In the last couple of days, the financial situation in Australia has rapidly changed due to COVID-19. The Federal Government has urgently pushed through new legislation to provide assistance to businesses during this pandemic. In particular, this article will look at the new cash flow boost for employers to allow them to continue to operate.
Am I eligible?
In order to be eligible for the boost, you must have a business or charity/not-for-profit that:
- Makes taxable payments (i.e. salaries or wages);
- is a business or charity, church or not-for-profit that has a turnover of less than $50 million (i.e. a small or medium business, charity, not-for-profit or church);
- held an ABN on 12 March 2020 (not applicable to charities*); and
- made income in the 2019 income year or made supplies between 1 July 2018 and 12 March 2020.
*Note: charities do not have to prove that they existed prior to 12 March 2020 to be eligible for this payment.
In order to apply for the boost, a company must lodge a business activity statement (BAS) in relation to the taxable payments relating to the months of March 2020, April 2020, May 2020, or June 2020. This is to notify the Commissioner of the need for the boost.
Charities who cannot create a BAS simply need to notify the Commissioner that it should satisfy the small to medium business requirement.
How does the cash flow bonus work?
The ATO will deliver payment as a credit in the activity statement system from 28 April 2020 once a business has lodged a BAS. In the month of March, the ATO with deliver a credit that is three times the amount of tax withheld.
In the months of April and May, the ATO will give a credit equal to the amount of tax withheld, up to a total credit of $50,000.
From June, if your business remains active, and you lodge your BAS monthly, every month between June 2020 and September 2020, you will receive a quarter of the total boost paid to you from March to June, up to a total of $50,000.
If your business remains active and you lodge your BAS quarterly, you will receive half of the total boost paid to you in part one in either:
- Two payments, one in June 2020 and the other in September 2020; or
- The months of June 2020, July 2020, August 2020 and September 2020 .
In summary, even if your business, charity, not-for-profit or church has changed circumstances whilst Part 2 is active, provided it remains active, it will be entitled to the same benefit under Part 1. This is to encourage businesses, charities, churches and not-for-profits to hold on to their employees, particularly in the early days of the impact of the Coronavirus.
Need more info about COVID-19 financial assistance?
To learn more about this boost, click here to visit the government’s informational page. If you are unsure as to how to access these payments, or you are a charity trying to access these payments, click here to contact one of our expert lawyers.