On the 16th of March, the Victorian Government announced a $500 million Business Support Fund to help business that have been affected by the COVID-19 Pandemic.
The once off, $10,000 grant can be applied for if your business has been 'Highly Impacted' by the restrictions.
Small businesses are eligible if they meet all these criteria:
Have been subject to closure or is highly impacted by shutdown restrictions announced by the Victorian Government to-date. For more information on affected sectors refer to the Non-Essential Activity Directions issued by the Deputy Chief Health Officer.
Have a turnover of more than $75,000
Have payroll of less than $650,000
Businesses will be required to attest to their eligibility and provide supporting documentation (including BAS statements) through the application process. Applicants will be subject to audit by the Victorian Government or its representatives.
If you wish to discuss your eligibility or apply for a grant, dont hesitate to contact us, your business partners.
Yesterday the Australian Federal Government announced a JobKeeper Payment to assist employees and employers to stay connected. Businesses affected by the Virus including those who have been forced to hibernate/close will be eligible to apply for assistance.
If you run a business that has been severely affected by the Covid-19 outbreak (30% reduction in revenue) or are employed by a business that has been affected, you may be eligible for a regular payment of $1500 per fortnight before tax for maximum period of 6 months. The payment covers employees that, as of the 1st March were employed full-time or part-time and also covers casual employees that have been employed for 12 months in their job.
These packages are designed to increase business cashflow. If you have any question regarding your own business feel free to contact the team at Lakewood Accounting
Directors of Companies - especially sole Directors. What happens to your company (and the bank account) if you are incapacitated?
A Power of Attorney (POA) could be the answer. A POA can step in to your shoes should the need arise meaning your business and bank account can continue to operate. However, there is some danger if the Attorney uses there powers improperly. For more information please call us on (03) 97755700.
A Power of Attorney is legal document allowing you to appoint someone to act on your behalf.
When in force, the signature of the person you appoint as your Power of Attorney has the same legal force as your own.
The laws governing a Power of Attorney vary from state to state.
There are different Powers of Attorney, each with a different purpose:
General Power of Attorney,
Enduring Power of Attorney, and
Enduring Guardian / Medical Power of Attorney/ Advanced Health Directive
Powers of Attorney
General Power of Attorney
Allows someone to act on your behalf with regard to your personal and financial affairs. You can set limitations around the powers if you wish, defining specific time frames or asset boundaries. For example, you can nominate someone to operate a nominated bank account or sell a specific asset while you are overseas.
All general powers of attorney become void if you lose your mental capacity to make decisions.
Enduring Power of Attorney
An Enduring Power of Attorney is similar to a General Power of Attorney, but it is not automatically revoked if you become mentally incapable.
An Enduring Power of Attorney can make important financial decisions in the event of your absence, illness or incapacity.
What happens if I don't have an Enduring Power of Attorney
If something happens to you and you do not have an Enduring Power of Attorney, your family will have to apply to the State Authority to have an Administrator manage your affairs.
Power to make medical and lifestyle decisions
Having an enduring power of attorney allows someone to make financial decisions on your behalf, but what about decisions that will affect your way of life?
It is important to have someone you trust to make medical decisions in the event of your illness or incapacity.
You can choose a person to make medical and lifestyle decisions on your behalf, depending on the state you live in, with a:
Medical power of attorney
Advanced health directive
An Enduring Guardian allows you to nominate someone to make health care decisions on your behalf. It is not revoked if you lose your mental capacity.
Some of the decisions that a Guardian can make include:
What future health treatment you have, including the medical practitioner who should treat you.
Whether to donate organs.
Where you should live.
Whether to participate in experimental health care.
Whether to have life-sustaining treatment withheld or withdrawn.
Medical power of attorney
A Medical Power of Attorney allows the person nominated to make medical decisions on your behalf, in the event of you being ill or incapacitated and unable to make decisions.
Unlike an Enduring guardian, a medical power of attorney does not allow the nominated person to make decisions affecting your lifestyle.
Advanced health directive
An advanced health directive also allows you to nominate the types of medical treatment or care you do or do riot want to receive in the event to you become unable to make the decisions for yourself.
Similar to an Enduring Guardian you can also nominate a person to make medical and lifestyle decisions on your behalf in the event become ill or incapacitated.
What's the difference between an Enduring Guardian and an Enduring Power of Attorney?
