In response to the deteriorating economic outlook, the Government announced on the weekend a second stimulus package that adds to the initial tax free cash payments to small and medium sized businesses (that’s businesses with turnovers less than $50mil).
Our blog on the first stimulus package :Keeping Ahead of the Virus outlined the capital investment incentives as well as the cash flow boosts for small and medium sized businesses who employ people. The cash flow boost has been enhanced as follows:
NOW – the minimum credit increases to $20,000 and the maximum is $100,000. So how does it work?
Under this enhanced scheme, Employers will receive a payment equal to 100% of the tax withheld from salary and wages (that’s up 50% from the previous announcement) with the maximum payment being increased from $25,000 to $50,000 and the minimum going up from $2,000 to $10,000. The way it is calculated will differ for quarterly and monthly payers:
- For quarterly payers, you will receive a credit of 100% of the tax withheld on wages for the March and June quarters, subject to the initial maximum cap of $50,000.
- For monthly payers, you will receive a credit of 300% of the tax withheld on wages for March 2020, and then for each of the following months until June 2020, you get a credit of 100% of the tax withheld for each month, until you reach the maximum cap of $50,000.
The above will be followed by a second round of payments from late July 2020 for those businesses that continue to be active. You will receive the same amounts you got above and will be delivered as follows:
- For quarterly payers, you will receive the credits in the June and September 2020 quarters, getting half for each quarter to the maximum $50,000 cap.
- For monthly payers, you will receive the credits in June, July, August and September statements being equal to a quarter of what you received in the first round until you reach the maximum cap of $50,000.
If you would like some specific advice for your own circumstances and how much the assistance is likely to be, then please do get in touch with us and we can calculate some numbers for you.
The ATO has also announced some administrative measures to assist taxpayers who are experiencing financial difficulty as a result of the COVID-19 outbreak, these include:
- Deferring by up to 6 months the amounts due for payment on BAS’s, PAYG instalments, FBT and income tax.
- Allowing businesses who usually get quarterly GST refunds to opt into monthly gst reporting to get access to refunds sooner.
- Allowing business to vary their PAYG instalments to zero for the March 2020 quarter. This is a great opportunity to preserve cash flow, you can vary any PAYG due to nil and also get back a refund of any PAYG paid for the September and December quarters – No penalties or interest will be charged by ATO for variations to PAYG for the 2019-20 year. Please ask us for assistance if required.
- Remitting any interest and penalties, incurred after 22 January 2020, that have been applied to tax liabilities.
- Allowing affected businesses to enter into low-interest payment plans for existing and ongoing tax liabilities.
Superannuation announcements
There were two main announcements:
- Firstly, the Government is allowing individuals affected by COVID-19 to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. They are tax free and will not impact existing Centrelink or Veterans Affairs payments.
- Secondly, for those drawing pensions, the minimum pension draw down has reduced by 50% for 2019-20 and 2020-21. For those of self managed superannuation clients in pension phase, please contact us for the updated numbers.
As always, Munro’s is available to assist you and your family through these difficult times. We are currently on a rotating roster, with up to 50% of our staff working from home and that’s going well. In the event we are required to shut down the office completely, then we will have everyone working from home. Whilst not ideal from an business efficiency aspect, it does enhance the COVID-19 protections for our staff and their families, and allows us to continue on servicing our clients.