If anyone thinks that the hand outs given to employers will be passed down to their employees they're crazy. Maybe in some cases, maybe in a lot of cases, but the reality is probably more like the employers will hand out a little to some, skim a large chunk and then re-hire what's needed down the track without any worries at all because masses of workers will be desperate for work.
Yes and no. Case by case.
Let's take a cafe for instance. They have suppliers they need to pay. If you don't pay, you don't get supply and it wrecks your ability to make money to pay wages anyway. If you give business nothing, they will fail. Full stop. Good luck finding a job when this is all over unless you work for government or other safe industries.
Businesses aren't only an employer and employee relationship. They have suppliers, bills, rent etc.
But, you're right, for most SME employees, they will get their next payslip and their entitlements and either stood down or made redundant. Some will be able to stay on a needs basis if that business is making some sales.
Income support is available for employees that are stood down/lose jobs. The hope is the cash injection is enough for businesses to keep the doors open until things pick up again - hopefully the staff can slot straight back in.
For most, this cash injection will only help very small businesses and is not enough to cover 6 months worth of wages.
The cash injection is directly linked to retained employees. Employer doesn’t get it if they put people off
Correct - linked to employers that have staff.
The employer keeps the tax collected from any staff they have!
I thought that too, but I think it's correlated to wages rather than PAYG withholding. Maybe someone who's received advice can confirm.
Here's the treasury document with examples https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf
I'm going to speak to the accountant on Monday and get clarification.
I think that is from the original stimulus package not the new one?
Believe it's the new one because they mention the increase of minimum payment from $2,000 to $20,000 - I might be wrong. Is there a link to the new one you've found?
This is what I have found so far!
How does it work?
The tax-free payment is worth 100% of the tax that small and medium-sized businesses withhold from their employees’ salary and wages up to a maximum amount of $100,000.
The amount will be paid automatically by the Australian Taxation Office based on the business’s monthly or quarterly business activity statements.
This means it will be directly linked to keeping someone employed as the tax is calculated and withheld based on a worker’s wage.
Eligible businesses that pay salary and wages will receive a minimum payment of $20,000, even if they are not required to withhold tax.
Ok...I've read one of the examples and this is what I've understood.
Basically, if you pay tax for your employees, you will get up to $50,000 of all PAYG back as you pay it. Minimum payment is $20,000 upfront regardless of how much PAYG is withheld.
After you've claimed back $50,000 in total, you can receive another $50,000 (split in 25% increments) spread over each BAS period for a total of $100,000.
Really, this will only work for businesses that have revenue to sustain wages. Most businesses have dropped significantly, so it's unlikely to help much overall.
Its the encouragement to keep those employees on, basically the government will be paying roughly 32% of employee wages. When you look at the British government paying 80% of wages.
I understand the sentiment behind the policy, but I own a business and I can tell you that you need to be making enough in the first place for this to work.
Let's take a small cafe earning revenue of $10,000 per week.
Fixed expenses (rent, electricity etc.) is $5,000/wk.
Remaining to cover wages and stock is $5,000/wk
If they drop to 20% revenue (i.e. Sydney CBD cafes).
Sales are now $2,000/wk.
Fixed expenses are still $5,000/wk
Remaining is -$3,000
How do I buy stock to sell let alone pay an employee?
If we knew what date we'd have to last to, then perhaps people would get loans etc. to see them through, but how long can someone haemorrhage $3,000/wk before they need to cut staff and stop paying suppliers? What happens when you are forced to shutdown and your revenue goes to $0? Should you keep borrowing money just so you can get your PAYG back? Can I even get a loan for a business with $0 revenue?....(based on my work I can confirm it would be unlikely). Do I really want to borrow thousands of dollars to give to someone else with no guarantee I can pay it back in the future?
I mean, in the last month they've closed the country down and will soon force businesses to close their doors...How much confidence do you think business owners have in continuing to bear the expenses of their business indefinitely?
The reality is, the remaining revenue needs to be enough to cover the wage bill in the first place. If your business drops 80% overnight, you're probably not going to keep paying people just to sit around indefinitely to get a discount on your wages that you never had in your account to pay in the first place.
Sorry mate, my last post was agreeing with you but was still watching the footy. Our government offered to effectively pay less than 32% of wages. In the UK the government is paying 80%.
