Boosting Cash Flow for Employers

The Government is providing up to $100,000 to eligible small and medium-sized businesses that employ people, with a minimum payment of $20,000. These payments will help businesses with their cash flow so they can keep operating.


Small and medium-sized business entities with an annual turnover under $50 million and that employ workers, are eligible.


The payment will be delivered by the Australian Taxation Office (ATO) as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements.


Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100 per cent of the amount withheld, up to a maximum payment of $50,000. Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax. The payments will only be available to active eligible employers established prior to 12 March 2020.


Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020. Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgments.


An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments. To qualify for the additional payment, the entity must continue to be active.


For monthly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000).


For quarterly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020 and September 2020 activity statements (up to a total of $50,000).


The Boosting Cash Flow for Employers payment provides a tax-free payment to employers and is automatically calculated by the Australian Taxation Office (ATO). There are no new forms required.


The Boosting Cash Flow for Employers payment will be applied to a limited number of activity statement lodgements (as above). The ATO will deliver the payment as a credit to the entity upon lodgment of their activity statements. Where this results in the entity being in a refund position, the ATO will deliver the refund within 14 days.


Example of Quarterly BAS Lodger

Anna’s Hairdressing Salon. Anna owns a hairdressing salon. She employs 3 hairdressers, with average salary of $50,000 per year. Anna reports withholding of $5,000 for her employees in each of her quarterly BAS.


Under the Government’s changes, Anna will be eligible to receive the payments on lodgment of her relevant BAS. Anna’s business will receive a credit of $10,000 for the March quarter (the minimum payment) and an additional payment of $5,000 for the June quarter, equal to 50 per cent of its total Boosting Cash Flow for Employers payments.


Anna will also receive an additional payment of $5,000 for the June quarter, equal to 50 per cent of his total Boosting Cash Flow for Employers payments and an additional payment of $5,000 for the September quarter, equal to 50 per cent of his total Boosting Cash Flow for Employers payments.


Under the Government’s enhanced Boosting Cash Flow for Employers measure, Anna’s business will receive $25,000. This is an additional $20,000 to support her business.


Example of Monthly BAS Lodger

Jasper’s Construction Business. Jasper owns and runs a building business and employs 8 construction workers on average full-time weekly earnings, who each earn $89,730 per year. Jasper reports withholding of $15,008 for her employees on each of his monthly Business Activity Statements (BAS). Under the Government’s changes, Jasper will be eligible to receive the payment on lodgment of his BAS. Jasper’s business receives:

  • A credit of $45,024 for the March period (lodged 21 April), equal to 300 per cent of her total withholding.

  • A credit of $4,976 for the April period (lodged 21 May), before he reaches the $50,000 cap.

  • No payment for the May period (lodged 22 June), as he has now reached the $50,000 cap.

  • An additional payment of $12,500 for the June period (lodged 21 July), equal to 25 per cent of his total Boosting Cash Flow for Employers payments.

  • An additional payment of $12,500 for the July period (lodged 21 August), equal to 25 per cent of her total Boosting Cash Flow for Employers payments.

  • An additional payment of $12,500 for the August period (lodged 21 September), equal to 25 per cent of her total Boosting Cash Flow for Employers payments.

  • An additional payment of $12,500 for the September period (lodged 21 October), equal to 25 per cent of her total Boosting Cash Flow for Employers payments.


Under the previously announced Boosting Cash Flow for Employers measure, Jasper’s business would have received a maximum payment of $25,000. Under the Government’s enhanced Boosting Cash Flow for Employers measure, Jasper’s business will receive $100,000. This is an additional $75,000 to support her business and help her retain her staff.


For more information, email mail@nationaltaxation.com.au


Disclaimer

The information presented is general in nature and not to be used, relied or acted upon without seeking professional advice to ensure that the information appropriate for your individual circumstances. National Taxation accepts no liability for any errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. www.nationaltaxation.com.au. ABN 63 665 545 130

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