COVID-19 Business Cash Flow Booster

COVID-19 Business Cash Flow Booster

The government’s delivery of the Stimulus Package has been confusing to say the least and we now have some clear decisions finally.

In response to the questions we are receiving surrounding the cash flow measures for business, I felt it best to summarise where we currently stand, with respect to the legislation that will apply to all eligible businesses.

The Government is providing a minimum of $20,000 and a maximum of $100,000 to eligible businesses that employ, in the form of 100% credit on their PAYG Withholding payments.

Eligible business are those with aggregated annual turnover under $50 million that employ workers.

The credits are designed to help businesses with their cash flow so they can keep operating and retain staff throughout the coming period.

The Cash Flow Booster provides a tax-free payment to employers and is automatically calculated by the ATO. There are no forms or applications required.

Below is my summary of how this will be rolled out.

 

Initial Cash Booster

1) The Initial Cash Booster is a minimum of $10,000 and a maximum of $50,000.

2) Employers that lodge quarterly BAS will receive a payment equal to 100% of PAYG Withheld on wages up to the maximum in their March & June BAS.

3) Employers that lodge monthly IAS will receive a payment equal to 300% of PAYG Withheld on wages in their March BAS (This brings them in line with quarterly lodgers).  They will then receive a payment equal to 100% of PAYG Withheld on wages for April / May IAS & June BAS.  Total receipt is up to the maximum.

4) Employers that are not required to withhold tax will receive the minimum of $10,000 regardless.

5) The “payment” will be delivered by the ATO as an automatic credit on BAS / IAS lodgements by the ordinary due dates for the respective returns.

6) Where the credit results in the entity being in a refund position, the ATO will deliver the refund within 14 days.

 

Additional Payments

Businesses will receive an additional payment across the June and September quarters, which combined will equal the total Cash Booster payments they have already received.

The payments will only be available to employers who were established prior to 12 March 2020 and continue to be active.

1) The additional payment is up to a maximum of $50,000 (making the total overall payment $100,000).

2) Employers that lodge quarterly BAS will receive a payment equal to 50% of their Initial Cash Booster Payment upon lodgement of their June & September BAS.  Total receipt is up to maximum.

3) Employers that lodge monthly IAS will receive a payment equal to 25% of their Initial Cash Booster Payment upon lodgement of their June BAS, and onwards for their July / August IAS & September BAS.  Total receipt is up to maximum.

4) Employers that are not required to withhold tax will receive $10,000 regardless.

5) The “payment” will be delivered by the ATO as an automatic credit on BAS / IAS lodgements by the ordinary due dates for the respective returns.

6) Where the credit results in the entity being in a refund position, the ATO will deliver the refund within 14 days.

I hope this helps you to absorb the Cash Booster section of the Stimulus Package for small business.  Please stay tuned for further summaries and general advice to our customers on how to approach the COVID-19 period ahead.   

If you have any questions at all regarding the Business Cash Flow Booster, Additional Payments or financial and business matters surrounding COVID-19, please don’t hesitate to contact me by email or phone.  

Leah Oliver CA BB (Acc/Fin)