COVID-19 stimulus PAYG benefits

The Government has announced a range of programs to stimulate the economy. One of those, the cashflow boost, assists business’ that employ staff. The following is a summary of that initiative.

To be eligible for the PAYG cash flow boost, the following criteria apply:

  • Your aggregated annual turnover must not exceed $50m (based on prior year);
  • Held an ABN at 12 March 2020 and continue to be active;
  • Made eligible payments you are required to withhold from (commonly but not exclusively, wages and directors fees), even if you were not required to withhold as PAYG-W was zero;
  • And, either (i) derived business income in the 2018–19 income year and lodged your 2019 tax return on or before 12 March 2020, or (ii) made GST taxable, GST-free or input-taxed sales in a previous tax period (since 1 July 2018) and lodged the relevant activity statement on or before 12 March 2020.
  • The entity (or its associate or agent) has not engaged in a scheme for the sole or dominant purpose of seeking to make the entity entitled to the payment or to increase the entitlement of the entity to the payment

For Not-For-Profits:

  • Held an active ABN on 12 March 2020;
  • Have an aggregate annual turnover of less than $50 million; and
  • Made payments to employees.

The benefits are payable in two components.

Initial Cash Flow Boost (in two parts)

Up to $50,000 will be credited to the business based on PAYG amounts withheld.

Eligible businesses may receive a minimum payment of $10,000, even when they do not withhold PAYG. However to receive more than $10,000 following the receipt of the minimum cash flow boost an entity must withhold more than $10,000 across the relevant activity statements.

The ATO will make payments of the initial cash flow boost, no earlier than 28 April 2020, even if the activity statement is lodged prior to that date.

Monthly Withholders will receive a credit equal to 3 x the amount of PAYG withheld reported on the March Activity Statement (subject to $10,000 minimum, $50,000 maximum).

In addition, a further amount equal to the total of the PAYG Withheld reported in the April, May and June activity statements, subject to the $50,000 maximum across the four activity statements.

Quarterly Withholders will receive a credit equal to 1 x the amount of PAYG withheld reported on the March Activity Statement (subject to $10,000 minimum, $50,000 maximum).

In addition, a further amount equal to the total of the PAYG Withheld reported in the quarterly June activity statement, subject to the $50,000 maximum across the two quarterly activity statements.

Additional Cash Flow Boost

The additional cash flow boost will be an amount equal to the total you receive under the initial cash flow boost, with an overall maximum across both rounds of $100,000.

The additional cashflow boost will be credited differently depending on whether you are a quarterly or monthly withholder.

Quarterly Withholders will receive 50% of the second round upon lodging the June Activity Statement (in July), and 50% on lodging the September Activity Statement (in October).

Monthly Withholders will receive the second round in four equal credits of 25% each upon lodging the June, July, August and September Activity Statements.

An entity doesn’t need to withhold tax from wages or applicable payments to access the additional cash flow boost, they are only required to lodge an activity statement.

These cashflow boost benefits are tax free.

You do not need to apply for the cash flow benefits.

If you are eligible, they will be automatically applied to your account on lodgement of activity statements for the relevant periods.

To access the cash flow benefits, you must lodge your activity statements.

The cash flow benefits will be applied to reduce liabilities arising from the same activity statement. This will result in eligible entities being required to pay less to the ATO.

Generally where a credit exceeds your other tax liabilities, the ATO will provide you with a refund of the excess amount.

Essentially, it means cash that is sitting in your bank account which would otherwise have been used to pay your Activity Statement debt can now be used for other purposes.

Alternatively, if you have an ATO debt, this simply reduces the value of the total debt you otherwise would have with the ATO.

For more details, clickhere.

If you would like to discuss your situation further, please contact us via the details below or email enquiry@primefinancial.com.au

Melbourne

Matt Murphy – mattm@primefinancial.com.au
Brendan Brown – brendanb@primefinancial.com.au
Simone Quin – simoneq@primefinancial.com.au
Paul Minieri – paulm@primefinancial.com.au
Jade Nicholls – jaden@primefinancial.com.au
Stuart Thomson – stuartt@primefinancial.com.au

Brisbane

Matthew Smith – matts@primefinancial.com.au
John Driscoll – johnd@primefinancial.com.au
Sean Fincham – seanf@primefinancial.com.au

Sydney

John Driscoll – johnd@primefinancial.com.au
Sean Fincham – seanf@primefinancial.com.au

This post is provided by Prime Accounting and Business Advisory Pty Ltd. Liability limited by a scheme approved under Professional Standards Legislation. This post is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this post. All information is subject to change without notice. We and each party providing material displayed in this post disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of information or material in this post. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.

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