COVID-19 GOVERNMENT ASSISTANCE PACKAGES
At the time of printing, the Australian Government is offering the following Assistance Packages for business
The Coronavirus (COVID-19) has already had an enormous impact on Australians. These unprecedented times are a cause for concern, not just for the health of those in our communities, but also because of the economic strain it is placing on Australian businesses.
The Australian Government has announced a significant stimulus package to assist businesses most likely to face significant financial hardship. As an automotive business this certainly includes you. These assistance packages are designed to help businesses to keep people in jobs.
The below was correct at the time of printing – for the latest updates, please visit www.aaaa.com.au
Boosting Cash Flow for Automotive industry employers
The Government is providing up to $100,000 to eligible small and medium sized businesses (under $50m turnover) that employ people, with a minimum payment of $20,000. These payments will help cash flow so you can keep operating, pay rent, electricity and other bills and retain staff.
To be eligible for this tax-free payment, simply complete your Business Activity Statements on-time – this payment is delivered as an automatic credit and you do not need to undertake any additional application. More detail on the Boosting Cash Flow Stimulus package and how it applies to the auto aftermarket is outlined on the AAAA website.
“We have undertaken a comprehensive analysis of this support package and in our view the majority of AAAA member companies will be in a position to access the maximum $100,000 in financial support between now and October,” AAAA Chief Executive Officer, Stuart Charity, said.
“In essence the scheme works by rebating the PAYG withholding tax that you remit to the ATO on behalf of your employees via the lodgement of your BAS statement.”
For illustrative purposes the AAAA has put together a case study of an automotive repair business that has five employees – one front of house, three technicians and the owner/manager.
In this case study, we estimate the total monthly withholding tax paid by this business is around $10,600 per month and they lodge their BAS statement quarterly.
In this scenario, this business would receive $32k in assistance 14 days after they lodge their March BAS statement (which is due at the end of April). They would then receive a further $18k in assistance 14 days after they lodge their June BAS statement (which is due at the end of July). They would then be automatically paid $12,500 per month for the next four months – with the total assistance of $100,000 paid over the next seven months.
“The maximum amount claimable under this program is $100,000 regardless of the size of your business and the minimum amount claimable is $20,000,” Stuart said.
“Our analysis shows that if your monthly withholding tax is over $8,500 you will receive the full $100k. The only businesses that won’t be eligible are those that are under the threshold to lodge a BAS statement or who do not withhold PAYG for your employees.
“It is important to note that cash payments will only be made by the ATO if you are in credit – if you owe the tax office money then this rebate will be credited against your outstanding debt.
“Also important is the fact that you don’t have to pay it back if your business circumstances change later in the year. This program has one aim and that is to keep businesses trading and employing people over the next few months and if you have enough cash reserves to get you through to mid-May, then you will receive the initial $32k payment if you lodge your BAS on time.”
Support for Apprentices and Trainees
If you are a small business of under 20 full-time employees, and you currently employ and wish to retain an apprentice or trainee (as at 1 March 2020), you can apply to receive up to 50 percent of the wage for nine months: a maximum of $21,000 per eligible apprentice or trainee – or $7,000 per quarter. You can register for this scheme in early April.
The JobKeeper payment is targeted at businesses affected by the shutdowns in response to the spread of COVID-19 and is also available to the self-employed. Eligible employees will receive, at a minimum, $1,500 per fortnight, before tax.
Eligible businesses are those with under $1 Billion annual turnover with a reduction of 30 percent relative to a comparable period a year ago of at least a month, or businesses of more than $1 Billion annual turnover with a reduction of more than 50 percent relative to a comparable period a year ago of at least a month.
The payment is only for all staff employed with the business at 1 March 2020 who continue in employment each month. This includes, full-time, part-time, long-term casuals, and stood down employees. Casual employees eligible for the payments must have been in regular employment at least for the previous 12 months as at 1 March 2020. Employees that are re-engaged by a business that was their employer on 1 March 2020 will also be eligible.
You must apply for the payment and supporting evidence will be required by the ATO demonstrating a downturn in business. This would include evidence of the comparable month a year previous, and evidence of a reduction in this current month. In addition, employers must continue to report the number of eligible employees employed by the business on a monthly basis. Employers can register their interest at www.ato.gov.au and the ATO will then contact those businesses once the legislation is passed and applications are open.
Other COVID-19 Business Assistance
There are other COVID-19 business programs that are available to you, including Loan Guarantee Schemes and Accelerated Depreciation. In addition to the role it is playing in the above programs, the Australian Tax Office is also providing a number of support initiatives.
As the situation evolves, more details are sure to be unveiled by both the Federal and State Governments and the AAAA will be providing updates on these at www.aaaa.com.au
The AAAA encourages all members to speak to their accountants if possible, to make sure you maximising all of the stimulus package items available including State Government programs.
For more information and the latest updates, please visit www.aaaa.com.au