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Cash flow boost for small business

 

The Australian Government announced earlier in the year that it would be providing small and medium sized businesses with an aggregated annual turnover under $50 million two sets of cash flow boosts up to $100,000. The cash flow boost provides a tax-free payment to employers and is automatically calculated by the ATO.

The additional payment for the periods of June to September will soon be delivered. The cash flow boost will be applied when activity statements for each monthly or quarterly period are lodged. These credits are equal to the total boosts credited for March to June 2020. They will be paid out in either two or four instalments depending on your reporting cycle.

For most businesses, the cash flow boost will automatically be credited to your account when you lodge your activity statement. Although to be eligible for the additional cash flow boost, you must have received the initial boost.

These cash flow boosts will be delivered as credits in the activity statement system and will be applied to reduce liabilities arising from the same statement.

Eligible employers who 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 who pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.

Case study

Sarah’s Construction Business

Sarah owns and runs a building business in South Australia and employs eight construction workers on average full-time weekly earnings, who each earn $89,730 per year. Sarah reports withholding of $15,008 for her employees on each of her monthly Business Activity Statements (BAS).

Under the Government’s changes, Sarah will be eligible to receive the payment on lodgement of her BAS. Sarah’s business receives:

A credit of $45,024 for the March period, equal to 300 per cent of her total withholding.

A credit of $4,976 for the April period, before she reaches the $50,000 cap.

No payment for the May period, as she has now reached the $50,000 cap.

An additional payment of $12,500 for the June period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments.

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

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

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

Under the previously announced Boosting Cash Flow for Employers measure, Sarah’s business would have received a maximum payment of $25,000.

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sarah’s business will receive $100,000. This is an additional $75,000 to support her business and help her retain her staff.

You can find further information regarding cash flow boosts in the links below.

Cash flow boosts

Fact Sheet - Boosting cash flow for employers

Boosting cash flow for employers