| Wow, what a crazy year 2020 has been so far! Here at Beagle Bookkeeping Services we have been inundated with requests for further information on the stimulus package announced by the Government to assist businesses who are affected by COVID-19. Here is a little run-down on what is being offered which will hopefully clear up any uncertainties you may have in relation to your business and its eligibility. 1. TAX FREE GRANT Boosting cash flow for employers $2,000 min to $25,000 max This is the big one in the $18 billion stimulus package representing $7 billion of it. A tax free grant for employers – based on employee wages PAYG Withholding tax between 1 January 2020 (or if monthly 1 March 2020) and 30 June 2020. This grant is payable to employers by way of reduced BAS payments and will result in a credit allocated against your ATO Integrated Client account. If the grant puts you in a refund position for your overall BAS figure, the net credit will be refunded in line with the usual ATO turnaround times. If you have any outstanding amounts payable to the ATO or a payment arrangement in place, the credit will go towards reducing this balance. This will commence May 2020 and end July 2020. HOW TO PREPARE FOR THE GRANT 1) Ensure you pay your employees by the 31st March 2020 and 30 June 2020 if they are owed wages to that date. 2) Ensure bonuses are considered and if necessary, booked in this period. POSITIVES OF THE GRANT * Eligibility is for small and medium businesses that employ workers. * The grant is tax free. * It is payable as a reduction in BAS payment; and if that results in a credit you get that credit as a refund. * It is payable in May and July 2020 for quarterly employers. And monthly starting May for monthly payers. NEGATIVES OF THE GRANT * Doesn’t provide any cash for sole traders. * Doesn’t provide any cash for any business owners in respect of themselves where they are not paid as employees e.g. they get trust distributions. * Businesses who have sub-contractors are not eligible. 2. BUSINESS INVESTMENT INCENTIVES In order to assist businesses in the short term and encourage stronger growth, two incentives have been introduced. INSTANT ASSET WRITE OFF Instant asset write off will be granted for assets up to $150,000 (including second hand) that are used for the first time, or installed ready for use, between now and 30 June 2020. Payment isn’t the key so a quick decision may be required in order to get the asset before 30 June 2020. Currently this incentive exists for asset expenditure up to $30,000. The benefit of this incentive will depend on your tax rate. For example, a small business company will get 27.5% benefit. The tax benefit can be up to 45%. The cash effect of this benefit will be lost, to the extent that the deduction creates a tax loss, or your business has carried forward losses. The cash effect will occur when you have paid your 2020 tax. This could be soon, for example PAYG tax instalments in BAS’s may be able to be varied down. FURTHER QUERIES RELATING TO THE INCENTIVES? For more information on the full details of the stimulus package please go to the following link: https://treasury.gov.au/coronavirus |
| If you are still unsure as to how this stimulus package will affect your business please don’t hesitate to contact us. |
COVID-19 Government Business Stimulus Package