November 2020 Business Finance Update

27 Nov

Here are some major business stories you need to be across:

Australians buying cars again
Employers given hiring incentive
Govt changing insolvency rules

Businesses and consumers buying cars again

After a big slump in new car buying activity earlier in the year, Australians are again showing they have the confidence and the funds to buy new cars.

Australians bought 81,220 new cars in October, according to the Federal Chamber of Automotive Industries (FCAI). That was down just 1.5% on the year before.

By way of comparison, new car sales for the first 10 months of 2020 were 18.8% lower than the first 10 months of 2019.

The top five selling models in October were:

Toyota HiLux = 4,444 sales
Ford Ranger = 4,217
Toyota RAV4 = 4,084
Toyota Landcruiser = 2,429
Toyota Prado = 2,207

FCAI chief executive Tony Weber said that after a very challenging year, the October data showed there were “green shoots” in the Australian new vehicle market.

“Every state and territory except Victoria and Tasmania have seen significant growth and, given the circumstances, Victoria’s result is seen as encouraging.”

Businesses given incentive to hire younger staff

The JobMaker Hiring Credit has been approved by parliament, meaning businesses can now claim up to $200 per week for each eligible employee they hire.

Businesses can claim:

$200 per week for an eligible employee aged 16 to 29 years
$100 per week for an eligible employee aged 30 to 35 years

For employees to be eligible, they must have:

Been working a minimum of 20 hours per week, averaged over a quarter
Been receiving JobSeeker Payment, Youth Allowance (Other) or Parenting Payment for at least one of the previous three months, assessed on the date of employment

Businesses can claim the credit only if they increase their headcount and payroll. Credits are paid quarterly in arrears by the Australian Taxation Office.

Click here for more information.

Treasurer Josh Frydenberg said the JobMaker Hiring Credit will help businesses recover from the coronavirus-induced downturn.

Govt throws lifeline to struggling businesses

The government has introduced legislation into parliament that it says is "the most significant changes to Australia’s insolvency framework in 30 years".

Treasurer Josh Frydenberg said the reforms will “help more small businesses restructure and survive the economic impact of COVID-19".

The reforms include a new debt restructuring process for businesses with liabilities of less than $1 million.

The rigid ‘creditor in possession’ model will be replaced with a more flexible ‘debtor in possession’ model. This “will allow eligible small businesses to restructure their existing debts while remaining in control of their business,” according to the Treasurer.

Small businesses that can’t survive the pandemic will get “a new simplified liquidation pathway” that includes “faster and lower-cost liquidation”.

Australia's small business ombudsman, Kate Carnell, said these "landmark reforms" would be "a game-changer for small businesses".

These new insolvency processes will take effect on 1 January 2021, if they’re approved by parliament.

You might be wondering how to get working capital for your business or how to secure finance to buy an asset such as a car or machinery. If so, please don't be afraid to get in touch with us.

Disclaimer: The advice provided in this article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. We encourage you to consult a finance professional before acting on any advice provided in this article or on this website.