Is My Business Eligible for Cash Flow Boost?

The outbreak of COVID-19 has resulted in hard times for many Australian companies. So the Australian government has committed to giving temporary cash flow boosts of between $20,000 and $100,000 to eligible businesses.

Which businesses are eligible for a cash flow boost?

All Australian businesses, including sole traders, companies, partnerships or trusts, and not-for-profit (NFP) organisations are eligible to receive the cash flow boost if they:

• Are a small or medium business entity or NFP of equivalent size (with annual turnover under $50  million)

• Held an ABN on 12  March 2020

• Made payments to employees subject to withholding (even if the amount you were required to withhold is zero), such as

  • Salary and wages
  • Director fees
  • Eligible retirement or termination payments
  • Compensation payments
  • Voluntary withholding from payments to contractors

• Lodged at least one of the following on or before 12  March 2020:

  • A 2018–19 income tax return showing business income
  • An activity statement or GST return for any tax period that started after 1  July 2018 and ended before 12  March 2020 showing they had made a taxable, GST-free or input-taxed sale.

Which businesses are not eligible for the cash flow boost?

There are numerous reasons a business may not qualify for this support, including:  

• Annual turnover of more than $50 million per year
• Not holding an ABN (although this condition may be waived in certain circumstances)
• Not paying a salary or wages to staff (for example, businesses run through a trust where the beneficiaries work in the business and receive trust distributions rather than a wage)

It's important to note that businesses are not eligible  for the cash flow boosts if they change the way they operate purely for the purpose of receiving cash flow boosts, when they wouldn't have been eligible in the past.

If your business is not eligible for a cash flow boost, speak to one of our tax experts at H&R Blocks and we can help you assess whether you are eligible for any other schemes or programs currently available for small and medium businesses.

How do I apply for the cash flow boost?

It's not necessary to apply, you just need to lodge your activity statements with the ATO up to the month or quarter of September 2020 to receive the cash flow boosts. These are then delivered as credits in the activity statement system and automatically credited to your account when you lodge your activity statement.

The amount will usually be equal to the amount withheld from wages paid to your employees for each monthly/quarterly period from March to June 2020. So essentially, you will keep the amounts you have withheld from payments for these periods.

You may also get a second cash flow boost when activity statements for each monthly or quarterly period from June to September 2020 are lodged. 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.

Do you have more questions about the cash flow boost? Talk to H&R Block. Our experienced tax consultants will be able to help. Call 13 23 25 for details or find your nearest office and book an appointment online.