.

As trusted guardians of the tax and super systems, we all have an important role to play in helping Australia overcome these challenges. The best way forward is for all of us to work together to ensure the Government measures are applied in accordance with their intent. We are committed to supporting you during this difficult time, and ask that you support all Australians in the conduct of your practices.

What does this all mean?

The main message here is that the ATO will not take too kindly of businesses looking to become eligible for, or to maximise benefits that they would not ordinarily be entitled to. It echos the information released as part of the Cashflow Boost for Employers

… if you have been paid more cash flow boosts than you are entitled to, you will be required to repay the excess

Schemes

You will not be eligible for cash flow boosts if you (or a representative) have entered into or carried out a scheme for the purpose of:

becoming entitled to cash flow boosts when you would otherwise not be entitled, or
increasing the amount of the cash flow boosts

This may include restructuring your business or the way you usually pay your workers to fall within the eligibility criteria, as well as increasing wages paid in a particular month to maximise the cash flow boost amount.

Any sudden changes to the characterisation of payments made may cause us to investigate whether the payments are in fact wages. If the payments are wages, we may consider the characterisation of past payments, including whether they should have been subject to PAYGW and whether super guarantee contributions should have been made. You may also have FBT obligations that have not yet been met.

Our position on all of this is not to make changes that might bring about scrutiny from the ATO. Don’t do things you would not have ordinarily.

And from the JobKeeper Fact Sheet from Treasury, prior to it being legislated –

The Government will include appropriate integrity rules to prevent employers from entering into artificial schemes in order to get inappropriate access to payments.There are serious consequences, including large penalties and possible imprisonment, for those trying to illegally get benefits under the scheme.

How does this change our approach with businesses?

It is clear that the Tax Office wants you to keep doing things the way it has always been done. No sudden changes. And for us, that’s our starting point recommendation as well. Remember, the ATO has massive amounts of information from your activity statements, and Single Touch Payroll reporting, to build a picture of what your business usually looks like.

The difficulty arises when is a genuine reason for a change to the characterisation of payments, that is not an attempt to scheme but is a legitimate case for the business. This could be, for example, a tax planning decision. Intention means everything.

Our position as professional accountants and business advisors is simple.

We are here to support you doing the right thing by everyone involved, and maximising the benefits you are entitled to while we navigate the intricacies of the stimulus measures put forward to us.

Our primary focus is always on supporting and protecting your best interests and your business.

Not just during these rough times but also into the future.

business

Managing Your Business Through COVID-19

By admin on

March 31, 2020

- business

COVID-19 poses a considerable threat not only to our health but also to our businesses.

For many businesses, the steps the governments have imposed to contain the virus have resulted in a sudden and dramatic fall in demand for products and services, labour shortages and supply disruptions.

There are a number of actions you should consider to help manage your business through these uncertain times.

These actions should assist your business to survive and place it in the best possible position for revival.

Below is a list of actions you can undertake to help your business manage this difficult time.

We encourage you to speak with your accountant or other professional advisers to help you manage through this crisis:

1. Keep your financials up-to-date

To be able to make the best possible decisions, you need access to the most up-to-date information on the financial position of your business.

2. Act now to improve your cash flow

Improving cash flow, whether it be by getting more cash into the business or reducing cash leaving the business, or both, is essential to business survival. It should also put your business in a good position to take advantage of the recovery. You need to establish a Cash War Chest.

3. Increase online sales and keep in contact with your key customers

With customers staying at home, look to reach them through online sales platforms. At a minimum have an Ebay store and look at an Amazon store front. Then consider whether a Shopify website will work.

4. Develop a contingency plan.

If possible, put in place a plan to help your business continue operations if the government imposes tighter restrictions, such as staff working from home. Also consider is there an opportunity for your business to change direction with new service offerings.

5. Keep regular contact with staff

Remain positive but also be upfront with staff on the state of your business.

6. Keep in contact with your key suppliers

Talk to your key suppliers about their ability to deliver reliably to you during the crisis. Consider alternative suppliers.

7. Do a regular financial health check on your business

Knowing the financial health of your business is essential to assisting you in deciding what you can and should do to manage through the crisis.

8. Take time to do a reality check

Ask yourself some questions about the performance of your business before the crisis to help you determine what you want your business to look like post-crisis.

9. If you are in financial difficulty, seek professional advice asap.

business

Managing Your Business In A Crisis

By admin on

March 19, 2020

- business

Managing your business in a crisis

Practical strategies you can deploy straight away.

We are experiencing extraordinary events, first the bushfires, then the rain and now the impact of the coronavirus.

The impact of these are likely to see Australia enter into recession for the first time in almost 30 years.

For businesses to prepare and combat the effect of a recession, business owners must urgently review their business and prepare for such an event. To assist business owners (or your clients) through these troublesome times, below are some simple and practical ideas that business owners can implement during such a crisis. We can also assist business owners with this assessment.

Here is our 5-step process to crisis proof your business.

Review
Identify and build
Execute and act
Monitor
Speak to us

1. Review

This is for you to focus on what is within your control and what your business key drivers are.

