Only One in Four Small Business Have a Disaster Plan

Small and family businesses can suffer greatly from natural disasters, yet just one out of every four small businesses today has a business continuity plan, according to a report by the Australian Small Business and Family Enterprise Ombudsman.

Last year, the Ombudsman conducted an inquiry after the country faced numerous disasters, such as bushfires, drought, floods, and the COVID-19 pandemic.

It visited 36 communities to hear directly from small and family businesses impacted by natural disasters. It also conducted an online survey, which attracted more than 2,000 respondents.

The Small Business Natural Disaster Preparedness and Resilience Inquiry report found that small and family businesses can recover more quickly from the effects of a natural disaster by taking reasonable risk mitigation measures, being better prepared, and building resilience.

Findings and Recommendations

Some of the report’s findings and recommendations include:

• Having a “certainty of response” for small business owners so they are automatically elevated and front of mind in disaster response, recovery, and funding arrangements, including indirectly affected businesses.
• Establishing a business hub after a disaster as a single point to seek help from federal, state, and local government and non-government agencies to provide support.
• Adopting a “tell-us-once” triage system to save small business owners the trauma and time associated with repeating their story.
• Creating an opt-in “My Business Record” to allow a small business to digitally store all relevant government-held and other vital information that it might need after a disaster.
• Providing infrastructure grants to ensure critical infrastructure relied upon during a disaster is fit for purpose and remains intact and functioning.
• Implementing a “good neighbour” program and mitigating risks on land the government owns.
• Making a government subsidy available when workers in a small business are called out for volunteer work for an extended period, or a business is required to scale back operations because of volunteer activities.
• An additional amount six to nine months after the small businesses received an Australian government grant for a “business health check” and to support any necessary adjustments.
• Due to the tremendous difficulty in finding affordable insurance, many small business owners are operating with inadequate or no insurance or with excesses payable that prevent them from filing a claim. More needs to be done to remedy this market failure.
• Creating an integrated response to disaster risk management for identified disaster-prone areas.

Source: ASFBEO – Only One-in-Four Small Businesses Have a Disaster Plan

Develop an Emergency Management Plan

Many business owners think an emergency probably won’t happen to them. However, preparing a business to survive such an event is vital for every business owner.

Natural disasters like floods, fires, and earthquakes can happen in Australia without prior notice. Protecting what you can in times of crisis is crucial because the business’s financial stability is important. The business may also provide a necessary service to the community, so getting back up and running is vital.

Managing emergencies involves properly adjusting the business to environmental changes. Resilient businesses anticipate risks, respond quickly and appropriately to crises, and then recover.

Keep the strategy as straightforward and brief as possible. There may be a lot of background research, and a business may have a long list of backup files to prepare, but the main plan should be clear and concise.

Ensure simple steps such as ensuring record keeping is up to date, business processes and critical information are, where possible, digitised, and payments to relevant bodies such as the ATO, lenders, and insurers are up to date. To mitigate the risk of losing hard copy records in a disaster, move to a cloud-based financial system.

If there is no continuity strategy in place at the time of the incident, recovery could take a while. All businesses should create a disaster management and recovery plan for upcoming events and incorporate essential lessons from previous incidents into ongoing business operations.

Working From Home Deductions Reform

Working From Home – Modernised Fixed Rate Method

The method by which taxpayers claim deductions for costs incurred when working from home has been updated by the Australian Taxation Office (ATO). The modifications are intended to represent current work-from-home arrangements more accurately but require more precise record keeping.

This temporary shortcut method of 80 cents per hour, introduced during the pandemic, applied from March 2020 and ended on the 30th of June last year, meaning taxpayers can no longer use it for this year’s tax return.

Taxpayers can choose one of two methods to claim working from home deductions: either the “actual cost” or “fixed rate” method. Only the fixed rate method is changing.

The revised fixed rate method applies from 1st July 2022 and can be used when taxpayers are working out deductions for their 2022–23 income tax returns.

New Fixed Rate Method

The revised fixed rate of 67 cents per work hour covers total deductible expenses such as energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery, and computer consumables. No additional deduction for any expenses covered by the rate can be claimed if you use this method.

This means that taxpayers cannot claim an additional separate deduction for items like a mobile phone when working from home, as the assumed cost is already included in the 67 cents rate.

However, the decline in value of assets used while working from home, such as computers and office furniture, repairs and maintenance of these assets, and costs associated with cleaning a dedicated home office need to be calculated and claimed separately.

It is Important to Maintain Records

The revised fixed rate method doesn’t require taxpayers to have a dedicated home office space to claim working-from-home expenses, but there are stricter guidelines for record keeping.

The total number of hours that taxpayers work remotely must be reported. Beginning on March 1st 2023, taxpayers must retain a record of all hours worked remotely for the whole income year. The ATO will no longer accept estimates.

As long as they are recorded as they happen, records of hours worked from home can be kept in any format, such as a diary or any similar document, such as timesheets, rosters, logs of the time spent logging into employer or business systems.

The fixed rate per hour reimburses any expense that taxpayers have incurred and must be recorded and documented (for example, if taxpayers use their phone and electricity when working from home, they must keep one bill for each of these expenses).

The fixed rate per hour reimburses any expense that taxpayers have incurred and must be recorded and documented (for example, if taxpayers use their phone and electricity when working from home, they must keep one bill for each of these expenses).

You can’t claim a deduction if you don’t have a record. Be aware that this is being introduced retrospectively. If you plan to use the revised fixed rate method for your 2022–23 tax return, you need to have the following:

• From 1st July 2022 to 28th February 2023: a record representative of the hours worked from home (e.g. diary notations or a work record showing start and finish times for at least 1 month of work as a representative period of time for the year).
• From 1st March 2023 to 30th June 2023: a record of the total number of hours worked from home (such as a timesheet, roster or diary) as well as evidence you paid for each of the expenses incurred that are covered by the fixed rate method (for example, a phone or electricity bill). You will also need records for any equipment bought to work from home, like technology or furniture (which provides details of the supplier, cost, and date acquired).

There haven’t been any modifications for those who choose to employ the actual cost method. The actual portion of any running expense that relates to work is still deductible by the taxpayer.

This entails maintaining thorough records for each and every expense incurred while working from home.

Source: ATO – Working from home expenses