Boosting Cashflow for Employers

This is simply a rebate of 100% of the PAYG Withholding you pay on your employees wages. It is delivered in 2 tranches. The 1st tranche (from 1 January 2020 to 30 June 2020) is a minimum of $10k (even if you don’t withhold $10k in total) and a maximum of $50k (even if you withhold more than $50k). The 2nd tranche is the same amount you qualified for in the 1st tranche delivered over 4 months, July - October 2020. This means at a minimum you will receive $20k between March - October if you are eligible, and a maximum of $100k.

This is a straight cash flow boost to your business. For many of you, that means you will have additional money saved in your tax bank accounts as you won’t have to physically pay the PAYG that you have been putting money aside for.

Payments - Tranche 1

Payments will be made via the ATO and will be determined based on the Wages and PAYG Withholding you lodge in your Activity Statements.

It’s important to note that if you employ someone and you don't have to withhold tax on their wages you will still receive $10k.

If you pay PAYG Withholding MONTHLY you will receive 3 x the PAYG amount you report in your March BAS, and then 100% of the PAYG you withhold in the April + May + June Activity Statements.

If you pay PAYG Withholding QUARTERLY you will receive 100% of the PAYG you withhold in the March BAS and 100% of the PAYG you withhold in the June BAS.

It’s important to note that the rebate stops as soon as your PAYG withholding amount for that period hits $50k.

To make things just a little bit more complicated EVERYONE who is eligible to receive the Boosting Cashflow stimulus will receive a minimum of $10k after lodging the March BAS, even if you have not withheld the full $10k in PAYG Withholding. The catch is that you don’t get any additional rebate until after your PAYG Withholding exceeds the $10k amount already paid.

It's important to note that the payment will not be made until after your BAS has been lodged and will only be made to you if your ATO account is in Credit. Ie if you owe the ATO money this will come off your existing debt.

Payments - Tranche 2

The payments for Tranche 2 are much simpler.

If you pay PAYG Withholding MONTHLY you will receive 25% of the total amount you qualified for in Tranche 1 in July, then another 25% in August, 25% in September and 25% in October.

If you pay PAYG Withholding QUARTERLY you will receive 50% of the total amount you qualified for in Tranche 1 in July and 50% in October.

Eligibility

To be eligible :

• Must have held an ABN on 12 March 2020
• Annual Turnover is under $50million
• Made eligible payments to employees (Salary, Wages, Directors Fees, ETP’s)
• You must also have derived business income in 18-19 year and lodged 2019 return before 12th March, OR, made GST taxable or GST-Free sales since 1 July 2018 and lodged an activity statement before 12th March

Note, the legislation also states that the entity is not eligible if it has entered into a scheme for the sole or dominant purpose of :

• Making the entity entitled to the cash flow boost
• Increasing the amount of the cash flow boost

Accounting & Administration

Thankfully there is no application process for this rebate, it is simply calculated by the ATO upon lodgement of your Activity Statements. As with most of these grants the sooner you have your accounts reconciled the quicker we can do the calculations for you and the sooner you know your rebate amount.

So you don’t need to do anything, we will be in touch each Month or Quarter to let you know the rebate amount.

If you are unsure how much PAYG Withholding you normally pay, jump into Payroll in Xero, go to pay employees and look at the tax column.

From an accounting perspective these payments are classified as Tax-Free Income. They will show up on your Profit and Loss, but won’t be included as income for calculating how much tax you need to pay on your business profit. You will start to see this in Xero in an account called Cashflow Boost (Covd-19).

Examples

Quarterly Lodger who withholds less than $10k per 6 months

Boss has 1 employee and he lodges his Activity Statements Quarterly. He normally withholds $2k a month on the employees wages.

In the March 2020 BAS he lodges $6k as the PAYG withholding amount. As the minimum payment is $10k Boss will be eligible to receive $10k as a credit on his Activity Statement even though he has only withheld $6k.

In the June 2020 BAS he lodges $6k as the PAYG withholding amount. Boss will be eligible to receive $2k as a credit on his Activity Statement as he has already received $10k previously which is $4k more than his previous withholding.

