In response to the current economic climate, legislation has now been put in place by the Government to provide temporary cash flow assistance and incentives to support small to medium businesses that have been affected by the Coronavirus (COVID-19).
We want you to be at the forefront of these assistance measures, to ensure that you receive the correct information and proper entitlements, to assist your business during these difficult times.
Our team at Allan Hall Business Advisors have put together the following summary of key actions points that require the highest priority and most urgent attention.
Firstly, the most recent and pressing announcement is in relation to:
Boosting Cashflow for Employers incentive
The Government announced the Boosting Cashflow for Employers incentive on 12th March 2020 to support businesses through this time and have continued to provide additional enhancements to this measure. Here is a quick summary of what is on offer and the process for obtaining the Boosting Cashflow for Employers incentive:
1. The Boosting Cashflow for Employers incentive is the $100,000 maximum tax free incentive that is based on your PAYGWT. It replaces the $25,000 incentive that was announced last week; it is not in addition to it.
2. It is paid (technically it is not paid, but credited to your Running Balance Account with the Tax Office), in two stages – being March to June and then June to September. The maximum you can receive is $50k in each stage.
3. How it is paid differs depending on whether you are a monthly or quarterly PAYGWT remitter.
4. STAGE 1:
- If you are a monthly remitter: On lodgement of your March BAS you will be credited with 300% of the March PAYGWT up to the maximum of $50k. If you don’t hit the maximum in March, you will then be credited with 100% of the PAYGWT on your IAS/BAS for each of April, May and June until you hit the $50k cap.
- If you are a quarterly remitter you will be credited with 100% of the PAYGWT on your March BAS and on your June BAS up to the maximum of $50k.
5. STAGE 2:
The total that you receive in stage 2 is equal to the total that you received for Stage 1.
- If you are a monthly remitter then you will be credited with 25% of your stage 1 amount on lodgement of each of the June, July, August and September IAS/BAS.
- If you are a quarterly remitter you will be credited with 50% of your stage 2 amount on lodgement of each of the June and Sept BAS.
In all cases crediting will occur on lodgement of the relevant BAS/IAS. So even if you are not paying, it is imperative that you lodge.
a. This is for small businesses only and is based on turnover (not wages). Your turnover must be under $50 million. Grouping is along the same lines as the small business turnover tests.
b. Each entity that has an ABN and is registered as a PAYG Withholder is entitled to the incentive payment. If you get a BAS/IAS then you have an ABN. If “W” boxes appear on your BAS/IAS then you are registered for PAYGWT.
c. You must be an active employer on each IAS/BAS lodgement to continue to receive the payments (this is especially relevant to stage 2 payments). Whilst there is no clear information on what is considered to be active employer, we believe that you will be required to maintain the employment of at least one person. You will be required to have a number other than xero at W1 on your IAS/BAS. Therefore, Directors should continue to draw wages if they are still doing any work for the business.
d. You must have had an ABN and been registered for PAYGWT prior to 12 March 2020.
For Stage 1 – If you are a monthly remitter if PAYGWT is under $3333 in the March BAS then you will receive the minimum $10,000. If the PAYGWT in your March BAS is greater than $3333 then you will receive more than $10,000 (however it will be rare for a monthly remitter to pay under $3333 in PAYGWT).
If you are a quarterly remitter if PAYGWT is less than $10,000 in the March BAS then you will receive the minimum of $10,000 on lodgement of your March BAS. This will occur even if there was no PAYG Withheld. This will require a number other than zero at W1 (as mentioned above in 6.d).
For Stage 2 – As long as you are still an active employer then:
If you are a monthly remitter you will automatically receive $2500 on lodgement of each of the June/July/August/Sept IAS/BAS.
If you are a quarterly remitter you will automatically receive $5000 on lodgement of each of the June BAS and Sept BAS.
Variation in PAYG Instalments
Your March BAS will automatically include an amount of PAYG Instalment (either as a set amount or a percentage of your turnover).
As always, you are entitled to vary this amount or this percentage.
As a further assistance for small businesses, the ATO will allow you to vary the PAYGI amount to zero and in the process this will create a credit for the amount of PAYG Instalment that you paid on your September 2019 BAS and your December 2019 BAS.
There will be no penalties applied if you end up having income tax to pay in your 2019/20 Income Tax Return. This could provide a significant and immediate cashflow benefit either by using it to offset the net GST owing on your BAS or creating a credit on your running balance account that you can request the Taxation Office to pay to you.
However, this will mean that you may face a significant tax bill to pay this time next year, so you need to weigh up the immediate cashflow benefits against a potential looming tax bill.
Your Allan Hall Business advisor can assist you in determining if a variation to zero is the best course of action for you.
Other Incentives and Other Assistance Measures
We will continue to provide you with further information on other incentives that may be available to you.
These will include:
- Payroll tax relief
- Subsidies to cover wages of apprentices
- ATO payment plans
- Superannuation measures
- Unsecured bank loans backed by the government
- Instant asset write off
- Protection from insolvency
- Assistance on rent reduction for tenants
For some of these incentives, the government is yet to provide clear details, particularly in relation to rent assistance for tenants.
What Do You Need to Do?
There are no forms to complete. The ATO will provide the appropriate credit to your running balance account once you lodge your BAS/IAS.
If, as a result your running balance account is in credit, you can apply to the ATO to transfer the credit balance amount to your bank account.
However, it cannot be understated that what goes in to your March BAS is critical to ensure that you receive your full and proper entitlements.
How Can We Help at Allan Hall?
If you are uncertain about any aspect of the Boosting Cashflow for Employers incentive, we urge you to contact your Allan Hall Business advisor prior to lodging your March BAS.
There are integrity rules in place that will bring in to play significant penalties for artificial or contrived arrangements. Your Allan Hall Business advisor can assist you in understanding these integrity rules.
It is our intention to prioritise the relief measures that require the most urgent attention and we will continue to provide you with the required and relevant information to assist you and your business through these challenging times.
Please don’t hesitate to contact our team at Allan Hall Business Advisors should you have any queries or questions regarding the Boosting Cashflow for Employers incentive or any other assistance measures that are now in place.