The Federal Government is providing cash flow boosts to support businesses and not-for-profit organisations through the economic downturn associated with COVID-19. The first cash flow boost of up to $50,000 has been delivered and you should now be preparing for the arrival of the second boost.

In no time at all, we are close to lodging June 2020 Business Activity Statement’s (BAS) which will include the finalisation of the first cash flow boost and the beginning of the second cash flow boost. The second cash flow boost will be paid in equal instalments from June to September 2020, up to $50,000 upon lodgement of your activity statements.

A quick refresh on the cash flow boost:

• It is based on the PAYG withholding you reported on your March BAS, April Instalment Activity Statement (IAS), May IAS and June BAS
• The minimum payment for each of the boosts is $10,000 (total $20,000) and the maximum payment for each of the boosts is $50,000 (total $100,000)
• The second boost is calculated based on the total of the first
• The cash flow boost is tax free.

How will it work?

If you received the first cash flow boost, you will automatically receive the second when you lodge your activity statements for each month/quarter from June to September 2020. The amounts will be equal to the total amount of initial cash flow boosts you receive and will be split evenly over your lodgements. If you lodge:

• quarterly, you will receive 50% of the second boost in the June 2020 quarter and 50% of the second boost in the September 2020 quarter
• monthly, you will receive 25% of the second boost in each of the following months in 2020: June, July, August and September.

Example 1

ABC Pty Ltd received the minimum first payment of $10,000 and lodge their BAS quarterly. ABC Pty Ltd will receive $5,000 for quarter ending June 2020 and $5,000 for quarter ending September 2020.

Example 2

DCE Pty Ltd received the maximum first payment of $50,000 and lodge their BAS/IAS monthly. DCE Pty Ltd will receive $12,500 for month ending June 2020, $12,500 for month ending July 2020, $12,500 for month ending August 2020 and $12,500 for month ending September 2020.

As the cash flow boost is tax free there is no tax to be paid on these amounts in the entity that receives them. However, if the entity is a trust or a company then there may be tax consequences for the recipient when the amount is distributed or paid via dividend.

The cash flow boost is not inclusive of GST and is not included in turnover calculations for JobKeeper purposes.

If you have any questions or would like any assistance in accessing the second cash flow boost, please give us a call on 03 5443 0344 or email us at afs@afsbendigo.com.au

Source: Thomson Reuters