Cash flow assistance for businesses
(response to COVID19)
23 March 2020
ECONOMIC RESPONSE TO THE CORONAVIRUS
This assistance will assist businesses to manage cashflow challenges and help businesses retain their employees. These two measures are designed to support
employing small and medium sized businesses and to improve business confidence. The Boosting Cash Flow for Employers measure also supports the activities of not-for-profits (including charities) at a time where they are facing increased demand for services.
The wage subsidy for apprentices and trainees will help to ensure the continued development of the skilled workforce.
BOOSTING CASH FLOW FOR EMPLOYERS
The Government is providing up to $100,000 to eligible small and medium sized businesses, and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
On 12 March 2020, the Government announced the Boosting Cash Flow for Employers measure. The measure initially provided up to $25,000 to business, with a minimum payment of $2,000 for eligible businesses. Small and medium sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible.
The Government has enhanced this measure as part of the second economic response package. Not-for-profit entities (NFPs), including charities, with aggregated annual turnover under $50 million and
that employ workers will now also be eligible. This will support employment activities at a time where NFPs are facing increasing demand for services.
Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to
$50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.
An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments
they have received. This means that eligible entities 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 entities to keep operating.
The cash flow boost provides a tax free payment to employers and is automatically calculated by the Australian Taxation Office (ATO). There are no new forms required.
Eligibility - Boosting Cash Flow for Employers payments
Small and medium sized business entities and NFPs with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover.
• The payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements.
• Eligible employers that 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 that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax.
• The payments will only be available to active eligible employers established prior to 12 March 2020. However, charities which are registered with the Australian Charities and Not-for-profits Commission
will be eligible regardless of when they were registered, subject to meeting other eligibility requirements. This recognises that new charities may be established in response to the Coronavirus
Eligibility - Additional payment
To qualify for the additional payment, the entity must continue to be active. For monthly activity statement lodgers, the additional payments will be delivered as an automatic credit in
the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020, July 2020, August 2020 and September
2020 activity statements (up to a total of $50,000).
For quarterly activity statement lodgers the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for
Employers payment following the lodgment of their June 2020 and September 2020 activity statements (up to a total of $50,000).
This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
Timing - Boosting Cash Flow for Employers payments
The Boosting Cash Flow for Employers payment will be applied to a limited number of activity statement lodgments. The ATO will deliver the payment as a credit to the entity upon lodgment of their activity
statements. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days.