The Federal Government & COVID-19: Cash flow assistance for businesses

The Federal Government & COVID-19

Cash flow assistance for businesses

 

This assistance will assist businesses to manage cashflow challenges and help businesses retain their employees. These two measures are designed to support employing small and medium sized businesses and to improve business confidence. The Boosting Cash Flow for Employers measure also supports the activities of not-for-profits (including charities) at a time where they are facing increased demand for services. 

The wage subsidy for apprentices and trainees will help to ensure the continued development of the skilled workforce. 

 

BOOSTING CASH FLOW FOR EMPLOYERS 

Summary 

The Government is providing up to $100,000 to eligible small and medium sized businesses, and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff. 

On 12 March 2020, the Government announced the Boosting Cash Flow for Employers measure. The measure initially provided up to $25,000 to business, with a minimum payment of $2,000 for eligible businesses. Small and medium sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. 

The Government has enhanced this measure as part of the second economic response package. Not-for-profit entities (NFPs), including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment activities at a time where NFPs are facing increasing demand for services. 

Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000. 

An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments. This additional payment continues cash flow support over a longer period, increasing confidence, helping employers to retain staff and helping entities to keep operating. 

The cash flow boost provides a tax free payment to employers and is automatically calculated by the Australian Taxation Office (ATO). There are no new forms required. 

Eligibility - Boosting Cash Flow for Employers payments 

Small and medium sized business entities and NFPs with aggregated annual turnover under $50 million and that employ workers will be eligible. Eligibility will generally be based on prior year turnover. 

• The payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020 upon employers lodging eligible upcoming activity statements. 

• Eligible employers that withhold tax to the ATO on their employees’ salary and wages will receive a payment equal to 100 per cent of the amount withheld, up to a maximum payment of $50,000. 

• Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax. 

• The payments will only be available to active eligible employers 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. This recognises that new charities may be established in response to the Coronavirus pandemic. 

Eligibility - Additional payment 

To qualify for the additional payment, the entity must continue to be active. 

For monthly activity statement lodgers, the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020, July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000). 

For quarterly activity statement lodgers the additional payments will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for Employers payment following the lodgment of their June 2020 and September 2020 activity statements (up to a total of $50,000). 

This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities). 

Timing - Boosting Cash Flow for Employers payments 

The Boosting Cash Flow for Employers payment will be applied to a limited number of activity statement lodgments. The ATO will deliver the payment as a credit to the entity upon lodgment of their activity statements. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days.

Type of lodger Eligible period Lodgment due date
Quarterly

Quarter 4 (April, May and June 2020) 

Quarter 1 (July, August and September 2020)

28 April 2020 

28 July 2020 

Monthly

June 2020 

July 2020 

August 2020 

September 2020 

21 April 2020 

21 May 2020 

22 June 2020 

21 July 2020 

Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020. 

Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgments. To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (300 per cent) in the March 2020 activity statement. 

The minimum payment will be applied to the entities’ first lodgment. 

Timing - Additional payment 

The additional payment will be applied to a limited number of activity statement lodgments. The ATO will deliver the payment as a credit to the entity upon lodgment of their activity statements. Where this places the entity in a refund position, the ATO will deliver the refund within 14 days.

Type of lodger Eligible period Lodgment due date
Quarterly

Quarter 4 (April, May and June 2020) 

Quarter 1 (July, August and September 2020)

28 July 2020 

28 October 2020 

Monthly

June 2020 

July 2020 

August 2020 

September 2020 

21 July 2020 

21 August 2020 

21 September 2020 

21 October 2020 

 

Quarterly lodgers will be eligible to receive the additional payment for the quarters ending June 2020 and September 2020. Each additional payment will be equal to half of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000). 

Monthly lodgers will be eligible to receive the additional payment for the June 2020, July 2020, August 2020 and September 2020 lodgments. Each additional payment will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment (up to a total of $50,000). 

Budget impact 

This measure is estimated to cost $31.9 billion over the forward estimates period.

Example: Sarah’s Construction Business 

Sarah owns and runs a building business in South Australia and employs 8 construction workers on average full-time weekly earnings, who each earn $89,730 per year. Sarah reports withholding of $15,008 for her employees on each of her monthly Business Activity Statements (BAS). 

Under the Government’s changes, Sarah will be eligible to receive the payment on lodgment of her BAS. Sarah’s business receives: 

• A credit of $45,024 for the March period, equal to 300 per cent of her total withholding. 

• A credit of $4,976 for the April period, before she reaches the $50,000 cap. 

• No payment for the May period, as she has now reached the $50,000 cap. 

• An additional payment of $12,500 for the June period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments. 

• An additional payment of $12,500 for the July period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments. 

