Government Stimulus Stage 2 - Business Cash Flow AssistanceThe Federal Government released Stage 2 of its Stimulus Package this week and the measures have now been passed into law.
In particular, some of the concessions announced as part of Stage 1 of the Stimulus Package have now been expanded and increased, to provide cash flow assistance for eligible businesses (to manage cash flow challenges and to help businesses retain employees), in the form of:
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Boosting cash flow for employersSmall and medium-sized businesses and not-for-profit entities, with an aggregated annual turnover of less than $50 million (usually based on their prior year's turnover, including turnover of entities which are 'connected' or 'affiliates') that employ people, may be eligible to receive a total payment of up to $100,000 (with a minimum total payment of $20,000 ), based on their PAYG withholding obligations, in the following two stages: |
Stage 1 payment (credit)Commencing from the lodgment of activity statements from 28 April 2020, eligible employers that withhold PAYG tax on their employees' salary and wages will receive a tax-free payment equal to 100% of the amount withheld , up to a maximum of $50,000 .
Eligible employers that pay salary and wages will receive a minimum (tax-free) payment of $10,000 , even if they are not required to withhold PAYG tax.
The tax-free payment will broadly be calculated and paid by the ATO as an automatic credit to an employer, upon the lodgment of activity statements from 28 April 2020, with any resulting refund being paid to the employer. This means that:
We note that the minimum payment of $10,000 will be applied to an entity's first activity statement lodgment (whether for the month of March or the March quarter) from 28 April 2020.
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Stage 2 additional payment (credit)For employers that continue to be active , an additional (tax-free) payment will be available in respect of the June to October 2020 period , basically as follows:
The ATO will automatically calculate and pay the additional (tax-free) payment as a credit to an employer upon the lodgment of their activity statements from July 2020, with any resulting refund being paid to the employer. This concession is available to small and medium businesses, and based on the current available information, it has not been clarified whether entities deriving commercial rent or passive income will be eligible entities.
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It is also important to note that eligibility for the above payments is subject to a specific integrity rule which is designed to stop artificial or contrived arrangements that are implemented to obtain access to this measure. In particular, if an employer or an associate enters into a scheme with the sole or dominant purpose of obtaining or increasing any of the above payments for a particular employer, for a period, the employer will not be eligible for any such payments for the relevant period.
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Wages Subsidies for apprentices and traineesEmployers with less than 20 full-time employees, who retain an apprentice or trainee who was in training with the employer as at 1 March 2020 , may be entitled to Government funded wage subsidies equal to 50% of the apprentice's or trainee's wage paid during the nine months from 1 January 2020 to 30 September 2020 . The wage subsidy over the nine-month period will be a maximum of $21,000 per eligible apprentice or trainee (or $7,000 per quarter).
Employers can register for the subsidy from early April 2020 . Final claims for payment must be lodged by 31 December 2020. Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network ('AASN') provider. |
Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further. |
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