As we are all now no doubt aware we are currently living in unprecedented times, as a result of the Coronavirus Global Pandemic. Whilst this is first and foremost a health crisis, the economic ramifications and impact upon small businesses in particular is expected to be severe.
We, at Progressive Accounting Solutions, are here to support our clients through these uncertain times. Below, you will find details regarding the Economic Stimulus Measures announced by the government to support small businesses. Note, as more stimulus measures are announced we will continue to update this page so that you may have access to all the relevant information.
JobKeeper Wage Subsidy Payments
This measure will provide businesses severely affected by the Coronavirus with a wage subsidy for each eligible employee. Eligible businesses will be entitled to $1,500 per fortnight per employee for up to 6 months. In order to be eligible employers must have a turnover of less than $1 billion and have had their turnover reduced by at least 30% when compared to a comparable period (of at least a month) a year ago.
Eligible employers will receive a payment for each eligible employee that was on their books as of 1 March 2020 – including fulltime, part time, long term casuals and stood down employees. Eligible employers who have stood down employees prior to the commencement of this scheme will be able to participate.
Self-employed individuals will be eligible to receive the JobKeeper payment where they suffered or expect to suffer a 30% decline in turnover.
The scheme will begin 30 March with the first payments expected to be received by employers in the first week of May.
Employers must select to participate in the scheme and will need to make an application with the ATO where they will be required to provide supporting information. You can register your interest at the link below.
Boosting Cash Flow for Employers
This measure will provide from $20,000 to $100,000 of tax-free payments to eligible businesses (increased from $2,000 to $25,000). In order to be eligible a business must have an aggregated turnover of less than $50 million and have been a registered employer with the ATO prior to 12 March 2020. Businesses that withhold tax from their employees will receive payments equal to 100% of the amount withheld up to the maximum payment of $50,000. Businesses that pay salary and wages will receive a minimum payment of $10,000 regardless of how much PAYG is remitted to the ATO.
Payments will be delivered by the ATO as a credit to Integrated Client Account. Should this payment result in a credit balance on your account you may request a cash refund. These payments will be automatic and will begin from the 28th of April.
An additional payment is also being introduced in the July-October 2020 period. Eligible entities will receive additional payments equal to their initial payments. (i.e. if you received $40,000 in the initial payment, you would receive $40,000 in the second payment).
Sally owns a hairdresser’s salon on the Bellarine Peninsula. She employs 12 hairdressers, with average salary of $50,000 per year. Sally reports PAYG withholding of $8,788 for her employees in each of her monthly BAS. Under the Government’s changes, Sally will be eligible to receive the payments on lodgement of her relevant BAS. Sally’s business will receive:
- A credit of $26,364 for the March period, equal to 300 per cent of her total withholding.
- A credit of $8,788 for the April period.
- A credit of $8,788 for the May period.
- A credit of $6,060 for the June period, before he reaches the $50,000 cap. Sally will also receive an additional payment of $12,500 for the June period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
- An additional payment of $12,500 for the July period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
- An additional payment of $12,500 for the August period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
- An additional payment of $12,500 for the September period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.
Under the previously announced Boosting Cash Flow for Employers measure, Sally’s business would have received a total payment of $25,000. Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sally’s business will receive $100,000. This is an additional $75,000 to support her business.
Supporting Apprentices and Trainees
Those businesses that employee apprentices and trainees will be eligible to apply for a wage subsidy equal to 50% of the apprentice/trainees wage for the nine months ended 30 September 2020. Where a small business is not able to retain an apprentice/trainee the subsidy will be available to a new employer. Employers will be reimbursed a maximum of $21,000 per apprentice/trainee ($7,000 per quarter). Employers can register for the subsidy from early April. Final claims for payment must be lodged by 31 December 2020.
Increasing the Instant Asset Write-Off
The threshold for the Instant Asset Write-Off will increase from $30,000 to $150,000 for assets purchased between 12 March and 3 June 2020. Businesses with a turnover of less than $500 million will be eligible for this measure.
Accelerated Depreciation Rules
From 12 March 2020 until 30 June 2021 eligible businesses will be allowed to claim a 50% depreciation deduction for assets that are first used or installed ready for use in the year that they are purchased. Existing depreciation rules will apply for the balance of the asset cost. Businesses with a turnover of less than $500 million will be eligible for this measure. Assets that can be depreciated under Division 40 of ITAA 1997 will be eligible for this measure.
ATO Administrative Relief
To assist businesses experiencing financial difficulty as a result of this pandemic to ATO have announced a series of relief options. Please note these relief measures and not automatic and if you wish to take advantage of them you or your tax agent will need to contact the ATO. The options include:
- Payment Deferral’s – The ATO will allow you to defer any tax payments for up to four months if you or your business has been affected;
- GST Credits – businesses on a quarterly reporting cycle may elect to change their GST reporting to monthly in order to get quicker access to the refunds that you or your business is entitled to. Changes can only be made at the start of each quarter;
- PAYG Instalments – If you are a quarterly PAYG instalment payer your can vary the instalment on your March statement. You may also apply for refunds for any instalments paid in the September & December 2019 quarters.
- General Interest Charge and Penalties – The ATO will consider remitting any penalties and/or interest applied to your account if you or your business has been affected by the pandemic
- Low Interest Payment Plans – the ATO will offer low interest payment plans to those businesses with tax liabilities who would like to enter an arrangement.
The ATO have stressed that employers still need to meet Superannuation Guarantee Obligations.
Victorian Payroll Tax Refunds
The Victorian Government has also announced its own business support package. This includes the refund of Payroll Tax Liabilities for eligible businesses. Businesses with a payroll of less than $3 million will be able to access refunds for all the payroll tax remitted for the 2020 financial year from Friday the 17th of March. Additionally, no further payroll tax will be required to be remitted for the remainder of the 2020 financial year.
Victorian Business Support Fund
Under this scheme businesses adversely affected by the Corona virus may be eligible for a one off $10,000 grant.
In order to be eligible for this grant businesses must:
- Have been subject to closure of been severely impacted by government social distancing directives;
- Employ staff;
- Have a turnover of more the $75,000;
- Have a payroll of less than $650,000;
- Hold an ABN;
- Have been operating a business in the state of Victoria on or before 16 March 2020
Applicants must certify that they meet the above eligibility criteria and may be subject to an audit and required to produce supporting evidence. Applications can be made online at the following link:
We remain committed to servicing our client’s though-out the pandemic and will contactable as per usual. Should you have any questions with regard to the above or anything else, please don’t hesitate to contact us on 0438 329 958 or via firstname.lastname@example.org.