The government recently passed legislation for a temporary cash flow boost, offering eligible SME’s an initial and additional cash flow boost from 28 April through the activity statement system.
Eligible businesses and not-for-profit organisations will receive a tax-free cash flow boost between $20,000 and $100,000 through credits when their activity statements are lodged with the Australian Taxation Office (ATO). Businesses must lodge their activity statement for PAYG with-holding as normal. Businesses with larger with-holdings must lodge the activity statement for other obligations such as GST as well.
There are two different outcomes depending on when the lodgements are made. A business that lodges before their due date of March 2020 will likely have excess credits applied against outstanding debts with other Australian Government agencies. Lodgings from 28 April would likely receive a refund amount.
Sarah owns and runs a building business in South Australia employing eight construction workers who each earn $89,730 per year. In the activity statements for March, April, May and June 2020, Sarah reports:
- Wages paid at W1 (total salary, wages and other payments)
- Withholding of $15,008 at W2 (amount withheld from payments shown at W1).
As Sarah’s March 2020 withholding is greater than $10,000, her initial cash flow boost is $45,024 (3 × $15,008).
For April 2020, Sarah’s withholding is $15,008. However, she will only receive $4,976 which is the remainder before the maximum limit of $50,000 is reached. Sarah will not receive any further initial cash flow boosts after she has reached the $50,000 limit.