Sometimes asked questions

Why was the PAYG cashflow calculator developed?

The PAYG cashflow boost calculator was built after the second stimulus package was released. We noticed that the periods of calculation for the first cashflow boost payment, and the second cashflow boost payment overlapped for June. We wanted to visualise what that meant for customers and clients from a payment timing perspective. We read over the treasury notes, ATO website, and the bill to build a model in Excel - before translating it to an online version when Excel didn't cut the mustard!

We figure this will be useful to help others looking to understand the same thing we were, so we released it into the wild for free. Businesses are doing it tough right now, and this is our way of supporting Australian small businesses and the bookkeeping and accounting industry 😊

Will I definitely get the amounts shown here?

The goal of the tool is to broadly forecast the cashflow timing. A core assumption here is that your entity is eligible for all the payments. To understand eligibility and your own individual circumstances is a great discussion to have with your tax accountant. We know some great accountants if you want an introduction →

What are the two cash flow boost payment periods?

There are two distinct periods for the cash flow boosts. The initial (or first) cashflow boost payments, and the additional (or second) cashflow boost payments.

The first period is the 4 months inclusive of -

  • March, 2020
  • April, 2020
  • May, 2020
  • June, 2020

The second period is the 4 months inclusive of -

  • June, 2020
  • July, 2020
  • August, 2020
  • September, 2020

Hold on, you've listed June twice?! 🤯

Sure did! and it's what sent us on this merry adventure to begin with

What are the assumptions made in calculating the amounts?

Our understanding is that the intention of the legislation is to provide a credit to businesses in line with the lodgement of their activity statements in two distinct periods - the 'first cash flow boost payments' and the 'second cashflow boost payments'. The credit amount during the first period is for 100% of the PAYG, with a minimum of 10K and capped at 50K. The second cashflow boost payments - assuming that the business is still eligible is simply a % of the total amount paid during the first period

To help explain the rules we've used to build it - we've provided the source information from the ATO, treasury and the bill itself so that you can make you own call on our workings 🧠



⭐ You're either quarterly or monthly →

3.46 It is expected that for most entities the approved form for this notification will also be the existing business activity statement or instalment activity statement that contains their GST return. In practice this means that entities will be entitled to payment once they lodge their activity statement for the relevant period.

3.49 Special rules apply if an entity changes from an entity that withholds monthly to an entity that withholds quarterly (or vice versa) during a quarter and outside of a quarter.

3.50 To ensure that there can be no excess or missed payments, for changes within a quarter -

• if the period for the entity in the first month they were eligible was a quarter → the payment period for the entity remains the quarter; and
• if the period in the first month for which they were eligible was a month → the payment periods continue to be each month in the quarter.

Explanatory Memorandum - referencing Subsection 6(4) of the Cash Flow Boost Bill
⭐ 10K minimum on the first lodgement, 50K maximum for the first cashflow boost payment, 100% of the PAYG witholdings →

Eligible businesses that withhold tax on their employees' salary and wages will receive a credit equal to 100% of the amount withheld, up to a maximum of $50,000. The minimum credit will be $10,000, even if the amount required to be withheld is zero.

ATO - Boosting cashflow for employers

The minimum payment will be applied to the entities' first lodgment

Treasury Fact Sheet - Cash flow assistance for businesses
First boosts
(1) If an entity is entitled to a cash flow boost for a period covered by subsection 5(2), the amount of the entity's cash flow boost for the period is:
(a) if the period is the first period for which the entity is entitled to a cash flow boost → the greater of $10,000 and the entity's withholding period total for the period; or
(b) otherwise - the entity's withholding period total for the period.

Caps on amount of first boosts
(2) The amount worked out under subsection (1) must be reduced to the extent (if any) necessary to ensure that the sum of the entity's cash flow boost for the period, and its cash flow boost for any previous periods:
(a) does not exceed $50,000; and
(b) if paragraph (1)(b) applies → does not exceed the sum of the entity's withholding period totals for those periods.

Boosting Cash Flow for Employers Bill
⭐ 300% of the March PAYG for monthly lodgers →

Monthly lodgers will receive a credit that is calculated at three times the rate (300 per cent) in the March 2020 activity statement, to align with quarterly lodgers.

