Well it was inevitable I guess. After 10 months without community transmission, Perth, Peel and the South West were forced into an abrupt lockdown last week after a security guard tested positive for the highly infectious UK variant of COVID.

The announcement by Mark McGowan sent shoppers into a foolish frenzy and forced business owners into a strenuous Sunday session to ready the team to work from home, or worse, close the doors and stand staff down.

When we went into voluntary lockdown in March last year, there was uncertainty around whether those stood down would get paid. But the Government soon announced the JobKeeper scheme which removed the issue for most.

This time around most businesses are no longer eligible for JobKeeper. So what happens now? Do you pay workers wages during lockdown or not?

Where staff can work from home, the rules are pretty clear. You should pay your team for the work they do, similar to if they were working at your premises. They are also entitled to normal entitlements like annual leave and sick leave. You must be careful to still comply with all OHS requirements, and may need to provide guidance on what constitutes a safe home office environment.

Where staff are stood down as a result of a Government imposed lockdown, and there is no possibility of working from home, you are generally not required to pay workers under Fair Work laws. But you might need to consider whether employment contracts or specific awards override this in your industry. You will also need to pay enough wages during lockdown to meet any JobKeeper obligations. You can of course choose to pay your team while they are stood down.

Employees can choose to use any accrued leave they have during the lockdown period, but unfortunately casual staff and contractors won’t have this option. You can’t refuse a request for leave without a good reason, and you can’t force staff to take annual leave.

A recent Court decision ruled that workers who are stood down in accordance with the Fair Work Act are not entitled to paid sick, carer’s or compassionate leave during that time. Fair Work are currently adopting this view, although an application has been made to appeal the decision.

Under certain awards (listed on the Fair Work website), all workers, including casuals can take up to two weeks of unpaid pandemic leave, without any accrual requirements. This leave can be used when there is a Government enforced lockdown, or when employees are directed to self-isolate or quarantine.

Here’s hoping the restrictions are lifted or at least lightened either by the time you read this blog or soon after, and that employers and their workers don’t have to re-visit this issue in the future.

Related blog:

JobMaker Hiring Credit – is my business eligible?

Author: Mark Douglas
Email: mark@faj.com.au

 

 

 

 

 

 

It’s generally accepted that a company provides a level of asset protection, because a company is a separate legal entity. From the time a company is first registered with ASIC up until it’s final deregistration date, it is viewed as having separate legal status, property, rights and liabilities.

This gives directors some protection and makes a company a good structure for running a business , but it doesn’t fully absolve directors from being responsible for a company’s liabilities and debts. Directors can be found to be personally responsible for debts and liabilities in certain instances, and these obligations continue even after the company is deregistered.

The Australian Investment and Securities Commission (ASIC) is in charge of assessing the liability of directors in accordance with the Corporations Act 2001.  Examples of instances where directors may be found to be personally liable for company debts include;

Insolvent Trading

Directors have a duty to ensure that companies do not trade while insolvent. If this duty is breached directors may face civil and criminal provisions or become liable for company debts. A company is classified as insolvent if it is unable to pay its debts as and when they fall due.

To determine insolvency, both the cash flow and financial position of the company need to be assessed. If the company is deemed to be trading while insolvent, potential director defences include;

• The director had reasonable grounds to expect solvency at the time the debt was incurred
• The director had reasonable grounds to believe a competent and reliable person provided adequate information that identified the company as being solvent
• The director did not participant in management due to illness or good reason at the time the debt was incurred
• The director took all reasonable steps to prevent the incurring of the debt

Company Losses

If directors breach their duties and this causes the company to suffer a loss they can be found personally liable.

Potential consequences of breaching duties may find directors as having acted illegally and not in accordance with the Corporations Act, they may face civil and criminal provisions or be made to compensate the company for the losses incurred.

Guarantee and Security

Directors may provide personal guarantees or collateral to secure company liabilities (e.g. to finance a bank loan). If a company defaults and is unable to fulfil their liabilities, directors may lose collateral assets (e.g. their home) or be made to repay company liabilities personally.

Company Tax Debt

Directors have a responsibility to ensure companies meet their PAYG withholding and Super Guarantee Charge obligations. A consequence of non-compliance may find directors personally liable for a penalty equal to the company obligations.

Phoenix Activity

Directors can’t establish a new company to continue the activity of an existing company that has been placed into administration or liquidation to avoid paying outstanding entitlements. As a result directors may face civil and criminal punishment as well as imprisonment.

Trustee

Where a company is acting as a trustee of a trust, directors may be liable for a company’s breach in trust terms, acting outside the scope of its powers and where the terms of the trust limit the company from being protected against the liabilities.

Related Blogs

Discretionary Trust v Unit Trust
How to provide tax incentives for early stage investors?