• An additional payment of $12,500 for the August period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments. 

• An additional payment of $12,500 for the September period, equal to 25 per cent of her total Boosting Cash Flow for Employers payments. 

Under the previously announced Boosting Cash Flow for Employers measure, Sarah’s business would have received a maximum payment of $25,000. 

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sarah’s business will receive $100,000. This is an additional $75,000 to support her business and help her retain her staff. 

 

Example: Sean’s Hairdresser Salon 

Sean owns a hairdresser’s salon on the Gold Coast. He employs 12 hairdressers, with average salary of $50,000 per year. Sean reports withholding of $8,788 for his employees in each of his monthly BAS.

Under the Government’s changes, Sean will be eligible to receive the payments on lodgment of his relevant BAS.  Sean's business will receive: 

• A credit of $26,364 for the March period, equal to 300 per cent of his total withholding. 

• A credit of $8,788 for the April period. 

• A credit of $8,788 for the May period. 

• A credit of $6,060 for the June period, before he reaches the $50,000 cap. Sean will also receive an additional payment of $12,500 for the June period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments. 

• An additional payment of $12,500 for the July period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments. 

• An additional payment of $12,500 for the August period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments. 

• An additional payment of $12,500 for the September period, equal to 25 per cent of his total Boosting Cash Flow for Employers payments. 

Under the previously announced Boosting Cash Flow for Employers measure, Sean’s business would have received a total payment of $25,000. 

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Sean’s business will receive $100,000. This is an additional $75,000 to support his business. 

 

Example: Tim’s Courier Run 

Tim owns and runs a small paper delivery business in Melbourne, and employs two casual employees who each earn $10,000 per year. In his quarterly BAS, Tim reports withholding of $0 for his employees as they are under the tax-free threshold. 

Under the Government’s changes, Tim will be eligible to receive the payment on lodgment of his BAS. 

Tim’s business will receive: 

• A credit of $10,000 for the March quarter, as he pays salary and wages but is not required to withhold tax. 

• An additional payment of $5,000 for the June quarter, equal to 50 per cent of his total Boosting Cash Flow for Employers payments. 

• An additional payment of $5,000 for the September quarter, equal to 50 per cent of his total Boosting Cash Flow for Employers payments. 

If Tim begins with holding tax for the June quarter, he would need to withhold more than $10,000 before he receives any additional payment. 

Under the previously announced Boosting Cash Flow for Employers measure, Tim’s business would have received a total payment of $2,000. 

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Tim’s business will receive $20,000. This is an additional $18,000 to support his business. 

 

Example: Help for the Homeless Op-Shop 

Help for the Homeless, a registered charity, runs an op-shop to support its programs and employs 5 part-time workers with average income of $30,000 per year. It reports total withholding of $3,510 for its employees for each quarterly BAS. 

Under the Government’s changes, Help for the Homeless will be eligible to receive the payment on lodgment of its BAS as it is a charity. Help for the Homeless receives: 

• A credit of $10,000 for the March quarter, the minimum payment. 

• An additional payment of $5,000 for the June quarter, equal to 50 per cent of its total Boosting Cash Flow for Employers payments. 

• An additional payment of $5,000 for the September quarter, equal to 50 per cent of its total Boosting Cash Flow for Employers payments. 

Under the Government’s enhanced Boosting Cash Flow for Employers measure, Help for the Homeless will receive $20,000. Under the previously announced Boosting Cash Flow for Employers measure, NFPs were not eligible for the support. 

Example: David’s Plumbing 

David’s Plumbing is a small business that employs 10 people, including two full-time Australian Apprentices. 

Taylor is a first year Australian Apprentice, aged 20, undertaking a Certificate III qualification. She commenced her apprenticeship with David’s Plumbing on 6 February 2020. Taylor receives a weekly wage of $532.89. 

Lisa is a third year Australian Apprentice, aged 29, undertaking a Certificate IV qualification. She commenced her apprenticeship with David’s Plumbing on 18 November 2017. She receives a weekly wage of $772.71. 

David’s Plumbing are eligible for Supporting Apprentices and Trainees which pays 50 per cent of the apprentices’ wages that have been paid by David’s Plumbing since 1 January 2020. 

David’s Plumbing will receive: 

• $9,059 subsidy for employing Taylor for 6 February 2020 to 30 September 2020; and 

• $15,068 subsidy for employing Lisa for 1 January 2020 to 30 September 2020. 

 

FOR MORE INFORMATION 

For more information on the Australian Government’s Economic Response to the Coronavirus visit treasury.gov.au/coronavirus

Businesses can visit business.gov.au to find out more about how the Economic Response complements the range of support available to small and medium businesses.

 

 

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