Accessing the cash flow boosts
To access the cash flow boost, you must lodge your activity statement for PAYGW.
If your business is a large withholder for PAYGW purposes, you should continue to pay your PAYGW to us as normal. To receive the cash flow boost, you must lodge the activity statement for your other obligations (such as GST).
What you will receive
The cash flow boosts will be applied to reduce liabilities arising from the same activity statement.
To support eligible entities during the period associated with COVID-19, any excess credit from the activity statement that received the cash flow boost amount will be refunded to you, rather than offset against any other tax debts you have. However, excess amounts may still be applied against any outstanding debts with other Australian Government agencies.
You may also receive a refund if you overpay your activity statement because your system was unable to take the cash flow boost into consideration when working out how much was payable.
If you are due to receive a refund, we will generally pay it within 14 days.
Example – refund of cash flow boost
When Sarah lodges her activity statement for the month of March 2020 she owes:
- PAYG withholding of $15,008
- GST of $9,704.
She also owes $4,500 from her February 2020 activity statement.
Sarah’s initial cash flow boost for the March activity statement is $45,024. This is used to pay the March activity statement liabilities of $24,712 ($15,008 + $9,704). She will be left with a remaining cash flow boost of $20,312.
To support Sarah’s business during this period, the cash flow boost of $20,312 will not be used to pay her outstanding liability of $4,500 from the February activity statement. Instead it will be paid to Sarah as a refund.End of example
Example – overpaying activity statement
Sanjay’s software calculated the liability for the quarterly March 2020 activity statement as $12,500. It did not account for any initial cash flow boost he may be entitled to. He pays the liability immediately.
Sanjay is entitled to an initial cash flow boost of $10,000. This means the March 2020 quarterly activity statement will be in credit by $10,000. Generally, the overpayment of $10,000 will be refunded to Sanjay.End of example
Tax consequences
You do not need to pay tax on the amount of the cash flow boost. However, if you distribute the cash flow boost from the business to another entity (for example, making a trust distribution or paying a dividend to shareholders) there may be tax consequences for the recipient.
The amounts do not need to be paid back when your cash flow improves. However, if you have been paid more cash flow boosts than you are entitled to you will need to repay the excess.
The cash flow boost is not subject to GST as you are not making or agreeing to make a supply for the payment.
You will still be entitled to a deduction for PAYG withholding paid.
There is no effect on tax paid by employees in respect of their salary and wages.
Schemes
You will not be eligible for cash flow boosts if you (or a representative) have entered into or carried out a scheme for the sole or dominant purpose of:
- becoming entitled to cash flow boosts when you would otherwise not be entitled
- increasing the amount of the cash flow boosts.
Schemes could include:
- artificially restructuring or arranging your business to meet the eligibility criteria
- increasing wages paid in a particular month to maximise the cash flow boost amount.
Any sudden changes to the characterisation of payments you make may prompt us to investigate whether the payments are in fact wages. This could trigger an ongoing liability to pay FBT, PAYG withholding, super guarantee contributions and other employee-related costs.
If the payments are wages, we may consider the characterisation of past payments, including whether:
- they should have been subject to PAYG withholding
- super guarantee contributions should have been made
- you have FBT obligations that have not yet been met.
The arrangements that concern us include:
- artificially restructuring businesses to gain access to the cash flow boost
- artificially changing the character of payments to salary and wage to maximise the cash flow boost
- inflating reported withholding amounts to maximise the cash flow boost
- resurrecting dormant entities or phoenixing
- making false statements or fraudulent attempts to create an entitlement.
If we find you have entered into or carried out a scheme with the aim of becoming entitled to the cash flow boost, or increasing the amounts of the cash flow boost, you will be required to repay the entire amount back to the Commissioner.
Significant penalties and interest charges can apply to overpayments of the cash flow boost arising from schemes. Sanctions under criminal law may also apply to fraudulent claims.
See also: