BOOSTING CASH FLOW FOR EMPLOYERS (BCF)
We have reviewed the recently announced Government stimulus initiatives. The BOOSTING CASH FLOW (BCF) initiative stands out as an urgent and critical issue for most business clients. Below we outline the practical issues for clients to consider. We have identified a series of actions based upon the information currently available and have sought further clarification from the ATO. We will advise further when a response is received.
Key Stimulus Overview:
- Purpose – To assist businesses to cover operating costs and retain employees.
- Eligible – Most small businesses and NFP, established as at 12th March 2020, who pay employees and continue to trade.
- Benefit – A tax-free, non-repayable grant of $20,000 to $100,000 based on your level of monthly PAYG withholding tax from wages.
- Monthly BAS lodgers – 7 monthly payments will be made from 28th April to October 2020.
- Quarterly BAS lodgers – 3 quarterly payments to be made from 28th April, July, October 2020.
- Payment made – As a credit to your tax account. A refund will issue or the credit offsets against other unpaid taxes.
- BCF Instalment #1 – Comprises and a large upfront amount (April) and subsequent payments in April-June. The upfront payment (from 28th April) equals the lesser of 3 months PAYGW or $50,000. Subsequent payments of PAYGW can bring the total claimed up to the $50,000 maximum.
- BCF Instalment #2 – Covering Jun-Sept 2020, this instalment is equal to the first BCF instalment but spread equally over 4 months or 2 BAS quarters.
- Unpaid taxes – can/may reduce and refund to be issued. We are seeking clarification.
Client Strategies:
- Prepare immediately to maximise the free “Cash flow boost”.
- Best estimate your BCF entitlement now – Eclipse can assist.
- Review owner/operator salary package and in the first quarter payroll system.
- Lodge your BAS early.
- Move to monthly BAS lodgements.
- Maximise GST refunds or minimise GST obligations as at 31st March.
- Vary downwards taxation instalments where possible.
- Assess the impact of any current unpaid taxes on the BCF payment.
- Get in contact with Eclipse. We can schedule an Economic Stimulus Review meeting to discuss your business’ position and revised forecasts for the financial year ended 30 June 2020.
Build your Small Business ‘war chest’
The key to business survival is cashflow. Business owners must urgently consider EVERY strategy to increase or hold revenue, reduce overhead costs and wage costs and hold liabilities under control. The “Boost cash flow” stimulus is a key part of the process. There are, however, other incentives and strategies that we will continue to report on.
If you need assistance in formulating a “Business Continuity Plan” please contact Eclipse urgently.
PS. At this time of crisis, the business and financial community needs cost-effective, experienced and practical financial advice they can rely on. In recent times the advice profession has been deeply diminished. Advisers and experience have left the industry. If your family and friends need quality, experienced, financial advice we are available to help. Any referred friend will be offered a complimentary “Welcome Consultation” on a no-obligation basis.