Cashflow from Government Stimulus Package
To support our clients gain clearer understanding of the Federal and State Governments stimulus packages to small businesses we will provide regular updates of clarification and where of benefit our response to the frequently asked questions that our clients are asking.
By far the most asked question now is about the workings of the PAYG Withholding Credit stimulus.
Today we are cutting through the maze of how we see the way businesses can access the credits and the likely amount of credit your business will receive and when you will receive the credit.
The Government is providing a minimum of $20,000 up to a maximum of $100,000 in PAYG Withholding credits for all businesses who pay salaries and wages with a turnover of up to $50m. Eligibility requires you to be ‘an active eligible employer established prior to 12 March 2020’.
There is already confusion as to whether this is a payment/refund system, or will businesses receive a credit? We believe the system will work first as a credit or offset system i.e. if you have lodged your PAYGW return but not paid the amount, your integrated account will be credited. We expect a payment/refund to be made only in cases where all payments due have been made.
The payments will be made as a credit of up to 100% of the amount withheld from salary and wages and will be automatically applied to activity statements starting with your March BAS.
The payment/credit will be split though between the following periods:
• March to June 2020 Activity Statements = minimum of $10,000 and a maximum of $50,000
• June to September 2020 Activity Statements = a further minimum of $10,000 and a maximum of a further $50,000
The second additional payment/credit will require your business to continue to be active and will be delivered as a portion of the amount previously paid under these incentives in the earlier period. It will be paid as follows:
• Quarterly Activity Statement lodgers = half of the amount previously paid on lodgement of June BAS and a half on lodgement of the September BAS.
• Monthly Activity Statement lodgers = quarter of amount previously paid on lodgement of the June, July, August and September BAS/IAS’s.
When you work through the examples provided from Treasury it shows that the initial payment will be effective based on the wages for January, February and March 2020. The following link to Treasury provides examples and further details of how the system will work.