This article was published on Friday 27 March 2020. As the COVID-19 situation continues to develop, you can find the information you need on government support at the ATO’s dedicated page.
Meeting payroll amid COVID-19 will undoubtedly be difficult for many Australian small businesses. So it’s reassuring to know that you may be eligible for a government cash-flow boost of up to $100,000. But you could miss out if you neglect a key bit of housekeeping: lodging your activity statement.
That’s because your activity statement (or BAS) is where you report PAYG withholding, and this is what the government will use to determine if you are eligible for a credit – and how much. The federal government is urging small and medium-sized employers to lodge their BAS by mid April to speed the delivery of aid. You don’t necessarily have to pay your tax bill on that date; payment may be deferred.
How do I get relief and when?
You don’t need to apply for the relief. If you’re eligible, it will be automatically delivered as credits in the ATO’s activity statement system after 21 April. Just get your BAS in.
If you are entitled to a refund, the funds will be deposited directly into your bank account. Alternatively they will be applied to your integrated account balance to reduce any other outstanding ATO liabilities you may have. If you don’t have your bank account details up to date with the ATO, you will not be prompted. We suggest you update these details using ATO Online or myGov.
How do you know whether you’re eligible? This ATO page provides a rundown, but the key criteria are that you must:
- Employ staff and report it on your activity statements at W1 and W2
- Have held an ABN on 12 March 2020 and continue to be active
- Have lodged your 2018-19 tax return or activity statement before 12 March 2020
- Have had an aggregated annual turnover under $50 million (assessed on the prior year’s tax return)
- Have made eligible payments you were required to withhold from (even if the amount you needed to withhold was zero). Eligible payments include, salary and wages, director fees, eligible retirement or termination payments, compensation payments and voluntary withholding from payments to contractors.
Filing your BAS in mid-April is admittedly earlier than the traditional 28 April deadline for businesses and 12 May for business advisors. But the earlier you lodge, the earlier the government can deliver relief. It is anticipated that the ATO will begin processing payments after 21 April.
If you have an activity-statement lodgement deferral (e.g. due to the recent bushfires and floods) you’ll still receive the cash flow boost – if you are eligible – at the time you lodge.
Getting your BAS together
If you’re an employer already using Single Touch Payroll, filing your BAS statement will be simpler than in years past. Hopefully you’re using online accounting software too, which will smooth things further. Add in a trusted accountant or bookkeeper who can ensure your BAS is in order, and the filing process should be relatively efficient.
This is a trying time for every business owner, and at Xero we want to help. It is our hope that as many of Australia’s 2.3 million small businesses as possible make it through the challenges COVID-19 will bring. With the latest technology, expert advice, and the support of government, we can help one another through the times ahead.
The next activity statement will be available to submit from within Xero or Xero Tax from Wednesday 1 April 2020.