cash flow can make or break your business

Improve cash flow and sleep better at night

Posted on 5 October 2021 | by Allan Hall

Cash flow can make or break your business, so take time to safeguard it

According to a survey by research firm East & Partners for lender Scottish Pacific, nearly 80 per cent of owners of small and medium enterprises said cash flow issues caused them the most sleepless nights.

So what might you do to improve your cash flow and sleep better at night? Here are five tips.

1. Build a cash reserve

Cash flow is the lifeblood of any business. To ensure that it makes, not breaks, your business, it’s important to build a robust cash reserve. This may help you meet your financial obligations in difficult times and allow you to take on opportunities to grow your business.

2. Separate business and personal money

By keeping business and personal expenses separate, you may better understand your business’s cash position. It may also ensure that you don’t use money meant for your business on personal expenses; for example, a holiday or your mortgage.

3. Get paid on time

If your business hasn’t been actively pursuing unpaid invoices, you may want to make it a practice – and have a strategy – to regularly chase up payment. Finding ways to encourage prompt payment, such as offering a discount to early payers, may help.

4. Control business costs

Controlling costs might help you to maintain a healthy cash flow. Experts suggest taking stock of your business expenses regularly to identify where you can cut costs without sacrificing growth. This may include reviewing your suppliers and negotiating better rates with them.

5. Protect your business

By taking out business expenses insurance and key person insurance, you may help ensure your business can meet its running costs if you or a key employee is too ill to work. Both insurance plans provide a monthly benefit if you or a key person in your business become incapacitated.

Work with a professional

Your professional financial adviser can tailor your insurance plans to your business’s cash flow protection needs, safeguarding what you’ve worked so hard to build.

General Advice Warning

The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

2021 COVID-19 Micro-Business Grant NSW

Posted on 27 July 2021 | by Allan Hall

Cash flow support for NSW micro-businesses impacted by COVID-19 restrictions while continuing to incur business costs.

Closing date 18 October 2021.

» You can apply online using your MyServiceNSW Account

The 2021 COVID-19 Micro-Business Grant provides fortnightly payments to NSW micro-businesses (small business, sole traders or not-for-profits) impacted by recent COVID-19 restrictions.

Available funding

Automatic payments of $1,500 per fortnight.
Payments made in arrears with the first payment backdated to 26 June.
Only one application per ABN and only one application even if multiple businesses under a single ABN.

Eligibility criteria

Must have an ABN and operating in NSW at 1 June 2021. There are some exemptions if you have an ABN outside NSW but can demonstrate you operated within NSW at 1 June 2021.
Aggregated turnover more than $30,000 and less than $75,000 for year-ended 30 June 2020[i].
Decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period within the Greater Sydney lockdown (26 June and due to end 30 July) compared to the same period in 2019.
Applicant has business costs for which there is no other government support available.
Applicant has not applied for the COVID-19 Business Grant or JobSaver.
Employing businesses must maintain headcount at 13 July.
For non-employing businesses, the business receiving the payments must be the primary income source for the associated person. Individuals with more than one non-employing business can only claim from one business.
Entities earning passive income (such as rent) are not eligible.
Employees can receive Commonwealth COVID-19 Disaster Payments if their employer is receiving this grant.
Non-employing businesses are not eligible for this grant if individuals associated with and deriving income from the business are receiving the Commonwealth Covid-19 Disaster Payment.

Evidence in support of eligibility

Applicant must have experienced a decline in turnover of 30% or more over a minimum 2-week period from 26 June 2021 to 30 July 2021 compared to the same period in June and/or July 2019.
There is no alternate test for businesses not operating in 2019 (or 2019 not a true comparison) or did not meet the minimum $30k turnover. These applicants should contact Service NSW.
Applicants need to supply one of the following as evidence that their turnover was more than $30,000 but less than $75,00 for the year ended 30 June 2020:
- A letter from their accountant;
- Business Activity Statement;
- Business bank statements;
- A tax return or notice of assessment.
If no employees, declare the business is the primary source of income for the owner of the business.
If business does have employees, applicant must declare their employee headcount on 13 July 2021 and notify Service NSW if the employee headcount declines.

Some important notes

Funding to be used to cover costs incurred from 18 July (wages, rent etc.)
Businesses that received the $1,500 NSW Small Business Fees and Charges Rebate can apply for this grant.
Where a business operates through a Trust, it will be required to provide additional information to demonstrate an aggregated turnover of more than $30k but less than $75k is derived through the Trust, as opposed to a business linked to a trust.

Applicants will require an accountant’s prepared declaration as part of the grant submission process. Allan Hall will be able to provide assistance to our clients as we have done with previous NSW grant programs.

See more information at https://www.service.nsw.gov.au/transaction/2021-covid-19-micro-business-grant or call Allan Hall’s team on 02 9981 2300.

[i] based on ATO definition

NOW OPEN 2021 COVID-19 business grant

Posted on 19 July 2021 | by Allan Hall

Eligibility for the 2021 COVID-19 business grant released

Registrations are expected to be open from today. Online applications will close on 13 September 2021.

