Please find below an updated summary of the measures.  

• Who is eligible to receive a payment under the Boosting Cash Flow for Employers measure? 

 You need to meet ALL of the following criteria: 

1. A business entity;
2. Aggregated annual turnover for the 2019 financial year under $50 million; 
3. Employ workers in the period January 2020 to June 2020; 
4. You must be an “active eligible employer” established prior to 12 March 2020. This is a new requirement. See discussion below; and
5. To qualify for the Additional Payment (discussed below) you must continue to be active in the period July 20 to September 20. This is a new requirement. See discussion below. 

Active eligible employer

This is a new requirement that could be critical. Our concern is that this requirement may limit the stimulus payment to those entities that were registered for PAYG withholding tax as at 12 March 2020. We will need to wait on the legislation to understand if this requirement prevents entities that register for PAYG withholding tax now from qualifying for a stimulus payment. 

Continue to be active

We will need to see the legislation to understand how the term “active” is defined and determine if this requirement creates any eligibility issues. 

• How do you apply for a payment? 

 There is no application process. Payments will be administered by the Australian Taxation Office and will be based on the lodgement of activity statements.  

 It is important to understand that payments will be made by the ATO as a credit to the activity statement account. Payments will not be paid in cash directly to eligible businesses. 

• How much can you receive? 

The maximum payment you can receive is $100,000; the minimum payment is $20,000. 

It is worth noting that the minimum payment has increased from $2,000 to $20,000.  

• How is the payment calculated? 

The stimulus payment is split into two parts: 

1. Initial Payment: payment of PAYG withholding tax for activity statements from March 20 to June 20 as per previous measures. However, the payment has increased from 50% to 100% of PAYG withholding tax reported (capped at $50,000). 
2. Additional Payment: an additional payment which will match the total of the Initial Payment received. 

The calculation will depend on whether the employer reports monthly or quarterly. 

Quarterly reporting 

If you report PAYG withholding tax quarterly, you will receive the following payments: 

(A) Initial Payment 

1. 100% of the PAYG withholding tax reported in the March 20 activity statement (subject to cap discussed below); and 
2. 100% of the PAYG withholding tax reported in the June 20 activity statement (subject to cap discussed below). 

The payments above are subject to a COMBINED cap of $50,000. This means if you receive a $40,000 payment for the March activity statement the maximum payment you can receive for the June activity statement is $10,000. 

Minimum payment: if you pay wages but are not required to withhold tax you will receive a stimulus payment of $10,000. Note, the wages would need to be reported in either the March 20 or June 20 activity statement. 

(B) Additional Payment 

1.  50% of the total Initial Payment received upon lodgement of the June 20 activity statement; and  
2.  50% of the total Initial Payment received upon lodgement of the September 20 activity statement. 

 This means if the Initial Payment total $36,000, the Additional Payments would be $18,000 upon lodgement of the June 20 activity statement and $18,000 upon lodgement of the September 20 activity statement. 

Monthly reporting 

 If you report PAYG withholding tax monthly, you will receive the following payments: 

(A) Initial Payment: 

1. 300% of the PAYG withholding tax reported in the March 20 activity statement (subject to cap discussed below);  
2. 100% of the PAYG withholding tax reported in the April 20 activity statement (subject to cap discussed below);  
3. 100% of the PAYG withholding tax reported in the May 20 activity statement (subject to cap discussed below); and 
4. 100% of the PAYG withholding tax reported in the June 20 activity statement (subject to cap discussed below). 

 The payments above are subject to a COMBINED cap of $50,000. This means if you receive:

• a payment of $30,000 for the March activity statement
• a payment of $8,000 for the April activity statement and
• a payment $10,000 for the May activity statement the maximum payment you can receive for the June activity statement is $2,000. 

Minimum payment: if you pay wages but are not required to withhold tax you will receive a stimulus payment of $10,000. Note, the wages would need to be reported in either the March 20, April 20, May 20 or June 20 activity statement. 

(B) Additional Payment 

1. 25% of the total Initial Payment received upon lodgement of the June 20 activity statement;  
2. 25% of the total Initial Payment received upon lodgement of the July 20 activity statemen
3. 25% of the total Initial Payment received upon lodgement of the August 20 activity statement; and 
4. 25% of the total Initial Payment received upon lodgement of the September 20 activity statement. 

This means if the Initial Payment total $48,000, the Additional Payments would be $12,000 for each of the June 20, July 20, August 20 and September 20 activity statement lodgements. 

Points to note 

We draw your attention to the payment calculation for the March 20 activity statement; this is calculated as 300% of the PAYG withholding tax reported. This is to provide a similar treatment to quarterly lodgers. Interestingly this could lead to a scenario where the payment made by the ATO for March exceeds the PAYG withholding tax reported. For example, if the PAYG withholding tax reported for March was $15,008 the ATO payment would be: $15,008 X 300% = $45,024.  

The amount of the Additional Payment is based entirely on the PAYG tax reported in the March 20 to June 20 activity statements. While there is an obligation to lodge activity statements for the July 20 to September 20 period there does not appear to be any minimum requirements in relation to the amount of PAYG withholding tax to be reported in this period. We will need to wait on the legislation for more details. 

• What can I do to maximise my stimulus payment? 

If you are currently employing workers and your PAYG withholding tax is at least $25,000 per quarter (for quarterly reporters) or $8,333 per month (for monthly reporters) you should receive the maximum stimulus payment of $100,000 without doing anything.  

However, we know a lot of small businesses do not fall into this category. It is common for small businesses to pay working directors/owners a relatively small salary (or no salary) and distribute profits as dividends and trust distributions. While we would generally support this type of strategy it may result in a reduced stimulus payment or even no stimulus payment. 

We have outlined our recommendations below for maximising your stimulus payment. 

• OUR RECOMMENDATIONS – URGENT ACTION MAY BE REQUIRED 

ALL CLIENTS We strongly recommend that any outstanding taxation obligations (including activity statements, income tax returns, FBT returns etc) be finalised as soon as possible. It is not uncommon for the ATO to delay payments until outstanding taxation obligations are met. If you need any assistance in meeting your outstanding tax obligations, please do not hesitate to contact us. 

What is the definition of a business? 

 The definition of a business has been the subject of much debate in recent years. Until we see the legislation for the stimulus package we do not know how broadly or narrowly the term business will be defined. Legislation to give effect to these measures will be introduced into Parliament, which resumes on 23 March 2020. It is expected that it will be passed urgently.