News 23rd March 2020

One-off payments to businesses

In addition to the other Commonwealth Government’s economic stimulus actions discussed within this newsletter, the Federal Government has provided the public with an update of the planned ‘Boosting Cash Flow for Employers’ initiative. This initiative will provide up to a maximum $100,000 back to Australian small and medium sized businesses (with prior year aggregated turnover up to $50m) to businesses, with a minimum $10,000 payment per quarter for eligible businesses. Payments are provided to support business cash flow in the short-term and are tax free

Most important details:

  • These amounts are not ‘cash payments’, they will be delivered to the eligible business’ activity statement account as a credit – so any outstanding GST payable, PAYG Withholding payable, or other ATO debt may be offset by the credited benefit.
  • Eligibility of payments are based on the lodgement of the business activity statements.
  • Quarterly lodgers are eligible for a credit of 100% of reported PAYG Withholding for the March 2020 and June 2020 quarters (capped at $100,000).
  • Monthly PAYGI lodgers are eligible for payment of 100% of reported PAYG Withholding for the March to June 2020.
  • An additional payment in the October 2020 quarter will also be available, plus an further one-off payment equal to the total of all Boosting Cashflow for Employers payments received (minimum $20,000) – to be delivered automatically after lodgement of all outstanding activity statements.
  • The $10,000 minimum payment is applicable to any Salary or Wage provider who lodges activity statements within the stated eligibility periods.
  • Credits will be available as from 28 April 2020, once lodgement has been received and processed.
  • Any available credits on the business’ integrated client account will be refunded within 14 working days from processed date.
  • Newly announced – NFPs and Charities that employ workers will also eligible for these support measures.

More details are expected to come in the near future.

Please note the legislation on these measures has not yet been released and is due to be debated over the coming week.

Our suggested action plan for this initiative:

  • Ensure your employee payruns are processed on time in your business’ specific accounting payroll software package.
  • Ensure your Business Activity Statement and Instalment Activity Statement lodgement are up to date.
  • Understand your responsibility to ensure ATO debts require on time payment – credits will act as offset against accumulated activity statement debts. If you are having difficulty in making payments, contact the ATO to arrange a suitable payment arrangement.
  • Look to leverage these credits and any available ATO payment arrangements build up business short-term cash-flow.
  • Consider payment of wages to related parties and business owners to maximise the potential credit.

Please contact our office regarding the above as there are a range of tax planning opportunities available which could have a significant benefit to your business cashflow.