» You can apply online at https://www.service.nsw.gov.au/transaction/2021-covid-19-business-grant

We have been through the detailed guidelines and summarise as follows.

Available funding

30% or more reduction in turnover – $7,500
50% or more reduction in turnover – $10,500
70% or more reduction in turnover – $15,000
Multiple businesses under one ABN are only eligible for one grant.

Eligibility criteria

Must have an ABN and have been operating in NSW at 1 June 2021. There are some exemptions if you have an ABN outside NSW but can demonstrate you operated within NSW at 1 June 2021.
Total Australian wages less than $10M at 1 July 2020.
Aggregated turnover of more than $75,000 less than $50M for year ended 30 June 2020. A micro business grant for businesses or sole traders with turnover of more than $30,000 but less than $75,000 will be available from late July.
Business costs that no other grant is available for (such as fees & charges rebate).
Maintain employee head count as at 13 July (Persons employed in NSW and who are full-time and part-time and long-term (more than 12 month) casuals). This means that the employer-employee relationship must be maintained, consistent with employment law (ie employment cannot be terminated). However employer will remain eligible if an employee voluntarily resigns.

Decline in turnover conditions

Your business must have experienced a decline in turnover of 30% or more over a minimum 2-week period from 26 June 2021 to 17 July 2021 compared to the same period in June and/or July 2019.
There is no alternate test for businesses that were not operating in 2019 (or if 2019 is not a true comparison) or did not meet the minimum $75,000 turnover. These applicants must contact Services NSW.
If you are in a highly impacted industry you only need a letter from your accountant for the $15,000 Grant. Service NSW will release $10,500 immediately and the additional $4,500 when you provide the letter. For the $7,500 and $10,000 Grant Service NSW requires you to include Allan Hall’s details for potential compliance.
Applicants not in one of the ‘highly impacted industries’ require an accountant’s letter to confirm their reduction in turnover. Contact your Allan Hall advisor who can assist with providing this.

Some important notes

Applicants must have lodged a 30 June 2020 tax return to demonstrate a minimum $75,000 turnover. We understand some clients that are eligible may not have lodged their 2020 tax return, however, we understand there will be other options available to prove the $75,000 turnover requirement. If you are in this position, please contact your Allan Hall advisor.
Non-employing businesses are not eligible to apply if persons associated with the business, and who derive income from it, have applied for, or are receiving, the Commonwealth Covid-19 Disaster Payment.
Where a business operates through a Trust, it will be required to provide additional information to demonstrate an aggregated turnover of $75,000 or more is derived through the Trust, as opposed to a business linked to a trust.

The Public Health Orders have created challenges for many businesses and the purpose of this one-off grant is to help cover business expenses and support employment for the first three weeks of the restrictions that were announced on 26 June.

From Week 4, eligible businesses will receive a minimum of $1,500 and a maximum of $10,000 per week under the JobSaver program announced by the NSW Government. Applications for the JobSaver program will be available from 26 July. We will communicate additional information on the JobSaver program when they are released by Services NSW later this week. Please refer to our previous article with what we know so far.

To avoid delays in preparing an application, please also refer to the Get readysection of our other previous article .

In addition, there are a number of options available to employers and employees during this time. Our HR team have prepared an article covering some key aspects, please click here for more information.

Navigating your way through a redundancy

Posted on 5 July 2021 | by Allan Hall

The ABS announced a record 932,000 jobs lost between the March and June 2020 quarters in the wake of COVID-19

While the Government extended temporary economic assistance for most businesses until March 2021, it has gradually been phased back which may result in many businesses downsizing, winding up or becoming bankrupt.

This means it’s possible that more jobs may be lost in the coming months.

If you are facing a possible redundancy at work due to the aftermath of COVID-19, or a company restructure, this is considered a significant life event that may impact your career, family, mental health and financial wellbeing. For those who are ready to retire, termination payments are likely to be a welcome windfall, but for those who don’t have retirement on the near horizon, you may find redundancy stressful, as it tends to happen during an economic downturn when it may be harder to find a new job.

The immediate issue to consider is whether you have enough money to tide things over until the next job comes along. If you are working with a Financial Adviser, then they will have a good idea of what your current financial position looks like, and how long you can manage without a job. They can also advise on different options to consider when it comes to a redundancy payout.

Your Financial Adviser can discuss:

How will redundancy payments be taxed?
What other employee entitlements will be lost?
Will lump sum payments impact on entitlements to social security and family assistance?
How will payments be used?

This is a great opportunity to make a real difference to your situation during a challenging time, and, if you are the employer, you may be able to support your employees to achieve a better outcome.

Genuine redundancy payment (GRP)

Payments on termination due to redundancy attract more generous tax concessions than if the employee resigns. If you are offered and accept a redundancy, it is worth knowing about the tax concessions and the conditions that must be met to be eligible.

A GRP must satisfy the following conditions:

The employee is dismissed because the employee’s position/role no longer exists
There is no arrangement between the employer (or another entity such as a company associated with the employer) and employee to rehire the employee after dismissal
Where the relationship between the employer and employee is non-arm’s length, the payment cannot be greater than the amount that would be reasonably expected if the relationship was at arm’s length
The dismissal occurs at the earlier of the following:
- before the employee attains Age Pension age, or
- before the employee attains the age, or completes a period of employment, when employment would have terminated.

