Archive for 'business'

Are You Meeting The New Minimum Rate For Your Employees Wages?

From 1 November 2021, minimum wages in 21 awards were increased. If you are not paying your employees this new rate of pay, you may find yourself facing significant penalties for failure to comply with the Fair Work Ombudsman. This increase is to be applied to anyone who is paid the minimum award wages or the national minimum wages.

As an employer of workers, you must pay them a fair wage according to the award that their profession exists under. That wage must meet the minimum wage expectations for the award, which is the minimum amount an employee can be paid for the work that they’re doing. Employees may be paid more than that wage, but the bare minimum that they can be paid is set out in the awards and as a part of the national minimum wage base rate.

The national minimum wage was increased from $19.84 per hour to $20.33 per hour, or 772.60 per week (increased from $753.80). This increase should have applied from the first full pay period starting on or after 1 July 2021. In addition, employees who are covered by awards should also have had their base rates increased by 2.5 per cent, though these increases may begin on different dates for different groups of awards.

Most award wage increases applied from 1 July 2021, though there were 21 awards where the Fair Work Commission deemed there to be exceptional circumstances in place that would affect the increase. Those 21 awards were increased from 1 November 2021, and include:

  • Pilots Award
  • Cabin Crew Award
  • Airline Ground Staff Award
  • Airport Award
  • Alpine Resorts Award
  • Amusement Award
  • Dry Cleaning and Laundry Award
  • Fitness Award
  • Hair and Beauty Award
  • Hospitality Award
  • Live Performance Award
  • Models Award
  • Marine Tourism and Charter Vessels Award
  • Nursery Award
  • Racing Clubs Events Award
  • Racing Ground Maintenance Award
  • Registered Clubs Award
  • Restaurant Award
  • Sporting Organisations Award
  • Travelling Shows Award
  • Wine Award

This increase is a result of the Fair Work Commission’s announcement after conducting its Annual Wage Review.  The Fair Work Commission is the independent national workplace relations tribunal. It is responsible for maintaining a safety net of minimum wages and employment conditions, as well as a range of other workplace functions and regulations.

Workplaces are expected to ensure that all of their employees are being treated fairly and paid the minimum rate relevant to their circumstances (award/base minimum rate).

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice and assistance about their pay and compliance requirements.

Are you concerned about potential non-compliance with the new minimum wage, want to know more about the other increases to different kinds of rewards? Trying to get your head wrapped around the new superannuation guarantee requirements, or after some business planning advice in the approach to the new year? We’re the people you can speak to about any concerns you may have for your business and its future.

Posted on 28 November '21 by , under business. No Comments.

Competitive Pricing For Tradies Can Drive Customer Retention – But Are Your Prices Too Cheap?

If you’re someone employed in a trade, the next few months are likely to be among the busiest of your year. With the added pressure of the pandemic’s effect on delaying site access and work progress, completing jobs is sure to be a high priority on your mind.

In the business process of providing your services, you would have provided your clients with a timeline for work completion and a quote for the services rendered at the acceptance of the job.

Ongoing supply chain issues from the global isolation of the country (as an island with no land border neighbours) have led to material shortages and inflated prices. This means that renegotiations need to be entered into regarding original quotes, as overall costs may have increased threefold.

In order for tradespeople to come out of the other side of the holiday season with a healthy profit margin, they will need to have a better understanding of their costs and how to choose a pricing strategy.

There are 5 key figures you need to be familiar with before pricing your work:

  • Sales revenue – the price you charge the customer for a job.
  • Cost of sales – the direct costs associated with the job, typically covering labour and material costs.
  • Gross profit – the amount of money you have left after subtracting the cost of sales from income.
  • Overheads – your fixed expenses for each month like rent, insurance, loan repayments etc.
  • Net profit – the final amount you’ll end up with after subtracting your overheads from gross profit.

You may already be familiar with these three common approaches to pricing work:

  • Estimate – A rough estimate of the final price that is not legally binding and subject to change
  • Quote – A legally binding agreement where the tradie offers a fixed price ahead of commencing work
  • Do and charge – Hourly rates, overhead charges and margins on time and materials are agreed in advance, and final invoices are based on the costs actually incurred on the job

Quoting a price for a customer or client is a popular pricing method, but can have a number of issues, including:

  • Uncertainty of customers accepting the quote, which can lead to underpricing or overpricing the work to be completed for your customers
  • If there is an unforeseen issue that causes you to run over budget, you will need to make up the difference out of pocket.

