BAS

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

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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5 BAS lodgement facts in 5 minutes!

As a BAS Agent, of course I understand how BAS lodgement works [or you would hope that I do lol!] Sometimes I forget that what is old hat for me, can be confusing to my clients or even present as completely new information. Yesterday a client asked me why his monthly instalment activity statement for September hadn’t yet been lodged. The simple answer is that it’s not due yet, something that I thought he understood – apparently not! This has prompted me to write this blog – 5 BAS lodgement facts in 5 minutes. Yep, it will only take you 5 minutes to read this blog which I recommend you do if you don’t understand the mechanics of BAS lodgement.

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Netflix Tax – A Bookkeeper’s View (from the Trenches)

My last blog was all about the new “Netflix Tax” and was really just an informational blog outlining what, how and when etc. In this blog, I want to look at the tax from a bookkeeper’s perspective and provide a real “from the trenches” viewpoint. All is not what it seems with the Netflix Tax!

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Simpler BAS – simpler in name only?

The ATO has recognised that there are too many labels to complete on the BAS – you can see just how many if you check out my blog series on BAS Labels – way too many! So, to make things easier for small business, a new “simpler BAS” will be introduced from 1 July 2017. It has been designed to help businesses reduce the time spent on BAS compliance and its associated costs. So how exactly does the “Simpler BAS” work and will it actually simplify our business lives? I’m not so sure…….

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How we work with you to get your BAS done

When I’m checking out companies on social media I often see that they’re doing exactly what I’m doing – sharing content related to their industries rather than sharing information directly about their companies. They do this so as not to come off as doing the “hard sell” to potential customers but rather go the “soft sell” approach by offering free content in the hopes that customers will visit their website through sheer intrigue. Don’t get me wrong, this approach does work – I should know, I use it! Lately, however, when pursuing companies on social media, I’ve started to really wish that they would just tell me what their product does and how to use it. Yes, I appreciate the extra free content they provide, but in general, if I’m half interested in their product, all I really want to see is information about that product. So that said, I’ve decided to apply this rationale to my own blogging strategy for a bit because I wouldn’t mind betting there are potential customers out there saying the same thing about this e-BAS Accounts! For the next few weeks, this blog will be all about e-BAS Accounts – how we work and the products and services we provide. That’s right – it’s going to be all about us – the how, why and what! To kick off this new blogging strategy, today’s blog is going to be all about our Business Activity Statement (BAS) procedure. I’ll explain what we do and what clients need to do (and stop doing) to make this “system” work.

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Can I pre-pay my tax? Yes you can!

Once upon a time, believe it or not, you couldn’t pre-pay your tax – no, really! If you tried to do this, the ATO would just refund it straight back to you because they didn’t know what to do with it! Well, as of January 2016, this has all changed!

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What’s in a GST name?

The Goods and Services Tax which we now call “GST” for short, is a complicated and convoluted tax, I’m sure you’ll all agree. The system is fraught with rules with which even the most experienced BAS or Tax Agents struggle to understand. At its core, one of the most difficult aspects of the GST is its own language (yes it has its own language!). The terms used by the ATO to describe even the simplest concept can be confusing and this is why we have supplied a graphic below which explains what some of these terms mean. We hope you find it helpful.

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How to account for prepayments and GST

Towards the end of each financial year, many business owners review their expenses and pinpoint which ones can be prepaid before June 30 in order to obtain a substantial tax deduction. Typically, expenses such as office rent and insurance are paid 12 months in advance and are then classified as prepayments. This is particularly useful if the profit margin is high and the business owner wishes to reduce tax payable (and who doesn’t!). But how do you enter these transactions into your accounts and how is GST affected? Let’s review this now.

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