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How the Australian Government’s $17.6bn Coronavirus Stimulus Package Affects Businesses with Employees

In light of the stimulus package released by the Australian Government on the 12th of March, 2020 we have compiled some information that’s relevant to you if you are a small to medium enterprise (SME) business owner with employees. The stimulus package is aimed to assist SME’s in paying their employee’s salaries and wages by reducing the amount of tax withheld payable to the ATO and by subsidizing apprentice and trainee wages for eligible employers.

Boosting Cash Flow for Employers

Small and medium sized businesses (with an annual turnover of less than $500 million) with employees are eligible for credits up to $25,000 for the March to June Business Activity Statement (BAS) & Instalment Activity Statements (IAS) lodgements.

If you lodge quarterly

You will receive a credit of 50% of your reported PAYG withholding for the BAS periods. This will be capped at $25,000 for the March and June quarters combined. For example, if your PAYG withholding for the March quarter is $40,000 the ATO will credit your account 50% of this ($20,000) once the BAS is lodged. You will then only be entitled to a credit of the remaining $5,000 of the cap in the following quarter.

If you lodge monthly

You will receive a credit of 150% of your reported PAYG withholding for your March BAS/IAS. This is to ensure you receive the full benefit of the credits and receive a similar treatment to the quarterly lodgers. For example, if your PAYG withholding for the month of March was $5,000, the ATO will credit your account $15,000. The rate will return to 50% for the months April, May, & June until you reach the $25,000 cap.

SME businesses that pay salary and wages but are not required to withhold tax are entitled to a one-off payment of $2,000.

If you employ apprentices/trainees

A wage subsidy of up to $21,000 per apprentice has been announced for all businesses with under 20 employees. Any apprentices or trainees must have been in training on or before 1 March 2020 to be eligible. You will be entitled to 50% of the apprentice/trainee’s wage from 1st January 2020 to 30 September 2020. The payments will be separated into a maximum of $7,000 per quarter, per apprentice.

Employers can register for the subsidy from early April. Final claims for payment must be made by 31st December 2020.

For further information please visit www.dese.gov.au.

If you have any questions regarding the information above and how it applies to your business, please get in contact with us via email or phone.