Although much attention is focused on the world’s battle with coronavirus, it shouldn’t be forgotten that the end of the financial year is fast approaching. Despite the pandemic affecting individuals and businesses across Australia in many different ways, now is still the time to prepare for an unusual end of the financial year.
At this stage, social distancing measures will probably remain in place until June or possibly beyond. As such, you will need to think about how to manage your clients and the end of financial year in this new environment, including factoring in new government support measures for businesses and factoring in recent superannuation announcements. Here is a list of things to consider and prepare for as we approach a tax season unlike ever before:
Whether you and your clients are already engaging with cloud-based technology to its full extent or not, it can replace many paper-based processes. There are a number of things to consider in order to ensure the processing times are not increased or delayed.
If a client needs to send through documents – either statement, contracts, or receipts to be used in processing their work – they should consider digitising them now. That might mean scanning documents that can be emailed to you as a PDF or uploading photos of receipts into a secure Dropbox folder and shared with you.
From Class’ tax statement automation to NowInfinity’s documentation and compliance software, it is easy to reduce complexities and save time. Class and NowInifinity customers also have a range of integrations available that can assist in streamlining and digitising processes.
Maintaining contact with your team while you are preparing for the end of year workload is also important, and cloud-based workflow platforms like Monday.com and Microsoft Teams are efficient in maintaining office workflow.
Providing guidance to clients on the various platforms in use and providing assurance of data security is also best practice.
The federal government has introduced the JobKeeper Payment Scheme to support businesses through the pandemic and keep more Australians in jobs. The government will subsidise qualifying employers to support the wages of eligible employees with payments of $1500 a fortnight for six months. Businesses must work out whether they qualify and, if so, which of their employees are eligible. This involves looking at staff’s employment status and residency/visa status.
From 12 March to 30 June, the instant asset write-off threshold is increased from $30,000 to $150,000 for businesses with a turnover of less than $500 million, including connected and affiliated entities. There is also a 15-month Backing Business Investment incentive (through to 30 June 2021), which accelerates depreciation deductions for businesses with turnover less than $500 million, including connected and affiliated entities. This means they can deduct half the cost of an eligible asset on installation. The existing depreciation rules apply to the balance of the asset’s cost. There is a great opportunity in helping eligible businesses make sure they take advantage of these initiatives.
Review of finance arrangements
The falls in interest rates the Reserve Bank of Australia recently announced should bring into focus the cost of any finance or loan arrangements businesses have in place. Are they getting the best deal or should they look at refinancing? If there is capacity to draw down additional funds under existing lending facilities, is now the right time to do this if the business expects a short-term impact to cash flow due to COVID-19? If the business has suffered from the crisis, is it time to speak to lenders to look at ways of alleviating cashflow concerns that may arise in the short or medium term?
Year-end planning meetings
In prior years, you may have met with your client face-to-face at year-end. In the current environment, this may not be possible – and may not be for a long time. However, year-end planning meetings are still an important part of understanding key events that occurred during the year, and whether there are opportunities to maximise tax planning ahead of year-end (e.g. taking advantage of the Backing Business Investment incentives referred to above). Now is the time to plan ways to make remote meetings as productive as possible, based on your clients’ capabilities and preferences.
Collection of financial information
With the risk of COVID-19 surviving on the surface of materials, the health and safety of anyone dealing with paper financial records needs to be considered. If your clients are unable to digitise their documents, now may be a good time to discuss how to manage records transfer to ensure no one has to take unnecessary risks and the information necessary for year-end accounts and tax returns is readily available.
It is important to ensure security in systems and software are up-to-date and be prepared to provide clients with information about your practice’s security.
See this time as an opportunity
If there is one thing we can take away from COVID-19 is that our world is changing. When we do return to normal, however that looks, we expect to see many changes. Technology has demonstrated its value. This time is an opportunity to close any gaps in your processes and ensure you are set up to work more efficiently. By doing this, you’ll be able to operate seamlessly in any future unprecedented challenge that the world may throw at us.