Business guide to Coronavirus

Get your timing right and make the most of temporary cashflow boosts

The government recently passed legislation for a temporary cashflow boost, offering eligible small and medium businesses an initial and additional cash flow boost from 28 April 2020 through the activity statement system.

The government recently passed legislation for a temporary cashflow boost, offering eligible small and medium businesses an initial and additional cash flow boost through the activity statement system. 

A further update to the temporary cashflow boost announced by the Australian Taxation Office (ATO) means there is no differentiation between a business lodging their activity statement before or after 28 April 2020.

Cashflow boost credits were due to flow from 28 April however, the ATO may have begun issuing the payments already. Any excess credits will be refunded versus offsetting outstanding liabilities from previous months.

Eligible businesses and not for profits will receive a tax-free cashflow boost between $20,000 and $100,000 through credits when their activity statements are lodged with the ATO. Businesses must lodge their activity statement for PAYG withholding as normal. Businesses with larger withholdings must lodge the activity statement for other obligations (such as GST) as well.

Temporary cash boost eligibility criteria

Most businesses will be eligible to receive the cashflow boost if they:

  • are a small or medium business entity or not for profit of equivalent size (with aggregated annual turnover less than $50 million)
  • held an ABN on 12 March 2020
  • made payments to employees, including withholding (even if the amount you withheld is zero), including: 
    • salary and wages
    • director fees
    • eligible retirement or termination payments
    • compensation payments
    • voluntary withholding from payments to contractors
  • have lodged, on or before 12 March 2020, at least one of:    
    • a 2018–19 income tax return showing that you had an amount included in your assessable income in relation to you carrying on a business
    • an activity statement or GST return for any tax period that started after 1 July 2018 and ended before 12 March 2020 showing that you made a taxable, GST-free or input-taxed sale.

Under very exceptional circumstances, discretion may be given to provide a business with further time, after 12 March 2020, to:

  • hold an ABN
  • provide notice that business income or supplies were made.

A business is not eligible for the cash flow boosts if the business operations changed in order to be entitled to receive cashflow boosts.

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Initial cashflow boost

The initial boost is based on the amount a business withholds tax on their employee salary and wages. It will be delivered as credits in the activity statement system when a business lodges activity statements for each monthly or quarterly period from March to June 2020, except for:

  • Monthly lodgers will receive a credit for March 2020 which is 300% of their withholding for that month, providing a close 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 cashflow boosts for March to June 2020 can’t exceed $50,000.

If a business receives the minimum credit of $10,000, they will not be eligible to receive any more cashflow boosts until PAYG withholding exceeds $10,000 over the eligibility periods.

Additional cashflow boost

If a business received an initial cashflow boost, they will receive an additional cash flow boost equalling the total initial boost amount upon lodging activity statements for each monthly or quarterly period from June to September 2020. 

The boost will be delivered in either two or four instalments, depending on the reporting period.

Temporary cashflow boost example

Initial boost

Sarah owns and runs a building business in South Australia employing eight construction workers and her February and March activity statements are below. 

February: Sarah owes $4,500 from her February 2020 activity statement.

March: Sarah lodges her activity statement for March 2020 and owes:

  • PAYG withholding of $15,008
  • GST of $9,704

Her initial cashflow boost for the March activity statement is $45,024. This is used to pay the March activity statement liabilities of $24,712 ($15,008 + $9,704). She will be left with a remaining cash-flow boost of $20,312.

The temporary cashflow boost of $20,312 will support Sarah’s business during this period by refunding the amount versus paying her outstanding liability of $4,500 from the February activity statement.

Disclaimer: This article does not constitute financial advice. For more information on the temporary cash flow boost, please refer to the ATO’s website

Siobhann Provost

Senior Writer, Business Australia

Siobhann has over 18 years human resources business partnering experience in large organisations. She more recently established and led a people advice team of senior workplace advisors before moving into content writing.