GST stands for Goods and Services tax. It is an indirect tax imposed on the supply of goods and services for domestic consumption. As a business owner, you might have to add GST to your product price. A customer who buys the product usually pays the sales price with GST added already.

BAS stands for Business Activity Statement. It is a form that businesses must submit to the ATO. The purpose of BAS is for businesses to report and pay tax liabilities. A large part of BAS is dedicated to GST. Quickbooks can automate much of the BAS process for business owners.

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Growing a business

What is the ATO Cash Flow Boost Scheme?

By QuickBooks Australia

Published on June 6, 2024

Small and medium businesses (SMBs) in Australia have found it difficult to retain staff during the economic downturn associated with COVID-19.

In response, the Australian Tax Office (ATO) has launched a cash flow boost scheme to reduce financial pressures on smaller businesses.

Launched on 12 March 2020, the scheme was designed to support SMBs and improve business confidence.The payments were aimed at improving cash flow so SMBs can keep operating as usual, pay their bills, and retain their workforce.

It is expected that this measure will help around 690,000 businesses employ around 7.8 million people and around 30,000 not-for-profit organisations (NFPs) including charities.

The key takeaway is that eligible businesses and NFPs that employ staff are entitled to tax-free cash boosts of between $20,000 and $100,000.

If you are eligible, all you have to do as a small business owner is lodge your monthly or quarterly business activity statements (BAS) as usual.

You’ll then receive the cash flow boost in two instalments as credits in the ATO’s activity statement system.

But how do you know if you are eligible, and how will the payments work? Let’s explore this further.

Who Is Eligible For the Cash Flow Boost?

As a business owner – be it sole traders, companies, partnerships or trusts, and NFP organisations – you are eligible to receive the cash flow boost if you meet the following conditions:

Your aggregated annual turnover is less than $50 million; and
You have an Australian business number (ABN), held on or before 12 March 2020.

In addition to these two conditions, one of the following criteria must be met:

Paid employees are subject to withholding, even if that amount was zero. This means you paid things like salary and wages, retirement or termination payments, compensation payments, director fees, or voluntary withholdings from payments to contractors.
Paid an amount in relation to alienated personal services income you received.

And, you must have lodged one of the following on or before 12 March 2020:

A tax return showing that you run a business
An activity statement or Good and Services Tax (GST) return

There are many other intricacies that could relate to your specific circumstances as a business owner. You can read the ATO’s full eligibility criteria for more information to see whether you qualify.

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How The Cash Flow Boost Works

Small businesses that qualify under this scheme can receive cash payments ranging from $20,000 to $100,000.

By helping businesses manage their cash flow, the cash flow boost can essentially allow SMBs to keep the payroll deductions made between March and June 2020.

The amount SMBs receive is generally equivalent to the amount they are required to withhold from wages paid to employees, i.e. the Pay As You Go (PAYG) withholding.

For example, if you withhold tax from the ATO on your employees’ salary and wages, you will receive a payment equal to 100 percent of the amount withheld, up to a maximum of $50,000.

For a more thorough estimation of what you can receive, use the ATO’s cash flow boost estimator.

For payments made between June and September 2020, a second round of cash flow boost payments will be made.

As a small business owner, you must file all your activity statements. The ATO's activity statement system then delivers cash flow increases as credits in either two or four instalments depending on how often you report, up to a maximum of $100,00 over the 2019-20 tax period.

Please note that cash flow boost payments must be reported on your upcoming tax return since they qualify as non-assessable non-exempt (NANE) income.

One thing to keep in mind is that you don’t need to apply for the cash flow boost.

Essentially, when you submit your BAS statement, you are automatically applying for the cash flow boost. The ATO will then determine whether you are eligible and will credit your account with funds.

Quickbooks Can Help

Quickbooks can help to lodge your BAS statement and ensure you are complying with your PAYG withholding obligations.

The simplest way to ensure you meet your PAYG withholding obligations is through Single Touch Payroll (STP). STP is a process that automatically reports to the ATO and is a mandatory obligation.

All PAYG payments must be up to date before filing any tax return. This is the legal responsibility of any employer.

With QuickBooks cloud payroll software, you have an STP-compliant simple solution to help you sort out your PAYG withholdings seamlessly.

Through QuickBooks, you’ll be able to integrate your PAYG details straight into your BAS. You can track GST and electronically lodge your BAS without ever leaving your QuickBooks account.

Applying For the Cash Flow Boost Through Quickbooks

The important thing to keep in mind is that you apply for the cash flow boost by filing your tax returns as a small business owner as usual.

However, if you believe you are eligible, you can use the ATO’s cash flow boost estimator to determine how much credit you could receive.

Quickbooks is transforming the way that small business owners are filing their BAS. Our easy-to-use system will simplify deductions, keep you legally compliant, and make record-keeping a breeze.

Take our free trial for a spin to see how Quickbooks can work for you.

FAQs

How will the cash flow boost be delivered?

Is the cash flow boost taxable?

Do you need to pay back the cash flow boost?

What is GST?

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What is the ATO Cash Flow Boost Scheme?

Who Is Eligible For the Cash Flow Boost?

Grow Your Business with QuickBooks

How The Cash Flow Boost Works

Quickbooks Can Help

Applying For the Cash Flow Boost Through Quickbooks

FAQs

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