Further to my prior blog post about the first Corona Virus stimulus package, we now have a bit more detail about how those running a business can (or in some cases can’t) make a claim.
First the sole traders & freelancers among you. Well a very disappointing outcome for the sole traders of Australia, as you can’t claim any cash at all. Yep, unless you have employees it is zip for you guys. Although you might like to avail yourself of a different part of the package, which has removed the entrance fees for Kakadu, Uluru and Booderee National Parks, with a trip away while your business falls in a heap!
Those business which have employees fair somewhat better, you can get some cash back – or more correctly receive a credit against employee PAYG tax. If you have had the joy of mastering single touch payroll, you probably fall in this group.
This is how it works. Businesses that report payroll quarterly on their BAS will receive a credit based on the amount shown at W2 (PAYG withheld on employee’s salaries), on their March 2020 and June 2020 BAS. The credit will be a minimum of $10k and a maximum of $50k in total.
Those businesses that report wages monthly will receive 100% of the W2 amount for the months of Mar, April and May, and then 3 x 100% of the W2 amount for the month of June 2020.
The credits will happen automatically – you don’t need to apply for them. The effect is, that if we assume your average employee has tax deducted at 30%, your total wages bill will be 30% less than normal for 4 months – subject to the $50k cap.
Some things to consider are
- that if you have had to let go of employees already you will not benefit as much from this,
- before you decide to pay large salaries to try and get a bigger credit, you will still need to pay the super. And,
- no, you can’t be an employee of yourself if you are a sole trader.
No doubt there will be lots of questions at BAS time later in the month. Luckily the ATO have set up a special small business shopfront to assist small business owners with their Covid-19 queries – oddly however it is in Cairns!
Lindsay 0413 952 180