The Federal Government has so far announced two separate stimulus packages to the sum of $189 billion.
The packages include both cash and tax incentive measures.
Below they are summarised, based on what we know as of today.
1) 100% Cashback on PAYG Withholding, up to $100,000 in total
Eligible small and medium-sized employers will be provided a 100% tax-free ‘cash back’ of up to $50,000 (and a minimum of $10,000) on your PAYG Withholding on wages between 1 January 2020 and 30 June 2020.
A second tranche of tax-free, cash back payments of up to $50,000 (and a minimum of $10,000) on your PAYG Withholding on wages will also be paid for the period 30 June 2020 – September 2020.
This second payment is calculated as the total cash back credit calculate in the first payment, split evenly over the June-2020 to September 2020 BAS/IAS lodgement period.
So to summarise – the cash back is now calculated on 100% of PAYGW of your wages, paid in 2 separate calculation periods.
So, breaking this down:
If you have spent $30k in PAYGW for the same period, you will get $30,000
Regarding the Additional Payment (Payment 2):
The same total benefit per Payment 1 is paid equally over your BAS/IAS lodgement period between 30 June 2020 and 30 September 2020
A couple of other points on this:
If you take your ‘salary’ as a dividend or directors drawing and want to maximise your ‘cash back’, you could explore changing the treatment of your remuneration from drawings to salary.
If you have an existing debt with the ATO this benefit will offset your existing liability.
💡 How to apply?This credit will automatically be processed upon lodgement for your BAS and IAS. We and/or your bookkeeper will process it for you.
2) 50% subsidy on apprentice wages, up to $21,000Eligible employers can apply for a wage subsidy of 50% of apprentice or trainee wages for up to 9 months from 1 January 2020 to 30 September 2020 (up to a maximum of $21,000 per eligible apprentice or trainee).
If a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
Tax incentives for Small Business OwnersThe immediate tax deduction threshold has been increased from $30,000 to $150,000 for assets purchased between 12 March 2020 and 30 June 2020
Assets over $150,000 will attract an additional 50 percent depreciation rate of the asset cost in the year of purchase for assets purchased between 12 March 2020 and 30 June 2021
A couple of other points on this:
It’s important to note that these are tax incentives, not cash back incentives. In other words, you need to spend the money, and pay income tax in order to get the tax benefit.
The tax benefits will be applicable for your FY20 and FY21 tax returns, which means you won’t see any benefit until you’ve lodged your 2020 and 2021 returns.
💡 How to apply?This credit will be processed upon preparation and lodgement for your 2020 and 2021 income tax returns.
Tax Payment Deferrals
The ATO is providing SMEs payment deferral concessions for businesses directly impacted by COVD-19.
They are outlined as followed:
Deferring by up to 4 months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise.
Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get faster access to GST refunds they may be entitled to.
Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.
Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
A couple of very important things to note:
You will still need to pay Superannuation
These relief provisions are not automatically applied. You will or we can contact the ATO to make any of the above requests for assistance.
💡 How to apply?
Businesses can call the ATO’s Emergency Support Infoline on 1800 806 218 to discuss relief options based on their needs and circumstances.
Government underwritten, Cash flow loans for SMEs
The Government will provide a guarantee of 50% of new loans written by banks and SME lenders to support new short-term unsecured loans to SMEs.
Important clarification – this does not mean the Federal Government is issuing loans directly.
It means that the Government is providing a guarantee to banks and SME lenders to reduce their risk to provide unsecured loans to SMEs that need the cash for working capital.
So what does this mean for me?
Expect a new type of loan product issued by the banks and lenders, tailored for SMEs that have been directly disrupted by COVID-19
Refer to the ‘Coronavirus SME Guarantee Scheme’ and ask what new loan products are available to assist.
💡 How to apply?
Contact your bank/lending institution about this package.
There is a lot more information out there and we will endeavour to sort through it all and pass on all that is important and relevant.
These are stressful times, and we are here to help you in anyway we can.
Please contact us if you any questions or need help with anything. Together we can work through this.