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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.

 

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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.

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The Federal Government has so far announced two separate stimulus packages to the sum of $189 billion.

The packages include both cash and tax incentive measures.

Below they are summarised, based on what we know as of today.

1) 100% Cashback on PAYG Withholding, up to $100,000 in total
Eligible small and medium-sized employers will be provided a 100% tax-free ‘cash back’ of up to $50,000 (and a minimum of $10,000) on your PAYG Withholding on wages between 1 January 2020 and 30 June 2020.

A second tranche of tax-free, cash back payments of up to $50,000 (and a minimum of $10,000) on your PAYG Withholding on wages will also be paid for the period 30 June 2020 – September 2020.

This second payment is calculated as the total cash back credit calculate in the first payment, split evenly over the June-2020 to September 2020 BAS/IAS lodgement period.

So to summarise – the cash back is now calculated on 100% of PAYGW of your wages, paid in 2 separate calculation periods.

So, breaking this down:

Payment 1

If you have spent more than $50k in PAYGW for the 6 month period between 1 January and 30 June 2020, you will receive $50,000 in cash from the Government for this period.

If you have spent $30k in PAYGW for the same period, you will get $30,000

Regarding the Additional Payment (Payment 2):
The same total benefit per Payment 1 is paid equally over your BAS/IAS lodgement period between 30 June 2020 and 30 September 2020

A couple of other points on this:

If you take your ‘salary’ as a dividend or directors drawing and want to maximise your ‘cash back’, you could explore changing the treatment of your remuneration from drawings to salary.

If you have an existing debt with the ATO this benefit will offset your existing liability.

💡 How to apply?

This credit will automatically be processed upon lodgement for your BAS and IAS. We and/or your bookkeeper will process it for you.

2) 50% subsidy on apprentice wages, up to $21,000

Eligible employers can apply for a wage subsidy of 50% of apprentice or trainee wages for up to 9 months from 1 January 2020 to 30 September 2020 (up to a maximum of $21,000 per eligible apprentice or trainee).

If a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.

Tax incentives for Small Business Owners

The immediate tax deduction threshold has been increased from $30,000 to $150,000 for assets purchased between 12 March 2020 and 30 June 2020

Assets over $150,000 will attract an additional 50 percent depreciation rate of the asset cost in the year of purchase for assets purchased between 12 March 2020 and 30 June 2021

A couple of other points on this:

It’s important to note that these are tax incentives, not cash back incentives. In other words, you need to spend the money, and pay income tax in order to get the tax benefit.

The tax benefits will be applicable for your FY20 and FY21 tax returns, which means you won’t see any benefit until you’ve lodged your 2020 and 2021 returns.

💡 How to apply?

This credit will be processed upon preparation and lodgement for your 2020 and 2021 income tax returns.

Tax Payment Deferrals

The ATO is providing SMEs payment deferral concessions for businesses directly impacted by COVD-19.

They are outlined as followed:

Deferring by up to 4 months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise.

Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get faster access to GST refunds they may be entitled to.

Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero 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.

A couple of very important things to note:

You will still need to pay Superannuation

These relief provisions are not automatically applied. You will or we can contact the ATO to make any of the above requests for assistance.


💡 How to apply?

Businesses can call the ATO’s Emergency Support Infoline on 1800 806 218 to discuss relief options based on their needs and circumstances.

Government underwritten, Cash flow loans for SMEs
The Government will provide a guarantee of 50% of new loans written by banks and SME lenders to support new short-term unsecured loans to SMEs.

Important clarification – this does not mean the Federal Government is issuing loans directly.

It means that the Government is providing a guarantee to banks and SME lenders to reduce their risk to provide unsecured loans to SMEs that need the cash for working capital.

So what does this mean for me?

Expect a new type of loan product issued by the banks and lenders, tailored for SMEs that have been directly disrupted by COVID-19


💡 How to apply?

Contact your bank/lending institution about this package.

Refer to the ‘Coronavirus SME Guarantee Scheme’ and ask what new loan products are available to assist.


There is a lot more information out there and we will endeavour to sort through it all and pass on all that is important and relevant.


These are stressful times, and we are here to help you in anyway we can.


Please contact us if you any questions or need help with anything. Together we can work through this.
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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.
  1. Review
  2. Identify and build
  3. Execute and act
  4. Monitor
  5. 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.
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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.

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Tax Tips for Medical Practice Owners

Tax time is a headache for many doctors, let alone medical practice owners. Even worse when you are a doctor and a medical practice owner!

Not only are you paying a lot of tax, you need to stay compliant to avoid audits and issues with the ATO while still keeping as much cash flow in your medical practice as possible.

So how do you keep on top of your tax as a medical practice owner?

Get organised

Doing your tax should not just be once a year thing. You should be working and reviewing your tax position throughout the year to stay compliant and be prepared come year end.

You should be working with an accountant that specialises in the medical industry, who will understand your situation and requirements. You should have regular meetings with your accountant through the year to ensure you are on top of everything, including due dates, changes in tax laws and how they impact you and your business

Keep your records safe and easily accessible. Also, you should maintain separate files for personal and business-related documents.

Know your business structure and the rules

Every business structure has different tax responsibilities and requirements that need to be met. Medical professionals in particular have a specific set of rules that need to be followed.

Each structure also has unique features that you need to understand. Having this understanding will help you with your business and your legal requirements.

Know what deductions you are entitled to

The expenses you can claim as a deduction will depend on your practice – how it is structure and how it is run, but some common areas include:

  • Professional dues or membership fees
  • Professional and some personal insurances
  • Medical journal subscriptions
  • Medical and technical equipment
  • Superannuation contributions
  • The cost of managing your accounting

Being familiar with what expenses you can claim will likely see a great uplift in your return.

Keep your books up-to-date

Keeping your financials up-to-date will have multiple benefits to you: you should not be hit with any surprises, such as an unexpected tax bill, you will have current figures if you need finance, it will give your accountant the opportunity to look at your position and make suggestions to help your tax position before the end of the tax year.

 

You can automate things and streamline your business, use accounting software like Xero. You can also explore other practice management software that may integrate bookkeeping as one of their functions.

Get expert advice

The most important tip for a medical practice owner is to work with a medical accountant who understands your needs and your profession. Running a medical practice is unique, and a financial expert who specialises in your profession will help you identify opportunities and reduce risks.

Reach out to us if you wish to discuss your practice and your situation.

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