Eligible entities can receive up to $100,000 in total upon lodgement of their activity statements for the period between 1 March and 30 September. They can receive an initial payment of between $10,000 and $50,000, as well as a further payment of the same amount.
Am I eligible?
This measure applies to small and medium sized business entities and not-for-profits that have an aggregated annual turnover of less than $50 million and that employ workers. An eligible employer is one 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). The turnover threshold will generally be based on prior year turnover.
How are payments made?
The payments are provided as an automatic credit in the activity statement system from 28 April 2020 onwards. Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive an initial payment equal to 100 per cent of the amount withheld up to the maximum (i.e. $50,000). The minimum payment will be equal to $10,000 even if they are not required to withhold tax. To qualify for the additional payment, the entity must continue to be active.
Unlike the JobKeeper payments, businesses and not-for-profits do not have to apply to the ATO for the cash flow boost payments. The ATO is automatically crediting the payments to taxpayers’ accounts based on the data in the ATO’s system regarding the taxpayer’s activity statement lodgements and their turnover.
What if I receive a cash flow payment in error?
In some cases, due to the way in which aggregated turnover is calculated, entities are receiving cash flow boost payments when they are not entitled to them because, for example, they exceed the turnover limit of $50 million. In those cases, the recipient of the payment has an obligation to identify the overpayment and to pay the relevant amount back to the ATO. Unfortunately, a number of entities in this position may be unaware of the eligibility requirements and are likely to accept the payments at face value.
TUNE IN | 3AW breakfast radio host Ross Stevenson speaks with taxation expert Craig Whatman about the Federal Government’s cashflow boost and whether businesses are eligible for the payments. Listen here.
This could lead to a cash flow problem in the event the ATO reviews their eligibility at a later date and requires the cash flow boost amounts to be repaid.
It is important that all businesses and not-for-profits that have already received cash flow boost payments from the ATO check their eligibility to confirm that the payments can be retained.
For more information or for assistance determining your eligibility for cashflow boost payments, contact a Pitcher Partners representative.