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  • Boosting cash flow for employers

    Temporary cash flow boosts will support small and medium businesses and not-for-profit organisations during the economic downturn associated with COVID-19.

    Eligible businesses and not-for-profit (NFP) organisations who employ staff will receive between $20,000 to $100,000 in cash flow boost amounts by lodging their activity statements up to the month or quarter of September 2020.

    The cash flow boosts will be delivered as credits in the activity statement system. They will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 2020. In practice, this means you keep the amounts you have withheld from payments for these periods. However, there are some exceptions.

    An additional cash flow boost is applied when you lodge activity statements for each monthly or quarterly period from June to September 2020. 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.

    On this page:

    See also:

    What you need to know

    • On 24 March 2021, the Full Federal Court (FFC) handed down its decision in Federal Commissioner of Taxation v Apted [2021] FCAFC 45 – for more information, see FFC decision JobKeeper and backdated ABNs.
    • For most businesses, the cash flow boost will automatically be credited to your account when you lodge your activity statement.
    • You must be eligible for the initial cash flow boost, in order to be eligible for the additional cash flow boosts.
    • The cash flow boost will be applied to reduce liabilities arising from the same activity statement – if there is credit remaining after this occurs, you will generally receive a refund of that amount.
    • If you are due to receive a refund, we will generally pay it within 14 days.
    • Any cash flow boost amounts you receive are non-assessable non-exempt (NANE) income and should be reported in the same way as you report other NANE income when lodging your tax return – see Tax consequences.

    Eligibility

    Businesses (including sole traders, companies, partnerships or trusts) and NFP organisations will be eligible to receive the cash flow boost if:

    • you are a small or medium business entity or NFP of equivalent size (that is, an entity with aggregated annual turnover less than $50 million)
    • you held an Australian business number (ABN) on 12 March 2020
    • you either
      • made payments to employees subject to withholding (even if the amount you were required to withhold was zero), such as   
        • salary and wages
        • director fees
        • eligible retirement or termination payments
        • compensation payments
        • voluntary withholding from payments to contractors
         
      • were required to pay an amount in relation to alienated personal services income you received (even if the amount you were required to pay was zero)
       
    • on or before 12 March 2020, you lodged at least one of  
      • a 2019 tax return showing that you had an amount included in your assessable income in relation to you carrying on a business
      • 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.
       

    In some circumstances, we may have discretion to give you further time after 12 March 2020.

    You won’t be disadvantaged if you have been given a deferral for your earlier activity statement or are not required to lodge your tax return yet. Read more about the impact of lodgment deferrals.

    You are not eligible for the cash flow boosts if you change the way you operate for the sole or dominant purpose of becoming entitled to cash flow boosts when you would otherwise not be entitled. Read more about schemes.

    If you don't meet these general eligibility criteria but think you may still be entitled to the boost, there are special eligibility rules for entities in the following situations:

    Examples

    Example 1 – A business that is eligible for the cash flow boost

    Robert has operated a small restaurant in Adelaide since 2015. He has had an ABN since then and pays wages to his chefs every week.

    Robert's 2019 tax return is not due until May 2020. However, he has lodged all his activity statements since July 2018.

    Robert is eligible to receive a cash flow boost.

    End of example

     

    Example 2 – A business that does not pay employees (and is not eligible for the cash flow boost)

    Angela runs a small convenience store in Darwin using a trust as her business vehicle. She is the only person who works in the business. She provides for her own remuneration by making trust distributions during the year and does not pay any wages.

    As Angela does not make eligible payments to employees, she is not eligible to receive the cash flow boost.

    On 15 March 2020, Angela realises her business is not eligible and applies to become registered for PAYG withholding, backdated to 1 March 2020. She changes her business records to reclassify some trust distributions as wages.

    Angela is still not eligible to receive the cash flow boost because she has changed the way her business operates for the purpose of receiving a cash flow boost that she was not otherwise entitled to receive.

    End of example

    Find out about:

    Discretion to give you further time

    We have discretion to give you further time, after 12 March 2020, to:

    • hold an ABN
    • provide us notice that business income or supplies were made.

    PSLA 2020/1 sets out the circumstances that the Commissioner will consider in deciding whether to exercise the discretion. This can include where you cannot satisfy the condition because:

    • although you were running an active business prior to 12 March 2020, you were not required to hold an ABN as a matter of law – for example, an entity which operates in the external territories of Australia is not required to have an ABN
    • you have deferred your lodgment under an extension of lodgment date granted by the Commissioner of Taxation – for example, you had an automatic lodgment deferral in place as you were affected by the Australian bushfires in late 2019, and you lodge your first activity statement after 12 March 2020.

