As the threat of a second wave of coronavirus looms in Western Australia it’s never been more crucial for businesses to ensure they have strategies in place to best cope with any potential changes in trading environments.

A SWOT analysis is a simple yet powerful means of reviewing aspects of an organisation that need to be addressed to ensure profitability and survival into the foreseeable future.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and your business may undertake a SWOT analysis as a method for assessing and evaluating these four aspects.

By collating information relating to each category an organisation can integrate findings into its own business strategy to build on the existing strengths of the organisation, minimise weaknesses, seize opportunities and mitigate threats.

How do you prepare a SWOT analysis?

A SWOT analysis should be a collaboration between multiple people with varying perspectives of an organisation. A brain storm is a great forum for this. Here’s some things you might consider;

Strengths
– Things your company does well
– Qualities that separate you from your competitors
– Internal resources such as knowledgeable staff
– Intangible assets such as intellectual property, capital proprietary technologies etc.

Weaknesses
– Things your company lacks
– Things your competitors do better than you
– Resource limitations

Opportunities
– Underserved markets for specific products
– Social or regulatory changes creating a market for a new product or service
– Media coverage of your company

Threats
– Emerging competitors
– Negative press/ media coverage
– Social or regulatory changes eliminating markets you currently service

Once you’ve examined all four aspects of SWOT you will have a long list of potential actions your organisation can take.

The biggest limitation of a SWOT analysis is that it provides no actionable tasks for your organisation, this places the responsibility on business owners to implement an actionable strategy based upon significant findings uncovered by the SWOT analysis.

At Francis A Jones we are here to help with more than just tax returns. If you need assistance with creating a SWOT analysis or a strategic plan get in contact with one of our specialists.

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Author: Nick Vincent
Email: nick@faj.com.au

GST recently reached the ripe old age of twenty. Hip-hip hooray.

I remember its birth well. First of July 2000. Actually, the recent COVID-19 stimulus measures reminded me of the introduction of GST, albeit that GST was implemented in a more controlled and measured fashion. As accountants we had no experience to draw on, and spent hours reading and interpreting draft legislation that came with very little practical explanation and certainly no legal precedents to follow.

Much like the situation during COVID, accountants were heavily relied on to steer our clients through the uncertainty. It was a stressful and busy time. We’d just mitigated an imaginary millennial bug and were distracted by dot com developments. Google hardly existed and dialling up Jeeves was less than helpful.

The original GST concept was simple. Scrap the complicated sales tax system, put 10% GST on everything and distribute the proceeds to the states. Truly a broad based tax. But to gain senate approval and get it over the line, the Government was forced to make last minute concessions around food, healthcare, education and childcare.

These carve-outs meant the new tax system didn’t raise the revenue it was expected to, and made the GST system incredibly complex. It’s been troubled ever since – there are currently 45 separate rulings regarding cakes and decorations. No wonder John Hewson struggled.

Although more recent changes have brought overseas companies like Netflix into the mix, GST revenue in Australia represents only 3.4% of GDP, compared with the OECD average of 6.8%.

There’s been many calls to increase the GST rate to 12.5% or 15% over recent years. I would much rather see an increase to the base – back to how it was designed in the first place. 10% on everything, no exceptions, nice and simple. It’s been estimated that making those excluded items taxable would increase GST revenues by $22 billion, which would increase our total take by about one third.

This increase could fund the reduction of state based payroll tax systems that currently stymy employment growth.

The counter argument for extending the base is that it will increase the cost of living for those most vulnerable in our society. This is true and the challenge for our politicians is to carefully construct alternate ways to compensate those impacted, most likely through our welfare system. It’s estimated that it would cost around a third of the extra revenue raised to achieve this.

The GST system needs an overhaul to future-proof it. Spending today is not what it was twenty years ago.  We now spend proportionately more on education and health, both GST exempt under the current system.

Related blog:
Do I need to register for GST?

Author: Mark Douglas
Email: mark@faj.com.au

As part of the stimulus package to deal with the economic impacts of COVID-19, the Federal Government created a scheme to access your super early.

The scheme allowed people who have suffered financially to access their super in two hits – one of up to $10,000 by 30 June 2020, and another of up to $10,000 between 1 July and 31 December 2020. Eligibility factors include loss of earnings, unemployment, redundancy and access to welfare.

APRA have recently released figures showing that 2.3 million applications have been approved so far and around $17.1 billion has been withdrawn.

The scheme is intended for those under real financial stress, and in my view should be accessed as a very last resort. There’s two reasons:

Firstly, the long-term cost of the withdrawal will be huge. The younger you are, the bigger that cost will be by the time you get to retirement. At a 5% future earnings rate, a 30 year old that withdraws $10,000 now will forego around $63,000 at retirement. Those withdrawing the entire balance of their super fund may also lose valuable life insurance cover. If you’re considering the second tranche, please give it some serious thought first.

