The coronavirus outbreak is first and foremost a human tragedy, affecting life of all Australian people and businesses. Cloud8 Accounting & Taxation has put together a summary of important helps and supports announced by the ATO and the Government for small businesses.
NOTE: Cloud8 is always here to help our clients to other businesses for their accounting and taxation needs during this difficult time. We are open for phone discussions and virtual meetings, to ensure you as small businesses able to get timely supports.
In this article, we will discuss:
- ATO Cash Flow Boost for business
- JobKeeper payments
- Victoria Business Support Fund
Supports for small businesses
Cash flow boost
Eligible businesses that withhold tax on their employees’ salary and wages will receive a credit equal to 100% of the amount withheld, up to a maximum of $50,000. The minimum credit will be $10,000, even if the amount required to be withheld is zero. However you will not be eligible to receive any more cash flow boosts until your PAYG withholding exceeds $10,000 over the relevant periods
Monthly lodgers will receive a credit that is calculated at three times the rate (300 per cent) in the March 2020 activity statement, to align with quarterly lodgers.
The total of all initial cash flow boosts across all of the relevant periods cannot exceed the maximum limit of $50,000 in March Quarter 2020.
Additional cash flow boost
The amount of additional cash flow boosts you are entitled to is based on the value of initial cash flow boosts you received.
If you lodge quarterly business activity statements you will receive 50% of your total initial cash flow boosts for each activity statement for June quarter and September quarter.
The minimum credit will be $5,000 each June and Sempter, even if the amount required to be withheld is zero.
If you lodge monthly business activity statements you will receive 25% of your total initial cash flow boosts for each activity statement.
TIP! This support will provide micro-businesses with a minimum $20,000 cash credit supports over three quarters even if PAYG withholding is nil!
Eligibility
You will be eligible to receive the cash flow boost if you are a small or medium business entity, including not-for-profit organisations, sole traders, partnership, company or trust that:
- held an ABN on 12 March 2020and continues to be active
- has an aggregated annual turnover under $50 million (generally based on prior year turnover)
- made eligible payments you are required to withhold from (even if the amount you need to withhold is zero).
Eligible payments include:
- salary and wages
- director fees
- eligible retirement or termination payments
- compensation payments
- voluntary withholding from payments to contractors.
In addition, you must also have either:
- derived business income in the 2018–19 income year and lodged your 2019 tax return on or before 12 March 2020
- made GST taxable, GST-free or input-taxed sales in a previous tax period (since 1 July 2018) and lodged the relevant activity statement on or before 12 March 2020.
WARNING! If you did not have a lodgement deferral in place, you will not become eligible if you lodge or amend the 2019 returns and/or BASs for those periods now.
Timing
The initial cash flow boosts will be delivered as credits in the activity statement system from the Government’s announced date of 28 April 2020. If you lodge early, you will not receive the cash flow boost before this date.
If you lodge:
- quarterly, you will be eligible to receive the credit for
- quarter 3, March 2020 (lodgment due date 28 April 2020)
- quarter 4, June 2020 (lodgment due date 28 July 2020).
- monthly, you will be eligible to receive the credit for the lodgment periods of
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- March 2020 (lodgment due date 21 April 2020)
- April 2020 (lodgment due date 21 May 2020)
- May 2020 (lodgment due date 21 June 2020)
- June 2020 (lodgment due date 21 July 2020).
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Eligible entities who received initial cash flow boosts will receive additional cash flow boosts, for the periods June to September 2020, equal to the total amount of initial cash flow boosts received. This will be delivered in either two or four instalments depending on your reporting period.
Early release of superannuation
From mid-April, eligible individuals will be able to apply online through myGov to access up to $10,000 of their superannuation before 1 July 2020. They will also be able to access up to a further $10,000 from 1 July 2020 until 24 September 2020.
Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
You are eligible to access your superannuation if you meet any of the following criteria:
- You are unemployed.
- You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
- On or after 1 January 2020, either
- you were made redundant
- your working hours were reduced by 20% or more
- your business was suspended or there was a reduction in your turnover of 20% or more, if you are a sole trader.
