Legislation has passed to provide temporary cash flow support to small and medium businesses and not-for-profit organisations that:
employ staff
have been affected by the economic downturn associated with COVID-19 (novel coronavirus).
Eligible businesses and not-for-profit (NFP) organisations will receive between $20,000 to $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 will be delivered as credits in the activity statement system, and will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 2020. In practice, this means you keep the amounts you have withheld from payments for these periods, however, there are some exceptions.
An additional cash flow boost will be applied when activity statements for each monthly or quarterly period from June to September 2020 are lodged. These credits are equal to the total boosts credited for March to June 2020. They will be paid out in either two or four instalments depending on your reporting cycle.
You must lodge your activity statement to receive the cash flow boosts.
On this page:
What you need to know
Eligibility
Special eligibility rules
Delivery of the cash flow boosts
Accessing the cash flow boosts
What you will receive
Tax consequences
See also:
COVID-19
JobKeeper Payment
Instant asset write-off
Backing business investment – accelerated depreciation
What you need to know
For most businesses, the cash flow boost will automatically be credited to your account when you lodge your activity statement.
You won’t be disadvantaged if you have been given a deferral for your earlier activity statement or are not required to lodge your income tax return yet. Read more about the impact of lodgment deferrals.
If eligible, the minimum cash flow boost credit you will receive when the March activity statement is lodged is $10,000. See examples of what you will receive.
The cash flow boosts will be applied to reduce liabilities arising from the same activity statement. If there is credit remaining after this occurs, you will generally receive a refund of that amount.
If you are due to receive a refund, we will generally pay it within 14 days.
Any excess credit from the activity statement that received the cash flow boost amount will be refunded to you, rather than offset against other tax debts. However, any excess may still be applied against any outstanding debts with other Australian Government agencies.
Eligibility
Businesses (including sole traders, companies, partnerships or trusts) and NFP organisations will be eligible to receive the cash flow boost if:
You are a small or medium business entity or NFP of equivalent size (that is, an entity with aggregated annual turnover less than $50 million).
You held an ABN on 12 March 2020.
- You made payments to employees subject to withholding (even if the amount you were required to withhold is zero), such as
salary and wages
director fees
eligible retirement or termination payments
compensation payments
voluntary withholding from payments to contractors.
- On or before 12 March 2020, you lodged at least one of
a 2018–19 income tax return showing that you had an amount included in your assessable income in relation to you carrying on a business
an activity statement or GST return for any tax period that started after 1 July 2018 and ended before 12 March 2020 showing that you made a taxable, GST-free or input-taxed sale.
You won’t be disadvantaged if you have been given a deferral for your earlier activity statement or are not required to lodge your income tax return yet. Read more about the impact of lodgment deferrals.
You are not eligible for the cash flow boosts if you change the way you operate for the sole or dominant purpose of becoming entitled to cash flow boosts when you would otherwise not be entitled. Read more about schemes.
If you don't meet these general eligibility criteria but think you may still be entitled to the boost, there are special eligibility rules for entities in the following situations:
New to business
Charities
Entities that are not registered for GST
Entities with a reduction in turnover to below $50 million
Businesses with related parties, or that are part of a group
Businesses with multiple branches
Businesses that are part of a GST joint venture
Businesses that use another entity to manage payroll
Example – A business that is eligible for the cash flow boost
Robert has operated a small restaurant in Adelaide since 2015. He has had an ABN since then and pays wages to his chefs every week.
Robert's income tax return for 2018–19 is not due until May 2020. However, he has lodged all his activity statements since July 2018.
Robert is eligible to receive a cash flow boost.
Example – A business that does not pay employees
Angela runs a small convenience store in Darwin using a trust as her business vehicle. She is the only person who works in the business. She provides for her own remuneration by making trust distributions during the year and does not pay any wages.
As Angela does not make eligible payments to employees, she is not eligible to receive the cash flow boost.
On 15 March 2020, Angela realises her business is not eligible and applies to become registered for PAYG withholding, backdated to 1 March 2020. She changes her business records to reclassify some trust distributions as wages.
Angela is still not eligible to receive the cash flow boost because she has changed the way her business operates for the purpose of receiving a cash flow boost that she was not otherwise entitled to receive.
Tax consequences
You do not need to pay tax on the amount of the cash flow boost. However, if you distribute the cash flow boost from the business to another entity (for example, making a trust distribution or paying a dividend to shareholders) there may be tax consequences for the recipient.
The amounts do not need to be paid back when your cash flow improves. However, if you have been paid more cash flow boosts than you are entitled to you will need to repay the excess.
The cash flow boost is not subject to GST as you are not making or agreeing to make a supply for the payment.
There is no effect on tax paid by employees in respect of their salary and wages.
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