The Coronavirus pandemic has hit every industry in the world in a hard way. Many businesses are being forced to shut stores on a temporary or a permanent basis. Any business is the backbone of any economy as it brings in revenues to the governments and employment to the people. There have been millions of job losses all over the world.

The Australian Government has devised a new policy for small and medium organizations and not for Profit Organisations by providing them temporary cash flows. This will help them keep running and save the jobs of the people.  The cash flow boost is between $20,000 and $100,000.

Eligibility

There are certain criteria that need to be fulfilled to be eligible for this cash flow boost.  Let’s look into the terms and conditions you need to meet to be eligible:

• The company must fall into the category of small and medium scale organizations or Not for Profit Organisations. This means that they should not have an annual turnover of more than $50 million.
• The company must have an Australian business number (ABN) as on 12 March 2020.
• Made payments to employees such as salary and wages, director fees, retirement or termination payments, compensation payments, and withholding from payments to contractors.
• You have paid for alienated personal services income you received.
• Before 12 March 2020, you either had a 2019 tax return lodged that had an amount in your assessable income with relation to your business or had lodged a GST statement for tax period between 1 July 2018 and 12 March 2020. It should show that you made a taxable, GST free or input taxed sale.

If you make any changes to your operations so that you become eligible for the cash boost, you will not be entitled to get the cash boost.

If you don’t meet the above criteria, there are some special eligibility criteria as well. They are:

• New Business

If you are a new business and didn’t have any income in the year 2018-2019. However, if you supplied in the current tax period ending before 12 March 2020, you will be eligible for the cash flow boost.

• Charities

For a charity, you must be registered with the Australian Charities and Not-for-profits Commission. You must also have a turnover of less than $50 million in a year and made eligible payments.

• Companies with A Reduction in Turnover

If your company had a turnover of more than $50 million during the previous calendar year and you expect your turnover to fall below $50 million, you can be eligible for the cash flow boost.

• Business with Multiple Branches

For businesses that have multiple branches with one ABN, they are considered as a single business. Thus, you will be considered as a single business and be eligible for one cash flow boost only.

• Business That Are Not Registered For GST

It is not necessary to be registered with GST to be eligible. If before 12^th March 2020, your company has lodged its 2019 tax return, has an amount in the assessable income in relation to the business, and complies with other eligible criteria, you can get the cash flow boost.

• Business That Uses Third-Party Payroll Facility

If another company is responsible for paying the employees of one or more entities, then those other companies are not eligible for the cash flow boost.

Transfer of Cash Flow Boost

The cash flow boost will be given only when the criteria are met and the statements are filed each monthly and quarterly from March to June 2020 and in the future from June to September 2020.

The initial cash flow boost will be credited in the activity statement when you file your activity statements for each month and quarter from March to June 2020. The minimum amount is $10,000 and the maximum is $50,000.

Additional cash flow boost will be given if you receive the initial cash flow boost. It will be given when you file your statements monthly or quarterly. The amount will be equal to the initial cash flow and will be split according to the account statements filed.

If you file Quarterly, you will get 50% of the initial cash flow for each statement filed.

If you file monthly, you will get 25% of the initial cash flow for each statement filed.

Tax Consequences of Cash Flow Boost

You don’t need to pay any taxes on the Cash Flow boost received. Also, you do not need to pay any GST on the cash flow boost. In case you have received an excess cash flow boost, you will have to return the excess amount. However, if your cash flow improves in the future, you don’t need to return the cash flow boost.

To Sum it Up

All these require a lot of accounting and many reports need to be filed properly according to the requirements of the Government. If there is any discrepancy in the papers, you could lose the cash flow boost.

Here, at Ascendum Business Services, we can help you prepare your papers like previous Tax returns, Payroll Service, and Accounts to comply with the rules and regulations.