The government’s coronavirus stimulus package explained
Last week the government announced a significant stimulus package aimed at keeping small businesses afloat through the coronavirus crisis. But according to many people that I’ve spoken to, the details and the potential impact have been lost among the coronavirus noise.
So here’s a breakdown.
Basically the stimulus package amounts to a tax break for small businesses that employ staff. This is the key. In order to be eligible, a business must employ at least one staff member.
The tax break is equal to a 50% rebate on tax paid up to $50,000. This means a maximum rebate of $25,000.
As an example, let’s consider a business that has three employees:
– Employee 1 earns $100,000, so the employer pays $25,000 tax
– Employee 2 earns $80,000, so the employer pays $18,000 tax
– Employee 3 earns $50,000, so the employer pays $7,500 tax
– The employer’s total annual tax bill is approximately $50,000
– Their quarterly tax bill is approximately $12,500
– Which means their quarterly tax rebate under this stimulus package equals approximately $6,250
That’s $6,250 back into the coffers of the business, which is a huge boost to keeping that business afloat through this crisis.
Let’s not underestimate the impact of this cash in the economy. We’re talking about 6000 businesses benefiting, and up to 8 million employees.
Of course, as always, if you’re concerned about your own financial position or that of your business, please don’t hesitate to get int ouch, we’re here to help.