    We are unlikely to exercise the discretion to extend the 12 March 2020 date if doing so would be inconsistent with the integrity provisions. For example, where steps are taken to set up new entities, or revive dormant entities, solely for the sole or dominant purpose of accessing the cash flow boost.

    Find out about:

    Special eligibility rules

    There are special eligibility rules for entities in some situations:

    New to business

    If you are a new business that did not have income in the 2018–19 year, you may still be eligible to receive the cash flow boost if you made supplies (or sales) in a tax period ending before 12 March 2020. The December 2019 quarter and the month of February 2020 are the last tax periods that end before 12 March 2020.

    In most cases, if you lodged an activity statement before 12 March 2020 which showed sales, you will not need to do anything.

    If you made a supply in one of those relevant tax periods but did not lodge any activity statements before 12 March 2020, you need to contact us and provide further information so that we can determine if you are eligible.

    If your business made no sales before 1 January 2020 (for quarterly lodgers) or 1 March 2020 (for monthly lodgers) you will not be eligible.

    Example – A business that is not eligible for the cash flow boost

    Carmel applied for an ABN and started a food delivery business in February 2020. She has one employee that she pays wages to fortnightly.

    Carmel's business was not operating in the 2018–19 year so she has not lodged a tax return. Because she reports GST quarterly, Carmel also has not made any sales in a tax period which ended before 12 March 2020.

    Carmel is not eligible to receive a cash flow boost.

    End of example

    Find out about:

    Charities

    If you are a charity registered with the Australian Charities and Not-for-profits Commission (ACNC) you are eligible, regardless of when you were registered as a charity, if you:

    • had an aggregated annual turnover under $50 million (generally based on prior year turnover)
    • made eligible payments that you were required to withhold from (even if the amount you were required to withhold is zero).

    Business created PAYG withholding role after 12 March 2020

    The cash flow boost is intended for employers who:

    • make payments subject to withholding
    • withhold from these payments
    • have not rearranged their affairs for the dominant purpose of making themselves eligible for the cash flow boost where they would not otherwise be eligible.

    While having a PAYGW role before 12 March 2020 is not specifically required by legislation, we would expect that a business who has been paying wages or other relevant payments would already have been registered. A business without a PAYG withholding registration in place on 12 March 2020 would generally not be entitled to the cash flow boost.

    There may be limited circumstances where the business was not registered on 12 March 2020 and may still be eligible. These circumstances include where:

    • the business started employing in the March 2020 period, and either
      • the employees were engaged before 12 March 2020 but were not required to be paid until 12 March 2020 or later
      • the employees were engaged after 12 March 2020, but the business can demonstrate there were other reasons for engaging the employee after that date, taking into account the current economic environment that businesses are currently operating in
       
    • the business has a history of paying wages to the relevant employees and can substantiate this.

    If you can demonstrate the above circumstances, you will need to contact us and provide additional information (including about your employees) to allow us to determine if you’re eligible.

    A business that has a history of paying wages but has not been registered for PAYG withholding, may be liable for penalties for failing to withhold and failing to register for PAYG withholding.

    Find out about:

    Entities that are not registered for GST

    You don’t need to be registered for GST to be eligible. If you have already lodged your 2019 tax return showing that you had an amount included in your assessable income in relation to you carrying on a business and meet other eligibility criteria, you do not need to do anything.

    If you are not required to be registered for GST and you are not required to lodge a 2019 tax return (or it is not yet due), you may be eligible if you made a sale in the period 1 July 2018 to 31 December 2019. We will need you to provide us additional information about your business activity (such as sales made in relevant periods) to allow us to determine if you’re eligible.

    If your business made no sales before 1 January 2020, you will not be eligible.

    Example – not required to be registered for GST and tax return not due

    FreshCo is a company that runs a small vegetable shop. It has held an ABN since July 2000, pays a weekly wage to two shop staff, but has never been required to register for GST. FreshCo’s director, Mary, checks whether FreshCo will be eligible to receive the cash flow boost.

    She considers the eligibility criteria. She determines she has met all the criteria except for demonstrating business activity by lodging (before 12 March 2020) her 2019 tax return showing business income, or an activity statement or GST return showing supplies.

    As FreshCo is not required to be registered for GST, it has never lodged an activity statement or return for GST. FreshCo uses a tax agent to prepare their tax returns, and their 2019 tax return is not due until May 2020.

    It appears as if FreshCo is not eligible to receive the cash flow boost because it has not lodged. However, Mary does some more research on the ATO website, and discovers advice about the impact of lodgment deferrals. She learns that because the law did not require FreshCo to have lodged before 12 March 2020, FreshCo can provide more information to confirm eligibility.

