PAYGW tax free cash payment to affected businesses(and apprentices)

Government announces increased tax benefits in response to the Coronavirus
March 16, 2020
Stimulus Package for Business
March 20, 2020

PAYGW tax free cash payment to affected businesses(and apprentices)

It is an incredibly challenging time for all of us.  However some much needed help is on the way:

  1. PAYGW cash back (50% of PAYGW as cash back)
  2. Apprenticeship cash back (50% of apprentice wages as cash back)

    a) What is it?

This is $2K to $25K cash back ‘or’ credit against your future BAS etc.

If your PAYGW for 1.01.20 to 30.06.20 (6 month period) is $50K, you should be entitled to $25K credit.  I.e. 50% of your PAYGW.

How do you qualify?

1. Aggregated (total group) income less than $50m in 2019.

2. Currently registered for PAYGW and employing staff.

Please refer to our worked examples below:

Tip

If you were considering lowering your personal wages due to the Coronavirus, perhaps this will assist you to change your mind. Essentially you should be entitled to up to 50% of your PAYGW for 1.01.20 to 30.06.20 as a cash back credit (up to $25K per employer).
Those considering a dividend should consider planning with higher wages instead.

I believe we can assist you to get your maximum benefits here, smart planning is needed.  Please contact our office prior to lodging your March to June, 2020 BAS.

Worked example 1
Monthly PAYGW, stimulus
     
       
  Without
Stimulus
With Stimulus Tax Saving
March, 2020 BAS      
       
GST collected 16,000 16,000 0
GST paid 5,000 5,000 0
Net GST owing 11,000 11,000 0
       
PAYGI 2000 0 (2000)
       
Gross Wages (monthly) 25,000 25,000 0
PAYGW (monthly) 8,000 8,000 0
       
Net BAS 21,000 19,000 (2,000)
       
less 3 X March 2020 PAYGW 0 (24,000) (24,000)
       
Actual BAS payable
March, 2020
21,000 (5,000) (26,000)

Worked example 2, Quarterly PAYGW, stimulus      
       
  Without
Stimulus
With Stimulus Tax Saving
March, 2020 BAS      
       
GST collected 16,000 16,000 0
GST paid 5,000 5,000 0
Net GST owing 11,000 11,000 0
       
PAYGI 2000 0 (2000)
       
Gross Wages (quarterly) 40,000 40,000 0
PAYGW (quarterly) 12,000 12,000 0
       
Net BAS 25,000 23,000 (2,000)
       
less 50% March 2020 PAYGW 0 (6,000) (6,000)
       
Actual BAS payable
March, 2020
25,000 17,000 (8,000)

    b) Apprentices

There is also help on the way for small businesses with apprentices and trainees.

How do you qualify?
1. You have qualifying registered and approved apprentices or trainees
2. You have less than 20 full time employees

If you continue to retain your apprentices and trainees, you should be entitled to a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for nine months.

The subsidy is up to a maximum of $21,000.

It will be available to businesses employing fewer than 20 full-time employees who retain an apprentice or trainee.

We will provide more information as it comes to hand.

Please stay tuned.

There is more to come in relation to deferrals of payment for tax debts, interest free payment arrangements, and more.

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