Further assistance for employers announced.

In this quick moving environment, the measures recently announced for employers have already been superseded. The Government has on Friday increased the previously announced up to $25,000 subsidy for up to 50% of tax withheld from employee wages will now be increased to a maximum of $100,000 ($50,000 for March – June 2020 and $50,000 for July – October 2020) or up to 100% of the amount withheld from employee wages. The minimum has also been increased from $2,000 to $20,000.

The mechanism for these payments remains as a credit in your Australian Taxation Office (ATO) Integrated Client Account when you lodge your Activity Statements.

The time period for these changes has also been extended. Previously the applied to Activity Statements up to end of June 2020. There will now be further payments for July to October 2020, but these will be equal to the amounts you received for March – June 2020, rather than being based on the tax withheld from wages during this time.

• This will apply to businesses with turnover up to $50m
• These are still proposed to be tax free payments
• The payments are only available to employers who were actively employing at 12^thMarch 2020. Thus businesses with only related party workers who were taking trust distributions or dividends, or sole traders do not seem to be eligible.

The credits will start being allocated to your ATO Integrated Client Accounts from 28^th April, and if this puts you into a refund position, refunds will be paid out by the ATO within 14 days.

Parliament is due to meet today to discuss and possibly pass these measures into law.

A number of examples have been provided – see below.

 

Government Guaranteed Loans

The Government and the banks are each putting $20 billion into the Coronavirus SME Gaurantee Scheme, to be administered by the banks.

The loans will require no repayments for the first 6 months, and be for a maximum $250,000 over three years. The Government will guarantee 50% of each loan.

• The loans will be unsecured
• The scheme should commence in early April 2020
• This will complement the announcement from last week that the banks would freeze repayments on business loans for six months

 

Examples of Wage Support Measures

Sarah’s Construction Business

Sarah owns and runs a building business in South Australia and employs 8 construction workers on average full-time weekly earnings, who each earn $89,730 per year. Sarah reports withholding of $15,008 for her employees on each of her monthly Business Activity Statements (BAS).

Under the Government’s changes, Sarah will be eligible to receive the payment on lodgment of her BAS.

Sarah’s business receives:

• A credit of $45,024 for the March period, equal to 300 per cent 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.
• 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, Sarah’s business would have received a maximum payment of $25,000.

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sarah’s business will receive $100,000. This is an additional $75,000 to support her business and help her retain her staff.
Sean’s Hairdresser Salon

Sean owns a hairdresser’s salon. He employs 12 hairdressers, with average salary of $50,000 per year. Sean reports withholding of $8,788 for his employees in each of his monthly BAS.

Under the Government’s changes, Sean will be eligible to receive the payments on lodgment of his relevant BAS.

Sean’s business will receive:

• A credit of $26,364 for the March period, equal to 300 per cent of his 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. Sean will also receive an additional payment of $12,500 for the June period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the July period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the August period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments.
• An additional payment of $12,500 for the September period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments.

Under the previously announced Boosting Cash Flow for Employers measure, Sean’s business would have received a total payment of $25,000.

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sean’s business will receive $100,000. This is an additional $75,000 to support his business.
Tim’s Courier Run

Tim owns and runs a small paper delivery business in Melbourne, and employs two casual employees who each earn $10,000 per year. In his quarterly BAS, Tim reports withholding of $0 for his employees as they are under the tax-free threshold.

Under the Government’s changes, Tim will be eligible to receive the payment on lodgment of his BAS.

Tim’s business will receive:

• A credit of $10,000 for the March quarter, as he pays salary and wages but is not required to withhold tax.
• An additional payment of $5,000 for the June quarter, equal to 50 per cent of his total Boosting Cash Flow for Employers payments.
• An additional payment of $5,000 for the September quarter, equal to 50 per cent of his total Boosting Cash Flow for Employers payments.

If Tim begins with holding tax for the June quarter, he would need to withhold more than $10,000 before he receives any additional payment.

Under the previously announced Boosting Cash Flow for Employers measure, Tim’s business would have received a total payment of $2,000.

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Tim’s business will receive $20,000. This is an additional $18,000 to support his business.
Help for the Homeless Op-Shop

Help for the Homeless, a registered charity, runs an op-shop to support its programs and employs 5 part-time workers with average income of $30,000 per year. It reports total withholding of $3,510 for its employees for each quarterly BAS.

Under the Government’s changes, Help for the Homeless will be eligible to receive the payment on lodgment of its BAS as it is a charity. Help for the Homeless receives:

• A credit of $10,000 for the March quarter, the minimum payment.
• An additional payment of $5,000 for the June quarter, equal to 50 per cent of its total Boosting Cash Flow for Employers payments.
• An additional payment of $5,000 for the September quarter, equal to 50 per cent of its total Boosting Cash Flow for Employers payments.

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Help for the Homeless will receive $20,000. Under the previously announced Boosting Cash Flow for Employers measure, NFPs were not eligible for the support.

These are challenging times. If you have any queries, please contact us to speak with one of our experienced Accountants  tel: 5221 7655.

This is is a general summary only. For more information, please speak with your Accountant.