Economic Stimulus Tax Free Payments for Businesses
The Morrison Government has improved on its first round Economic Stimulus package in an effort to boost cash flow for employers as a result of the COVID-19. Originally the Morrison Government had pledged tax-free payments to small and medium sized businesses of up to $25,000.
The Government has now enhanced on the cash flow boosting measures it announced originally. The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000.
It is important to note the cash flow boosting payments will occur in two separate tranche payments either side of 30 June 2020. Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent) for the period 01 January 2020 - 30 June 2020, with the maximum payment being increased from $25,000 to $50,000 (per payment). In addition, the minimum payment is being increased from $2,000 to $10,000. Put simply, the second tranche of the tax free payment for eligible businesses paid post 30 June 2020 will be equal to the first tranche received prior to 30 June 2020.
This means that eligible entities will receive at least $20,000 (two payments of $10,000) up to a total of $100,000 (two payments of $50,000) under both payments.
If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $20,000 (two payments of $10,000) will still be made.
Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgments.
Eligibility for the measure will be based on prior year turnover and the payments will only be available to active eligible employers established prior to 12 March 2020. However, charities which are registered with the Australian Charities and Not for profits Commission will be eligible regardless of when they were registered, subject to meeting other eligibility requirements. This recognises that new charities may be established in response to the coronavirus pandemic.
Should you wish to discuss this with your Advisor in more detail please contact your GMD team member.