If these conditions are not met, the employee is ineligible for the tax concessions that apply to GRPs. For example, where redundancy occurs on or after Age Pension age, the employee is not eligible for a tax-free GRP.

Payments on termination

Payments that may be received by an employee who is made redundant include:

salary and wages, overtime, bonuses and allowances
unused annual leave and long service leave
severance payments
a gratuity or ‘golden handshake’
genuine redundancy or early retirement scheme payments
non-genuine redundancy payments (eg redundancy occurs after employee reaches Age Pension age)
payments in lieu of notice
unused sick leave
unused rostered days off.

Taxation of payments

Payments on termination are categorised to determine how they are taxed. If you are offered a redundancy, you can plan ahead by asking your employer for an estimate of the payments you will receive, including withholding tax amounts. Your employer can provide you with an income statement at termination or you can obtain this from the Australian Taxation Office (ATO).

Payments eligible for concessional tax treatment attract tax offsets so that the tax paid does not exceed the concessional tax rate. Tax withheld by your employer reduces the final tax payable and if too much tax was withheld the excess is refunded to you.

Your Financial Adviser can help you identify and work out:

Payments for earned income
Tax on unused annual or long service leave
non-excluded employment termination payment (ETP), the tax-free genuine redundancy payment (GRP) and the excluded ETP.

Other considerations

As well as working out any payments, your Financial Adviser can discuss other financial and personal considerations, including:

How ongoing expenses can be met and for how long
Whether you intend to retire and if not, how long it may take to find another job
Other financial resources available to you
Eligibility for social security payments and/or Family Tax Benefits
Whether your employer has the flexibility to ‘time’ the redundancy and termination payments to assist with a better tax outcome
Whether deferring taxable income (for example deferring the sale of investments with capital gains implications) will have a favourable outcome
Your capacity to make personal deductible super contributions
What you would like to do if you do decide to retire, and what your retirement lifestyle will look like given your financial situation
If you decide to return to the workforce, whether your next job can pay a similar salary or if you take a pay cut in the current economic environment.

Redundancy may be beneficial if you’re ready to retire but stressful if you need to find a new job in a challenging economic environment. Some employers may be able to offer flexible payment arrangements on termination to facilitate a better tax outcome.

A Financial Adviser will discuss both the impact of redundancy on your overall financial situation and how to achieve a favourable payment outcome.

General Advice Warning

Mark O’Connell, Robin Bell and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

Working from home deductions

Posted on 31 May 2021 | by Allan Hall

Working from the kitchen bench? Here’s how you sort your tax

With the end of financial year not far ahead, the Australian Taxation Office is reminding taxpayers how best to navigate working-from-home deductions.

The temporary shortcut method has been flagged as a method to consider this tax time.

The working-from-home shortcut method allows claims at the all-inclusive rate of 80 cents per hour, rather than needing to do complex calculations for specific items. It can be claimed by multiple taxpayers living under the same roof and, unlike existing methods, does not require a dedicated work area.

The shortcut method is straightforward; just multiply the hours worked at home by 80 cents.

The only proof required is a record of the number of hours you’ve worked from home, such as a timesheet.

That being said, taxpayers can still claim under the existing arrangements if they choose. If you decide to use an existing method, we encourage you to consult with the team at Allan Hall before you embark and keep good records. Keeping track of each individual expense and calculating the work-related use of each one can be fiddly, so be organised.

Three methods for claiming expenses

To claim any work-related expense, you must have spent the money yourself and not have been reimbursed. The expense must be directly related to earning income (not a private expense), and you must have kept any necessary records (a receipt is best). There are three ways to do this:

Claim a rate of 80 cents per work hour at home for all your working from home expenses — this is the shortcut method
Claim a rate of 52 cents per work hour at home for the heating, cooling, lighting and cleaning of your dedicated work area and the decline in value of office furniture and furnishings. Then calculate the work-related portion of your telephone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device, or
Claim the actual work-related portion of all your running expenses, which needs to be calculated on a reasonable basis.

Four no-go expense areas

The ATO has reminded us that if a taxpayer chooses to claim their working from expenses through the fixed rate or actual cost methods, they can’t claim the following:

Personal expenses like coffee, tea and toilet paper. While they might normally be supplied by your employer, they still aren’t directly related to earning your income.
Expenses related to your child’s education such as online learning courses or laptops.
Large expenses up front. Any asset costing over $300 (either in total or per item) such as a computer, can’t be claimed immediately. Instead, these claims should be spread out over a number of years.
Employees generally can’t claim occupancy expenses such as rent, mortgage interest, property insurance, land taxes and rates. Working from home does not mean your home is a place of business for tax purposes. If you claim occupancy expenses, you may have to pay capital gains tax when you sell your home, even if it is your main residence.

More information about working from home is available from ato.gov.au/home or contact Allan Hall’s Tax & Accounting specialists in Brookvale on 02 9981 2300 for specific advice about your circumstances.