What is the Boosting Cash Flow for Employers Plan?
Updated: Apr 22
With COVID-19 impacting so many employers and their business and staff, the Australian government released a number of packages to the ease some of the financial burdens.
One such package was the Boosting Cashflow for Employers scheme, also known as the PAYG cash flow boost for small business enterprise.
In this article, we'll outline what you can get from the scheme, who is able to get this help, how much you're able to receive and how you can get what is being offered.
What is the Boosting Cash Flow for Employers scheme?
The Boosting Cash Flow for Employers measure was announced by the federal government on the 12 March to provide relief for businesses affected by COVID-19.
This measure is targeted at employers to help them retain employees during this period.
Businesses that qualify will receive a credit based on PAYGW amounts withheld from employee wages.
The credit will be provided in two phases - one in the 2019-20 financial year and another in the July - October 2020 period.
The maximum amount available for eligible employers is $100,000 and the minimum is $20,000.
For a business to qualify for the measure, they need to meet the following criteria:
They must have had an ABN as of 12 March 2020.
They must have had some history of business activity prior to 12 March 2020. This activity must have been reported to the ATO by 12 March 2020.
They must have an aggregated annual turnover of less than $50m.
They need to employ workers.
They need to make at least one payment during the corresponding period that fits within the scope of certain PAYGW rules.
They need to lodge activity statements for the corresponding periods.
These measures can apply to eligible companies, trusts, partnerships, sole-traders and not-for-profit organisations. Essentially, any company that employs workers may be eligible.
However, please keep in mind the following:
A sole-trader can't employ themself. While a sole-trader might be able to receive this particular type of support if they employ a worker, any amounts paid to the sole-trader won't be applicable.
A partner in a partnership is not considered an employee of the partnership. Once again, they may be able to receive this type of support if they employ a worker but any amounts paid to the partners won't be applicable.
Dividends and trust distributions are not subject to PAYGW and therefore won't be considered applicable for the measure.
There are also some integrity rules in place to prevent contrived or made up arrangements from being used to access this measure. The government has not provided specifics about these but has identified that it will be monitoring this.
How much can I get?
The boosting cash flow measure is provided in two phases. However much you receive in the first phase will be given to you again in the second phases.
You shouldn't need to prove eligibility a second time. If your business was eligible for a credit in phase one, you should be automatically entitled to a second credit in phase two so long as your business continues to lodge GST returns during the relevant periods.
The amount you receive in credit in phase one is generally based on PAYGW amounts (withheld wages, salary, director fees, etc.). The calculation is done differently depending on whether the business lodges quarterly or monthly.
The credit for quarterly lodgers is equal to 100% of the amount withheld from staff payments during the quarter ending March 2020 and the quarter ending June 2020.
The credit for monthly lodgers is equal to 300% of amounts withheld from staff payments in March 2020 as well as 100% of amounts withheld from payments in April, May and June 2020.
The amounts in phase two are the same as the amounts credited in phase one. However, the timing that you receive these depends on how you lodge.
For quarterly lodgers, you will receive 50% of the phase one amount at the end of the June 2020 and September 2020 quarters.
For monthly lodgers, you will receive 25% of the phase one amount at the end of the June, July, August and September 2020 periods.