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12th May, 2020
As of the second round of economic stimulus in response to the COVID-19 pandemic, the Australian Government has legislated a measure to boost cash flow for employers. However, small to medium employers who intend to claim the “cash flow boost payment” in the hope of receiving an injection of cash should beware. The “payment” is not actually a payment, but a credit that will be offset against the liabilities that appear on the business activity statement (BAS) and any debits in your running balance account (RBA). While this is still likely to support employment by reducing the amount some businesses have to pay to the ATO, anyone hoping to get a cash injection will be sorely disappointed.
Eligible employers will receive an offset equal to three times the amount of tax withheld from ordinary salary and wages as disclosed in the March monthly BAS, or equal to the amount of tax withheld from ordinary salary and wages for the quarter. Both are subject to a minimum of $10,000 and a maximum of $50,000. The payment is due on 28 April 2020 and other payments will follow later this year.
These cash flow boost payments are only available to entities that qualified as small or medium entities (ie with turnover less than $50 million) for the income year most recently assessed. There is also a withholding requirement – the payment will only be made to entities that first notify the ATO that they have a withholding obligation through the lodgment of a BAS or an instalment activity statement (IAS) for the period.
11th Apr, 2020
In an effort to combat the economic effects of the global coronavirus pandemic, on 12 March 2020 the Federal Government announced an economic stimulus package worth $17.6 billion, which it said is expected to provide direct support for up to 6.5 million individuals and 3.5 million businesses. The package includes business investment initiatives, cash flow assistance payments to small and medium entities (SMEs), household stimulus payments and support for impacted sectors, regions and communities, as well as tax administration relief.
The instant asset write-off threshold will be increased from $30,000 to $150,000 and expanded to include access for businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.
A time-limited 15-month investment incentive (through to 30 June 2021) will also be provided to support business investment by accelerating depreciation deductions.
Eligible small and medium entities will receive a Boost Cash Flow for Employers payment of up to $25,000. The tax-free payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020. Businesses will receive payments of 50% of their Business Activity Statement (BAS) or Instalment Activity Statement (IAS) from 28 April 2020, with refunds to be paid within 14 days.
Eligible small businesses employers can apply for a wage subsidy of 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that same apprentice.
A one-off $750 stimulus payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Payments will be made from 31 March 2020 on a progressive basis, with over 90% of payments expected to be made by mid-April. This payment will be tax-free and not count as income for social security, farm household allowance and veteran payments.