Cash Flow Boost
Your COVID-19 cash flow boost is about a lot of money.
How To Qualify for the Cash Flow Boost
The cash flow boost – together with the job keeper payment and other measures – is to help you cope with the COVID-19 crisis. The cash flow boost is at least $20,000 with a maximum of $100,000 for anybody who qualifies – or even a lot more if you operate through several entities.
So the cash flow boost is about a lot of money. But to get it you need to qualify.
To qualify for the cash flow boost you need to meet 7 conditions.
1 – Turnover – turnover of less than $50m per annum
2 – ABN – active ABN on 12 March 2020
3 – Activity – assessable income in 2018/19 or GST turnover
4 – Payment – payments that require PAYG withholding before 30 June
5 – Notification – lodgement of your BAS to show PAYG withholding
6 – Objective Purpose – you did nothing with the sole purpose to qualify
7 – Lodgement – lodgement of your 2019 tax return and relevant BAS
Let’s look at this in more detail.
1 – Turnover
Put all your entities – companies, trusts, partnerships, sole traders – into one big basket and add their turnovers together. Less than $50m? You pass this test.
2 – ABN
Whoever wants to apply for the cash flow boost – be it you as a sole trader or your company or trust or partnership – needs to have an ABN on 12 March 2020.
3 – Activity
You or your company, partnership or trust needs at least $1 of assessable income between 1 July 2018 and 30 June 2019 or $1 of GST turnover between 1 July 2018 and 12 March 2020.
4 – Payment
Payment covers anything that requires a PAYG withholding. This is usually salary and wages and – for a company – director fees.
Payment is an issue if you are a sole trader without employees. And it is also an issue if you are a sole director and so far only paid yourself dividends but no wage or director fees.
However, ‘payment’ doesn’t require that you actually paid PAYG withholding. The only requirement is that you made a payment – be it salary and wages or a voluntary withholding from a contractor payment – that requires PAYG withholding, but the actual withholding itself might be nil.
And ‘payment’ is not limited to payments before 12 March 2020 when this measure was announced. You can make a payment anytime before 30 June 2020. But watch out for the objective purpose test when you pay after 12 March 2020.
5 – Notification
You need to notify the ATO of the payments and withholdings you made and you do that through your BAS. So to report your withholdings you need to be registered for PAYG W by 30 June 2020.
6 – Objective Purpose
If somebody watched you doing what you do, would they think you did it to qualify for the cash flow boost? If yes, there is a problem.
So this is not about what you think but how it looks to others – especially the ATO. If there are no changes in your modus operandi after 12 March – if you just continue doing what you have been doing before – you should be fine.
7 – Lodgement
To qualify for the cash flow boost you need to lodge. You need to lodge your 2019 tax return and 2020 BAS.
Without your BAS for the March and June 2020 quarters, the ATO can’t calculate the amount of your boost.
And without your 2019 tax return, the ATO can’t see whether you are below the turnover thresholds. So lodge and lodge on time.
So if you meet these 7 conditions, your cash flow boost should be plain sailing. Just call me on 0407 909 779 if you need help.
Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.
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Last Updated on 20 April 2020