As Boss has lodged $12k in PAYG withholding in the March and June Quarterly Activity Statements he will receive the $12k again paid 50% in July and 50% in October, ie $6k in July and $6k in October.

Quarterly Lodger who withholds $5k per month

Boss has 3 employees and he lodges his Activity Statements Quarterly. He normally withholds $5k a month on the employees wages.

In the March 2020 BAS he lodges $15k as the PAYG withholding amount. Boss will be eligible to receive $15k as a credit on his Activity Statement.

In the June 2020 BAS he lodges $15k as the PAYG withholding amount. Boss will be eligible to receive $15k as a credit on his Activity Statement as this amount is still under the $50k maximum threshold.

As Boss has lodged $30k in PAYG withholding in the March and June Quarterly Activity Statements he will receive the $30k again paid 50% in July and 50% in October, ie $15k in July and $15k in October.

Monthly Lodger who withholds $5k per month

Boss has 3 employees and he lodges his Activity Statements Monthly. He normally withholds $5k a month on the employees wages.

In the March 2020 BAS he lodges $5k as the PAYG withholding amount. As Boss is a monthly lodger he is entitled to 3 x the monthly amount back in March, ie $15k. This $15k will be a credit on his Activity Statement.

In the April 2020 BAS he lodges $5k as the PAYG withholding amount. Boss will be eligible to receive $5k as a credit on his Activity Statement.

In the May 2020 BAS he lodges $5k as the PAYG withholding amount. Boss will be eligible to receive $5k as a credit on his Activity Statement.

In the June 2020 BAS he lodges $5k as the PAYG withholding amount. Boss will be eligible to receive $5k as a credit on his Activity Statement.

As Boss has lodged $30k in PAYG withholding in the March to June Monthly Activity Statements he will receive the $30k again paid 25% in July, 25% in August, 25% in September and 25% in October, ie $7,500 per month.

Monthly lodger who withholds $15k per month

Boss has 6 employees and he lodges his Activity Statements Monthly. He normally withholds $15k a month on the employees wages.

In the March 2020 BAS he lodges $15k as the PAYG withholding amount. As Boss is a monthly lodger he is entitled to 3 x the monthly amount back in March, ie $45k. This $45k will be a credit on his Activity Statement.

In the April 2020 BAS he lodges $15k as the PAYG withholding amount. Boss will be eligible to receive $5k as a credit on his Activity Statement. This is because Boss has already reached the $50k maximum threshold.

In the May 2020 BAS he lodges $15k as the PAYG withholding amount. Boss will not be eligible for any rebate as he has already claimed the maximum threshold.

In the June 2020 BAS he lodges $15k as the PAYG withholding amount. Boss will not be eligible for any rebate as he has already claimed the maximum threshold.

As Boss has lodged greater than $50k in PAYG withholding in the March to June Monthly Activity Statements he will receive the $50k again paid 25% in July, 25% in August, 25% in September and 25% in October, ie $12,500 per month.

50% Subsidy on Apprenticeship wages

A wage subsidy is available for businesses to retain apprentices and trainees.

Payments

At the end of each Quarter your Apprenticeship provider will give you a rebate (cash paid into your bank account) of 50% of the total Apprentice wages for the Quarter.

This goes from 1 January to 30 September, meaning you will get this rebate for 3 Quarterly periods.

The maximum you can receive per Apprentice is $21,000, or $7,000 per apprentice per quarter.

Eligibility

The business must employ fewer than 20 full-time employees

The business must retain the employee. It's important to note that if you employ a new apprentice that was displaced from another employer you will be eligible for the rebate.

The Apprentice must have been with the employer on the 1st March

Final claims for payment must be made before 31 December 2020

Accounting & Administration

Eligibility assessments will need to be done by an Australian Apprenticeship Support Network Provider.

Part of the process for application means providing your Apprenticement provider with documentation showing the payments made to your employees each Quarter. You also need to be sure you have the employees classification setup correctly in Xero AND the correct Apprenticeship code. This will mean the reports that you produce from Xero will be sufficient evidence to ensure prompt payment of the grant. If you are unsure how to do this give Carina in our office a buzz.

