Update: Additional Information Regarding Government Stimulus Package

Cash flow assistance for businesses – PAYG withholding credit

A second stimulus package has been announced that improves the cashflow assistance that has been previously announced. Eligible employers will be entitled to up to AUD100,000 of benefits, the updated terms are below:

• Boosting cash flow for employers by helping small and medium-sized businesses cover the costs of employee wages and salaries (100 per cent of PAYG withheld, with a minimum AUD20,000 payment and up to a cap of AUD50,000 between January and June 2020).

This will be delivered automatically through the tax system as a credit applied upon businesses lodging their next activity statement.

• An additional payment has been announced that will deliver a credit equal to the amount received under the initial boosting cash flow for employers payments up to the maximum amount of a further AUD50,000. The additional amount will be paid directly to your ATO account on lodgement of the June – September 2020 activity statements. The amount received will be spread evenly over the lodgements in this period.

Small and medium business entities with aggregated annual turnover under AUD50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover. There will be a minimum payment of AUD20,000 to eligible businesses even if they are not required to withhold tax. In order to be eligible for the maximum amount you must withhold PAYGW of AUD50,000 from employee salaries between January and June 2020.

The minimum payment will be applied to the business’ first lodgement.

Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020.

Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (150 per cent) in the March 2020 activity statement.

If you would like to see a worked example of the payments please see pages 3 and 4 of the treasury announcement CLICK HERE.

Additional Stimulus Benefits

There are additional stimulus benefits available including;

1. Small business loan support
2. Early release of Superannuation
3. Reduction to minimum pension drawings by 50%
4. Expansion of the Instant asset write-off to assist businesses with turnover up to AUD500 million (from AUD50 million) for assets under AUD150,000 purchased before 30 June 2020

There are also State Government incentives, particularly regarding Payroll Tax.  Each State is offering different benefits and we are keeping abreast of them for you.  Given the variances between each State, we have not listed them in this update.