Cash Flow Boost payments – do not just assume the ATO knows best!

The Cash Flow Boost is a refundable credit applied to businesses’ ATO account, based on the tax they withhold from their employees.

However, many businesses have not accessed this Government support initiative, which requires:

  • Aggregated global turnover of less than $50m in the last-lodged Income Tax Return, the last Financial Year, or the current Financial Year;
  • An ABN held at 12 March 2020; and
  • Lodgment before 12 March 2020 of either a 2019 Income Tax Return or a Business Activity Statement from the 2019 or 2020 Financial Year, showing business income.

This has prevented large international groups and non-businesses from claiming this support scheme, as intended. However, an unintended consequences has been the effect on businesses that were not registered for GST which has prevented them from applying.

Alternative tests were offered for businesses that failed the above eligibility criteria, but these only cater to a few cases, require quite a bit of documentation to be supplied to the ATO as proof of business operation, and the criteria has changed a number of times over the past month.

Unfortunately, the ATO decided not to have businesses self-assess eligibility for the Cash Flow Boost. Instead, from what we have seen:

  • They deemed as eligible any employer that they could see satisfied the second and third criteria; and
  • They deemed as ineligible the others.

As a result, a number of our clients that were eligible under the alternate tests had to fight an uphill battle to prove they were running a business purely because they failed the third criteria. All because they had chosen to take advantage of the ATO lodgment program that gave them a due date for lodgment of their 2019 Income Tax Return of 15 May 2020.

Equally concerning, all of our large groups with global turnover in excess of $50m received the Cash Flow Boost. For the past month, we have been liaising with the ATO, and incurring costs for our clients in notifying the ATO of their error in granting the credit, tracking down how the ATO applied the funds against outstanding liabilities, and returning whatever money had been refunded. In many cases, the ATO had transferred the credit against other accounts, and/or refunded part-amounts of the credit to old EFT details they had on file. Combine that with a recent decision to “simplify” the ATO online services which essentially prevents us from extracting details of transactions from one report download, and requires us instead to manually navigate to check every amount, which has caused frustration on both sides.

Our key take-away is that we encourage you to keep an eye out for any odd refunds appearing in your bank accounts or credit applied by the ATO against your liabilities. Importantly, it remains your responsibility to flag any receipt of money to which you are not legally entitled.

Please contact your local Accru Felsers office if you require our assistance with either claiming a credit that was not applied to you, or to return a credit you were not legally entitled to and we will endeavour to make the process as seamless as possible.

About the Author
Will Merdy Principal | Accru Felsers
Will sees himself as a driver of innovation and progress. He challenges the status-quo and helps his clients in planning for the best business solutions and taxation strategies.