A common mistake that is made in the profession is when the work is priced based on the cost of the sales without considering overhead costs. Your business’s sales revenue needs to conder your overheads, the cost of your labour and materials and still have enough left over for a profit.

You may need to experiment with your pricing (particularly post-lockdowns) to determine what works best for your business. However, a general rule of thumb is that your overheads should constitute 25-50 per cent of your sales revenue to make sure there’s at least 10 per cent net profit left over.

Trying to work out what your business can afford to price? Looking for assistance with business planning? Come start a conversation with us. We are business experts who are more than happy to assist you with your queries.

Posted on 23 November '21 by , under business. No Comments.

Learn How To Navigate Your Business Being In Debt With These Simple Steps

Money is the lifeblood of business, and ensuring optimal cashflow keeps its heart beating and makes for smoother operations and its continuation.

Sometimes, however, a business accrues debt during its operations. This could be due to a loan, start-up costs, inventory and stocking costs, or even invoices not being paid for services rendered.

There are two kinds of debt that businesses can go into – good debt and bad debt. You might be asking, how can a debt be good? Determining the type of debt is highly dependent on how the debt has been used for your business.

Good debt has the potential to support your business’s growth and its ability to create and generate further wealth. This could be when your business purchases an asset through borrowed money that generates income for the business, with the return on investment for the asset exceeding its after-tax interest cost. If you are a business in a seasonal industry, you could use a business loan or line of credit to balance out uneven cash flow in the slower seasons.

As a general rule, good debt generates more value or money than the loan itself costs. It allows you to expand by financing things for the business, such as equipment, premises, skilled employees and marketing.

Bad debt may come in two forms. The first is a loss that your business has incurred because credit has been extended to customers that cannot be repaid or recovered (which should be expensed on your income account). It could also be a loan that your business takes out to finance things, such as growth or day-to-day operations.

Bad debt essentially affects the bottom line, disrupts the day-to-day activities and operations by affecting cash flow, constrain growth and even threaten the survival of your business.

However, even good debt can become bad debt if it is not carefully managed and controlled. Always have a plan for paying off debt in place, and try to pay off the more expensive forms of good debt before the cheaper good debt.

Suppose it feels like you are waiting with bated breath for the creditors to knock on your business’s door due to unmanageable debt. In that case, you may want to consider the following:

  • Conduct as much research into businesses you are entering into agreements with to determine the business’s legitimacy and that they are solvent (able to pay)
  • Get advice from professionals, such as restructuring, business turnaround and insolvency experts as a matter of urgency. The sooner you contact them, the sooner you can put into place your options and potentially avoid closure.
  • Work with creditors to reach new repayment arrangements.
  • Consider restructuring and turnaround measures to give your business a lifeline, assist in the repayment of debts, and continue operations.
  • Voluntary administration, receivership and liquidation are last-resort measures that result in shutting down your business and, less commonly, turning your business around.

If you require assistance with planning your business’s debt management solution, you should seek professional advice. Consult with us on how your debt can become manageable today.

Posted on 9 November '21 by , under business. No Comments.

What Management Style Your Business Uses Could Impact Your Employee Relationships – And Not Always For The Better

The business management style you adopt will depend on the needs of your business, what motivates your employees, and your style of work. Therefore, you do have some flexibility when it comes to the choices you make and how you manage your business. However, there are some which you should always avoid due to the relationship they foster between employers and employees.

Autocratic

This style of top-down management leaves all decision-making to managers and expects full cooperation from employees. Any sort of criticism from employees will be received with public disapproval. This management style relies on fear and guilt and seeks to micromanage employees rather than allowing flexibility.

This sort of strategy limits innovation and inhibits employees’ loyalty and personal motivation to progress as employees do not share the company vision.

Servant

This type of management values the business’s people first and the tasks second. Overvaluing emotions and wanting to avoid conflict at all costs is detrimental to effectively completing the work.

This sort of strategy places no focus on success and goal completion. It can damage the business if performance is not up to par and employees are not encouraged to do their best at the tasks assigned to them.

These two management strategies sit on opposite ends of the spectrum when it comes to valuing employees. You should regularly make an effort to interact with employees and ask them for suggestions to improve company performance as collaboration can be extremely valuable. However, don’t get carried away in developing personal relationships with employees that can be detrimental to business success.

