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COVID-19 support – cash boost for employers

Started ‎3 April 2020 by
Modified 4 weeks ago by

Eligible employers will receive between $20,000 and $100,000 in cash flow boost amounts by lodging their activity statements up to the month or quarter of September 2020.

 

The cash flow boosts are being delivered as credits in the activity statement system and will generally equal the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 2020. What this means is, you keep the amounts you have withheld from payments for these periods. However, there are some exceptions.

 

How do I apply for the cash flow boost?

You don’t need to apply. All you need to do is lodge your upcoming activity statements, and if you’re eligible, the cash flow boost will be automatically credited to your activity statement account.

 

The credit is used to reduce your liabilities from the activity statement. If your liabilities are less than the cash flow boost, the remaining credit is refunded to you. If you are due to receive a refund, we will generally pay it within 14 days.

 

See this thread if you’ve lodged your activity statement and haven’t received your cash flow boost: I haven't received the cash flow boost

 

How do I know if my business is eligible?

The cash flow boost is for small and medium businesses, and not-for-profit organisations of equivalent size, that employ staff. This means sole traders, companies or partnerships are all eligible if they meet the eligibility criteria. However, there are special eligibility rules for charities.

 

Use this eligibility checklist to work out if you’re eligible. If you answer yes to all of the following, you are automatically eligible. The cash flow boosts will be credited when you lodge your relevant activity statements.

 

  1. Did you make eligible payments to at least one employee you are required to withhold from (e.g. salary and wages or director fees) and have reported the amounts to us (even if the amount you withheld was zero)?
  2. Is your aggregated annual turnover under $50 million?
  3. Did you have an ABN on 12 March 2020? There are only very exceptional circumstances where we have discretion to give you further time to hold an ABN.
  4. Have you lodged at least one of the following on or before 12 March 2020?
    1. your 2018-19 income tax return showing you had assessable business income
    2. a GST return for a tax period that started from 1 July 2018 and ended before 12 March 2020 showing that you made a supply.
  5. You haven’t changed the way you operate for the sole purpose of becoming entitled to receive the cash flow boosts (e.g. restructuring your business to meet the eligibility criteria or increasing wages in a particular month to maximize the cash flow boost amount).

 

If you don’t meet these criteria you won’t receive the cash flow boost automatically. However, we’re finding there are situations where we need more information from you to confirm if you are eligible. One of the most common situations is if you answered ‘no’ to question 4 above but you are able to provide information that shows you either had assessable business income in 2018-19 or made a sale between 1 July 2018 and 31 December 2019.

 

You can find more information about the special eligibility rules and examples on our website which cover scenarios like:

 

How much will my business receive?

This will depend on:

  • how much tax you withheld from eligible payments
  • any liabilities in your activity statement (e.g. PAYGW or GST payable)

 

The cash flow boost is not a cash payment, it’s a credit on your activity statement.

 

The initial cash flow boost is based on the amount of your PAYG withholding (a minimum of $10,000) and will be credited when you lodge your activity statements for each monthly or quarterly period from March to June 2020. 

 

Additional cash flow boost credits will be equal to the total amount of initial cash flow boosts received and will be applied when activity statements are lodged for June to September 2020. They will be credited in either two or four instalments, depending on your reporting period.

 

What tax consequences do I need to be aware of?

There are minimal tax consequences with the cash flow boosts. However, you should know:

  • you don’t need to pay tax on the amount you receive from us
  • you don’t need to repay any cash flow boosts when your cash flow improves, however you will need to repay any cash flow boosts received you weren’t entitled to
  • the cash flow boosts are not subject to GST
  • you are still entitled to a deduction for the PAYG withholding paid
  • there is no effect on tax paid by employees in respect of their salary and wages.

 

If you’ve received a cash flow boost and you don’t believe you should have, contact us to let us know. We appreciate your proactive engagement and disclosure with us.

 

To find out more, visit Boosting cash flow for employers or ask a question on the COVID-19 board on ATO Community.

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