• Is your work environment for staff and customers safe?

• What expenses are key to the business operating and which are not?

• Are there any expenses that can be reduced without impacting the business’s long term viability?

• Which revenue streams have been or will be impacted?

• What actions can be undertaken to protect and maintain revenue?

• What obligations do you have to financial institutions, such as loans?

• What statutory obligations to you have in the short and medium term?

2. Identify and Build

Once you have determined the key drivers of your business then you MUST develop a plan.

Documenting the plan, allocating responsibilities, and setting agreed timelines is essential.

Ensure your staff and key stakeholders are supportive of the plan. Communication is key.

• Prepare a plan to ensure a safe environment for your staff and customers. How are you communicating that you have a safe environment to your staff and customers? How often are you communicating?

• Optimise revenue—what revenue initiatives can be undertaken to maintain a sustainable level of income—consider collection of debtors, sale campaign, alternative delivery methods (online). Are there new revenue lines that can be undertaken as a result of changing market conditions? But also be honest with the stock levels you have to your customers.

• Supplies – ask your suppliers if they can recommend alternatives if they’re affected by imports. If they can’t, explore finding alternative for your stock.

• Reduce expenses—a detailed review of business expenses should be undertaken to identify any expenses that can be reduced or even eliminated altogether. This could be a reduction in staffing hours, termination of unnecessary or non-essential services or even sale of surplus assets that are subject to finance.

• Deferral of expenses—are there any other expenses that can be delayed? Are there any creditors that are willing and able to provide support through relaxed payment terms? The Australian Taxation Office (ATO) can provide relief through the following initiatives:

– Deferring (by up to four months) the payment date of amounts due through the business activity statement—including pay as you go (PAYG) instalments)—income tax assessments, fringe benefits tax assessments and excise tax.

– Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to GST refunds they may be entitled to.

– Allowing businesses to vary PAYG instalment amounts to zero for the March 2020 quarter. Those businesses can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.

– Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.

– Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.

– Financier support—contact your financier to discuss what financial support is available (usually by way of deferred payment terms under the loan facility).

– Consider government assistance—find out which government support applies to your circumstances.

3. Execute and Act

Urgently responding to these situations could include the following approach.

• Increase your sales through new sales approaches and new revenue lines.

• Increase exposure through other platforms to sell and market your business. Could platforms previously thought to not work for your business now be relevant? Consider ecommerce and social media to increase your businesses visibility and exposure to current and new markets.

• Communication must be open and transparent with employees, financial institutions, landlords, suppliers, the ATO, customers and local business networks. It should be regular and honest.

• Implement relaxed payment terms. Make it easier for other businesses to do business with you. But make sure you understand the financial impact this may have on your business.

• Enable staff to work from home if possible. Staff safety is paramount and non-negotiable.However, knowing what they need to be effective while away from an office environment will help speed up this process and streamline job functions/tasks during this period. Also ensure cyber security measures are in place.

4. Monitor

Regularly check on the financial position.

This means:
• Monitor on a regular basis.
• Adapt and change your plan, if necessary.

5. Speak to us

The current environment can be very daunting and we are available at any time to assist business owners that find themselves in a distressed position. We are experts in
providing advice and can provide the guidance that may be needed in these difficult times.

business

Key Performance Indicators in a General Practice

By admin on

February 14, 2020

- business

What Is A Key Performance indictor?

A Key Performance Indicator (KPI) is a type of performance measurement used to monitor the success of targets in set categories within your business, which in turn calculates the performance and success of the activities and the business.

Why Have Key Performance Indicators?

Your KPIs should be linked with your key goals and strategic priorities. By evaluating the data gained from the KPIs it will lead to an understanding of the general practice’s position. Identify irregularities and guide future decisions. KPIs can help to:

Focus on continuing improvement
Ensure that practice activities are linked to overall strategies
Provide an early indication of emerging issues that may require remedial action
Plan for the future
Ensure staff know the direction and expectations of the practice and work towards those goals.

What Should Your Practice Measure?

Every general practice is different and will have different priorities. Priorities should be linked to the practice’s goals and strategies and should be relevant measures that can, over time, provide evidence or demonstrate performance results.

Where to Start?

There are no right or wrong KPIs for medical practices, as they should reflect the individual practice’s goals. However, all KPIs should be clear, focused, relevant and measurable in order to be comparable over time.

There are four basic methods used for measuring performance:

Costs – e.g., doctors service fees, support staff wages, practice expenses, administration expenses.
Profits – e.g. the amount of surplus after all expenses are paid
Quality – e.g. the aspect of meeting patients’ expectations
Time – e.g. the efficiencies relating to the number of patients seen per hours/session/day

A good starting point is to establish processes to record figures. Most information required may be extracted from your practice software.

Figures could be extracted daily or weekly for practices with multiple doctors, while smaller practices and solo doctor patients may prefer to use monthly system.

The information gained can be recorded and charted by tables, graphs and / or reports used as a tool to plot trends and identify anomalies.

