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Just as 2020 is coming to an end, so is the insolvent trading moratorium.  It is vital that businesses do a health check and take corrective action if needed.

The temporary COVID-19 Safe Harbour changes to Corporations Act came into effect on 25 March this year and directors could retrospectively be personally liable for insolvent trading from that point.  By being pro-active and recognising the signs you can get ahead of any possible issues and achieve a positive outcome. 

Business recovery and liquidation specialists recognise and understand these signs and are able to steer you in the right direction and layout the options to mitigate risk and prevent action being taken.

Virtually every major world economy has been adversely affected by COVID-19 in 2020. The USA and Europe, as well as Japan and India, have all borne the brunt. Australia has seen unemployment rise and businesses feel the strain, in common with these economies. Yet a similar pattern to COVID-19 can also be seen in our economy: the picture may not seem good, yet somehow not as bleak as any number of countries in terms of absolute numbers.

By now, we have all felt some type of hopelessness during these strangely unprecedented times. Whether that has been in your personal life - due to missing social interaction or pushing weights in the gym, or in your business life – seeing a major drop in profits or not even being able to operate at all/ losing a job – we have all felt it.

Thanks to the three stage plan that Scott Morrison has implemented, we can now see that there is a light at the end of the tunnel.

In the meantime, the Australian government has created various schemes to keep us afloat financially (we really do live in the best country in the world).

The Australian Government has enacted a number of stimulus measures to help business and the economy through a global pandemic. This includes JobKeeper, early release of superannuation and boosts to cash flow. Most people and businesses have been honest with their usage of benefits made available to them. However, a number of cases of fraud have also emerged.

The ATO has announced that it will be vigilant regarding the matter. In fact, the ATO has uncovered a number of schemes designed to cheat the system. Such tactics include the withdrawal of money from superannuation and re-contributing in order to get a tax deduction. Single Touch Payment, tax returns and superannuation fund information are used to track and catch those that do cheat the system.

Many small and medium enterprises are finding ways to survive under the stress of the Coronavirus pandemic and economic downturn, which has taken Australia into recession for the first time in three decades (albeit not as hard hit as a number of other countries). Businesses are finding ways to adapt and survive, in the hope they come out stronger on the other side. 

On March 12, 2020, the Federal Government announced that the instant asset write-off limit was to be raised from $30,000 to $150,000. There is also an extension of six months to write off assets. Furthermore, eligibility has been expanded so that businesses with a turnover of less than $500 million (up from $50 million) can claim this. This is expected to be in force at least for the remainder of the year.

Even before the uncertainty generated by the Coronavirus crisis, many retailers in Australia and overseas were already heading into stormy waters. The crisis is already having a devastating impact on the sector globally, but many warning signs were there even before it hit. Laura Ashley had pulled out of Australia in 2018, and are now in administration. While Coronavirus has been cited, the warnings signs had evidently been there for a while.

The handbag and accessories chain Collette by Collette Hayman and homeware chain ISHKA are just some of the latest in a line of collapses, although the likes of Harris Scarfe and Jeanswest have managed to find buyers to keep them going – for now at least. Still, there have been a host of retail chain collapses and withdrawals from the Australian market in the last few years.

As if this year hasn’t already had enough thrown at it with the bushfires and flash floods, we are now in what is considered to be a pandemic due to the outbreak of the Coronavirus. CNN describes a pandemic as the "worldwide spread" of a new disease. A magnitude of businesses’ have already been affected by the outbreak across various industries. For some, it may be positively (i.e. toilet paper companies/ hand sanitiser companies etc.), but for the majority of businesses, it will probably have a largely damaging affect.

Manufacturers, education and training businesses are already largely being hurt by the coronavirus outbreak as well as travel and tourism businesses, community services, business services, property, and so on. 

In a recent speech at a forum gathering, the Deputy Commissioner of Taxation, James O’Halloran, has come out with common shortcomings of employers and the use of Single Touch Payroll (STP) from the data that is being fed through its systems (being mainly multiple payroll records and incomplete data).

As readers are aware, STP is the ATO’s new compliance tool that requires employers to send employee payroll information i.e. salaries, wages, PAYG withholding and superannuation to the ATO when pay runs are made.

With STP, the ATO is continually learning and understanding exactly where employers are going wrong, whether with payroll or superannuation obligations.

The post-Christmas period is infamously difficult for Small to Medium Enterprise (SME) businesses. Typically, the stress put on SME’s during this period is induced by poor budgeting and planning.

There is overindulgence during the Christmas season which sees customers paying out significant sums of money for their respective festivities. As a result, businesses experiencing higher than normal sales in the lead up to Christmas, may then burn the company’s capital on a spending spree, leaving little to no cash reserves, for the slow down after the Christmas break.

For those in industries such as construction, where the entire industry shuts down for nearly the whole month of January, many companies may feel cashflow stress for months afterwards. Especially those companies who provide credit terms as they may feel the pinch right up until March, as an after-effect of their clients closing for the Christmas break.

Ah the payroll system, a system which is once again a hot topic everyone is talking about. It is one of the most widely used systems around the globe which plays a critical role to the functioning of a business. It is also one of the oldest business systems which can be traced back to 7000BC, in fact the first known system similar to ours is the Greek system. This was done by the Athenians who developed a way to keep track of their pay records for different employees by carving payment details into stone.

You may be wondering why I’m mentioning the ancient Greeks, well, the payroll system has had thousands of years to evolve and one would think since the rise of technology in the past 2 decades would enable us to create the ultimate payroll system. Unfortunately, that’s not the case and many businesses are facing compliance issues from errors whilst using todays systems.