Those operating in the tourism sector should be considering both existing and new taxation concessions, along with turnaround strategies to minimise exposure to Australia’s natural disasters and coronavirus, which could impact cash flows for some time.
The tragic Australian natural disasters of late 2019, followed shortly by the outbreak of Novel Coronavirus COVID-19 has and, unfortunately, will continue to impact cash flows.
While meeting taxation obligations will not immediately be at the forefront of tourism operator participants' thoughts during difficult times; in early February the Australian Taxation Office (ATO) devoted an entire section of their website providing assistance to taxpayers who have been directly affected by drought or bushfires - in what the ATO refers to as ‘impacted postcodes’. Businesses located within these impacted postcodes are automatically given extra time to lodge and pay various taxation obligations including deferred income tax; Business Activity Statements (‘the BAS’); self-managed super fund; fringe benefits tax and excise returns, until 28 May 2020.
Additionally, for those not located in the ‘impacted postcodes,’ the ATO has established the ‘Emergency Support Infoline’ on 1800 806 218 for help and has acknowledged the broader impact of this disaster to taxpayers beyond these localities.
Various State and Territory revenue offices have also responded by providing several lodgement and payment deferrals, and linkage to disaster assistance programs (see end of article for links).
As at 3 March 2020, the ATO has not provided any indication that they are expanding the above to cover businesses that have been adversely impacted by COVID-19. However, it’s reasonable to anticipate that as this global health outbreak continues to affect Australia, the ATO may consider expanding the natural disaster concessions to include industries that are severely impacted by COVID-19.
Rather than relying on concessions provided by the ATO, tourism operator participants should be considering whether existing taxation concessions – both federally and state across various taxing statutes – are available, including:
- For Inbound Tour Operators, making sure the requirements of Practical Compliance Guideline PCG 2018/6 ‘GST – Inbound Tour Operators and Agency’ are implemented. This will reduce the amount of GST paid to the ATO on each tax period’s BAS, therefore taking pressure of cash flow;
- Reviewing your debtor list to identify whether any invoiced amounts that remain outstanding are likely to be collected in part or in full;
- Identifying whether any motor vehicle(s) have been acquired over the last four years in excess of $64,132 that were used solely for the principal purpose of carrying tourists for leisure activities and of a ‘touring nature’ and not claimed the Luxury Car Tax credit (in addition to any GST that has been claimed as an input tax credit);
- Taking advantage of any state and territory rebates, concessions and deferment of lodgement and payment of such obligations as payroll and land tax, along with any grants and loans;
- Applying and receiving your full entitlement to the Export Market Development Grants scheme. Begin to prepare this year’s claim now so that it can be lodged as soon applications open on 1 July 2020; and
- Consider working with a business recovery and turnaround specialist who can assist in financial reconstruction. They support businesses to proactively manage their position and protect their interests, by minimising loss and exposure.
The turnaround process is designed to:
- Investigate a business’ viability and working capital requirements;
- Evaluate the options available to reverse under-performance and repair working capital;
- Create and implement an agreed turnaround and growth strategy;
- Monitor business’ future performance;
- Deliver interim and crisis management; and
- Provide interim CEO/CFO support.
With any business recovery, timing is everything. Paying attention to early warning signs could mean the difference between business rescue and business failure.
Our specialists can assist with providing support to creditors on your behalf, identifying and introducing new methods to maximise returns, producing client communications, undertaking business and corporate restructuring, debt agreements and general turnaround management.
Do you need assistance accessing tax concessions? Contact our indirect tax team: Fady Abi Abdallah or Steve Visser.
If you want to minimise your exposure to recent events, contact our business recovery team: Duncan Clubb and Andrew Sallway.
Prepare your business
How can your business respond to Coronavirus (COVID-19)?
Find out more
Disaster Assistance Programs