    Mary decides that it is not possible to lodge FreshCo’s 2019 tax return earlier than anticipated. Instead, she locates copies of invoices issued by FreshCo in December 2019 showing that FreshCo made a GST-free supply (that is, they sold vegetables) in a tax period which ended between 1 July 2018 and 12 March 2020. Mary attaches those invoices to a message in the Business Portal so that the ATO can confirm FreshCo’s eligibility for the cash flow boost.

    End of example

    Find out about:

    Entities with a reduction in turnover to below $50 million

    If your aggregated turnover in previous years was greater than $50 million, but you expect it to be less than $50 million in 2019–20, you may still be eligible to receive a cash flow boost.

    Contact us to provide more information about your circumstances.

    Example – A business that is experiencing a reduction in turnover

    Sri runs a cellar door service for several regional wineries. The aggregated turnover of her business in 2018–19 was $60 million.

    In the financial year up to 29 February 2020, Sri's business had a turnover of $40 million. However, as a result of restrictions imposed as a response to the coronavirus, Sri is not permitted to trade between 25 March and 30 June 2020. Therefore, she expects her aggregated turnover for 2019–20 year to be around $41 million.

    Sri contacts the ATO to discuss her eligibility for the cash flow boost and provides the additional supporting documents requested.

    End of example

    Find out about:

    Businesses with related parties, or that are part of a group

    Your aggregated turnover will include your annual turnover and the annual turnover of any entity that is connected with you or that is your affiliate. This may affect your eligibility for the cash flow boost. If you are part of a tax consolidated group or GST group these entities may be part of the same group, however it may also include entities which are outside these groups.

    Broadly, an entity is connected with you if it can exercise control, such as voting rights and distributions of income or capital. An entity is an affiliate of yours if they act, or could reasonably be expected to act, according to your directions or wishes, in relation to their business affairs.

    We will use the annual turnover in your most recent previous year’s tax return, as well as other information held by us, to determine your eligibility. If your annual turnover and the annual turnovers of entities connected or affiliated with you total more than $50 million, then you (and the entities connected or affiliated with you) will not be eligible for the cash flow boost.

    If you are not required to lodge a tax return, or don't have lodgments from previous years, you may still be eligible if we are satisfied that your aggregated annual turnover is under $50 million.

    Example – A business that is part of a group

    Companies B and C are subsidiaries of Company A. Each company reported individual annual turnover of $26 million in their 2019 tax return.

    Companies B and C are connected to Company A. Although Companies B and C each have annual turnover that is below $50 million, their aggregated turnover includes the annual turnover of Company A. As their aggregated annual turnover is over $50 million, they are not eligible to receive a cash flow boost.

    End of example

    See also:

    Businesses that are members of a consolidated or GST group

    If you are a member of an income tax consolidated group or a GST group, you may be eligible for the cash flow boost if you can individually meet the eligibility criteria.

    The lodgment of a tax return by the head company or a GST return by the representative member does not provide us enough information to determine your eligibility for the cash flow boost, even where they include amounts of assessable income or taxable supplies made by you.

    We will need you to provide us additional information about your business activity (such as sales you made in the relevant periods) to allow us to determine if you’re eligible).

    Example – A business that is a member of a consolidated and GST group

    Companies Y and Z are members of an income tax consolidated group and a GST group for which Company X is both the head company for the tax consolidated group and the representative member of the GST group. Company X has the group's income tax and GST returns for the 2018–19 year.

    The group returns do not provide enough information to show that Companies Y and Z each either:

    • had business income in the 2018–19 year
    • made a taxable, GST-free or input taxed supply in a tax period that started after 1 July 2018 and ended before 12 March 2020.

    Companies Y and Z need to provide additional information about their business activity which shows the business income or supplies they made.

    End of example

    Businesses with multiple branches

    If you are an entity that operates several branches of a business using one ABN you are considered a single business for the purposes of the cash flow boost. This means you are not entitled to receive a separate cash flow boost for each branch.

    Example – A business that has multiple branches

    Con runs three pharmacies in Townsville using his ABN. Each pharmacy pays staff separately and lodges separate activity statements.

    Con is only entitled to receive the cash flow boost for a single business, not for each pharmacy.

    End of example

    Businesses that are part of a GST joint venture 

    A GST joint venture cannot be registered for PAYG withholding however, entities that are members of the venture may be registered for PAYG withholding in their own right. In this scenario, the entitlement to cash flow boost will be determined based on the PAYG withholding reported by the joint venture member.

