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With the development of COVID-19 from epidemic to pandemic status, businesses across Australia are facing the possibility of harmful effect. We are all aware of the impact and potential expansion of Coronavirus on the world, but what are the potential impacts on the Australian economy over 2020 and how the impact can be managed and mitigated.

It is unknown if Covid-19 will be long forgotten in 12 months or something that we all have to accept as part of our lives. The truth is Australian businesses are likely to face many challenges including cash flow issues, loss of trades, supply shortages and changes to working arrangement for staffs which resulting in operational disruption.

As the situation develops there is more uncertainty than assurance that the issue will be resolves at this time. It is important to keep yourself constantly updated with Government advice releases.

What to do?

There is no need to be panic. Remember that tough times don’t last, tough people do. Businesses should consider taking an immediate action to develop strategic plan to mitigate the disruption and financial loss for immediate and future threats. It is vital for businesses to identify all significant risks and potential opportunities it may be exposed to during this time and develop an action plan to ensure business continuity throughout.

Businesses can assess and evaluate their trading performance, financial position and current cash flow position via review of the relevant aspects. This process will enable assessment of the business financially, the business challenges in the short to medium term and thoroughly test financial forecast assumptions.

Constant communication with clients, suppliers, employees, financiers and all other key stakeholders regarding the development of this situation is important.

Government

The Australian Government is acting decisively in the national interest to address the potentially significant economic consequences of the virus, without a permanent or structural impact on the budget balance.

The government has now announced an economic response totalling $17.6 billion across the forward estimates, representing 0.9 percent of annual GDP to strengthen the economy during this tough period.

The package is intended to support confidence, employment and business continuity. It is designed to support business investment, help small businesses manage short-term cash flow challenges, provide targeted support to individuals and assistance to the most severely affected communities and regions. It includes cash grant of up to $25,000 for small businesses, $750 one-off payments for potential consumers, and a significant temporary extension to the instant asset write-off scheme (from $30,000 to $150,000)

The Australian Taxation Office (ATO) is also providing administrative relief for some tax obligations for people affected by the Coronavirus outbreak, on a case-by-case basis including potential deferrals of lodgements.

For more details on the stimulus package, please visit the link below
https://www.pm.gov.au/media/economic-stimulus-package

If you have any questions or would like to seek assistance, please do not hesitate to contact Pitt Martin Accountants & Tax Advisers on 02 9221 3345 or connect@pittmartin.com.au