Small and medium businesses that employ staff will now be eligible to receive up to $100,000 in cash flow boosts, the Australian Taxation Office (ATO) has confirmed.
To access the boost, businesses must lodge their activity statements for pay-as-you-go (PAYG) withholding up to the month or quarter of September 2020.
The initial cash flow boost will be equal to 100 per cent of the amount of tax withheld on each employee’s salary and wages, with the following exceptions:
Monthly lodgers will receive a credit for March which is 300 per cent of their withholding for that month;
Eligible businesses will receive a minimum of $10,000 across March to June, even if their total withholding is less than $10,000; and
Total cash flow boosts for March to June cannot exceed $50,000.
There will be an additional cash flow boost of up to $50,000 for the June to September quarter.
According to the ATO, the cash flow boosts will be delivered as credits in the activity statement system, and will be applied to reduce liabilities arising from the same statement.
“They will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 2020,” the ATO stated.
“In practice, this means you keep the amounts you have withheld from payments for these periods.”
Excess credit from the activity statement that received the cash flow boost amount will be refunded to the business, rather than offset against any other tax debts.
For example, if a business has liabilities of $20,000, and a cash flow boost of $40,000 is given, the business will receive the further $20,000 as a refund, according to the ATO.
It follows the government’s announcement that small and medium-sized businesses would be eligible for part-guaranteed loans of up to $1 million, as an extension of the $40 billion SME Guarantee Scheme first announced in May.
And the loans and cash boosts have come at a much-need time: consultancy firm Deloitte warned that nearly 10 per cent of all Australian businesses are at high risk of failure come September.
Deloitte Access Economics estimated around 240,000 businesses in the hospitality, professional services and transport industries would crumble after the JobKeeper expiry date.
The government will today announce plans to extend the JobKeeper scheme until March 2021, but reduce the payments and apply a tiered system to their availability.
The JobSeeker boost will similarly be extended to March 2021, but again at a reduced rate.
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