The ATO is providing temporary cash flow boosts to support small and medium businesses and not-for-profit organisations during the economic recession related to COVID. The cash flow boost helps employers to keep operating, retain staff and pay rent and utility bills. Eligible applicants who employ staff are eligible for cash flow boost amounts from $20,000 to $100,000. Applicants must lodge their activity statements up to the month or quarter of September 2020.

Most businesses and not-for-profit organisations will be eligible to receive the cash flow boost if they meet the following criteria:

• You are a small or medium business or NFP with an annual turnover of less than $50m
• You held an ABN on 12 March 2020
• You made payments to employees subject to withholding such as
  • Salary and wages
  • Director fees
  • Retirement or termination payments
  • Compensation payments
  • Voluntary withholding from payments to contractors
• You have lodged, on or before 12 March 2020: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 OR 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

You do not need to apply for the the cash flow boost. It is automatically calculated by the ATO and is a tax free payment to employers. In most cases, it will automatically be credited to your business account when you lodge your activity statement for pay as you go withholding.

The ATO is very interested in the eligibility of all staff employed. They will ask for and may check information including bank statements, payroll (even Single Touch Payroll), and individual staff bank accounts. Data is of high importance and they will not be shy about asking it. It’s crucial that all your records are presented and that everybody in the business has consistent paperwork, just as if you were dealing with an independent person.

The ATO is implementing a lot of law changes right now and building systems as fast as they can. Legislation is complex and everyone is different. The important thing to note is that the ATO does not reflect the law and is ever-changing. If you qualify and you’ve applied the principles for the legislation, then you should be paid. What this means is just because you receive a rejection, does not mean it has to stay that way. You have a reasonably good chance of being entitled and still getting paid.

Some common problems we encounter from our clients include:

• The PAYG Registration date – You’ve registered for PAYG after the 12^th March and the ATO says you don’t qualify but that’s not actually one of the requirements.
• Taxable supply – The tax office says they don’t have any proof that you were running a business before the 12^th March.
• Lodgment issues – Annual payers who lodged after the 12^th March but were still on time.

There’s quite a distinction between the first problem and the others. In one, you qualify until the ATO decides that you don’t and in the others, you don’t qualify unless the ATO decides that you do. It’s really at the discretion of the tax office.

We receive frequent enquiries from clients pertaining to their Cash Flow Boost application along with more complex concerns and disputes. If you’re uncertain or confused about any aspect of the cash flow boost, give us a call or contact us. Our experienced consultants are both lawyers and chartered accountants and can provide you with the relevant information and solutions you need in a way that’s easy to understand.