Strategies and advice for businesses to stay in control through COVID-19 and get ahead of the pack

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COVID-19 Business Continuity – 21st April

I’m here with the COV-19 business continuity update for Tenfold clients on Tuesday 21st April.

In today’s update:
1. A perspective on leadership
2. More signs for the road out
3. JobKeeper details:

A. Identifying the turnover test period, comparison period, and the alternative test

B. How to work out the relevant GST turnover

C. Whether to use cash or accruals basis to calculate GST turnover and projection

D. When to pay your employees JobKeeper and how much to pay

E. JobKeeper for directors and sole traders

1. A perspective on leadership

Today I’d like to give you a perspective on leadership. At some point in your working life as an employee you would have had 2 types of bosses: a great boss who led with integrity, and a lousy boss who didn’t. Just take a couple of seconds to think about each boss and imagine how they would be handling this crisis.

It’s fair to say that the current business climate is a high-pressure environment. Under pressure, some people will react: they’ll lash out, blame others, and look to protect (or even advance) their own self-interests.

The leadership we need now more than ever is for leaders to step up to the role of captain; to be decisive with decisions, be a strong communicator, and be compassionate because everybody is in turmoil. Some people can’t manage their emotions under pressure so we need leaders who can understand that and show patience and compassion in those times.

We’re all in this together, we need to share this pain. A good leader identifies that they have to make decisions to protect their business and also to look after their staff, customers and suppliers. A good leader needs to be able to look a couple of steps ahead, envisage where the business needs to head, identify the business opportunities on the other side of Coronavirus, and communicate the path and plan to others.

In summary, as a leader you should:

  • Look after the most vulnerable members in your network
  • When big emotions are directed at you, take them with a grain of salt. Remember that people are under pressure – it’s not about you.
  • Regularly communicate with your people; over-communicate the same message time and time again of how your business will handle this current time to make it through to the other side.
  • Identify the future state, even though it might be a very different state to what you might have been considering several months ago.

This could be a defining time in your leadership journey; remember which type of leader you wanted to become when you started your business.

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2. More signs for the road out

In Friday’s update, I spoke about the other side and positive signals we’re seeing from the government to support growth. In particular, we looked at the messages from the PM relating to “very pro-growth” policies and the intention to “super-charge” the economy. This commitment to growth was reiterated by Finance Minister Mathias Cormann in his comments today when he said, “We need to have a deliberate pro-business growth strategy to ensure that we maximise the strength of the economy on the other side.”
Senator Cormann went on to describe that the budget (delayed until October), will include a “whole package of initiatives to encourage increased investment in business and to encourage businesses to hire more Australians again.”

The budget will feature “lower taxes” and “aggressive deregulation to really ensure businesses have the best possible opportunity”.

My read on this continues to be that the nation’s leaders will take significant and substantial action to stimulate the economy. Businesses that are able to persevere through the worst and prepare for the uplift will be in the best position to take advantage of the growth opportunities that will come.

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3. JobKeeper detailed information

The ATO has published more detailed information that clarifies some of the key aspects of JobKeeper that many of you have been questioning with your coach:

A. How to identify the turnover test period
B. How to work out the relevant GST turnover
C. Whether to use cash or accruals basis to calculate GST turnover and projection
D. When to pay your employees JobKeeper and how much to pay
E. JobKeeper for directors and sole traders

A. How to identify the turnover test period

This excerpt from the ATO’s website on JobKeeper scheme will help you decide whether to compare our monthly or quarterly turnover to assess your eligibility for JobKeeper. It also explains the test period if you join the scheme at a later date:

JobKeeper identify turnover test period

The relevant comparison period must be the same period in 2019 that corresponds to the turnover test period you have chosen. See here:

JobKeeper identify comparison period

Here’s the section on the alternative test if your comparison period isn’t relevant:
JobKeeper alternative test
Unfortunately, this doesn’t give any more detail as to how the alternative test or ‘edge cases’ will be handled, especially for businesses that have materially grown over the past 12 months. Many Tenfold clients have grown their businesses and their revenues considerably over the last 12 months – at this stage we haven’t heard anything from the ATO on whether they will take this business growth into account when assessing eligibility.

B. How to work out the relevant GST turnover

This section explains how to determine GST turnover and what should be excluded:

JobKeeper calculate GST turnover
Essentially the way we understand this is that your turnover includes the sales made in the general course of running your business, and excludes one off “other income” items such as the sale of an asset. Speak to your accountant for clarity and confirmation on this point.

C. Whether to use cash or accruals basis to calculate GST turnover and projection

This excerpt clarifies whether you can/should use cash or accruals basis for the purposes of calculating your GST turnover and projection when assessing eligibility for JobKeeper:

JobKeeper cash or acccrual basis

For the full details on the information presented above, see: https://www.ato.gov.au/General/JobKeeper-Payment/In-detail/Applying-the-turnover-test/?page=2#Basic_test

D. When to pay your employees JobKeeper and how much to pay

There was some initial confusion about when businesses were expected to pay employees for the JobKeeper pay periods. This is now clarified on the ATO’s page on “Paying your eligible employees” – see this excerpt:

JobKeeper when to pay employees
See here:
https://www.ato.gov.au/General/JobKeeper-Payment/Employers/Paying-your-eligible-employees/

This following table also shows the amount of JobKeeper reimbursements you’ll receive per employee per fortnight:

JobKeeper amounts paid to employers
Note that there are 3 pay periods in September.

See here: https://www.ato.gov.au/general/jobkeeper-payment/employers/your-eligible-employees/amount-of-jobkeeper-payment/

E. JobKeeper for directors and sole traders

As a director or sole trader, you may also be eligible for JobKeeper payment – in this case, you are referred to as an “eligible business participant” (as distinct from an “eligible employee”.) Note, our understanding is that only one business owner is eligible per entity, so multiple shareholders (receiving distributions instead of salaries) in the one entity aren’t eligible.

JobKeeper sole traders and directors

An eligible business participant is explained in this excerpt here:

JobKeeper eligible business participant

The page on sole traders and directors can be found here: https://www.ato.gov.au/General/JobKeeper-Payment/Sole-traders-and-other-entities/

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I know there’s a lot to understand with JobKeeper – we’re here to support you and help you keep on top of it all.

Ash

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