Your business should be able to function in a management style that best suits the needs of the business while balancing your employee’s needs and functionality. A well-suited management style should enhance performance and productivity, without sacrificing or compromising its integrity and core values.

Posted on 3 November '21 by , under business. No Comments.

Collaboration Between Businesses During Times Of Isolation Could Lead To New Ways Forward – But How Do You Start?

Innovation is one of the pinnacles of good business practice. However, sometimes innovation isn’t a process that can be achieved by one person alone. In business, some of the best ideas and practices that your business might achieve could occur through collaboration.

Most businesses will have understood the impact and importance of internal collaboration between team members and already put into place tools to help promote this. However, what exactly does effective business collaboration look like?

Business collaboration is the leveraging of internal and external connections in order to generate ideas, find solutions and achieve common goals for your business. It can be done internally (through collaboration with your team), or externally (through the combined efforts of multiple businesses).

Many businesses are already seeing the benefits of remote collaboration within their teams, especially with regards to the time being saved and the increase in productivity.

Businesses may also find that learning opportunities are presented to their employees and team members through the interaction and collaboration with other businesses that could benefit them, with additional knowledge and skillsets gained throughout the process.

Even with many restrictions remaining in place that limit travel on both domestic and international scales, businesses are able to confer with remote workers and businesses through the assistance of digital technologies, thus enabling collaborative efforts to continue

As restrictions ease and businesses are able to engage with one another once again in face-to-face settings, remote collaboration tools can be used to facilitate inter-business collaboration from the ease of anywhere.

These include:

  • Instant messaging – allows for quick online communication for day-to-day business with the teams involved.
  • Video conferencing – replicating face-to-face contact without the need to travel into the office or to a meeting space.
  • Online workspaces – communicating, collaborating, and sharing ideas in one online space, without the need to be in the same room or even area
  • Cloud sharing – cloud tools offer functionalities for collaborating on files, tasks, projects, and calendars in real-time in one accessible, shared online space.

These tools allow businesses to work uninterrupted with individuals, clients and other businesses, as the distance between is no longer a major inhibiting factor to operations (if operations can be conducted away from the site). It can also potentially promote global interconnectedness for the business, as collaboration does not have to occur at a local or domestic level.

Your business might not collaborate with other businesses in exactly the same way as a business in the same industry. It’s important to know what might be the right form of collaboration for your business to benefit from it – and doing that will depend on what you may want to get out of it, and how long you may want it to last.

Alliance

This is known as the traditional type of business collaboration, usually involving two or three companies temporarily working together. They are able to reach a common goal by combining their resources and knowledge, which can be effective for businesses with knowledge/resource gaps that another business could temporarily fill.

Co-Opetition

Competitors can be great collaborators if used appropriately. Co-opettion involves collaborating with competitors so that businesses can share resources, avoid duplication of their work and generate new customers for all parties involved.

Portfolio

When one large business manages a broad collaboration with multiple smaller, external partners, this is known as portfolio collaboration. The main, central business sets the rules for the collaboration and maintains it, offering many of the benefits of an alliance but in a long-term form that generates more connections between businesses.

Community 

Simply put, community collaboration uses one of the greatest resources that a business may have at its disposal – the community. Essentially, businesses collaborate with individuals or other businesses that are within their community. This can be done via both the business community (e.g local business partnerships) AND the customer community (e.g. social media influencers).

Network

If a business knows of other businesses with similar goals and values that they want to uphold, they may instigate network collaboration. This style of collaboration means that the businesses may not necessarily be in competition with one another but, with shared interests can collaborate on mutually beneficial projects with access to one another’s resources and customer base.

Your business may choose to collaborate with other businesses through:

  • A wiki, which can be used to share knowledge, improve training and contribute towards a strong company culture.
  • Cross-promoting, where the businesses promote one another on various platforms. This could be done through social media, running partnered promotions, or even by getting creative with guest posts on websites or a shared podcast.
  • Running a networking event to find new clients and potential future collaborators, which can be conducted online or in person.
  • Community events can be a great way to connect your business with potential customers and collaborators, and running it with another local business is an effective way to put yourself out there and foster connections that could lead to long-term partnerships.

The rapidly changing and digitally-inclined business world means that businesses that don’t prioritise collaboration – both internally and externally – are likely to fall behind. Making the most of collaboration solutions and tools allows collaborations to be streamlined, which is beneficial to all involved.

