What a changed world we are living in as we all try to navigate the challenges arising from the current Coronavirus Pandemic, including protecting the health and safety of our friends and family, and the viability of our businesses, employment and investments.
This newsletter aims to provide you with an update relating to the Government’s Economic Stimulus Package in response to the Coronavirus. Our staff will continue to assist and support you where we can through this uncertain period as we attempt to survive the ever-changing restrictions, we are all dealing with.
Cash Flow Assistance for Businesses
The Government is providing cash flow assistance for eligible businesses in the form of two separate measures.
Boosting cash flow for employers
Small and medium-sized businesses and not-for-profit entities, with an aggregated annual turnover of less than $50 million (usually based on their prior year’s turnover) that employ people, may be eligible to receive a total payment (in the form of a refundable tax credits) of up to $100,000 (with a minimum total payment of $20,000), based on their PAYG withholding obligations in two stages:
Stage 1 payment (Credit)
Commencing with the lodgement of activity statements from 28 April 2020, eligible employers that withhold PAYG tax on their employees’ salary and wages will receive a tax-free payment equal to 100% of the amount withheld, up to a maximum of $50,000.
Eligible employers that pay salary and wages but do not withhold any PAYG tax, will receive a minimum (tax-free) payment of $10,000.
The tax-free payment will be paid by the ATO as an automatic tax credit to an employer, upon the lodgement of activity statements from 28 April 2020, with any resulting refund being paid to the employer as follows;
Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020; and
Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgments.
Note: The minimum payment of $10,000 will be applied to an entity’s first activity statement lodgement from 28 April 2020.
Stage 2 payment (Credit)
For employers that continue to be active, an additional (tax-free) payment will be available in respect of the June to October 2020 period as follows:
Quarterly lodgers will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020, with each payment being equal to 50% of their Stage 1 payment (up to a maximum of $50,000).
Monthly lodgers will be eligible to receive the additional payment for the June 2020, July 2020, August 2020 and September 2020 activity statement lodgements, with each additional payment being equal to a quarter of their Stage 1 payment (up to a maximum of $50,000).
Again, the ATO will pay the additional (tax-free) payment as a credit to an employer upon the lodgement of their activity statements from July 2020, with any resulting tax refund being paid to the employer.
Examples
1. Sarah’s Construction Business
Sarah runs a building business employing 8 construction workers. Sarah reports withholding of $15,008 for her employees on each of her monthly Business Activity Statements (BAS).
Sarah will be eligible to receive the following payments on lodgement of her BAS:
Payment 1
A credit of $45,024 for the March period, equal to 300% of her total withholding.
A credit of $4,976 for the April period, before she reaches the $50,000 cap.
No payment for the May period, as she has now reached the $50,000 cap.
Payment 2
An additional payment of $12,500 for the June period, equal to 25 % of the Payment 1 ($50,000).
An additional payment of $12,500 for the July period, equal to 25 % of the Payment 1 ($50,000).
An additional payment of $12,500 for the August period, equal to 25% of the Payment 1 ($50,000).
An additional payment of $12,500 for the September period, equal to 25 % of the Payment 1 ($50,000).
2. Tim’s Courier Run
Tim runs a delivery business and employs two casual employees who each earn $10,000 per year.
In his quarterly BAS, Tim reports PAYG withholding of $0 for his employees as they are under the tax-free threshold.
Tim will be eligible to receive the following payments on lodgement of his BAS:
Payment 1
A credit of $10,000 for the March quarter, as he pays salary and wages but is not required to withhold tax.
Payment 2
An additional payment of $5,000 for the June quarter, equal to 50 % of Payment 1.
An additional payment of $5,000 for the September quarter, equal to 50 % of Payment 1.
It is imperative that we ensure your eligibility for the abovementioned stimulus package to maximize the total benefit to you.
Accordingly, we will facilitate the application and lodgement of the stimulus package to the ATO on your behalf.
Wage Subsidies for Apprentices & Trainees
Employers with less than 20 full-time employees, who retain an apprentice or trainee (who was in training with the employer as at 1 March 2020) may be entitled to Government funded wage subsidies.
These will be equal to 50% of the apprentice’s or trainee’s wage paid during the nine months from 1 January 2020 to 30 September 2020.
The maximum wage subsidy over the nine-month period will be $21,000 per eligible apprentice or trainee.
Our staff can assist you in registering for the subsidy from early April 2020.
Increasing the Instant Write-off threshold for business assets
The depreciating asset instant asset write-off threshold will be increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
The measure applies to both new and second-hand assets first used or installed ready for use in the period beginning on 12 March 2020 (i.e., the date on which this measure was announced) and ending on 30 June 2020. Many of the comments in this publication 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.
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