You wouldn’t think that the size of your cash flow boost depends on timing. But it might. 

Cash Flow Boost Depends on Timing

The timing of your PAYG withholding can significantly impact the size of your cash flow boost payment.

Once you have qualified for the cash flow boost, the next question is, how much? How much boost will you get – just the minimum of $20,000 or the maximum of $100,000?

The answer doesn’t just depend on the actual withholding you do, but also on the timing of these withholdings, especially if you are a monthly lodger of PAYG withholding. 

The cash flow boost is all about your PAYG withholding in your March and June quarters. Any withholding after 30 June 2020 has no impact on the size of your cash flow boost.

Calculation

The cash flow boost depends on your PAYG W in the March and June quarters.

Whatever you withhold in the March and June quarters as a quarterly withholders, you receive twice that amount as a cash flow boost with a minimum of $20,000 and a maximum of $100,000.

Whatever you withheld in March as a monthly withholder, you get SIX times plus twice your withholdings in April to June, all again within the minimum of $20,000 and a maximum of $100,000 per qualifying entity.

Minimum

The moment you qualify, you are entitled to the minimum of $20,000. It doesn’t matter, how much PAYG withholding you actually did.

Even if your business is really small with very little turnover each year, you are still entitled to the minimum of $20,000 – always assuming that you meet the 7 conditions.

And timing doesn’t matter. If the total of your PAYG withholding for the March and June quarters is well below $10,000, then timing of your PAYG W doesn’t matter. It doesn’t matter whether you have more or less PAYG withholding before or after 30 June 2020. And it doesn’t matter whether you withhold more or less in the month of March.

Maximum

To get the maximum – or at least more than the minimum – then timing starts playing a role. It all depends on the W2 for your March and June quarters. 

Your PAYG withholding after 30 June 2020 has no effect on your cash boost. So timing of your withholding is important. Focus on your W2 for your March and June quarters.

However, if your PAYG W is well below $10,000, then timing doesn’t matter at all, since you just get the minimum anyway as long as you qualify.

Monthly Withholder

If you are a monthly withholder, timing is even more important since the cash boost is heavily front-loaded for monthly withholders.  Timing of your wage payments can mean the maximum of $100,000 or the minimum of $20,000. 

If you are a monthly withholder, which you are if you withhold at least $25,000 per year in PAYG Withholding, then your March PAYG W will hit your cash boost 3-fold, while your PAYG W in April, May and June just hit it 1:1. And the PAYG W you pay from 1 July 2020 onwards has no effect at all on your cash boost. So timing is everything.

Let’s go through two examples to make this clear. Shaun and Sheila – both monthly withholders.

Shaun – All in March

Shaun has $20,000 PAYG W in March and nothing after that since he went through a stand down. So Shaun receives a cash boost of $50,000 in late April (3 x $20,000 = $60,000, capped at $50,000) and another $50,000 over 4 instalments in June, July, August and September 2020. So $100,000 in total.

Sheila – Some in April and some in July

Sheila also has $20,000 PAYG W, but half in April and half in July. So she receives the minimum of $10,000 in June and another $10,000 from June to September. So $20,000 in total. The PAYG W payment in July has no impact.

So once you qualify, make sure you correctly report your PAYG withholding for the March and June quarters.  Just call me on 0407 909 779 if you need help.

 

MORE

Cash Flow Boost

Boost Your Cash Boost

How To Boost Your Cash Boost

 

Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.

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Last Updated on 20 April 2020