Secondly, the Tax Office is keeping a very close eye on this scheme. They are looking hard at eligibility and warning of penalties of up to $12,000 for making false and misleading statements.

They are also convinced that nobody should intentionally get a tax benefit out of this.

As long as you’re eligible, it’s ok to apply for the early access whether you truly need the money or not. Not a great idea, but legal. And in theory, if you withdraw money under the early access scheme, have a change of circumstances and no longer need it, you could re-contribute some or all of that money back into super.

The problem is that for most people that will create a tax benefit, because the money will have come out tax-free under the scheme, and will likely create a tax deduction when it goes back in. There’s a nasty little provision in the Tax Act known as Part IVA (part four A). It’s a complex section, so my more simplistic interpretation is “if the main reason for doing something is to get a tax benefit then don’t do it, or else”. Part IVA comes with big penalties, and it’s one of those guilty until proven innocent type rules.

The Tax Office are making a lot of noise about this scheme, so tread carefully if you need access to your super, but think hard about whether you really do.

Related blog:
How can you access your super?

Author: Mark Douglas
Email: mark@faj.com.au

The super guarantee amnesty is a one off chance for employers to catch up on missed employee super with reduced penalties.

Whether it was past cash flow problems or not understanding super guarantee rules, it is not too late to correct past happenings to protect your business from harsh penalties.

On the 6th of March 2020 an amnesty for unpaid super guarantees was introduced. By law, an employee is entitled to a super contribution of 9.5% of their gross wage to be paid by their employer, provided they earn more than $450 in a calendar month. The Guarantee will increase from 9.5% to 10% on July 1 2021, and will rise to 12% from 1 July 2025.

The Amnesty is to encourage employers who have not been meeting their super obligations to come forward and report without risk of increased fines and penalties, while also allowing deductions to reduce their tax liability. Employers will need to lodge their super guarantee amnesty using an approved form before the 7th of September 2020.

Where the disclosure results is a large liability, and because of the impacts of Coronavirus, the ATO may establish payment plans for employers. However, only payments made before 7 September will qualify as a tax deduction, and it is imperative that once negotiations are made with the ATO, the employer must meet these obligations. Failure to make payment will result in disqualification from the amnesty. Penalties and interest will then apply.

It may seem daunting, or more convenient, to roll the dice and not look to resolve super liabilities for your employees. However, the ATO now has a greater ability to identify wrong doings, as a result of greater reporting requirements, and this significantly increases the chances of employers getting caught and being exposed to large penalties. 

Pro tip: Stay ahead of potential penalties by checking your super guarantee clearing account and ensuring the payments are being cleared monthly. 

Other related blogs:

When do I need to pay super for contractors

Making sense of Superstream for Employers

Author: Lachlan Hunn

Email: lachlan@faj.com.au    

A recently released index saw business confidence in April rebound from its record low base in March.

Although confidence is still down, the uptick is a sure reflection of the effectiveness of the JobKeeper and other stimulus announcements in giving businesses the best chance of their COVID recovery and ultimate survival.

With our current health position being better than expected, and restrictions being lifted, it’s time for business owners to make plans for their recovery.

Firstly, it will not be business as usual. Growth will be gradual. The world is a very different place. On the positive, we will have learned new things, become more inventive with our offerings, and adopted new technologies.

If you managed to stay open, or have since re-opened, that’s great. If you’re still closed, but you’re receiving JobKeeper payments, you should now have your whole team working (at least part-time, so it comes at little or no cost) and take the opportunity to teach new skills, create new products, assess technologies, identify new markets and improve processes.

Hopefully consumers will now appreciate the benefit of buying local and businesses should make the most of this.

On the negative side, unemployment will be high, consumer spending will be restrained, and you’ll be on a tight budget. So you’re going to have to be amongst the best in your industry to get a decent share of business.

Customers will reset their choices and you can’t assume their immediate loyalty. You will need to once again build interest and awareness in your brand and products. Marketing will be crucial.

It all starts with planning, and now is the time. Not a complicated in-depth plan, but a one-page business plan that outlines how you’ll navigate through the awakening of the economy. Perhaps start at the beginning, because it sort of is. If you were a new business entering the market, how would you go about it?

Do a SWOT analysis as part of your planning. How can you use your JobKeeper subsidised resources to eliminate your weaknesses and prepare for your opportunities?

Think about what you’ve learned since restrictions have been in place. Do you still need all of that office space? Are Zoom meetings more efficient? Is your online platform as good as it could be? How can you better satisfy your customers’ needs?

Finish with an action plan. Who will do what by when? Give some responsibility to key team members and let them run with parts of it. You might be surprised.

Over the last couple of months we’ve had to think differently and learn to be agile. We now need to build on that to strengthen and perfect our adaptability, ready for whatever the world throws at us next.

Contact us if you need assistance with any aspect of planning for your COVID recovery.

Related blogs:

You need a business roadmap
Cash is king

Author: Mark Douglas
Email: mark@faj.com.au