COVID19 PAYG Refund & Jobkeeper

Discussion in 'Accounting & Tax' started by PeterW, 10th Apr, 2020.

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  1. PeterW

    PeterW Well-Known Member

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    My wife has a company (Pty Ltd) in which she is the only employee (although there are many contractors). The company pays her a salary. It seems there are 2 stimulus payments she might be entitled to. Any help much appreciated.

    1. PAYG tax refunded to employer. So any tax the company withholds on her wages for the March and June BAS will be 100% refunded to the company, up to $50,000 each? Not sure but I think for March BAS she only withheld about $4k. But they refund the company a minimum of $10k, so it would still get $10k from the ATO anyway? And then for June, it would seem logical for her to pay herself a lot, such that the company would withhold $50k tax, to use up the full $50k available?

    2. Jobkeeper payments. Her company would receive $1,500 p.f. to keep her employed? Required to demonstrate 30% decline in turnover? Measured how - April 2020 vs. April 2019 etc?
     
  2. JasonC

    JasonC Well-Known Member

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    PeterW,

    I believe there are provisions in the rules to deny the stimulus payments if a business has taken measures whose primary purpose is to increase the payments received. Ie. A sudden pay rise to an employee (who happens to be the director/owner) in the middle of a financial/health crisis.

    Presumably previously the additional profit would be paid out as a dividend or retained in the company. I’d suggest keeping the salary/payment strategy the same as previously would be the wisest course. This is what I would be doing if I was in the same position (and as it happens - I am in the exact same position although I work through a trust with corporate trustee, not just a company).

    Regards,

    Jason
     
  3. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Efforts to manipulate any benefits are subject to harsh penalties. If her company pays a stable amount prior to 12/3 then maintaining that to access the 10k base should b ok. Manipulation to defraud the Commonwealth is subject to penalties. The jobkeeper may be a consideration. I would ensure your tax adviser reviews this. This also has quite harsh penalties incl 75% penalties criminal charges and jail.

    The march cashflow boost can set the amount to be paid in June so it is the same and not less and manipulation may be unnecessary anyway
     
  4. PeterW

    PeterW Well-Known Member

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  5. Mike A

    Mike A Accountant Business Member

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    How has your wife historically compensated herself ?
     
  6. Mike A

    Mike A Accountant Business Member

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    Comparison for turnover is as follows

    MONTHLY LODGER

    30 April 2019 compared to 30 April 2020
    31 May 2019 compared to 31 May 2020
    30 June 2019 compared to 30 June 2020
    31 July 2019 compared to 31 July 2020
    31 August 2019 compared to 31 August 2020
    30 September 2019 compared to 30 September 2020

    QUARTERLY LODGERS

    30 June 2019 compared to 30 June 2020
    30 September 2019 compared to 30 September 2020