Updated Stimulus Package - TAX FREE Payments up to $100,000 for Employers
Cash flow assistance for Employers:
First Payments - TAX FREE Payment now up to $50,000 for Employers up to the June 2020 quarter
Subsequent Payments - Additional TAX FREE Payment for the July – October 2020 period of a maximum $50,000
To further assist small and medium business (turnover < $50m based on prior year T/O) that employ workers, an updated initial maximum payment of $50,000, and minimum amount of $20,000 is now available for eligible businesses:
Applies to eligible businesses that employ staff between 1 January 2020 and 30 June 2020.
The payments are only available to active eligible employers established before 12 March 2020.
The updated measures now extend to Not For Profit entities.
For businesses that withhold tax on employees' wages, the initial payment will now equal 100% of the tax amount withheld, up to a maximum of $50,000.
Where nil tax is required to be withheld from employee wages, a minimum payment of $10,000 will be made. This will be applied to the first lodgment.
An additional payment will be made that equals the amount received from the initial payment.
The Tax Office will deliver the payments from 28 April 2020 by way of a credit to the business upon lodgment of their activity statements. This will then reduce any net payable due or if a refund is owing, this will be refunded within 14 days.
Monthly Lodgers – Initial Payments:
Will be eligible to receive the credit for the March 2020, April 2020, May 2020 and June 2020 lodgments.
For these businesses, the payment for monthly lodgers for the March 2020 activity statement, will be 300% of the March 2020 reported PAYG withholding.
If you withhold $10,000 in tax from wages for the month of March 2020, then the tax free credit/payment for this first month will be $30,000, for April $10,000 and for May $10,000, which would then be nil for June 2020 as the maximum credit/payment of $50,000 would be reached.
If you withhold $4,000 in tax from wages for each month, for the March 2020 month the tax free credit will be $12,000, for April it would be $4,000, May $4,000 and June $4,000.
Quarterly Lodgers – Initial Payments:
Will be eligible to receive the credit for the BAS lodgments for the quarters ending March 2020 and June 2020.
A business that lodges their activity statements quarterly that has quarterly tax withheld on wages of $6,000 would receive a credit of $10,000 for the March 2020 quarter being the minimum payment amount, and then nil for the June 2020 quarter.
Additional TAX FREE Payment for the July – October 2020 period of a maximum $50,000
Under the updated scheme, there is an additional payment to be introduced in the July – October 2020 period, that will be equal to 100% of the tax withheld from the previous 2 quarters (March and June 2020 quarters) with a minimum payment of $10,000 and a maximum of $50,000.
Monthly Lodgers – For Additional Payments:
Will be eligible to receive the additional credit/payment for the June, July, August and September 2020 lodgments. Each monthly payment will be equal to 25% of the total initial payment received.
From the above example 1, a total payment of $50,000 was received. Then the additional tax-free credit/payment for June will be $12,500, for July $12,500, for August $12,500 and for September 2020 $12,500. This additional payment amounts to $50,000 and a total tax-free payment of $100,000 would be received in total from these measures.
From the above example 2, a total of $24,000 was received. The additional tax-free credit/payment would then be $6,000 in June, $6,000 in July, $6,000 in August and $6,000 in September 2020. The total of the additional payment amounts to $24,000 and the total for all payments under these measures amounts to $48,000.
Quarterly Lodgers – For Additional Payments:
Will be eligible to receive the credit for the lodgments for the quarters ending June 2020 and September 2020. Each quarterly payment will be equal to 50% of the total initial payment received.
From the above example 3, a total of $10,000 was received. For the additional payment, this business would receive an amount of $5,000 in the June quarter and $5,000 in the September 2020 quarter. This amounts to an extra $10,000 payment, and a total of $20,000 received under these measures.
If you have any questions on how this will apply to your business, please do not hesitate to contact Roscoe & Company.