    Businesses that use another entity to manage payroll

    Only an entity making payments subject to withholding and notifies us of the withholding amount may be eligible for the cash flow boost. If another entity is responsible for the payroll functions and withholding obligations for one or more other entities, then those other entities are not eligible for the cash flow boost.

    Example – A business that uses another entity to manage its payroll

    Company A manages the payroll functions for Companies B, C and D. Company A pays the wages for all of Companies B, C and D's employees, withholds tax from the wages and reports and remits the amounts of PAYG withholding to the Commissioner.

    Company A may be eligible for the cash flow boost. Companies B, C and D will not be eligible for the cash flow boost as they have not made any payments subject to withholding.

    End of example

    Impact of lodgment deferrals

    You won't be disadvantaged if, before 12 March 2020, we gave you a deferral for your:

    • 2018–19 tax return, or it is not yet due for you
    • activity statements, or you are not required to lodge an activity statement yet.

    However, we will need more information to confirm your eligibility for the cash flow boosts if you:

    • haven't lodged because of the deferral we gave you
    • aren't able to lodge your deferred tax return or activity statement before you lodge your March 2020 activity statement.

    If you are able to lodge your deferred tax return or activity statement before your March 2020 activity statement, we should be able to determine your eligibility when you lodge.

    Example – Deferred lodgment due dates

    Hieu uses a tax agent to prepare his business income tax and annual GST returns. He did not lodge his 2019 tax return or annual GST return by 12 March 2020 because his due date for these lodgments is 15 May 2020.

    Hieu remains eligible to receive the cash flow boost as long as he lodges his 2019 tax return or 2018–19 annual GST return before his due date.

    If Hieu lodges his March 2020 activity statement before either of the 2018–19 returns are lodged, the cash flow boost will be credited when the first return is lodged.

    Alternatively, Hieu can provide us with supporting documents that assist us to determine that he is eligible.

    End of example

    Providing more information about your eligibility or ineligibility

    We need some businesses to provide us with more information before we can determine that they are eligible to receive the cash flow boost. For example, we will need more information from:

    • businesses with aggregated turnover that reduces to below $50 million for the 2019–20 year
    • businesses that do not have an obligation to lodge at least one of the following: 
      • a 2019 tax return which shows an amount included in assessable income in relation to carrying on a business
      • an activity statement or GST return for any tax period that started after 1 July 2018 and ended before 12 March 2020 which shows a taxable, GST-free or input-taxed sale.
       

    If you haven't received the cash flow boost automatically, check out our eligibility companion guide which gives an overview of how we determine eligibility.

    You can also contact us if your business is not eligible to receive the cash flow boost but you are concerned that a cash flow boost has been credited to you. For example, because you have a business structure that makes identifying affiliates difficult.

    If you need to discuss your eligibility, phone us on 13 28 66 option 7.

    See also:

    Additional information we may need as evidence

    The kinds of supporting documents we may ask for will depend on your circumstances.

    If you have a reduction in turnover

    For businesses that have experienced a reduction in turnover the documents may include:

    • business records showing year-to-date turnover
    • directives issued by state or territory governments that prohibit trading
    • other documents that demonstrate the reasons for turnover declining.
    If you have not lodged tax returns or activity statements

    For businesses that have not lodged tax returns or activity statements and need to provide information about their business activity the documents may include: 

    • details of when the business commenced and the nature of the activities that the business carries on
    • bank statements in the business name which confirm payments received in relation to business activity
    • tax invoices or receipts provided for any supplies made by the business
    • records of merchant payment facilities
    • evidence of corporate structure, including ASIC registration for companies, partnership agreement, executed trust deed
    • occupancy agreements (such as leases) for business premises
    • documents showing business financing arrangements
    • business contracts
    • advertising of business services.
    If we need documents about your employees

    For businesses that need to provide additional information about their employees, we will need evidence that an employment relationship exists. This would include details of:

    • who the employees are
    • how long they have been employed
    • the work contracts between your business and your employees
    • payroll information
    • employer insurance policies, such as for workers compensation insurance
    • the work they performed in line with the remuneration
    • superannuation payments you have made
    • the nature of the work they conduct for your business.
    Evidence of payments made which were subject to withholding

    Businesses will also need to provide evidence that payments have been made to the employees during the relevant tax period. To show payments were made, we generally require copies of original bank statements verifying the salary and wage payments made to employees in the period. The original bank statements should be on an official bank letterhead and include the entity name and address of the business.

    Further evidence of salary and wage payments may include:

    • pay slips you have issued to employees
    • employee declarations, such as a tax file number (TFN) declaration or withholding variation
    • registration for, or remittance of, state and territory payroll taxes.
      Last modified: 21 May 2021QC 61925