Author: Elena Rear
Email: elena.rear@faj.com.au

 

 

 

A tax deduction is something you claim in your tax return that reduces your assessable income, meaning you pay less income tax and therefore get a bigger tax refund (or reduce your tax bill).

For a donation to be tax deductible, it must be for $2 or more and made to an organisation that is ‘endorsed’ by the Australian Tax Office (ATO) as a Deductible Gift Recipient (DGR). It must also be a genuine gift, you cannot receive any benefit from the donation. If you receive something in exchange for the donation (e.g. a raffle ticket, items, entertainment or food) then it doesn’t qualify as a tax deduction. The Tax Office defines this as a transaction where you receive a good or service in return for the money donated.

Organisations have to apply to the ATO to get DGR status, and there are a majority of registered charities that don’t have DGR endorsement. Not being able to offer a tax deduction for a donation as a DGR is not an indication that the charity is illegitimate or that its cause isn’t valuable. DGR endorsement is just a tax concession that some charities have applied for and are entitled to.

For some people, being able to claim the donation back on their personal tax return is important in making a decision to donate, but for others it isn’t. To determine if a charity has DGR status, you can visit the ACNC Charity Register.

Author: Natasha Woodvine

Email: natasha@faj.com.au    

Trend analysis uses past data in order to predict the future of your business and the environment in which it operates. It’s a simple tool you can use to assist you in planning and setting strategy for your business.

It involves the examination of business data over time to identify trends and develop strategies that are in line with your business goals and objectives. A very simple example might be to plot your sales of various product categories over the last 5 years. Which product groups are trending up, and which are trending down? Once you know that you might make some business decisions about your product lines based on the results.

Trend analysis helps to highlight the strengths and weaknesses of your business, aiding in improving areas of underperformance and maintaining those that are successful. It can also assist in industry comparisons by benchmarking against competitors, maintaining adequate cash flow and profitability levels.

The main form of measurement is known as a Key Performance Indicator (KPI’s). As the name suggests, KPI’s are performance measures aligned with the strategic goals of your organisation. To assist in developing effective KPI’s it is recommend they reflect the balance scorecard of the business, covering the following four factors; Financial, Customer, Internal Business Processes and Learning & Growth. Examples of KPI’s that achieve each quadrant of the balanced scorecard include;

• Financial
  • Ratios measuring profitability (gross profit margin), cost effectiveness (net profit margin) and cash flow (quick asset ratio)
• Customer
  • Customer satisfaction (surveys) and customer retention (number of repeat purchases)
• Internal Business Processes
  • Quality control, inventory turnover and safety record
• Learning & Growth
  • Employee training, turnover and skills

Once your business has identified which trends to measure, you can establish thresholds to trigger further investigation (e.g. an increase/decrease of over 15% in KPI). The business will then need to consider causation of the trend (internal or external factors) and how to manage this trend in line with the strategic business goals.

To optimise the benefits of trend analysis for your business you’ll need accurate and timely records, full employee participation and clarity of data. It’s also important to recognise that trend analysis only involves the analysis of past data and thus, is limited by its historical nature.

Other related blogs:

What is a SWOT analysis and why do I need it for mu business?
Why small business should be using monthly budgeting
You need a business roadmap

Author: Georgia Burgess
Email: georgia@faj.com.au

Monthly budgeting is an essential tool to help you make strategic business decisions that will result in a success. It gives you a better understanding of your business and where you stand going forward, and has never been as important as it is in the current economic environment.

Budgeting identifies current available capital, provides an estimate of expenditure and anticipates incoming revenue. By referring to the budget businesses can measure performance against expenditure and ensure that resources are available for initiatives that support business growth and development. It enables the business owner to concentrate on cash flow, reducing costs, improving profits and increasing returns on investment.

Setting up your budget:

Nearly all accounting software providers will provide you with some sort of budgeting feature. It will set out a format where you can provide your business inflows and outflows and show you where your business money is going on one document. You can then test out different scenarios for your business. E.g what if sales go up by 10%, what if I lose a big client or can I afford to hire more staff.

It is important to review your budget constantly and monthly is generally a good time frame. As future events become more known you should update the budget accordingly. Since a budget applies a lot of estimating and forecasting for future events it’s important to update these figures to make sure the budget is as accurate as possible, especially in rapidly changing conditions.. This will give you better information to make informed business decisions.

But most of all, a budget gives you more certainty and confidence. You get a clearer picture of the state of your business and you know where you stand. You’ll be able to see the obstacles and find your way around them.

Preparing a budget is one of FAJ’s Planning and Growth services. If you would like any assistance please contact us.

Other related blogs:

Ready for COVID recovery
You need a business roadmap
Cash is king

Author: Rhys Frewin
Email: rhys@faj.com.au