$25000 Coronavirus Rebate Explained
EMMA BOWDLER
I’m a cheerleader for women and an accountant bursting with personality.
(It is a CREDIT, not a REFUND!
The Boosting Cashflow for Employers measure announced by the Australian Government on 12 March 2020 is set to provide up to $25000 back to businesses, with a minimum payment of $2000 for those eligible.
However, just like the toilet paper saga, this too has sent the country into a spin with many thinking it’s a refund straight back into the bank account. Sadly, this isn’t the case at all. In most cases, it will simply reduce the amount owing to the ATO. If you happen to end up in a refund position, it is expected that the refund will be refunded within 14 days.
For example, let’s say you owe the ATO $14000 total for the March 2020 quarter. This is made up of $10000 GST and $4000 PAYG. You meet all the eligibility criteria. You’ll receive 50% credit for the PAYG component, therefore reducing your total payment to $12000.
“These measures have NOT been passed by parliament yet ”
EMMA BOWDLER
Eligibility
- Small and medium business entities with aggregated annual turnover under $50 million and that employ workers will be eligible.
- Eligibility will generally be based on prior year turnover.
- Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.
- Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000.
- Will be delivered by the ATO as a CREDIT in the activity statement system from 28 April 2020 upon lodgement of activity statement.
- It is a tax-free incentive
- Eligibility will generally be based on prior year turnover.
Now, I need to mention, these measures have NOT been passed by parliament yet and we don’t have all the finer details of how it will work.
But, the big question (for accountants) is are related party employees included? If the answer is yes, then this opens our clients up to some exceptional tax planning opportunities for the 2019/20 financial year.
So whilst we’d love ScoMo to open the government wallet and deposit $25000 into our bank accounts, it simply won’t work that way.
“I’m pleased the government is recognising what we are all going through”
EMMA BOWDLER
Along with the other incentives that were announced with this package (including an increase to the instant asset write off from $30000 to $150000), please research what they mean for you BEFORE you make any rash (and potentially costly) business decisions.
Time will tell what impact the Coronavirus pandemic will have on our economy, but right now, I’m pleased the government is recognising what we are all going through. Bush fires, floods and now Coronavirus.
Come on universe, give small business a break!
EMMA BOWDLER
I’m a cheerleader for women and an accountant bursting with personality.
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Emma is an award-winning international entrepreneur, cheerleader for women and an accountant bursting with personality. She loves helping women kick some serious goals in business.
Emma is a Fellow of the National Tax Agents Association (NTAA), a Registered Tax Agent, and a Justice of the Peace in Qld with a Bachelor of Commerce in Accounting,