From an accounting perspective these payments are classified as Taxable Income, but with no GST. They will show up on your Profit and Loss, and be included as income for calculating how much tax you need to pay on your business profit. You will start to see this in Xero in an account called Apprenticeship Rebate.

Examples

Boss has expanded and now has an Apprentice on the books named Underling. Underling started her apprenticeship on the 2nd January so was already employed on the 1st March. Underling is paid a wage of $7,500 a quarter.

At the end of March, Boss lodges payslips for Underling showing gross wages of $7,500 for the Quarter. Boss will be paid $3,750 from the Apprenticeship provider being 50% of the wages paid for the Quarter.

Assuming Underling doesn’t get a payrise, Boss will be paid $3,750 at the end of the June Quarter and again at the end of the September quarter.

Instant Asset Write-Off

While the above are all cash payments there are also some additional tax planning incentives announced as well. The 1st is the increase of the Instant Asset Write Off from $30,000 to $150,000 for assets purchased after 12 March 2020 and before 30 June 2020.

Whenever you purchase an asset for your business (a car, computer, machinery etc) you generally need to depreciate or claim the cost of this asset over a number of years in your tax returns.

In the last budget the government increased this threshold meaning anything costing less than $30k could be claimed as a tax deduction immediately rather than needing to be claimed over a number of years.

With this new announcement…..

Any assets purchased between 1 July 2019 and 11 March 2020 and costing less than $30,000 can be written off in full. If more than this amount they will need to be depreciated, or claimed over a number of years.

Any assets purchased between 12 March 2020 and 30 June 2020 and costing less than $150,000 can be written off in full. If more than this amount they will need to be depreciated, or claimed over a number of years.

It’s important to note that as the legislation stands, any assets purchased from 1 July 2020 and costing less than $1,000 can be written off in full. Everything else will need to be depreciated, or claimed over a number of years.

Note all of these figures are the GST Exclusive cost of the asset.

Payments

There are no ‘payments’ being made for this stimulus by the government. This measure is simply allowing you to claim the cost of the asset you are purchasing as a deduction this year, rather than claiming over multiple years.

Remember you need to a) be making a profit and have to pay tax in order for this to apply, and b) have the cash flow in your business to support and sustain the purchase.

Eligibility

For an asset to be eligible for the instant asset write-off it must be first used for a taxable purpose in the period 12 March 2020 to 30 June 2020. Alternatively, the asset must be installed and ready for use in that period.

Your turnover also needs to be under $500million to qualify.

Example

Let’s say you needed to purchase a new Truck for your Electrical business. This truck costs $50k excluding GST, and you purchased it (ie drove it out of the car dealership) on the 14th April 2020. Based on the new rules you would be eligible to claim the total cost as a tax deduction this year. That means your profit would decrease by $50k, and you would save $13,750 in Tax.

Accelerating Depreciation

Similarly with the Instant Asset write-off increase, the government has also announced a 15 month investment incentive by accelerating depreciation deductions.

Under this incentive you claim 50% of the cost of an asset upfront, and the remaining 50% being depreciated under the normal rules.

This assumes the asset you are purchasing falls outside of the Instant Asset Write-off rules above.

Payments

Again, there are no ‘payments’ being made for this stimulus by the government. This measure is simply allowing you to claim the cost of 50% of the asset you are purchasing as a deduction this year, rather than claiming over multiple years. And the remainder of the asset under normal depreciation rules.

Remember you need to a) be making a profit and have to pay tax in order for this to apply, and b) have the cash flow in your business to support and sustain the purchase.

Eligibility

This incentive is only available to those businesses with a turnover of less than $500million

It’s important to note that the asset needs to be installed and ready for use in order to claim the 50% deduction.

The asset needs purchased between 12 March 2020 and 30 June 2021

The asset purchased needs to be new and not owned by a previous entity (ie not 2nd hand).

The asset also cannot have been depreciated previously.

Example

You purchase a large still to make hand sanitiser on the 14th April 2020 at a cost of $250k excluding GST. The still is installed in your factory on this day ready to start production. Normally you would pool this piece of equipment and therefore claim 15% of the cost this year and then 30% of the balance each year thereafter. Instead with these new rules you will claim $125k as a deduction this year being 50% of the total cost of the asset, and the remaining $125k you will claim 15% of (being your normal depreciation rules) ie $18,750.

