For many business owners and individuals, this year’s tax return is going to be like no other. The Covid-19 lockdown and collapse in revenue for some businesses meant that they had to find strategies in a hurry to ensure their survival and chances for recovery.
Let’s have a look at some of the impacts these changing circumstances could have on how your business assets could contribute to this.
The construction industry generally has a high use of tools and machinery that are subject to depreciation of their asset value over time. In the last few months, the construction industry was lucky to be able to continue to operate during the Covid-19 lockdown. However, with the big “R” word now being mouthed by politicians, we know there will be tough times ahead.
There are ways to manage this from an accounting perspective. For example, when assets are becoming idle for a long period of time, this is considered an internal indicator of impairment and can have tax implications.
Further indicators are
- Evidence that economic performance is worse than expected;
- Plans to dispose of an asset;
- Plans to restructure.
Due to the temporary interruption of operations and potential ongoing uncertainty, an immediate decline in demand and reduction of profitability can be expected. This will undoubtedly affect how you use your assets.
One of the biggest assets your business has is good will which you’ve built up over the years with your customers and providers. That’s why it’s the right time now to look at all your assets and also start engaging with your customers and providers to find out what’s changed in their world. Things could look very different for your customers post-Covid-19 and you might need to rethink how you deliver your services and what kind of products in order to meet the needs of your customers in the future.
Remember to also include reviewing your supply chain and talk to providers what could be done better in the times to come.
If you need help to work out how to best manoeuvre your business through these times, feel free to contact us for a FREE Covid-19 Business Recovery Session.
Please Note: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.