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The “Boosting Cash Flow for Employers” payment (PAYGW Boost Credit)

BAS Agent's Blog, COVID-19, GST & BAS, Payroll & Superannuation / By Louise McLoughlin / 12 April 2020 / BAS, Boosting Cashflow, Cash, Cash flow, Coronavirus, COVID-19, IAS, PAYG withholding, Stimulus / 4 minutes of reading

As part of the economic stimulus triggered by the Corona Virus pandemic, the Federal Government has introduced the “Boosting Cash flow for Employers” measure or as we like to call it, the PAYGW Boost Credit. This measure promises to “refund” the PAYG withholding reported on the BAS or IAS by employers back into their integrated client accounts (ICA) as an offset against any existing BAS/IAS debt. To be clear, this is not a supply of cash to employers into their banks. This is simply crediting PAYGW back into the ICA to effectively reduce BAS/IAS debt. The only time an employer will see any cash is when a refund is created because the PAYGW credit is more than the whole activity statement debt. So who gets these payments, how much do they get and how do they get it? Read on to find out!

WHO IS ELIGIBLE?

Businesses will be eligible for this stimulus measure if they:

Held an ABN on 12 March 2020 and continue to be active
Are a small or medium business including NFP, sole trader, partnership, company and trust entities.
Have an aggregated turnover under $50M
Have made payments from which they have been required to withhold (even if this a zero amount). Such payments may include salary and wages, director’s fees, eligible termination payments, compensation payments and withholding from contractor fees.
Have made GST taxable, GST free or input taxed sales in a previous tax period since 1 July 2018 and lodged a relevant BAS on or before 12 March 2020.

HOW MUCH IS PAID?

PAYG withholding amounts will be credited back to the integrated client account (ICA) of between $20K and $50K. These credits are not income and as such will not be taxed. The do not have to be repaid ever. The good thing is that the PAYG withholding you report on your BAS will still be tax deductible. Note, if you have a tax debt on your ICA, the credit boost amount will simply pay down that debt.

HOW IS IT PAID?

These credits will be applied in two stages to integrated client accounts after 28th April 2020 and after the March 2020 quarter or monthly BAS is lodged. You do not have to apply for this measure, AND you do not receive any actual cash – this is credit only, not cash paid to your bank. The second stage credit will be applied in quarter 1 of 2020-21.

HOW DO THE PAYMENTS WORK?

Put simply, there are 2 payment stages for this measure. The first stage is a payment of up to $50K based on the amount of PAYGW reported on the March 2020 BAS. Examples below:

Quarterly Lodgers

If your March 2020 BAS shows a PAYGW amount of $12,000, this amount will be credited back to your ICA. In your June 2020 BAS, if a $14,000 PAYGW is reported, then this will also be sent back to the ICA. So far, a total of $26,000 has been credited. This is the first stage amount. The second stage amount will be the same as the first one i.e. $26,000 and will be credited to your ICA split evenly across June to September 2020.

Monthly Lodgers

If your March 2020 BAS shows a PAYGW amount of $12,000, this amount is multiplied by 3 (to take up amounts for January and February 2020) to give you a credit of $36,000. April, May and June 2020 BAS’s will continue to be lodged which may or may not total more than $50K. For this example, let’s say April was $10,000, May was $8,000 and June was $6,000. This will be a total PAYGW of $60,000. As the first stage payable can be no more than $50K, then $50K is all that will be credited to your ICA. The second stage payment will also be $50K.

What if my PAYGW is less than $10K or zero in my March 2020 BAS?

In this case, you will be credited $10K in the first stage of credits and another $10K in the second stage for a total of $20K.

PAYGW Boost Credit Calculator

Here is a great calculator to assist you to work out how much your PAYGW boost credit might be: https://digit.business/payg-cashflow-boost-calculator-advanced

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Employing staff and Coronavirus: Fairwork directions

Coronavirus (COVID-19) has brought with it great uncertainty and worry amongst the general population, not the least of these, employers and staff. There are many unknowns relating to how to manoeuvre in these difficult times as an employer, especially in terms of ensuring staff are treated correctly and fairly. Recently, Fairwork released some direction for employers on their website. We advise you read the bulk of the details on their page yourself but we do provide a “taste” of the information provided below.

My employee (or his family member) has Coronavirus. What now?

You must direct the employee not to come to work and to only return when s/he has been given medical clearance. If the employee is part or full time, s/he will be able to take paid personal/carers leave. Casual workers will need to take unpaid leave given they do not receive leave entitlements. Workers refusing to use their leave entitlements are not required to be paid. You can ask the employee for evidence of the illness or emergency i.e. doctor’s certificate if required.

My employee wants to stay home to avoid contact with others.

In this case, you need to discuss this with the staff member and come to an agreement that suits you both. If working from home is an option and your staff member agrees to do so, then make arrangements together to ensure this can occur easily and smoothly. If the employee cannot work from home, then you must decide if paid or unpaid leave will be provided. Where an employee refuses to take paid leave (where it is available), then that employee cannot be paid.

I want to tell my employee/s to stay home.

From Fairwork: ” Under workplace health and safety laws, employers must ensure the health and safety of their workers and others at the workplace as far as is reasonably practicable. ” If you believe that it would be best to instruct your staff to stay home due to possible risks from COVID-19, then you certainly can do so. You can organise a “work-from-home” scenario where possible or if not possible, you can direct staff to remain off site but you must be aware as per Fairwork ” where an employer directs a full-time or part-time employee not to work due to workplace health and safety risks but the employee is ready, willing and able to work, the employee is generally entitled to be paid while the direction applies”, and also “standing down employees without pay is not generally available due to a deterioration of business conditions or because an employee has the coronavirus.”

I want to direct staff not to travel.

While you can direct your employees not to travel for work-related events, meetings etc because you want to reduce the risks associated with COVID-19 at your workplace, you cannot ask them to cancel personal travel/trips.

So, in summary, you need to ensure your workplace is safe and you can do this by keeping unwell employees at home and/or all staff at home if required. If your business is structured in such a way that working from home is possible, then certainly bring that to the table and discuss with staff how best to handle that scenario. Part and full time staff should take personal leave if affected by the virus or unpaid leave if they prefer. Similarly, if staff unaffected by COVID-19 request to remain at home and also cannot work from home, they must opt to take annual or unpaid leave. If you direct staff to stay home and there isn’t any evidence that they have been affected by COVID-19, that is, they are well and able to work, then you must continue to pay them as normal. To read the full list of instructions provided by Fairwork, download their factsheet below.

Coronavirus and Australian workplace_Fair_Work_Ombudsman Download