Archive

Please reload

Tags

Please reload

Cash Flow Boost for Employers

April 6, 2020

 

 

In this article we will provide further clarity on the governments Cash Flow Boost incentive.

 

As of today, legislation has not been passed on the Jobkeeper subsidy so we will refrain from providing any further detail on this subsidy until the law has passed.

 

We write to you today to better explain how the cash flow boost for employers will work as this is now coming into effect this month.

 

There has been a lot of confusion as to the calculation for this boost however it seems it has been made clearer by the government over the last week.

 

As you are by now aware the cash flow boost will be a subsidy based on tax withheld by employers for their employees. With a minimum payment of 20,000 over 6 months and a cap of $100,000.

 

The way this will work is as follows:

 

First and Second phases

 

The PAYGW in the March and June quarter BAS will constitute the First Cash Flow Boost payment, with a minimum payment of $10,000 and a maximum payment of $50,000. This total amount will then be paid again as part of the Second Cash Flow Boost payment which will be paid over the June and September quarters.

 

Who is eligible?

 

For a business to qualify for this support it must have been established prior to 12 March 2020. The cash flow support measures will be provided in the form of a credit in the activity statement system. The business must also have derived income in the 2018-19 income year and lodged their 2019 tax return on or before 12 March OR made GST taxable, GST free or input taxed sales in a previous period (since July 2018) and lodged relevant statements on or before 12 March 2020.

 

When and how much?

 

The first phase will see eligible employers receive a credit equal to 100% of the PAYG amounts withheld from salary and wages paid to employees in the March and June quarters, with a maximum payment of $50,000.

 

The second phase sees eligible employers receive credits equal to the amount received in the first phase. These amounts will be paid during the June and September quarters, or through July to September if the lodger lodges monthly statements.

 

If a business pays salary and wages to employees but does not withhold any tax, they will still receive a minimum $10,000 payment in the first phase and a $10,000 payment for the second phase.

 

 

 

Example 1 – Small business that employs staff but does not withhold tax, Quarterly lodger.

 

                First phase

                $10,000 credit in March BAS
                $0 credit in June BAS                      Total = $10,000

 

                Second phase

                $5,000 in June BAS         
                $5,000 in September BAS

 

Example 2 – Business that employs staff and withholds $10,000 per quarter

 

                First phase

                $10,000 credit in March BAS
                $10,000 credit in June BAS           Total $20,000

 

                Second phase

                $10,000 credit in June BAS
                $10,000 credit in September BAS

 

Example 3 – Business that withholds $3,000 in PAYG per month, Monthly lodger.

 

                First phase

                $9,000 credit in March BAS (3XPAYGW)
                $3,000 credit in April IAS
                $3,000 credit in May IAS
                $3,000 credit in June BAS             Total = $18,000

 

                Second phase (4 equal payments of the total first                    cash flow boost)

                $4,500 credit in June BAS
                $4,500 credit in July IAS
                $4,500 credit in August IAS
                $4,500 credit in September BAS

 

Please feel free to contact us if you have any questions relating to your business and its eligibility for all the governments COVID-19 stimulus packages.

Please reload

Recent Posts

Please reload

Address

Contact

Follow

©2017 by MP Tax & Business Solutions

3b/277 Heaths Rd, Werribee VIC 3030, Australia

68-72 York Street, South Melbourne VIC 3205, Australia

ABN: 48 805 620 565

  • White Facebook Icon
  • White LinkedIn Icon
  • White Google Places Icon

Servicing