ATO - Boosting cashflow for employers

(3) For the purposes of subsections (1) and (2), treat an entity's withholding period total for a period that is the month of March 2020 as being 3 times the actual amount of that withholding period total

Boosting Cash Flow for Employers Bill

3.39 However, if the payment is for the month of March 2020, the entity is entitled to a payment of an amount equal to 300 per cent of the amount that has been withheld

Explanatory Memorandum - referencing Subsection 7(3) of the Cash Flow Boost Bill
⭐ The second boost is 100% of the first boost

3.44 The Cash Flow Boost Bill also provides for second cash flow boost payments of a total amount equal to the full amount of the first cash flow boost payments to which the entity was entitled.

Explanatory Memorandum - referencing Section 6 and subsection 7(4) of the Cash Flow Boost Bill
⭐ Payments are broken up into 4 payments of 25% for monthly, and 2 payments of 50% for quarterly lodgers →

If you lodge quarterly business activity statements you will receive 50% of your total initial cash flow boosts for each activity statement

If you lodge monthly business activity statements you will receive 25% of your total initial cash flow boosts for each activity statement

ATO - Boosting cashflow for employers

3.47 Payments of the second cash flow boost are made in four equal amounts for the months of June 2020, July 2020, August 2020 and September 2020 for entities that are large or medium withholders for those months

3.48 For all other entities, the second cash flow boost payments are made in two equal amounts for the quarters ending June 2020 and September 2020.

Explanatory Memorandum - referencing Subsections 6(2) and (3) of the Cash Flow Boost Bill

Second boosts
(4) If an entity is entitled to a cash flow boost for a period covered by subsection 6(2), the amount of the entity's cash flow boost for the period is -
(a) if the period is a month → 25% of the total of the amounts of cash flow boosts to which the entity is entitled for periods covered by subsection 5(2); or
(b) if the period is a quarter → 50% of that total.

Boosting Cash Flow for Employers Bill
⭐ The boosts are paid at the later of the lodgement date or due date (we've modelled on the due date as the best case scenario) →

How do you interpret the way in which future payments are adjusted by the 10K minimum?

This is an interesting one!

The treasury notes, and the ATO documentation don't currently provide an example of what happens when you report less than 10K in the first period, and then in subsequent periods report more than 10K over the first cashflow boost period

We've relied on section 7 of the bill and the explanatory memorandum to provide hints at how to interpret it

Our interpretation is that you get a minimum of 10K, otherwise you get 100% of the PAYG, and the total amount for the first cashflow boost period is the lessor of 50K or 100% of the PAYG across the entire period. In the case where you have lodged less than the 10K total, you won't receive more than 10K until the total amount withheld over the initial period exceeds 10K 🤯

You will not be eligible to receive any more cash flow boosts until your PAYG withholding exceeds $10,000 over the relevant periods

ATO

3.42 As a result, all eligible entities will receive a minimum total first cash flow boost payment of $10,000, with this amount provided in the first period they are eligible. No further amount will be paid to an entity until, but for the minimum payment of $10,000, the amount the entity is entitled to receive exceeds the minimum payment.

Explanatory Memorandum
First boosts
(1) If an entity is entitled to a cash flow boost for a period covered by subsection 5(2), the amount of the entity's cash flow boost for the period is:
(a) if the period is the first period for which the entity is entitled to a cash flow boost- the greater of $10,000 and the entity's withholding period total for the period; or
(b) otherwise - the entity's withholding period total for the period.

Caps on amount of first boosts
(2) The amount worked out under subsection (1) must be reduced to the extent (if any) necessary to ensure that the sum of the entity's cash flow boost for the period, and its cash flow boost for any previous periods:
(a) does not exceed $50,000; and
(b) if paragraph (1)(b) applies - does not exceed the sum of the entity's withholding period totals for those periods.

Boosting Cash Flow for Employers Bill

It's definitely a case of do your own research - by linking the source bills we hope that people can confirm our workings or challenge them

Are you lawyers or tax agents?

No. We're BAS agents. We've simply read the legislation and put together a model that best reflects our interpretation of its intent and purpose to help us talk to our clients. Again it's important to understand that without concrete examples of how this will play out (or confirmation from the ATO on the use cases) this model is to be taken with a grain of salt.

We've provided the basis of our calcs for you here, do your own research 🧐

cashflow scenarios run, and counting. Need help? Let's talk →