We have received a number of enquiries with regard to the proposed government business stimulus package. The announcement was made on the 12th March and below is what we know so far. Please note that at this stage we are focusing on the business stimulus and not the stimulus to households.
The government will provide cashflow relief to eligible businesses* in the form of a tax free credit of 50% of the PAYG withholding component of your March 2020 BAS, with a minimum $2,000 payment and up to a maximum of $25,000.
If your business is on a quarterly activity cycle the credit will be payable in the March 2020 quarter and the June 2020 quarter, with the minimum payment applied to the first lodgement.
If your business is on a monthly activity cycle, the disbursement of the credit will be granted through the March, April, May and June 2020 activity statements. However, 50% of the total of the January, February and March 2020 PAYG withholding amounts will be credited in the March activity statement. To put some numbers to illustrate.
Let’s say the eligible business made the following monthly lodgements (focussing on the PAYG Withholding component only)
January 2020 PAYGWH 10,000
February 2020 PAYGWH 10,000
March 2020 PAYGWH 10,000
Total PAYG for the quarter 30,000
50% credit for the quarter <15,000>
Reduction of total March BAS by $15,000.
Then for the April and subsequent months, as follows:
April 2020 PAYGWH $10,000 but reduced by $5,000, total due $5,000
May 2020 PAYGWH $10,000 but reduced by $5,000, total due $5,000
June 2020 PAYGWH $10,000 no reduction as reached total $25,000 cap.
Business’s that pay wages, but do not pay PAYG withholding may still be eligible for payments of $2,000.
*Eligible businesses are companies, partnerships, sole traders or trusts that pay PAYG Withholding and have a turnover less than $50 million. At this stage sole traders who do not employ people are not eligible.
To see a comprehensive summary of how the ATO are applying relief due to the Coronavirus, please click on the link below: