Taxing times for recruitment firms during COVID-19
Five months post initial lockdown, business now is very different to what it was pre-COVID-19. We approached the initial phase of the pandemic lead crisis as if we were to take the six weeks of “medicine”, than the return to normal would be waiting for us.
This bubble burst prior to the end of that six-week period by Europe, the UK, America and then Singapore experiencing how difficult the virus was to control.
The recovery is likely to be slow and protracted and with the recent second lockdowns in Melbourne and Auckland, we are seeing firsthand the public health policy decisions impacting economic recoveries.
The chart below depicting the number of COVID-19 cases could be the wave effect scenario that we need to be prepared for over the next two years.
Scenario planning is vital for all organisations and it is recommended that shareholders, directors and executive teams work closely together to define a number of scenarios and run financial forecasts alongside each.
The above scenarios will have direct impacts on the balance sheets of every organisation.
Presently in Australia, most businesses have elected to defer the payment of taxes in favour of preserving cash for the extreme uncertainties being faced by most businesses.
But at some point, the Australian Taxation Office and other regulatory bodies will need to begin collecting the taxes owed.
In considering how to preserve cash reserves and to optimise your working capital, have you considered an approach to the repayment of the deferred liabilities currently recorded in your balance sheet?
As the stimulus 1.0 packages draw to a close and the moratoriums that are currently in place expire, it is time to consider the next phase of managing your organisation through a protracted COVID-19 scenario.
Should you wish to discuss your working capital scenario planning and what is achievable in respect of a tax plan arrangements, contact us at firstname.lastname@example.org to receive an obligation free initial assessment.
Chris White’s webinar “Taxing times for recruitment firms during COVID-19” is free for RCSA members and will be held at 1pm on August 21.