Cashflow boost changes for PSI entities
The amendments should improve access to the cash flow boost scheme for companies and trusts that derive personal services income (PSI) and cannot pass the PSI tests.
One of the conditions that needs to be met to access the cash flow boost rules is that the entity in question must have paid some salary, wages, directors fees, etc., that trigger certain PAYGW rules during the relevant period. For quarterly lodgers, this needs to occur between 1 January 2020 and 30 June 2020.
As the rules stand at the moment, when dealing with a company or trust that derives income from someone's personal services you need to distinguish between amounts that are actually paid as salary or wages to the individual (which can be taken into account under the cash flow boost rules) and amounts that are merely attributed to the individual under the PSI provisions (these are not taken into account under the cash flow boost rules). Both of these trigger PAYGW obligations for the entity and the PAYGW amounts are reported in much the same way on activity statements, but the outcome under the cash flow boost rules can be very different.
However, the Government is planning to change the rules in this area so that PAYGW obligations that are triggered in relation to attributed PSI amounts are taken into account under the cash flow boost rules in the same ways as PAYGW obligations that arise on payments of salary or wages. The changes would apply retrospectively.
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