If you are looking for advice on how to structure these collaborations or work out the best way to get involved with other businesses, you can plan out your way forward with our help. Start a conversation with us today.

Posted on 17 October '21 by , under business. No Comments.

Reskill Or Upskill? Could Improving Your Employees Skills Help With Shortages In Your Business?

Many businesses may have found that their positions and practices have required a rethink. You might have noticed that your business is now situated in a more digitised environment, or that your employees’ roles and responsibilities have had to change and adapt to accommodate new norms. There’s a growing need for skilled individuals to step into these changed roles, but that doesn’t mean that you should neglect the employees that you already have.

Your employees are your greatest resource, and putting the time and effort into ensuring that they can perform their roles can result in excellent productivity and capabilities. Your focus should be on reskilling or upskilling your employees. No longer is it just a recommendation for your employees to be multiskilled – it’s more of a necessity than ever before.

Reskilling and upskilling can occur through three methods:

  • Through formal learning, such as that conducted while at university or TAFE (higher learning, certifications, etc).
  • Via non-formal learning (such as learning activities that do not result in a certification, but equip you with skills).
  • Informal learning (learning processes and skills to help their tasks from colleagues, supervisors, etc).

This can then result in either viable transitions in employment, or desirable transitions that further their career pathways. Essentially, a viable job transition involves the movement from one job to another that is highly similar (in terms of required knowledge, skills, abilities, work activities, education levels and experience). A desirable transition however results in higher wages in a field of work that is expanding, rather than declining (in the IT or digital-based industries, for example).

There are many schemes available to employees and employers that can assist in upskilling. Employees may look into:

  • Fee-free courses (such as those that are TAFE or university endorsed)
  • Online workshops
  • Short courses
  • Certification (such as first aid or RSA)

If you are an employer looking to reskill or upskill your employees, some of the more popular options to boost your employees’ skillsets include computer skills, digital upskilling and learning how to code.

There may also be options for employers to access funding schemes, which can be provided by the government.

Most of the options available for upskilling or reskilling employees, particularly if provided by employers could be a tax deduction that they (the employer) can offset as a tax deduction. If you wish to learn more about how reskilling your employees can be a tax-deductible offset, speak with us. We can also assist you in other business planning enquiries.

Posted on 11 October '21 by , under business. No Comments.

ABN, Contractors & Sham Contracting – What You Have To Watch Out For As An Independent Contractor Or Employer Of One

Being a contractor offers flexibility, choice and more control over your own schedule. It also means that you have different responsibilities from other employees that you may have to fulfil.

For employers, knowing the difference between a contractor and an employee is a must. It can lead to costly penalties if the two get confused.

An independent contractor is someone who operates under an ABN and is not an employee of the company that they perform work for. They may also provide services to another person or business,

Sometimes an independent contractor may operate their own business and have many clients, in other cases the independent contractor may only do work for one company.

There are a number of factors that determine whether or not you may be classified as a contractor versus an employee. These can include:

  • How much control you have over the work you are conducting for the business – the more control you have, the more likely it is an independent contracting relationship.
  • If you are allowed to pick when you are working – employees have set hours in their agreement.
  • If you are running your own business and can have other clients while doing the work for this particular business.
  • If you are able to delegate or subcontract the work to others.
  • If you are the one responsible for your work and insurances – employees are covered by their employer, contractors are responsible for organising their own.
  • If you are expected to have your own equipment prepared for the work that you will be performing – employees will be provided with the equipment that they need.
  • If you bear financial risk for your errors.  You might have to redo the work for no pay if you get it wrong

In Australia, independent contractors often use the sole trader business structure when operating and conducting their business. Due to this, there is a legal requirement that you register an ABN for yourself or your business if operating as a contractor/sole trader.

Having an ABN is important. It identities you and your business to the government, and helps with tax and other business-related activities.

Not everyone may be entitled to an ABN (especially if they are considered to be an employee for the work that they are performing),. As a sole trader though, you are as you are considered to be starting or carrying on an enterprise.

For those who wish to contract you for your services, an ABN means that your clients will not be required to deduct tax from you. If you invoice an organisation without being in possession of an ABN, they are required by law to deduct tax at the highest rate that they can, as well as declare the income you receive from them through to the ATO.

