As with everything at the moment, another week brings another round of government stimulus. In the past few days, there have been key announcements from the Federal Government as well as NSW, VIC and QLD state governments. Below are the key takeaways for small businesses to consider:
Cash Boost for SMEs
Last week the government announced a cash boost equivalent to 50% of PAYGW effective from the March BAS. The government has now increased this to be equivalent to 100% of PAYGW paid for the same period and the cap is now $50,000 for the period.
So if you paid $35,000 in PAYGW for the March quarter, you will now receive $35,000 as your cash boost through the ATO. If you pay a further $35,000 in the June quarter, you will receive another $15,000 to take you up to the cap of $50,000.
On top of this, the government will make a second tranche from July – September. If you pay another $35,000 in PAYGW for the September quarter, then you will receive another $35,000 cash boost through the ATO. The cap for this period is also $50,000.
For businesses with PAYGW in excess of $100k for March – September, you will receive $100k in total being $50k for the period to 30 June and another $50k for the period to 30 September.
You do not need to apply for this, the ATO will automatically apply the credit to your Business Activity Statement Account when we lodge your BAS.
This amount will offset any existing debt you have with the ATO first, with any amount left to be refunded to you.
Apprentice Wage Subsidy
If you have an apprentice or trainee on your team, you may be eligible for a 50% subsidy on apprentice wages paid from 1 Jan – 30 Sep 2020.
To be eligible for this, you need to employ no more than 20 full time staff including your apprentices/trainees.
Employers will receive a subsidy of 50% of apprentice wages, capped at $7,000 per apprentice per quarter. This means if you are paying your apprentice $10k per quarter, you will receive back $5,000 for the March quarter, $5,000 for the June quarter and $5,000 for the September quarter from the government.
To access this benefit you will need to register, however registration details will not be available until early April 2020.
Cash flow loans for SMEs
The government is working with banks to provide a guarantee of 50% of new loans written by banks to small businesses. This is designed to cut the red tape and allow you quicker access to unsecured short-term business loans to assist while your business is impacted by COVID-19.
New South Wales
Payroll tax waiver
For any small business (assuming your payroll is under $10m), you won’t need to pay NSW payroll tax for the next 3 months. This will be the amounts you typically paid in April, May & June for the prior month.
Don’t be tempted to try and skew things though. When your annual reconciliation is lodged in July, there will be a square up to ensure you are getting a 25% total reduction.
But what if you lodge annually? You won’t miss out. When you do your annual lodgement in July, the NSW Government will give you 25% off the total bill. Equivalent to a quarter of the year.
All you need to do is continue to complete your payroll tax monthly or annual lodgements (but don’t pay the monthly ones) and Revenue NSW will take care of the rest.
Increased payroll tax threshold
From 1 July, the threshold for payroll tax will increase to $1 million from $900,000. This means businesses with a total wage bill under $1 million per year will no longer need to pay payroll tax.
If your wage bill is over $1 million, you will still be able to take advantage of this increase. With the increased threshold, you will save $5,450 on your payroll tax bill over the year.
You don’t need to apply for this, Revenue NSW will automatically apply the new threshold amount from 1 July 2020.
Payroll tax refund
Businesses with annual taxable wages $3 million will not have to pay payroll tax for FY20. If you lodge annually, you will still need to complete your annual reconciliation however you will not need to pay anything.
If you lodge monthly you need to continue to do so, however you will not have to make any payments for the rest of the year. In addition to this, the State Revenue Office will contact you to organise a reimbursement for all payroll tax paid to date for the year.
You do not need to do anything to access this benefit, the State Revenue Office will apply this automatically to your account and contact you if you are eligible for a reimbursement.
Concessional loan facility
If you are based in Queensland and experiencing cash flow difficulties as a result of COVID-19, the government is offering loans of up to $250,000 to help you retain staff. These loans will have a 12 month interest free period but there is no indication yet what the terms will be after 12 months. Further details around eligibility are due to be released by the end of this week.
Payroll tax deferral
The Queensland Government will assist employers impacted by COVID-19 by deferring payroll tax payments for the next 3 months.
To access this, you need to be able to show that your taxable wages are under $6.5 million and there has been a direct or indirect impact to your turnover, supply contracts or customers.
If you meet the criteria above, you will not need to lodge or pay your March, April or May payroll tax until 31 July 2020.
If you want to access this scheme, you will need to register here.
If you have any questions or concerns about how the stimulus package applies to your business, please don’t hesitate to get in touch by calling. We’re here to help!