Learn about tax consequences relating to cash flow boosts and what happens when you enter into cash flow boost schemes.
Tax and cash flow boosts
You don't 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 don't need to be paid back when your cash flow improves, but 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.
For more information, see:
- Paying dividends and other distributions
- Company non-assessable payments (CGT event G1)
- Trust non-assessable payments (CGT event E4)
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.
See Clawback adjustments and the Clawback adjustment guide.
Schemes
You won't 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 wages. This could trigger an ongoing liability to pay:
- fringe benefits tax (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 joined or carried out a scheme in order to get the cash flow boost, or increase the amount of the cash flow boost, you must repay the entire amount back to the Commissioner.
Significant penalties and interest charges may apply to overpayments of the cash flow boost arising from schemes. Sanctions under criminal law may also apply to fraudulent claims.
For more information, see: