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PAYGW Tax vs Payroll Tax: your COVID-19 queries explained

Apr 2, 2020 | Real News, Taxation | 0 comments

In order to clear up any confusion, we have outlined the tax relief measures as a result of the impacts of coronavirus (COVID-19) for both PAYGW Tax and Payroll Tax – as they are different taxes! Keep reading for PAYGW Tax vs Payroll Tax: your COVID-19 queries explained!
 

PAYG WITHHOLDING TAX

 
The Government is now providing UP TO $100,000 to eligible small and medium sized businesses, and not-for-profits (including charities) that employ people, with a MINIMUM payment of $20,000.
 
This payment continues cash flow support over a longer period, increasing confidence, helping employers to retain staff and helping entities to keep operating.
 
The cash flow boost provides a TAX FREE payment to employers and is automatically calculated by the Australian Taxation Office (ATO). There are no new forms required.
 
ELIGIBILITY:

 

Small and medium business entities with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover.
 
✔️ The NON-TAXABLE/NON REPAYABLE payment will be delivered by the Australian Taxation Office (ATO) as a credit in the activity statement system from 28 April 2020 upon businesses lodging eligible upcoming activity statements.
 
✔️ Eligible businesses that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100 per cent of the amount withheld, up to a maximum payment of $50,000.
 
✔️ Eligible businesses that pay salary and wages will receive a minimum payment of $10,000, even if they are NOT required to withhold tax.
 
✔️ The payments will only be available to active eligible employers established prior to 12 March 2020. However, charities which are registered with the Australian Charities and Not for profits Commission will be eligible regardless of when they were registered, subject to meeting other eligibility requirements. This recognises that new charities may be established in response to the coronavirus pandemic.
 
See examples of how this payment can help your business here.           
                                                                

PAYROLL TAX

 

Payroll tax is a self-assessed tax on the wages that employers pay to their Queensland employees when the total wages are more than a certain threshold.

As an employer, you must register for payroll tax within 7 days after the end of the month in which you:

  • pay more than $25,000 a week in Australian taxable wages or
  • become a member of a group that together pays more than $25,000 a week in Australian taxable wages.

Businesses may be grouped and treated as one unit for payroll tax if they are related or connected.

This guide gives you everything you need to determine your employer status, register for payroll tax and start lodging returns.

You may be eligible for one or more of a range of payroll tax relief measures as a result of the impacts of coronavirus (COVID-19).

These include:

  • refunds of payroll tax for 2 months
  • a payroll tax holiday for 3 months
  • deferral of paying payroll tax for the 2020 calendar year.
ELIGIBILITY:

 

If you are an employer (or part of a group of employers) who pays $6.5 million or less in Australian taxable wages, you may receive an email about a:

  • refund of your payroll tax for 2 months
  • payroll tax holiday (i.e. no payroll tax to be paid) for 3 months.

You can also apply for a deferral of payroll tax for the 2020 calendar year. (If you have already applied for a deferral, you do not need not reapply – it will be extended.)

If you do not receive an email, or you are unsure about your eligibility, complete the refund/holiday application form.

If you are an employer (or part of a group of employers) who pays more than $6.5 million in Australian taxable wages and have been negatively affected (directly or indirectly) by coronavirus, you can apply for a:

  • deferral of payroll tax for the 2020 calendar year (If you have already applied for a deferral, you do not need not reapply – it will be extended.)
  • refund of your payroll tax for 2 months.

A business is directly or indirectly affected by coronavirus if their current turnover, profit, customers, bookings, retail sales, supply contracts or other factors are negatively affected compared with normal operating conditions.

How to apply

There are 2 online application forms.

Apply for deferral

Apply for refund/holiday (You must apply for this one before 31 May 2020.)

The team at DGL are here to clear up any confusion and assist you with the new announcements and updates, in particular regarding PAYGW Tax vs Payroll Tax and the Coronavirus tax relief measures.

Please contact us if you need help.