Do you qualify for the Government’s cash flow boost?

Brent Wedesweiler

Tuesday, 21 April 2020

If your business was registered before March 12, 2020, you might be eligible for a cash flow boost, labelled ‘Boosting cash flow for employers’. The new measure was announced by the Government on March 12 in response to the COVID-19 crisis.

If your business happens to be a charity (registered with the Australian charities and Not-for-profits commission) you'll be eligible for payment even if your business was established after this date. The Government realises new charities will emerge in response to the COVID-19 crisis, and they must be supported.

Not a charity? Let’s find out if you qualify.

What’s the ‘Boosting Cash Flow for Employers’ measure?

The Boosting Cash Flow for Employers measure is an automatic payment credited to eligible Aussie businesses, designed to take pressure off of business owners who are working hard to stay afloat during this pandemic.

The payment started as a minimum of $2,000, but has since been increased to $10,000, meaning eligible businesses will receive at least $10,000 regardless of whether they withhold cash for their employees or not.

If your business withholds tax on their employees’ salary, you’ll receive a payment equal to 100 percent of the amount withheld, up to a maximum payment of $50,000.

A secondary payment will be available for eligible businesses in the July - October period (2020) of $100,000 (up from an initial amount of $25,000). To be eligible for this additional payment, your business must remain active and meet eligibility requirements that we’ll touch upon later in this post.

Cash flow boosts are expected to benefit an estimated 690,000 businesses (employing 7.8 million people) and 30,000 Not-for-profits in Australia.

How does it work?

Cash flow boosts will be delivered to thousands of Aussie businesses from 28th April 2020, through automatic credits in the activity statement system.

If your business is eligible, you will receive cash in either two or four bursts, depending on when you typically lodge your activity statements. If you lodge every quarter, you’ll receive credit for quarter 3 (March 2020) and quarter 4 (June 2020).

If you lodge monthly, you’ll receive cash each month from now up until June 2020.

The tables below give you a clear snapshot of when you can expect to receive payment, provided your business is eligible.

If you're a quarterly lodger:

To receive payment for… Lodge by… Quarter 3 (January, February & March 2020) 28 April 2020 Quarter 4 (April, May & June 2020) 28 July, 2020

If you're a monthly lodger:

To receive payment for… Lodge by… March 2020 21 April 2020 April 2020 21 May, 2020 May 2020 22 June, 2020 June 2020 21 July, 2020

How to apply for a cash flow boost

Provided you’re eligible to receive the payment, there’s no need to make any claims. From 28 April 2020 (after lodging your upcoming activity statements) the ATO will automatically credit your business.

Are you eligible to receive payments?

Small to medium-sized businesses and not-for-profit organisations who employ staff are eligible, provided they meet the following criteria:

You held an ABN on 12 March 2020 and still hold it today You have an aggregated annual turnover of less than $50 million (generally based on your figures from the year before) You’ve previously made (eligible) payments in which you had to withhold, even if the amount you withheld was zero.

What do we mean by ‘eligible’ payments? These include:

  • Salaries and wages
  • Compensation payments
  • Some retirement payments
  • Some termination payments
  • Voluntary withholding from payments to contractors.

One other thing—you must have:

  • Either lodged your 2019 tax return on or before 12 March 2020 and obtained business income in the 2018-19 financial year, or
  • Made sales that were GST taxable, GST-free or input-taxed in a previous tax period (since 1 July 2018) while also lodging your relevant activity statement on or before 12 March 2020.

How do I know whether my business is considered small or medium?

The Government determines the size of your business based on previous income tax assessments, generally from the year prior.

If you don’t have any prior tax assessments, you could still be eligible—so long as the Government knows you’re legitimately in business. They’ll use other information they have on hand to figure this out.

For example, if you have a lodgement deferral in place or another piece of evidence that proves you made business income or supplies, this will help the Government confirm your legitimacy.

I’m a not-for-profit business. Am I eligible?

As we mentioned, if you’re a charity, you’re already eligible for the Boosting Cash Flow payment regardless of when you were established, as long as you’re registered with the Australian Charities and Not-for-profits Commission.

All other not-for-profit businesses must:

  • Have held an active ABN since 12 March 2020 or before this date
  • Have an annual aggregate turnover of less than $50 million
  • Made payments to employees

Resources

For more information, check out the Government's Boosting Cash Flow fact sheet.

While the Government has several measures in place to help business owners stay afloat, you might need an extra boost to pay the bills. If this sounds like you, chat to a lending expert today for a tailored finance solution. We’d love to learn more about your situation and find out how we can help.


Brent is the Director of Operations at Valiant, bringing a wealth of knowledge from 18 years of experience in the finance industry. He’s worked with banks and fin-techs in the consumer & commercial space, where he discovered his passion for helping SMEs.

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