An Enduring Guardian makes medical and lifestyle decisions for you, whereas an Enduring Power of Attorney manages your financial and legal affairs.
Every small business person wishes to build their dream business with the aim to retire with a comfortable lifestyle. Is that lifestyle funded from the business continuing to operate under management or does the business get sold and the proceeds invested. Is superannuation (with its concessional tax environment) used to hold the proceeds?
Whichever way, it is important to protect the Assets that the business creates. This include the income that you create along the way. . This is likely to be your biggest asset in your lifetime. A simple calculation is to take your current gross salary and multiply it by the number of years before you retire eg: a 40 year old earning $120,000 per annum will earn $3 million (25 years * $120,000). This does not allow for pay rises, inflation or promotions.
If you do not have Income Protection insurance please contact us immediately on (03) 97755700.
Self Managed Super Funds
Is a SMSF right for you?
Whether you should establish a SMSF depends on a large number of factors. The Australian Taxation Office (ATO) has produced excellent material on the issues you should consider. The material can be referenced at the following web page:
Although this material is lengthy we recommend you read this material so you have a good understanding of your obligations. The reason you should read and understand this material is that you are ultimately responsible for the SMSF and should you not comply with your legal requirements you may be subject to heavy penalties. These penalties can be fines or extra tax which could result in losing up to 45% of the funds value.
Do you have the time, skills and knowledge required in running a SMSF? Some of the more important issues are:
Maintaining the SMSF for the sole purpose of providing yourself retirement benefits or death benefits to dependents
Rules regarding contributions and payments
Preparation of accounts
Reporting obligations to the ATO
Keeping the accounts separate from other accounts you have.
Prohibition on lending money or providing financial assistance to members or member’s relatives
Obligation to have a written investment strategy which includes insurance
Having an exit strategy in place should the SMSF no longer be appropriate. This is covered on the ATO website stated above in the section “Winding up”
No access to financial assistance
It is important you are aware that you do not have access to the government’s financial assistance program that is available to trustees of Australian Prudential Regulation Authority (APRA) regulated funds in the case of financial loss due to fraudulent conduct or theft. For example, if, as a trustee of a SMSF, you invest in a particular investment and that investment falls in value due to fraudulent conduct or theft of someone related to that investment then you cannot claim financial assistance.
No access to the Superannuation Complaints Tribunal (SCT)
The SCT provides superannuation members the opportunity to complain about certain trustee decisions. When you establish a SMSF you will lose this access to the SCT. Instead you may have to rely on regular court actions.
Costs associated with establishing, running and winding up an SMSF
The following is a list of costs associated with SMFSs:
Type of cost
Costs associated with setting up an SMSF
Costs for a trust deed
Costs for establishing a corporate trustee, including the ASIC fee for establishing a corporate entity
Ongoing costs associated with operating an SMSF
The annual SMSF supervisory levy (collected by the Australian Taxation Office), the annual independent audit fee, costs to produce an annual financial statement and tax return, and (when required) the fee for annual actuarial certification
Costs for amending the trust deed of the SMSF, professional investment advice fees, accounting and book-keeping fees, and investment management fees.
Types of costs associated with winding up an SMSF
Costs will include both compliance costs and costs related to realising assets. The nature of some of these costs will depend on the assets the SMSF invests in, but might include brokerage or agent fees.
The ‘opportunity cost’ associated with managing an SMSF
The time associated with managing an SMSF results in an ‘opportunity cost’ for the trustee. This cost is often overlooked as one of the costs associated with an SMSF structure.
An employer’s default superannuation fund must offer a minimum level of life insurance, and so most investors will have some insurance cover through their APRA-regulated superannuation fund.
An SMSF’s investment strategy needs to consider whether the trustees of the fund should hold insurance cover for one or more members of the fund. The costs of obtaining such insurance through the SMSF may differ from the cost of holding similar insurance through an APRA-regulated superannuation fund because of, for example, the lack of any ‘bulk discount’ for the SMSF.
There will be costs associated with making investments through the SMSF. These costs will vary depending on the nature of the asset and also the frequency with which assets are bought and sold within the SMSF.
Continued suitability of an SMSF
If your SMSF falls below a balance of $200,000, we may need to reassess whether the SMSF continues to be appropriate for you and if you are in a better position than that being in a retail/WRAP fund.
Your continued capacity, capability and time commitments should also be considered.