Now again this is a tax deduction only, not money back from the government. Based on this example and assuming you are a company paying 27.5% tax you would save $39,531 in tax.

Cash Flow Loans

The government is encouraging banks to lend to small businesses by guaranteeing 50% of loans issued to small businesses. These loans are short term unsecured loans (up to 3 years). They can only be for a maximum of $250,000 with a 6 month repayment holiday.

The easiest way to apply for this is with your current bank. As each process is slightly different you will need to go through the motions starting with registering your intent to claim. This could be as easy as contacting your banking manager or sending a secure mail message through your internet banking.

Note if you are not with a major bank you will not be able to apply for these loans.You can alternatively look to move your banking if you desperately need one of these loans.

Remember, these loans are designed to be temporary and be paid back (or refinanced) in the short term. There is no sense applying for this unless you have exhausted your other options and you know you can pay this back when trading returns to normal.

Please reach out to us if you are looking to go down this path.

Commercial Tenancy Code

The National Cabinet’s mandatory Code of Conduct for commercial tenancies (Code), released on 7 April 2020, aims to impose a set of good faith leasing principles for negotiations between landlords and tenants. Specifically, the Code relates to measures the two parties can agree on and implement to alleviate financial stress and hardship stemming from the COVID-19 pandemic.

The code will be legislated by the States, and will be mandatory. To be eligible you need to have a turnover of less than $50million and be eligible for the JobKeeper rebate.

The details :

Landlords must not terminate leases for non-payment of rent & tenants need to continue to comply with lease obligations. Interest and charges cannot be applied to accounts.

Landlords must freeze rent increases for the period of the pandemic and a reasonable period afterwards.

Landlords must pass on rent reductions proportionate to the turnover reduction of the tenant.

Landlords must pass on any statutory reductions such as land tax etc to tenants.

An Example :

Let's assume a tenant has had a reduction in income of 60% and they normally pay $10,000 a month in rent. They could expect a proportionate reduction in rent.

In this example they would be expecting $6,000 proportionment reduction.

As the code stands 50% of the reduction needs to be provided as a complete waiver of rent, ie rent free. And the other 50% needs to be a deferral of rent over a minimum of 24 months.

This would mean $3,000 of rent would not be payable by the tenant, and the $3,000 would be amortised over a minimum 24 month period.

Care should also be taken to ensure that any repayment of the deferred rent does not compromise the ability of the tenant to recover from the crisis.

NSW

Business Grants for NSW Businesses

Grants of up to $10,000 are being offered to NSW businesses which must be used for funding unavoidable business costs such as utilities, overheads, legal costs and financial advice.

To be eligible, businesses will need to:

• Have between 1-19 employees and a turnover of more than $75,000;
• A payroll below the NSW Government 2019-20 payroll tax threshold of $900,000;
• Have an Australian Business Number as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020;
• Be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020;
• Use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice;
• Provide appropriate documentation upon application.

Payroll Tax Concessions

No Payroll Tax to be paid for March, April or May

When your annual reconciliation is lodged in July you will get an exemption of 25% of your total payroll liability for the year (note this includes the wages you paid in March - June)

VIC

Business Support Fund

Funding of $10,000 per business is available and will be allocated through a grant process.

• Employ staff
• Have been subject to closure or is highly impacted by shutdown restrictions
• Have a turnover of more than $75,000
• Have payroll of less than $650,000
• Hold an Australian Business Number (ABN) and have held that ABN at 16 March 2020
• Have been engaged in carrying out the operation of the business in the Australian State of Victoria on 16 March 2020.

Activities ceased :

• Cafés and food courts
• Retail and commercial premises
• Beauty and personal care services
• Entertainment venues
• Community and recreation centres
• Outdoor recreation

This support fund is designed to help with :

• Meeting business costs, including utilities, salaries, rent
• Seeking financial, legal or other advice to support business continuity planning
• Developing the business through marketing and communications activities
• Other supporting activities related to the operation of the business.

Business Grants for Melbourne Businesses

The city of Melbourne is offering $5 million in grants for small to medium sized businesses to invest in online and e-commerce capabilities, take part in training and professional development, and undertake capital works.

