Commonwealth Cash Flow Boost Payments for Employers

The Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Bill 2020 (Cth) (“the Bill”) was first introduced on 23 March 2020 by Federal Treasurer Josh Frydenberg, as part of a package of bills aimed to support the Australian community and economy affected by the coronavirus. The Bill passed both houses of Parliament on the same day, and was assented on 24 March 2020.

The Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 (Cth) (“the Cash Flow Boost Act”) provides for two payments to support employers to encourage the retention of employees and maintain operations through cash boost payments. The measures will provide between $20,000 and $100,000 to eligible businesses and not-for-profits, including charities. The Treasurer, in his second reading speech, estimated that approximately 690,000 businesses and 30,000 not-for-profits will receive these benefits. The payments are to be made in two separate bursts.

Eligibility for Payments

In order to be eligible for the first cash flow boost payment, entities will need to show that they have made a payment in a period, which is either in a month between March 2020 to June 2020, or in a quarter ending on March 2020 or June 2020. An amount from this payment have to have been withheld by the entity within this period under provisions in Subdivisions 12-B, 12-C, or 12-D in Schedule 1 of the Taxation Administration Act 1953 (Cth). These subdivisions relate to:

• Payments for work and services
• Payments for retirement, or due to termination of employment
• Benefit and compensation payments

The entity will also need to prove, that if the payment was made in a monthly period, that the entity qualifies as either a large or medium withholder for the month. If the payment was made in a quarterly period, the entity will need to show that it was a small withholder for the month that starts in the quarter. These thresholds are defined as per the Income Tax Assessment Act 1997 (Cth) and Taxation Administration Act 1953 (Cth) as follows:

• A large withholder is an entity that withheld an amount of more than $1 million in the financial year ending at least 2 months before the aforementioned month
• A medium withholder is an entity that withheld an amount of more than $25,000 in the financial year ending before the aforementioned month
• A small withholder is an entity that withheld an amount, but is neither a large nor medium withholder

The entity must also show that they were a small or medium business entity for most of the recent income year. Otherwise, the Commissioner of Taxation, must be reasonably satisfied that they were a small to medium businesses for the income year.

The entity must also show that it is either:

• Is a registered charity, according to the meaning given by the A New Tax System (Goods and Services Tax) Act 1999 (Cth), at any time in this period
• Had an ABN on 12 March 2020

If the entity had an ABN, the entity needs to either have:

• Had an assessable income from business in the 2018-19 income year, or
• Made a taxable supply in a tax period between 1 July 2018 and 12 March 2020

In fulfilling these requirements, the entity must complete the approved form and lodge it to the Commissioner of Taxation.

If the entity, or an associate and/or agent of the entity is found to be involved in a scheme to make the entity eligible for or increase the entity’s entitlement for the first cash flow boost, the entity will no longer be eligible for the payment.

Entities that were entitled to the first payment, will receive the second cash flow boost payment after they lodge activity statements for the period of June 2020 to September 2020.

The Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (“the Omnibus Act”) makes additional amendments to various other acts in order to support the introduction of these new measures. The Omnibus Act is discussed in a separate TimeBase article.

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Boosting Cash Flow for Employers (Coronavirus Economic Response Package) Act 2020 (Cth), Bill and supporting documents available from TimeBase’s LawOne Service