Now that some businesses have lodged their March activity statements, the much anticipated cash flow boost has started to be received (not offset against any tax liabilities either, as was initially a possibility).

The cash flow boosts (there is to be two of them), delivered as credits in the activity statement system, will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June. The ATO says that in practice, this means an employer will get to keep the amounts they have withheld from payments for these periods. There are however a few exceptions, as follows:

  • Monthly lodgers will receive a credit for March 2020 which is 300% of their withholding for that month. This will provide an approximate equivalent to lodgers reporting quarterly.
  • Eligible businesses will receive a minimum of $10,000 across March to June 2020, even if their total withholding is less than $10,000.
  • Total cash flow boosts for March to June 2020 cannot exceed $50,000.

An additional cash flow boost will be applied when activity statements are lodged for each monthly or quarterly period from June to September 2020. These credits will be equal to the total boosts credited for March to June, and will be paid out in either two or four instalments depending on a business’s reporting cycle.

However there continue to be aspects of the cash flow boost that has businesses, and practitioners, scratching their heads. Tax & Super Australia has received many enquiries pertaining to the cash flow boost’s application and finer details — such as the payment mechanism.

Questions answered
One member asked, for example, how the payments are calculated.

The minimum first cash flow boost payment is $10,000 (maximum $50,000) and is payable provided an eligible payment of any amount is made during the first cash flow boost period (regardless of whether any withholding is required) which is the period from:

  • 1 March 2020 to 30 June 2020 (for monthly lodgers); and
  • 1 January 2020 until 30 June 2020 (for quarterly lodgers). Readmore