|Legislation hit parliament last week to give approval to the stimulus package that’s been bandied about on the news, so we thought we’d explain how it actually works:
- There are two sections to these payments:
- Payment for between 1/1/2020 – 30/6/2020 – $50,000.
- If you lodge your BAS Quarterly the government will “refund you” 100% of the PAYG you deduct from your staff wages to a total of $50,000.
- If your total PAYG doesn’t come to $5,000 each quarter they will “refund you” that amount as a minimum.
- When you lodge your BAS, the amount “refunded” will offset any PAYG and GST amounts, then they will offset any existing ATO debt for this entity.
- If the amount “refunded” is more than the debts owing, it will be refunded to you within 14 days in cash. If not, it simply reduces the amount payable.
- This will happen with the lodgement of each BAS.
- If you lodge your BAS/IAS on a monthly basis, the payments are slightly different as January and March have already been finalised.
- For your March BAS, they will “refund” 3 times the PAYG for March. If this amount is over the amount owed to the ATO then it will be refunded in cash within 14 days, if not it simply reduces the amount payable.
- For each BAS/IAS after that, they will “refund” 100% of the PAYG up to a total of $50,000.
- Although unlikely for someone on monthly BAS/IAS, if the amount of PAYG withheld is less than the $10,000, they will “refund” you the higher amount in the June BAS.
- Payment for between 1/7/2020 – 30/9/2020 – $50,000.
- If you lodge quarterly, they will “refund” you the same amount as they paid you between 1/1/2020 – 30/6/2020 regardless. Again it will offset any BAS/IAS amounts and you will receive the balance as a cash payment where the amount is more than the BAS/IAS payable.
There are some anti-avoidance rules so we can’t be clever and backdate or over-inflate PAYG for business owners to take advantage of extra cash bonuses.
If you are a sole trader or partnership and don’t employ staff you are not eligible for any of these bonuses. Also sole traders and partnerships cannot employ themselves.
If you weren’t registered for PAYG prior to 12 march 2020 and had employed staff previously, you are not able to backdate registration to receive these bonuses.
Naturally, it depends on your individual business as to how this plays out. We strongly suggest that if you prepare your BAS yourself, you talk to us before lodging so you know exactly what your numbers are going to be
There are 3 other stimulus packages for businesses announced by the government:
- $21,000 cashback to continue to employ your apprentices or take over apprentices let go by other employers. This will be paid through state apprenticeship boards and will be by application during April 2020 but paid over 3 quarters.
- Depreciation instant asset write off has increased from $30,000 to $150,000 for any assets purchased after 12 March and installed before 30 June. Talk to us before doing this to discuss possible cashflow advantages and any pitfalls with your potential purchase
- Increased depreciation rates for assets over the $150,000 limit.
The ATO has also come on board as well:
- It is possible to defer for up to 4 months the payment of your BAS – talk to us about the cash flow ramifications of doing this.
- You can change from Quarterly to Monthly BAS from 1/4/2020 to make it easier on your cash flow.
- It’s possible to vary the PAYG for the March quarter to NIL and request refunds of PAYG paid in September & December BAS should you need to – this is best discussed with us as we do your tax planning. (Like the actual calculations of the cash stimulus, we can work out this before you lodge your March BAS if necessary).
- You can ask for remittance of any interest charged on unpaid amounts after 23/1/2020.
- Low-Interest payment plans to pay off existing debt – be careful using those though as this often doesn’t look good for bank lending.
The Queensland Government has offered a few teasers as well:
- Loans up to $250,000 with the first 12 months being interest-free. These are similar to the ones they have offered to drought-affected farmers in the past.
- Payroll tax lodgement deferred to 31/7/2020.
So the bottom line is that there is assistance available. In some cases, it will be reduced payments to the ATO rather than cashback.
Our suggestion to you is to get in touch to discuss your own personal situation, we are offering free phone or Zoom meetings to help you navigate all your options.