Examples of Key Performance Indicators for a General Practice

Areas that could be relevant for general practice KPI’s are:

Financial performance = e.g. cash flow, return on investments, expenses, cost of keeping the practice open, percentage of claims denied by Medicare, fees generated per doctor per hour, total expenses per doctor per annum, average cost per hour of opening the practice, revenue generated by each doctor, total patient revenue, average patient revenue.
Patients – e.g., patient satisfaction, new patient numbers, total patient numbers, cancellations and appointment no-shows, number of patients that do not attend follow-up appointments, percentage of time spent per patient on consultation.
Employees – e.g. employee satisfaction, employee performance, break-even number of patients per day, ratio of private to bulk billing, number of patients seen per period/per doctor.
Medical data and patient services – e.g. percentage of diabetes/asthma patients, patient responses to recalls.
Expenses – e.g. monitoring individual expenses will give a better understanding of expenses and ways to manage them.

Examples of how to calculate a KPI

The practice wants to know how much each visit on average contributes in financial terms to the practice.

To calculate, take the total revenue for the period you are working on, and divide it by the total visits for the period.

The average visit value will indicate how much revenue is generated by each patient and will aid in determining policies such as discounted consultations.
Compare how many patients each doctor consults and work out the productivity in terms of financial gain. By knowing this information, you can investigate if there are any problems in inefficiency, a mismanaged schedule or if there is a clear decline in appointment requests.
Track missed appointments and cancellations by utilising a simple graph for each doctor. It is wise to track missed appointments, as it can cost the practice a lot of money in missed revenue over time. The remedy may simply be improving schedule patterns or adjusting staff processes.
You may wish to determine if your patients are satisfied with the services, doctors and experience with the practice. A means of gaining this information could be through a patient questionnaire e.g. by asking “would you recommend this practice to others?” Use a scale of 1 as the lowest score to 5 as the highest and calculate the overall score. Also, ask for their reasoning behind their answer.

All results should be analysed, and action taken where necessary, or in the case of encouraging feedback, used as positive reinforcement that the practice is meeting their goals.

business

Medical Practice Set-Up Checklist

By admin on

January 23, 2020

- business

Over the years we have worked with many medical professionals across many specialisations. This great level of experience means we understand the medical profession.

In this medical practice checklist, we discuss key areas you need to consider.

BUSINESS STRUCTURE

The structure you choose to operate from can make a massive difference to your wealth and financial security. Each structure has its own benefits and limitations, but it is important to choose a structure that meets your individual circumstances, is in accordance with ATO guidelines, while at the same time yielding any additional tax benefits.

Is your structure compliant with ATO guidelines?
Does your structure ensure you meet payroll tax, superannuation, WorkCover and employee leave entitlement obligations?
Does your structure provide opportunities for tax planning?
Does your structure provide adequate asset protection?
Do you have the appropriate documentation in place for your structure?
Do you have agreements in place with your business partners?

TAX PLANNING

As a medical professional it is likely you will be in the higher income brackets, and therefore be expected to pay a fair share of what you earn in tax. However, there are certain tax planning strategies that can be implemented to effectively manage tax liabilities, while still ensuring you are compliant with ATO guidelines.

Are you taking advantage of the unique tax planning opportunities available to medical professionals?
Do you meet with your accountant at least once a year to discuss tax planning strategies?
Is your debt structured correctly to ensure you maximise the tax deductibility of interest? Do you know the difference between good and bad debt?
Do you have a structured plan for your superannuation and contributions?

TECHNOLOGY & SOFTWARE

With cloud technology and software available for almost every role and purpose, the facilities available to medical professionals to streamline processes and reduce costs are huge. The hardest part is working out what is most suitable for your practice.

Do you use cloud-based accounting software?
Are you aware of the various add-ons available for you accounting software to automate & streamline processes?
Are you utilising your software to the fullest and have you been provided with adequate training?
Are your automating steps with technology to improve efficiency and reduce costs?
Is your accountant familiar with the software available to medical professionals?

THE POWER OF COLLABORATION

The life of a medical professional can be a very stressful one with competing demands on you time being at the top of the list. Efficiencies gained from having everything ‘under the one-roof’ should never be overlooked.

Is your medical practice and associated entities accounting and taxation all done by the one team to streamline the process and reduce costs?
Are you able to speak with your Advisor about lending, investments and insurance?
How much time do you spend working on your business to understand how to identify efficiencies in operation, implement process improvement ideas and best practice solutions?

INDUSTRY EXPERTS

Having solid knowledge of the medical profession ensures an understanding of the professional life-cycle of medical professionals. The medical profession is unique and therefore to get the best advice you need to make sure you have the right people ‘on your team’. Professional understanding, technical knowledge and proven results are critical attributes you should look when selecting your team.

Has your advisor looked after medical professionals before?
Does your advisor have a great network of firms around them to support you in the successful operation of your practice and personal wealth growth?
Are you fully aware of all the financial opportunities available to you as a medical professional?

Want to talk about your Medical Practice to see if you are operating at your full potential, then contact us for a coffee and a chat.