If you’re operating as an independent contractor or sole trader, losing a chunk of your income to tax before you even get paid isn’t something that you’re likely to want to happen. That’s why having an ABN is important for you, to ensure that that doesn’t happen.

If your business is looking into creating a working relationship with a contractor, you need to be careful that you do not fall into a sham contracting arrangement.

A sham contractor arrangement is when a business (or individual) tells a worker that they are an independent contractor. It can exist even if the worker is treated like an independent contractor in some ways such as having an ABN and providing invoices like what a genuine independent contractor might have to do.

It’s illegal, and may be done knowingly by an employer to avoid taking fiscal responsibility for paying legal entitlements to employees. It is illegal to:

  • tell an employee they are an independent contractor
  • say something false to convince an employee to do the same work for the employer but as an independent contractor
  • dismiss or threaten to dismiss an employee if they don’t become an independent contractor, or
  • dismiss an employee and hire them as an independent contractor to do the same work.

If you are concerned that you may be involved in a sham contracting arrangement, or are an independent contractor looking for assistance in ensuring that you are remaining compliant with your current obligations when it comes to tax, super or business, we can assist. We are also equipped to help you with dealing with an ABN.

Posted on 27 September '21 by , under business. No Comments.

Emergency Management Plans Are Critical To Keeping Your Business Operational – Is Yours Ready For Anything?

Emergencies can crop up without any warning, but a business needs to be prepared for any eventuality.

Unexpected disruptions to business operations can be prevented with a well-thought-out emergency management plan and recovery plan to help protect your business before, during and after an emergency.

Natural disasters, such as floods, fire and earthquakes can strike without warning, and throw a spanner into your business.

Your primary aim with an emergency plan is to ensure that your business is able to act and continue to be operational. To do so, you need to have in place specific plans for your business to manage operations in the event of an emergency prior to, during and after its occurrence.

You will want to ensure that you have the following plans developed for your business:

  • The continuity plan, which helps you to prepare your business for an emergency by identifying risks to critical areas, and how best to protect them.
  • The emergency action plan allows you and your staff to know what to do during an emergency situation
  • The recovery plan which guides your business’s recovery after an emergency.

Once you have those in place, you will need to ensure that you have a list and copies of the supporting documentation that you will need, such as detailed emergency procedures, evacuation maps and insurance information. By having these documents in place, you can ensure that your emergency management plans are equipped with comprehensive information to smooth the process.

To keep that information up to date, and to be certain that your emergency management plan stays relevant to changing situations and circumstances, you will need to regularly review the contents. Keeping both the management and recovery plans updated will ensure that you are prepared for any eventuality.

In the event that staff changes occur or locations for business alter, those changes need to be reflected in the plan.

All of your staff should be apprised of the plans and procedures that are in place. Doing so through practice, drills and repeated enforcement of the steps to be taken can help you determine if anything needs to change. This is a key opportunity to understand the efficiency of your emergency procedures and plans for your business, and if anything can be done to improve.

This could be as simple as fire and evacuation drills, through to meetings and safety courses for what to do in the event of an emergency.

Posted on 23 September '21 by , under business. No Comments.

Investigating Your Options For Your Business Before Closing Doors Could Open Different Pathways – Here’s Why A Restructure Should Always Be Considered First

With the demanding conditions that have plagued the retail industry over the past twelve months, business owners need to be aware of all the restructuring options available before it is too late.

COVID-19 has unfortunately resulted in reduced foot traffic, store closures, the accumulation of legacy creditors and significant deteriorations in working capital positions.

Even with the support of JobKeeper and other government initiatives buoying business ventures from early 2021 to now, many family and small businesses are sure to continue to struggle.

The Misconceptions Of Formal Restructures

The idea of restructuring your business or reaching out for external help can appear scary and often seen as something to be avoided at all costs. However, business owners are not on their own when dealing with the difficult conditions facing them in their short-term future.

No one wants to see a business fail.

That’s why there are always options available to businesses. However, the longer a company holds off on making a decision, the more the business and its available options will deteriorate.

If companies and businesses can act early enough, their options include informal arrangements and advice, voluntary administration, and new restructuring reforms for small businesses.

With the availability of these options and the right people involved, there is no reason why a financially distressed small business cannot survive the challenging times and thrive in the future. All companies experience some form of distress from time to time and often at no fault of their own. The ones that survive focus on cash, seek appropriate advice from trusted advisors at the right time and act further on it.

