Staying In

Boosting Cash Flow for Employers Payments

The announcement of the Federal Government stimulus package was good news but what does it actually mean for you and your business? And what will you be able to get out of it, to allow you to survive COVID-19?

The announcement was that small and medium sized business entities or NFPs with an aggregated annual turnover under $50 million and employ workers will be eligible for the ‘Boosting Cash Flow for Employers payments’.

We had some questions so we asked Kristy from Your Good Accountant, Kristy specialises in working with small business and has been inundated with questions of late. Kristy has been good enough to share some of the Q&A's that have come across her desk, starting with;

Q. It was announced that eligible employers that withhold tax on their employees’ salary and wages will receive a payment equal to 100 percent of the amount withheld, up to a maximum payment of $100,000. Is this money received as a cash payment into our account?

No, it will be a credit on the businesses ATO Account. If the business owes money to the ATO for a previous BAS (Business Activity Statement) or owes GST on the BAS then the Cash Flow Boost will be applied against the existing debt. If the account is in credit then the ATO will refund this to the business.

Q. Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax. Is this payment also based on prior year turnover.

Yes, you still need to meet the turnover requirement of under $50million

Q. Will this be paid in a cash payment?

Not necessarily, it will be the same as the above example, a credit on their ATO account and as long as there is no debt owing on this account, then the cash will be transferred to the business bank account.

Q. So for example; I run a cafe and employ 3 people with average wages of $25k each. How much government stimulus can I expect to receive and when?

I wish it was that simple! Let’s add some extra details to this example…. You withhold tax on wages that equals $1,000 a quarter and based on your Jan – March  Sales you need to pay the ATO $3,000 in GST. So your March BAS (Business Activity Statement) would be $4,000 Payable

You will receive the minimum cash boost of $10,000 as people who pay wages receive this amount regardless of the amount of tax they withhold from wages.

You lodged your March BAS, $4,000 payable and receive a $10,000 credit on your ATO Account. Therefore as your business does not have any debts with the ATO you will receive $6,000.

This refund should be processed within 14 days of lodging your BAS.

You will then receive 50% of the initial cash boost, once you lodge your June BAS and September BAS ie $5,000 Credit after lodging each BAS again these amounts will be credited to your ATO account.

Q. I’ve had to put off staff, or are about to, is my best advice to them to register with Centrelink?

Yes, however people need to bear in mind that there are still some family income tests that may need to be met. Centrelink payments can be very complex, however if you are entitled to a payment the government is waiving the usual wait times that apply.

In addition to the standard Centrelink payments the government is establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients of the eligible payment categories.

It is important for people to know that the additional $550 a fortnight will not kick in for another month ie this will not be added to any centrelink payments until 27 April

Once entitled to government assistance then other assistance like Energy Supplements may also apply.

The example below is direct from the treasury website;

Leonie is in her mid-30s, with two dependent children aged 10 and 12 and works as a telephone consultant for a travel agency. The economic downturn due to Coronavirus has caused the travel agency where she works to close for a six month period, and resulted in Leonie’s hours being reduced to zero.

Leonie will be eligible to apply for JobSeeker Payment and the Coronavirus supplement under the new streamlined process. Leonie can apply on-line and make a declaration about her identity, residency status, income and that she has had her hours reduced to zero as a result of the economic downturn due to Coronavirus.

 Leonie is eligible for Jobseeker Payment and will receive $1,171.50 per fortnight, comprising:

  • JobSeeker Payment single, with dependent child rate of $612.00 per fortnight; plus
  • Energy Supplement of $9.50 per fortnight; plus
  • Coronavirus supplement of $550 per fortnight.

Leonie will also receive Family Tax Benefit Part A and Part B of $483 a fortnight.

Having recently left employment, Leonie is already job ready. An employment service provider will look to match Leonie’s skills with available opportunities (for example, in another call centre) so Leonie’s skills can be used in another industry and Leonie can get another job quickly.

Q. Is the best way to apply with Centrelink online? We've seen the queues outside Centrelink offices.

The first thing people need to do before applying to centrelink online is register for a myGov Account. Once this is done, they can register with Centrelink online keeping in mind there is an identification process that needs to be followed.

Q. I can pay my staff for the next 2 – 4 weeks however beyond that I am not sure? Would they be best to start the Centrelink registration process now?

Unfortunately there is not a one size fits all in this time, therefore communication is going to be key between employers and employees. There are income tests still in place, so if people are still employed and receiving income they will most likely not be able to apply for assistance.

The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders.

  • The first payment (announced on 12 March 2020) will be available to people who are eligible payment recipients and concession card holders at any time from 12 March 2020 to 13 April 2020 inclusive.
  • The second payment will be available to people who are eligible payment recipients and concession card holders from 10 July 2020

Q. If I am still in a position to re-employee my staff I plan to do this, in the mean time is there anything else I should be doing?

Small Businesses should be discussing their situations with their accountants. Everyone should make sure they are up to date with their tax returns and business activity statements to make sure the process is as easy as possible and there are no delays. Here are some other useful links for further reading.

How to create a myGov Account

Treasury Fact Sheets, Economic Response to Coronavirus

ATO Frequently Asked COVID-19 Questions

Fairwork Coronavirus and Australian Workplace Laws

Individuals Affected