Boosting Cashflow for Employers

Boosting Cash Flow for Employers

What is it?

The Government is providing up to $100,000 to eligible NFPs with a minimum payment of $20,000.

Who is eligible?

To be eligible the NFP must have a turnover under $50 million, employ staff and be established prior to March 2020.

What do I do?

Lodge your Business Activity and Instalment Activity Statements as usual

When will payments be received?

  • An initial payment equal to 100% of PAYG withheld, up to a maximum payment of $50,000. The minimum credit will be $10,000, even if the amount required to be withheld is zero. The payment will be delivered as automatic credits in the activity statement system from 28 April.
  • An additional payment of equal value will be available for the periods June to September 2020, delivered in either two or four instalments depending on your reporting period.
  • The additional payment will again be delivered as credits in the activity statement system
  • If credits result in a refund position the ATO will deliver the refund within 14 days.

FAQ’s:

When will the initial cash flow boost amounts be received?
If the entity lodges quarterly business activity statements it will receive 50% of its total initial cash flow boosts for each activity statement. If the entity lodges monthly business activity statements it will receive a credit that is calculated at three times the rate (300 per cent) in the March 2020 activity statement to align with quarterly lodgers.

When will the additional cash flow boost amounts be received?
Eligible entities who receive the initial cash flow boosts will receive additional cash flow boosts, for the periods June to September 2020, equal to the total amount of initial cash flow boosts received. This will be delivered in either two or four instalments depending on your reporting period.

Our organisation started employing 5 new employees in April. Will we receive a larger amount of the cash flow boost from our April PAYG?
The amount received will be dependent on the March activity statement. Refer to the worked examples for further explanation.

Be aware that any sudden changes to the characterisation of payments made may cause the ATO to investigate whether the payments are in fact wages, or are part of a scheme. If the payments are wages, the ATO may consider the characterisation of past payments, including whether they should have been subject to PAYG withholding and whether super guarantee contributions should have been made.

The ATO will not provide the cash flow boosts if the entity has entered into or carried out a scheme for the purpose of:

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

As the BAS includes other payments (GST, PAYG etc.), will the initial cash flow boost result in the credit being offset against the other liabilities in the BAS rather than an immediate cash injection?
Currently the credit may be offset against other liabilities on the same activity statement. So if the organisation has other tax liabilities on the BAS, the credit will be offset against those first. However this may change as the ATO makes further decisions.

My Organisation has received the initial cash flow boosts, are we eligible to receive the additional cash flow boosts?
Yes, eligible entities who received initial cash flow boosts will receive additional cash flow boosts.

What is the timing of the initial cash flow boost?
If you lodge:

Quarterly, you will be eligible to receive the credit for:

  • Quarter 3, March 2020 (lodgement due date 28 April 2020)
  • Quarter 4, June 2020 (lodgement due date 28 July 2020)

Monthly, you will be eligible to receive the credit for the lodgement periods of:

  • March 2020 (lodgement due date 21 April 2020)
  • April 2020 (lodgement due date 21 May 2020)
  • May 2020 (lodgement due date 21 June 2020)
  • June 2020 (lodgement due date 21 July 2020)

What are the tax consequences of the cash flow boosts?
All cash flow boosts are tax free (non-assessable non-exempt income) and are not required to be paid back when cash flow improves. However, if you have been paid more cash flow boosts than you are entitled to, you will be required to repay the excess. The cash flow boosts are not subject to GST.

Worked Examples:

PAYG with less than $10,000 in first period
NFP1 employs two casual employees who each earn $10,000 per year. In the March 2020 quarterly activity statement, NFP1 reports wages paid at W1 and $0 at W2 for its employees as they are under the tax-free threshold.

The March 2020 quarter is the first period NFP1 is eligible for an initial cash flow boost. Its withholding of $0 is less than $10,000 so NFP1’s initial cash flow boost will be the minimum amount $10,000.

NFP1 will not receive any further initial cash flow boosts unless its withholding in the June 2020 quarter is greater than $10,000.

Adapted from: ATO.gov.au

PAYG with more than $10,000 in first period
NFP2 employs 8 workers on average full-time weekly earnings who each earn $89,730 per year. In the months of March, April, May and June for the 2019–20 income year, NFP2 reports wages paid at W1 and withholding of $15,008 for its employees at W2 on each activity statement.

For March 2020, NFP2’s initial cash flow boost is three times its withholding (W2). This equates to $45,024 ($15,008 3). As this amount is greater than $10,000, NFP2 will receive a cash flow boost of $45,024.

For April 2020, NFP2’s withholding is $15,008, however there is only $4,976 of initial cash flow boosts remaining before it reaches the $50,000 limit. NFP2 will receive a further initial cash flow boost of $4,976.

NFP2 will not receive any further initial cash flow boosts after it has reached the $50,000 limit.

Adapted from: ATO.gov.au

Overpaying Activity Statement
NFP3’s accounting software calculates that its liability for the quarterly March 2020 activity statement is $12,500 (without taking into account any initial cash flow boost it  may be entitled to), which NFP3 pays immediately. The ATO calculates that NFP3 is entitled to an initial cash flow boost of $10,000 meaning NFP3 overpaid the March 2020 quarterly activity statement by $10,000. Generally the overpayment of $10,000 will be refunded to NFP3.

Adapted from: ATO.gov.au

Additional Cash Flow Boosts
NFP4 received the maximum initial cash flow boosts of $50,000. When NFP4 lodges its June to September 2020 business activity statements it will receive additional cash flow boots as follows:

  • June 2020, $12,500
  • July 2020, $12,500
  • August 2020, $12,500
  • September 2020, $12,500

Adapted from: ATO.gov.au


Links for further information

Treasury Cash Flow Assistance Fact Sheet

Treasury Boosting Cash Flow for Employers

PAYG Cash Flow Boost Calculator ** Results from this calculator have not been endorsed by NFPAS or the ATO.


Government Support

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