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The stimulus package that the federal government announced 2 weeks ago included withholding tax credits equal to 50% of W2 reported from 28th April 2020 (in other words, the January-March 2020 BAS and onwards), with a maximum credit of $25,000. This has today been extended to 100% credit and capped at $50,000 for the period Jan-June 2020, and an additional credit available for wages reported from Jul-October, bringing the maximum available credits to $100,000.
Who is eligible?
Any business with a turnover of less than $50m (based on prior year turnover), and
That employ workers, and
The entity must continue to be active.
If you fall into this category, then you are eligible for the credit.
What do I need to do to get the credit?
You need to lodge a BAS for the period January-March 2020, April-June 2020, July-October 2020, or any monthly income activity statement where wages are reported over this period. Your BAS will need to include wages (W1) and witholding tax (W2). You will still need to pay GST but you will not need to pay the withholding tax.
Employers have an obligation to withhold tax at marginal rates using ATO-issued tax tables (or software that supports these rates). Employers will not be able to claim disproportionate withholding tax as this will not meet their legal obligations. For example, you will not be able to report salary $10,000 and withholding tax $10,000.
Eligible employers will receive a minimum 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. In other words, we will not be able to set up new companies for sole traders for the purpose of accessing this package.
We are here to assist our clients to meet their employer obligations and lodgement program. Please send us an email if you have any questions.
More information about this assistance package can be found here