Coronavirus Measures – Boosting Cash Flow for Employers
As announced on 22 March, the government is now providing up to $100,000 to eligible small and medium sized businesses and not-for-profits (including charities) that employ people, with a minimum payment of $20,000, payable in stages. These payments will help business and not-for-profit cash flow so they can keep operating, pay their bills and retain staff.
Small and medium sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible, subject to fulfilling certain criteria (see the ATO link below for details). The tax boost payments will be tax-free and automatically calculated by the ATO; no new registrations or new forms will be required.
The payments will be delivered by the ATO as an automatic credit in the activity statement system (i.e. reducing your BAS payment or creating a refund) from 28 April 2020 upon employers lodging eligible upcoming activity statements. The minimum payment of $10,000 or maximum of $50,000 (if eligible) in the first stage will be applied to the entity’s first lodgement or March 2020 BAS. Where the entity is in a refund position, the ATO will deliver the refund within 14 days. Please see the ATO link for more detail reading the timing and calculation of payments.
We are aware of a number of accountants suggesting that people (eg directors or self employed) add themselves to the payroll to obtain an additional benefit that they would not normally be entitled to. With the advent of Single Touch Payroll, the ATO will be able to see exactly when these employees were added. The ATO has now issued guidelines regarding this and stated that where any schemes are carried out to increase cash boost entitlements that employers wouldn’t be otherwise entitled to, the employer will be obliged to repay that amount. General interest charges will apply. Therefore we caution against backdating or creating salary arrangements in order to generate or increase entitlements to the payment. Doing so could constitute fraudulent behaviour.
Due to the complex nature of the calculation of the entitlement, some aspects still require clarification from the ATO. Each client’s circumstances will be different, so we encourage you to use the PAYG Cashflow Boost Calculator to estimate your possible entitlement. Please note: STA is not associated with the publishers of this calculator and does not accept any responsibility for the information provided. It is intended merely as a guide.
Please contact us if you need help with estimating your likely entitlement to this measure on (08) 9754 4144 or 0481 677 302.
The Government is also expected to make an announcement on a wage subsidy today – we will circulate further information on this in the coming days.
For further information:
https://digit.business/payg-cashflow-boost-calculator-advanced
https://taxbanter.com.au/banter-blog/coronavirus-economic-stimulus-package
