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Boosting cash flow for employers

An economic stimulus package is being put in place to support businesses to manage cash flow challenges and assist them retain their employees to continue to stay viable through the coronavirus crisis.

The Government is providing tax-free cash flow boosts between $20,000 and $100,000 to eligible businesses delivered through credits in the activity statement system when businesses lodge their statements. Businesses do not need to apply, and the first amount will automatically be credited to the business’ account from 28 April.

Eligible businesses:

  • Have an active ABN on 12 March 2020, which continues to be active.
  • Have an aggregated turnover less than $50 million, based on the business’ previous years turnover.
  • Made eligible payments that the business is required to (ie wages, directors fees, eligible termination or retirement payments, compensation payments or voluntary withholdings from payments to contractors).
  • Earned an assessable income from 2018-19 year or made sales in a previous tax period (since 1 July 2018) and lodged the relevant activity statement on or before 12 March  2020.
  • Not-for-profit organisations, sole traders, partnerships, companies and trusts (Not-for-profit organisations eligibility can be found here).

When will you see your cash flow boost?

If the business lodges:

  • Quarterly, it will be eligible to receive the credit for:
    • Quarter 3, March 2020 (lodgement due date 28 April 2020)
    • Quarter 4, June 2020 (lodgement due date 28 July 2020)
    • Quarter 1, September 2020 (lodgement due date 28 October 2020)
  • Monthly, it will be eligible to receive the credit for the lodgement periods of:
    • March 2020 (lodgement due date 21 April 2020)
    • April 2020 (lodgement due date 21 May 2020)
    • May 2020 (lodgement due date 21 June 2020)
    • June 2020 (lodgement due date 21 July 2020)
    • July 2020 (lodgement due date 21 August 2020)
    • August 2020 (lodgement due date 21 September 2020)
    • September 2020 (lodgement due date 21 October 2020)

Note: if the businesses has been granted a deferral from the ATO, the cash flow boost will generally be made at the time of the deferral lodgement.

Additional payments

Eligible businesses who received the initial cash flow boost will receive an additional cash flow boost, for the periods June to September 2020, equal to the amount of initial cash flow boost received.

Can you qualify for a refund?

A business may receive a refund where the credit exceeds the business’ other tax liabilities or if it has overpaid its activity statement. If your business is in the position to receive a refund, you will generally receive the refund within 14 days.

If you have any questions in regards to the cash flow boosts your business is entitled to, please don’t hesitate to give us a call.

Information in this article has been sourced from: https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/In-detail/Boosting-cash-flow-for-employers/

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