If you are a small or medium business that employs staff, it has never been so important to lodge your March Quarter or March Monthly Business Activity Statement on time.
The Government is providing temporary cash flow support to small and medium businesses and not for profit organisations that employ staff during the economic downturn associated with COVID-19. This will be provided through two sets cash flow boosts of between $10,000 and $100,000 delivered from 28 April 2020 to support employers to retain employees.
The cash flow boosts will be delivered through credits in the activity statement system and will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 2020 when eligible businesses lodge their Business Activity Statements.
Which businesses are eligible for the cash flow boost?
- If you carry on a business or are a not for profit with an aggregated annual turnover of under $50 million.
- Make eligible payments you are required to withhold from (even if the amount you are required to withhold is zero), including salary and wages, directors fees, eligible retirement or termination payments, compensation payments, and voluntary withholding from payments to contractors.
- Held an ABN on the 12th of March
- You have lodged, on or before the 12th of March 2020, at least one of either a 2018-19 income tax return showing that you had an amount included in your assessable income in relation to you carrying on a business, or an activity statement or GST return for any tax period that started after 1 July 2018 and ended before 12 March 2020 showing that you made a taxable, GST-free or input-taxed sale.
For most businesses, the cash flow boost will automatically be credited to your account when you lodge your activity statement.
The cash flow boosts will be applied to reduce liabilities arising from the same activity statement, and if there is a credit remaining after this occurs you will generally receive a refund of that amount. The ATO advises that any excess credit from the activity statement that received the cashflow boost amount will be refunded to you, rather than offset against any other tax debts you have. However, any excess may still be applied against any outstanding debts with other Australian Government agencies.
The minimum initial payment is $10,000 and the maximum initial payment is $50,000. Businesses who received the initial cash flow boosts will receive additional cash flow boosts for the periods June to September 2020, equal to the total amount of initial cash flow boosts received. This means that eligible businesses that employ people will receive at least $20,000 up to a total of $100,000 under both payments. This additional payment continues cash flow support over a longer period, increasing confidence, helping employers to retain staff and helping businesses to keep operating.
If you have any questions regarding cash flow boosts for businesses contact your local RSM office.