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  • Accessing the cash flow boosts

    To access the boosts, you must lodge your activity statement for PAYG withholding.

    If your business is a large withholder for PAYG withholding purposes, you should continue to pay your PAYG withholding to us as normal. To receive the boosts, you must lodge the activity statement for your other obligations (such as GST).

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    What you will receive

    The cash flow boosts will be applied to reduce liabilities arising from the same activity statement.

    To support eligible entities during the period associated with COVID-19, any excess credit from the activity statement that received the cash flow boost amount will be refunded to you, rather than offset against any other tax debts you have. However, excess amounts may still be applied against any outstanding debts with other Australian Government agencies.

    You may also receive a refund if you overpay your activity statement because your system was unable to take the cash flow boost into consideration when working out how much was payable.

    If you are due to receive a refund, we will generally pay it within 14 days.

    It is important to make sure your financial institution details are up to date for your activity statement account. You can check and update them using our online services or contact your tax or BAS agent.

    Cash flow boost credits will be visible on your statement of account. They will appear as 'cash flow boost 1' for amounts relating to March to June 2020, or in the case of the additional cash flow boost from June to September 2020, as 'cash flow boost 2'.

    You can estimate how much cash flow boost you may receive by using the Cash flow boost estimator (XLSX5.3MB)This link will download a file.

    Example 1 – refund of cash flow boost

    When Sarah lodges her activity statement for the month of March 2020 she owes:

    • PAYG withholding of $15,008
    • GST of $9,704.

    She also owes $4,500 from her February 2020 activity statement.

    Sarah’s initial cash flow boost for the March activity statement is $45,024. This is used to pay the March activity statement liabilities of $24,712 ($15,008 + $9,704). She will be left with a remaining cash flow boost of $20,312.

    To support Sarah’s business during this period, the cash flow boost of $20,312 will not be used to pay her outstanding liability of $4,500 from the February activity statement. Instead it will be paid to Sarah as a refund.

    End of example

     

    Example 2 – overpaying activity statement

    Sanjay's software calculates the liability for the quarterly March 2020 activity statement as $12,500. It does not account for any initial cash flow boost he may be entitled to. He pays the liability immediately.

    Sanjay is entitled to an initial cash flow boost of $10,000. This means the March 2020 quarterly activity statement will be in credit by $10,000. Generally, the overpayment of $10,000 is refunded to Sanjay.

    End of example

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    Tax consequences

    You do not need to pay tax on the amount of the cash flow boost and the cash flow boost is not subject to GST because there is no supply for the payment.

    The amounts do not need to be paid back when your cash flow improves. However, if you have been paid more cash flow boosts than you are entitled to you will need to repay the excess.

    Passing on the cash flow boost to others

    If you distribute an amount representing the cash flow boost through your company or trust, the tax consequences of the recipients will depend on your type of entity making the distribution. 

    For example, if your unit trust distributes all or part of the cash flow boost amount to a unit holder, there will be no tax consequences for the unit holder in receiving that amount. If your company distributes all or part of the cash flow boost amount to a shareholder, the amount will be treated as a dividend, and it will need to be included in the recipient's assessable income for that income year. We would expect that such distributions will be rare, however, since the cash flow boost is intended to be used to support the business needs of the company or trust.

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    Claiming the research and development tax incentive

    If you claim the research and development (R&D) tax offset, your claim is not affected by any cash flow boost you receive.

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    Schemes

    You will not be eligible for cash flow boosts if you (or a representative) have entered into or carried out a scheme for the sole or dominant purpose of:

    • becoming entitled to cash flow boosts when you would otherwise not be entitled
    • increasing the amount of the cash flow boosts.

    Schemes could include:

    • artificially restructuring or arranging your business to meet the eligibility criteria
    • increasing wages paid in a particular month to maximise the cash flow boost amount.

    Any sudden changes to the characterisation of payments you make may prompt us to investigate whether the payments are in fact wages. This could trigger an ongoing liability to pay:

    • FBT
    • PAYG withholding
    • super guarantee contributions
    • other employee-related costs.

    If the payments are wages, we may consider the characterisation of past payments, including whether:

    • they should have been subject to PAYG withholding
    • super guarantee contributions should have been made
    • you have FBT obligations that have not yet been met.

    The arrangements that concern us include:

    • artificially restructuring businesses to gain access to the cash flow boost
    • artificially changing the character of payments to salary and wage to maximise the cash flow boost
    • inflating reported withholding amounts to maximise the cash flow boost
    • resurrecting dormant entities or phoenixing
    • making false statements or fraudulent attempts to create an entitlement.

    If we find you have entered into or carried out a scheme with the aim of becoming entitled to the cash flow boost, or increasing the amounts of the cash flow boost, you will be required to repay the entire amount back to the Commissioner.

    Significant penalties and interest charges can apply to overpayments of the cash flow boost arising from schemes. Sanctions under criminal law may also apply to fraudulent claims.

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      Last modified: 31 Jul 2020QC 61925