Q&A Guide to Understanding “Boosting Cashflow for Employers”
The pandemic has wreaked havoc on not only people’s health and wellbeing but also the economy. Many businesses are struggling to continue operating, and some have been forced to close down completely. Experts predict economic recessions in the most severely affected countries, which, in turn, may have catastrophic effects on global markets.
In the meantime, the Australian government has been doing its best to help out businesses by implementing various measures to address economic concerns. Recently, a new measure described as “boosting cash flow for employers” has been announced. Here is what you can expect from it:
Q: What is the cash boost all about?
A: The announcement relates to two rounds of payment that aim to benefit employers. These payments will not be subject to income tax, nor will they reduce the tax that your business can claim later in the future. In other words, the income provided by this policy is non-assessable and non-exempt. Additionally, the payments will also be GST-free.
Q: What can I expect from the first payment?
A: The first payment will only be available if your business has paid wages and other payments during this time, whether or not it has accounted for any PAYG withholding.
The amount you will receive will depend on several factors. If you lodge quarterly statements of your business activities (BAS) or quarterly lodgers, you will receive either $10,000 or the entirety of your PAYG withholding reported in the quarterly BAS ending on 31st March 2020 and 30th June 2020. Note that you will only receive the higher of the two. If your total PAYG withholding is less than $10,000, for example, you will receive $10,000.
On the other hand, if you maintain monthly lodgers or your business can be labelled as a “large withholder,” you will receive either $10,000 or three times the PAYG withholding amount reported in March 2020, in addition to the PAYG withholding reported for April, May, and June of 2020. Note that if the latter is more than $10,000, a maximum of $50,000 will apply.
Q: What can I expect from the second payment?
A: For the second payment, if you maintain quarterly lodgers, you will receive half of the initial amount for the quarter ending on 30th June 2020, plus another half of the amount received for the quarter ending on 30th September 2020.
If you maintain monthly lodgers, you will get a quarter of the initial amount for the BAS lodgment for each of June, July, August, and September.
As an employer, we hope that you understand a bit more of what you can expect with the “boosting cashflow for employers” announcement. If you are still having trouble understanding how it will affect your business or have any concerns regarding how it works, do not be afraid to contact professional accountants with knowledge on this topic.
With their help, you may fully understand what the announcement means for your business. They will ensure your business stays on top of its finances during this difficult time to help you identify problems and keep your business alive.
Are you looking for business accountants at the Gold Coast? New Wave is here for you! We can strategize and execute plans to keep your business growing. Get in touch with us today to book a consultation.