The Government has announced that there will be Pay As You Go Withholdings credits available to businesses with a minimum value of $10,000. This is a credit for the PAYG tax that is withheld from the wages of your employees to a maximum value of $100,000.
To be eligible for the PAYGW Credits you must:
- Have held your ABN on 12 March 2020 and it continues to be active
- Have an annual turnover of less than $50m
- Made eligible payments that the business is required to withhold from (even if the withholding amount is $0)
In addition the business must also have either:
- Derived business income in the 2018-19 income year and lodged it 2019 tax return on or before 12 March 2020; or
- 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.
Eligible payments include:
- Salary and Wages
- Director Fees
- Eligible retirement or termination payments
- Compensation payemnts
- Voluntary withholding from payments to contractors
How Is The Credit Calculated?
Credits will be calculated based on the PAYG withholdings reported on your BAS.
- For Quarterly BAS lodgers, the credit will be 100% of the PAYGW for January to March.
- For Monthly IAS/BAS lodgers, the credit will be 300% of the March PAYG
What If My PAYGW Are More/Less Than The Credit?
Firstly, if your PAYGW are less than the $10,000, your first payment will be the full $10,000. You will not receive another payment up to 30 June until your wages exceed the $10,000. If you exceed $10,000 during the April to June period, you will receive the additional balance after $10,000.
If your PAYGW totals are more than $50,000 for the March, April, May and June, you will only receive up to the maximum $50,000.
Second Stimulus Payment
Not long after the first stimulus payment was announced, the Government introduced the second stimulus. This stimulus will take affect after 30 June 2020.
This second payment will be to the same value as the first stimulus (so if you received PAYGW credits for $20,000 during the first round, you will receive the same amount during the second round as long as you are still employing staff).
- Quarterly lodgers will receive the payment over 2 installments, each being 50% of the first payment
- Monthly lodgers will receive the payment over 4 installments, each being 25% of the first payment
There is conflicting information on the Treasury fact sheets, this will be updated once the information becomes clearer.
When Will I Receive The Money In My Bank Account?
Unfortunately the Small Business Stimulus has been incorrectly marketed as a “cash boost” for business. It is actually a credit to your ATO Integrated Account paid in two or more installments. What this means is if you have money owing to the ATO from a current or previous BAS, these funds will be allocated to your ATO Integrated Account and used to offset the balance of the monies owing.
If you have no monies owing to the ATO, you can request to have the balance of the ATO Integrated Account transferred to your bank account, you will need to ensure that the ATO have your current bank details on file.
Unfortunately there have been instances where businesses have received incorrect information from Bookkeepers, Accountants, Financial Advisers and Other Businesses, providing advice on registering directors for wages who may usually take drawings, or inflating wages to receive a higher credit from the Government. The ATO will be on the lookout for businesses who are doing the wrong thing to take advantage of the assistance during this time. The ATO will be conducting audits on businesses and if you are seen to have inflated figures, you will be required to pay back all monies.
To read the full fact sheet from the QLD Treasury click here