How Might A Business Survive Financial Distress

Using the voluntary administration process as a restructuring tool allowed Tuchuzy (a well-known retailer in Bondi) to successfully deal with legacy creditors, refocus on high margin product lines, and ultimately, the company continued to trade profitably.

The key to Tuchuzy’s restructure was a ‘light touch’ administration to minimise costs and disruption to the business and closely working alongside the director to ensure the proposal submitted to her creditors would be acceptable than an immediate winding up scenario (of which it was).

There is a lot of flexibility and breathing space afforded in the voluntary administration process.

The administrator can quickly reset the cost base by exiting unprofitable stores, reducing the workforce, and focusing on only buying and selling favourable margin products.

Even when a liquidation becomes necessary, the process can be reasonably quick, fair and transparent if run properly.

The secret is to overcome the general stigma accompanying restructures and approach restructuring experts early who will ‘unemotionally’ explain each available option and provide an impartial recommendation that aligns best with the individual circumstances.

What Do The New Small Business Restructuring Reforms Mean For You?

For a business with few creditors and a single location, the process of voluntary administration can be expensive and unnecessary.

Indeed, voluntary administration is often not appropriate for many small businesses due to associated financial costs and the hurdle accompanying a director relinquishing control.

The government has responded to this critique and offered an alternative. This alternative comes at a perfect time as directors are, once again, exposed to personal liability for insolvent trading.

The new small business restructuring (SBR) reforms offer a lower cost and far simplified restructure process, critical for small businesses to continue to trade after government assistance such as JobKeeper ceased in March 2021. The reforms add an essential new path that will assist many retailers.

Though there have been only a handful of SBRs to date, and their effectiveness to save businesses is yet to be appropriately evaluated, it is an option to explore in the right circumstances.

Critical Questions Your Business Should Be Asking

The COVID-19 crisis has put a severe strain on many previously successful businesses. Though the government and many advisors are attempting to ensure that they do not collapse, directors and business owners need to be proactive and engage early for them to work.

Often businesses approach liquidators and advisors at the point where their financial problems have become insurmountable, and a liquidation/shutdown is often the only option left. The timing of coming and asking for help can be the difference between a shutdown and the continuation of trading.

With proper preparation and an effective plan that considers all stakeholders, any business should be able to restructure and continue to trade.

If your answer to any of the below questions is yes, you should seek immediate advice from a trusted restructuring advisor.

  1. Am I currently losing money?
  2. Am I finding it hard to pay bills on time?
  3. Have I got old debts that I am finding hard to pay down?
  4. Do I need some breathing space?
  5. Do I have my ‘head in the sand’?

Posted on 6 September '21 by , under business. No Comments.

Rent Relief Rebate For Commercial Tenants & Landlords

Commercial tenants have been some of the hardest hit during the ongoing COVID-19 situation, with many losing out on revenue while businesses have been forced to close or make alternative arrangements across the state/country.

Several states have announced rent relief in the form of rebates and legislation to ensure that commercial tenants can viably remain in place during the ongoing situation facing the country.

Victoria

The Victorian government recently announced the finalised new regulations for the rent relief rebate and broadened the eligibility requirements for the Commerical Tenancy Relief Scheme (known also as “the Scheme”).

For Commercial Tenants

These amendments have been brought in to assist small and medium-sized businesses with some welcome rent relief, a major concern for many businesses within hotspot areas who cannot continue operations in the usual manner during the COVID-19 situation.

This rent relief rebate will be in the form of a proportionate reduction in rent, determined by the decrease in turnover/revenue.

Commercial tenants will now be able to choose three consecutive months between 1 April and 30 September to compare to their turnover in the same three months in 2019, to assist in determining the financial relief amount.

The Scheme is hoped to help the small and medium-sized businesses with an annual turnover of less than $50 million who have experienced a decrease of more than 30% during the pandemic of their revenue.

New businesses will also be eligible for assistance under the Scheme if they have been opened since April 2019. Special arrangements will be in place to calculate the turnover impacts for businesses that were not operating in 2019.

For Landlords

Commercial tenants are not the only beneficiaries of the rent relief amendments, however. Landlords who provide their eligible tenants with rent relief will be provided by the Government with tax relief of up to 25 per cent (in addition to any previous relief), with the support worth up to $100 million.  Additionally, any small landlord who can demonstrate acute hardship will be eligible to apply for payments as a part of a $20 million hardship fund.