JobKeeper Payment
On the 30th of March 2020, the Government announced a further massive subsidy for businesses to help them retain employees, called the JobKeeper payment.
The payment will be made to eligible employers for eligible employees. The payment will be $1,500 per fortnight per employee for a period of 6 months. It will be paid in respect of full time and part time employees who were employed as at 1 March 2020. Also, casual employees will be eligible if they have been with their employer on a regular basis for at least the previous 12 months as at 1 March 2020.
The employees must continue to be engaged by the business. If an employee has been stood down or has had their employment terminated, they can still be eligible. If an employee’s employment has been terminated, the employee must be re-engaged by the business.
Eligibility
Not all employers are eligible for the payment. A business will be eligible:
- If the business has a turnover of less than $1 billion and its turnover will be reduced by more than 30% relative to a comparable period a year ago, of at least one month; or
- The business has a turnover of $1 billion or more and its turnover will be reduced by more than 50% relative to a comparable period a year ago of at least one month; and
- The business is not subject to the Major Bank Levy.
Employers must elect to receive the JobSeeker payment and provide supporting information. This can be done through the ATO website.
Employers must report the number of eligible employees employed by the business on a monthly basis.
NOTE：An individual cannot receiver both the JobKeeper and JobSeeker payments. If an employee has more than one employer, only one JobKeeper payment will be made to one employer. The employer claiming the JobKeeper payment will usually be the one from whom the employee claims the tax-free threshold.
Superannuation Guarantee contributions (9.5%) need not be made on the JobKeeper payments. However, to the extent an employee is paid their normal salary or wages, the 9.5% contributions still need to be paid as normal.
If an employee ordinarily receives less than $1,500 in income per fortnight before tax, their employer must pay their employee, at a minimum, $1,500 per fortnight, before tax.
If an employee has been stood down, their employer must pay the employee, at a minimum, $1,500 per fortnight, before tax.
If an employee was employed on 1 March 2020, subsequently ceased employment with their employer, and then has been re-engaged by the same eligible employer, the employee will receive, at a minimum, $1,500 per fortnight.
Timing of Payment
With regard to the timing of payments, the payments will be made to an employer monthly in arrears by the ATO. The Prime Minister has pointed out that this should not delay employers from making payments to employees. This is because the employer can make payments to their employees in the knowledge that the employer will receive the JobKeeper payment. Of course, this assumes that the employer has the money to make the payment in the first place!
The JobSeeker payment will start on 30 March 2020, with the first payments to be received by employers in the first week of May.
For most businesses, the ATO will use the Single Touch Payroll system data to pre-populate the employee details for the business.
Employers must notify all eligible employees that they are receiving the JobKeeper payment.
Not all employees are eligible. I won’t go through the details of that here.
The JobSeeker payment will be available for not-for-profit organisations.
TIP! The JobSeeker payment will also be available for the self-employed where they expect to suffer a 30% decline in turnover relative to a comparable prior period.
Victoria Business Support Fund
The Victorian Government has launched the $500 million Business Support Fund to help small businesses survive the impacts of the coronavirus (COVID-19) pandemic and keep people in work.
Potential value of grant
Funding of $10,000 per business is available and will be allocated through a grant process.
Eligibility
Small businesses are eligible if they:
- employ staff
- have been subject to closure or are highly impacted by Victoria’s Non-Essential Activity Directions issued by the Deputy Chief Health Officer to-date External link (opens in same window).
- have a turnover of more than $75,000
- have payroll of less than $650,000.
- Hold an Australian Business Number (ABN) and held that ABN at 16 March 2020 (when the State of Emergency was declared); and
- Have been engaged in carrying out the operation of the business in the Australian State of Victoria on 16 March 2020.
How To Apply
Applicants must submit an application online via https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-support-fund
Applicants are required to provide a copy of their most recent Business Activity Statement (BAS). Other supporting materials can also be provided.
CLOUD 8 RECOMMENDATIONS AND SOLUTIONS
All the Government supports require businesses to employ people and reporting though Single Touch Payroll.
We recommend client to discuss with us about their eligibility for support ASAP.
It’s never a better opportunity to set-up Single Touch Payroll and start reporting.
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