Grants include:

• Up to $5000 for investing in online and e-commerce activities.
• Up to $2000 for training and professional development.
• Up to $10,000 for capital works projects (matching dollar-for-dollar) to adapt to changing conditions.

💡 How to apply?

• Eligible businesses and organisations can apply online.
• To discuss your situation, or if you have any questions, contact our COVID-19 Business Concierge Hotline on 9658 9658 (press 1 for business).

Payroll Tax Concessions

For those with Annual Payroll of up to $3million this year NO PAYROLL TAX. If you have already paid during the year you will receive a refund.

QLD

Business Grants

Interest Free State Government Loans

The QLD Government will offer $500m in loans to eligible businesses to retain employees and maintain operations. Details are:

• Maximum loan up to $250,000
• No repayments or interest charged for the first year
• Plus two years interest only
• 2.5% fixed interest rate
• 10-year term of loan
• Open until 25 September 2020 or until funding is fully committed.

Payroll Tax Concessions

An employer who pays $6.5 million or less in taxable wages can obtain a refund of payroll tax for 2 months and a payroll tax holiday for 3 months. The employer can also apply for a deferral of payroll tax for the 2020 calendar year.

An employer who pays more than $6.5 million taxable wages and has been “negatively affected” by coronavirus can apply for deferral of payroll tax for the 2020 calendar year and a refund of payroll tax for 2 months.

SA

Business Grants

Small businesses and not-for-profit entities that employ South Australians who have been highly impacted by the COVID-19 pandemic may be eligible to receive a $10,000 grant to support the operation of their business.

The grant is being funded from the State Government’s $650 million Jobs Rescue Package.

To be eligible, businesses and not-for-profits including eligible sporting and community organisations will need to:

• Employ people in South Australia.
• Have annual turnover of more than $75,000 (GST exclusive).
• Have an annual payroll of less than $1.5 million, and not be entitled to a payroll tax waiver under COVID-19 support measures introduced by the South Australian Government.
• Have an ABN and were carrying on the operation of the business in South Australia on 1 March 2020.
• Have been subject to closure or highly impacted by COVID-19 related restrictions^.
• Apply by 1 June 2020.
• Use the funds to support activities related to the operation of the business.

If:

• The business has received any South Australian Government grants provided to address COVID-19 related business impacts, the value of these payment(s) will be deducted from the $10,000 grant.
• The business is part of a group of companies that is registered for payroll tax and will receive the payroll tax waiver, the business is ineligible for this grant.

Applications for the grant will open shortly and be available until 1 June 2020.

Payroll Tax Concessions

A 6-month waiver for all businesses with an annual payroll up to $4 million. Employers with grouped annual wages above $4m able to defer for 6 months if they can demonstrate a significant impact on their cash flow caused by COVID-19.

WA

Business Grants

The Western Australian Government has announced measures to support small business during the coronavirus (COVID-19) pandemic.

The small business relief includes:

• $17,500 grants for small businesses with a payroll between $1 million and $4 million.
• The $1 million payroll tax threshold (announced in October 2019) will be brought forward by six months to 1 July 2020.
• The WA Government will waive rental payments for small businesses and not-for-profit groups in State Government-owned buildings for six months.

As well as the following measures announced on 31 March 2020:

• One-off $2,500 credit on electricity bills for small businesses that consume less than 50MWh per annum. For more information read the statements on the Synergy and Horizon Power websites.
• Power and water disconnections will not occur and interest will not be charged on deferred payments until 30 September for small businesses facing financial difficulty due to COVID-19. Please note: This applies to Synergy and Horizon Power customers.
• Payroll tax will be waived for four months for businesses with annual wages under $7.5 million (NB: this replaces the previous payroll deferral measure which was announced).
• Affected businesses can apply for interest free payment arrangements and for late payment penalties to be waved for a range of taxes and duties, including payroll tax, transfer duty, landholder duty, vehicle licence duty or land tax.
• A range of business licence fees have been waived, including liquor licence renewal fees for 2020, which will be waived and refunds given to businesses that have already paid.

Payroll Tax Concessions

One off grants are available for employers with Australian wages between $1million and $4million. Grant total is $17,500