The government have today passed the legislation based on the announcements made on the 12th and 22nd March 2020 as measures to help the economy withstand and recover from the economic impact of COVID-19 (coronavirus). 

The below information is relating to the part of the government stimulus referred to by the government, the ATO and the media as the “Boosting Cash Flow For Employers” section of the package. 

Below is a list of the measures relating to small and medium business: 

Cash flow for employers – Initial Payment 

The Government is providing up to $100,000 to eligible small and medium sized businesses, with a minimum payment of $20,000 

These payments are to help businesses cash flow so they can keep operating, pay their rent and other operating expenses and retain their staff. 

Employers will receive a payment equal to 100 per cent of their salary and wages withheld, with the maximum payment being $50,000. The minimum payment is $10,000. 

Eligibility – Cash Flow for Employers – Initial Payment 

Small and medium sized business entities and NFPs with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover. 

• The payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements. 
• Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100 per cent of the amount withheld, up to a maximum payment of $50,000. 
• Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.
• The payments will only be available to active eligible employers established prior to 12 March 2020. However, charities which are registered with the Australian Charities and Not-for-profits Commission will be eligible regardless of when they were registered, subject to meeting other eligibility requirements. This recognises that new charities may be established in response to the Coronavirus pandemic. 

Timing – Cash flow for employers – Initial Payment 

The Cash Flow for Employers – Initial Payment will be applied to a limited number of activity statement lodgements. The ATO will deliver the payment as a credit to the entity upon lodgement of their activity statements. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days. 

Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020. 

Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (300 per cent) in the March 2020 activity statement. 

The minimum payment will be applied to the entities’ first lodgement. 

Cash flow for employers – Additional Payment 

An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments. This additional payment continues cash flow support over a longer period, increasing confidence, helping employers to retain staff and helping entities to keep operating. 

Eligibility – Cash flow for employers – Additional Payment 

To qualify for the additional payment, the entity must continue to be active. 

For monthly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgement of their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000). 

For quarterly activity statement lodgers the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for Employers payment following the lodgement of their June 2020 and September 2020 activity statements (up to a total of $50,000). 

Timing – Cash flow for employers – Additional Payment 

The additional payment will be applied to a limited number of activity statement lodgements. The ATO will deliver the payment as a credit to the entity upon lodgement of their activity statements. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days. 

Quarterly lodgers will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020. Each additional payment will be equal to half of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000). 

Monthly lodgers will be eligible to receive the additional payment for the June 2020, July 2020, 

August 2020 and September 2020 lodgements. Each additional payment will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000). 

Fuse Accounting Commentary: 

Please note the announcement made by the government on the 22 March 2020, some refer to as the second round of the Stimulus and within this write up it is referred to as the “Enhanced Scheme” or “Enhanced Measures” is not in addition to the amounts announced on the 12 March 2020, in effect they overwrite what was originally announced on 12 March 2020. For Example, This statement is taken from the Australian Governments Treasury Department Fact Sheet taken from the Tim’s Courier Business Example:  

Under the previously announced Boosting Cash Flow for Employers measure, Tim’s business would have received a total payment of $2,000. 

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Tim’s business will receive $20,000. This is an additional $18,000 to support his business. 

These payments from the ATO will be made to business starting from 28 April 2020 and is structured in a way that the amounts will be essentially based on the data lodged in the upcoming Business Activity Statements for Quarterly Lodgers and Instalment Activity Statements for Monthly lodgers for all eligible employing entities.  

I will be assisting all clients to obtain amounts they are eligible for. 

SUPPORTING APPRENTICES AND TRAINEES 

Summary 

The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer. 

Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter). 

Support will also be provided to the National Apprentice Employment Network, the peak national body representing Group Training Organisations, to co-ordinate the re-employment of displaced apprentices and trainees throughout their network of host employers across Australia. 

Eligibility 

The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020. 

Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will be eligible for the subsidy. 

Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider. 

This measure will support up to 70,000 small businesses, employing around 117,000 apprentices. 

Timing 

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

Further information is available at: 

• The Department of Education, Skills and Employment website at: www.dese.gov.au 
• Australian Apprenticeships website at: www.australianapprenticeships.gov.au 

For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network (AASN) provider. 

If you need any further information at this time please contact Fuse Accounting. 

We understand everyone, both individuals and businesses, may be affected by the coronavirus crisis and we hope for everyone to have strength through this difficult time and to reach out to friends, family or myself if you are struggling and need someone to talk to. We want to see everyone get through this trying time. 

Elliot Johnson

Fuse Accounting 

This blog is intended to give an overview of the taxation issues involved and does not constitute tax advice. It is important that you consider appropriate tax advice that suits your circumstances.