Newsletter - June 2020 Edition 1

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Cents & Sensibility | Tax News | Views | Clues 

 

15 June

Cashflow Takes Corona’s Crown! – by Norman Same

 

The COVID-19 pandemic impacted our lives in ways we could not have imagined.

 

Federal and State Governments introduced several very expensive programs to both business and consumers in a short time frame, to curb major economic fallout. Some economists have already predicted that this may not be enough, and it could take many years to repay the enormous debt incurred.

 

As we emerge from the lockdown and most businesses reactivate in this new environment, it is worth taking note of cashflow to ensure long term viability.

 

The series of government grants such as the PAYG Cashflow Support, Payroll Tax holiday, JobKeeper program and the various deferrals to stave off a recession, eventually come to an end. At present, deferral of income tax payments, the PAYG Cashflow Support and the JobKeeper Program end at the end of September 2020. The payroll tax holiday and one of the depreciation incentives ends by 30th June 2020. Some major income/expense reductions/tax payment deferrals conclude within three months. Whilst there is some talk of extending the JobKeeper Program, nothing in this climate is a certainty. The cashflow impact to businesses no longer receiving government grants at the same time as having to pay what in some cases, are very large tax payments because of a successful 2019 financial year, could be disastrous. Deferral does NOT mean it never has to be paid!

 

These cashflow impacts are being experienced in an economy that is attempting to recover from the downturn caused by the virus. Consumer confidence is low. Discretionary spending is low, i.e. spending on non-essential items and services. Economic forecasts are usually self-fulfilling prophecies. If enough people think there is going to be a recession in the future, it will happen. Their actions will cause that downward spiral and right now, it does not require a helping hand! You either spend or save that one dollar – you cannot do both.

 

Cashflow budgeting and monitoring that is always important is now vital. Businesses will need to factor in the combination of no more government incentives, handouts and grants, payment of deferred debts taxes (personal, company, land, etc.) and other liabilities such as rent, all whilst operating in a very unstable economy, with the threat of a second wave of the Corona Virus hovering over our heads. Yes, cash will be king if we are to survive this turbulent time. Planning for these events is essential. Building a nest egg now to meet the negative impacts that mostly fall due in December quarter is a must.

 

Our highly trained and talented staff is skilled in cashflow forecasting and monitoring. We can also assist in navigating and implementing the various incentives, grants and programs available for business. For this reason, we have established our knp BusinessKeeper hotline to help. 

 

Please call 1 300 knp pnk (1 300 567 765) if you require our assistance.

 

JobKeeper declaration due 14 June

 

Businesses that have enrolled in the JobKeeper Scheme and identified their eligible employees are reminded that they will need to make a monthly declaration to the ATO to ensure they continue to receive JobKeeper payments.

 

The monthly declaration must be made by the 14th day of each month to claim JobKeeper payments for the previous month.  

 

As part of the declaration, businesses will need to:

  • ensure they have paid their eligible employees at least $1,500 (before tax) in each JobKeeper fortnight they are claiming for;
  • re-confirm their eligible employees, including notifying if an eligible employee has changed or left employment; and
  • provide the current and projected GST turnover of the business – note, this is not a retest of the eligibility of the business.

 

For example, to claim JobKeeper payments for the May 2020 JobKeeper fortnights, businesses must report their GST turnover for the month of May 2020 as well as their projected GST turnover for the month of June 2020 by 14 June 2020.

 

The monthly declaration can be lodged through the ATO business portal or through STP-enabled software.  Alternatively, tax agents can assist clients by lodging the monthly declaration on behalf of registered clients.

 

ATO reminder for employers – Finalise STP data for 2020

 

The ATO has issued a reminder to employers who report through Single Touch Payroll (‘STP’) – which should be all employers, unless an exemption or deferral applies – that they will need to finalise payroll information for the 2020 income year by making a declaration.

 

The due date for making finalisation declarations is:

  • 14 July 2020 for employers with 20 or more employees; and
  • 31 July 2020 for employers with 19 or fewer employees.

 

Employers that finalise through STP are not required to provide payment summaries to employees and lodge a payment summary annual report to the ATO.

 

Instead, employees will be able to access their payroll information (for preparation of their 2020 tax return) through a registered tax agent or via ATO online services.

 

Please contact our office if you require more information on finalising STP data.

Checklists

 

We know this year is a little different to others, so to help you prepare for this end of financial year, we have attached checklists for Individuals and Businesses.

 

2019/20 Year-end Checklist for Business

 

2019/20 Individual Tax Return Checklist

knpeople

 

Congratulations to Jaimie Ruberto completing The Push-Up Challenge.

 

 

 

The Push-Up Challenge started in 2018 to raise awareness of mental health in Australia. This year, The Push-Up Challenge highlights the devastating number of Australian lives lost to suicide in 2018 (3,046).

 

Jamie completed 3,046 push ups over 21 days to represent the 3,046 lives lost to suicide in Australia in 2018.

 

If you would like to donate to this worthy cause, please go to:

https://www.thepushupchallenge.com.au/pushuperer/115284

 

Important:

Clients should not act solely on the basis of the material contained in Cents & Sensibility. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Cents & Sensibility is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Please contact us if you wish to discuss how the points raised in this edition specifically affect you. 

 

Yours faithfully,

The knp Team

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