In accordance with the Scheme, the Victorian Small Business Commission will support tenants and landlords with the provision of information to assist in negotiating a rent relief agreement. They will also provide access to free and impartial mediation if a fair agreement cannot be brokered, and are also offering help with negotiations and mediation in the event that a tenant isn’t eligible.

Landlords and tenants will require a mandatory reassessment point (as per the Scheme’s provisions) during the period of rent relief to check in on one another, and assess whether the circumstances have changed and rent relief should be adjusted accordingly.

The Scheme will apply retrospectively from 28 July 2021 through to 15 January 2022.

In light of the new rental relief amendments to the Scheme, commercial landlords and tenants should enter into a negotiation with regard to their current commercial leases. Seeking additional advice from legal professionals or the VSBC regarding these negotiations is highly encouraged.

New South Wales

In New South Wales, the government reintroduced the National Cabinet’s Mandatory Code of Conduct for Commercial Leasing, which will mandate the rent relief for eligible tenants who have been hit hard by COVID-19 until at least 13 January 2022.

For Landlords

With the extension of the Retail and Other Commercial Leases Regulation (COVID-19) 2021, landlords will be required to renegotiate with their tenants about rent. Previously, this regulation only required the landlords to attempt mediation before evicting or locking out tenants, but landlords will now be required to offer rent relief in proportion with a tenant’s decline in turnover. At least half of this must be offered as a waiver, and rent negotiations must be entered into prior to moving to evict or lock their tenants out.

The mandated relief will also be accompanied by a new $40 million Hardship Fund, which will be offering monthly grants of up to $3,000 for small commercial or retail landlords who have waived rent of the same value and who rely primarily on that rental income from the commercial properties.

Eligible commercial landowners are able to apply for up to 100 per cent of their land tax liability for 2021. To be eligible, the landowner must have reduced rent for the affected tenant by at least the amount being claimed for any period between July 1 and December 31 this year.

For Tenants

The extended regulation of the Retail and Other Commercial Leases Regulation (COVID-19) 2021 is applicable to those commercial and retail tenants with a turnover of up to $50 million who meet eligibility criteria for either the COVID-19 micro-business grant, COVID-19 Business Grant or JobSaver Payment.

In addition, the NSW government has committed $2 million to the Small Business Commission so that it can handle the surging demand for mediation requests from small businesses.

Queensland

Commercial businesses who have been impacted by the effects of COVID-19, which has resulted in a reduction in turnover during the response period or extension period, may be eligible to negotiate rent relief with their landlord under the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (known also as the Regulation).

The deadline for this was 31 December 2020, but may be subjected to change or amendment depending on the current situation in Queensland (as of August 2021).

The Regulation and the COVID-19 Emergency Response Act 2020 (known as the Act) sets out the arrangements in place for Queensland regarding small and medium-sized enterprise commercial leases affected by the COVID-19 emergency.

For Tenants

Under the Regulation, landlords cannot take prescribed actions against a tenant with an affected lease who fails to pay rent or outgoings or is not open for trade during either the response period or the extension period (including the taking of action after either of those periods). However, this does not mean that a tenant does not have to pay anything, or otherwise comply with their lease.

Commercial tenants must have an affected lease to be eligible for rent relief assistance under the Regulation. It must meet all of the eligibility criteria to be eligible:

  • It is a retail shop lease or prescribed lease
  • It was binding on the tenant on 28 May 2020
  • The tenant is a small and medium enterprise that carried on a business (or non-profit activity) in the financial year and had a turnover of less than $50 million for the 2020-21 financial year and/or turnover that was likely to be less than $50 million for the 2020-21 financial year.
  • The tenant under the lease is eligible for but not necessarily enrolled in the JobKeeper Payment Scheme.

Small businesses can also continue to lodge small business tenancy disputes as needed.

For Landlords

Negotiation must be entered into regarding the lease and prompted by either the landlord or the commercial tenant. Any information shared must be true, accurate and correct, and not misleading, while also being sufficient enough to enable all parties to negotiate in a fair and transparent way.

The landlord must make an offer about rent (and other lease conditions) during the response period and/or the extension period to the tenant within 30 days of sufficient information being received.

During the response period, at least 50% of the rent reduction must be waived as a discount, and the remainder of the reduction must be deferred to be repaid by instalments after 30 September 2020.

Posted on 1 September '21 by , under business. No Comments.