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  • #1222674
    Paul – FS Concierge
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    Calcul8or, post: 269126, member: 29970 wrote:
    I have a company, but I’m the only employee. Does that disqualify me as a sole trader?
    The website you referred to is quite informative in a lot of respects however, for your purposes, it does not define “the self employed” Shail.

    The intent of these measures is clearly to provide assistance to those that need it but with Government Programs, a normally, very small number of people slip through the cracks.

    I hope that is not you.

    Worth noting, in the Sole Trader example, the person’s income falls to zero. The page mentions many tests and compliance measures that will be forgiven during this period, however, it does not mention the Income Test, so that *probably* still applies without relief.

    In your circumstances, I would investigate options around the stimulus payments for small business at least at the same time, if not in preference to the enhanced income support measures.

    It is also worth noting that Income Support payments have traditionally been triggered by the application date so don’t waste any time if you are going this route ie, they can not be back-dated to before the date of your application.

    It would be best to get your identity (100 points), bank statements, any rent documents in order pronto.

    Centrelink will be inundated and overwhelmed – I hope their servers stand up to the strain.

    If history is a guide, their workers will be operating on little more info than you in the short term.

    I hope you find a way through this Shail. My thoughts are with you.

    Cheers

    #1222675
    Calcul8or
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    Thanks [USER=78928]@Paul – FS Concierge[/USER], it’s not pleasant having to think about options in this way, especially since I’ve always avoided having to rely on government payments of any kind, except Austudy for a brief period eons ago.

    There’s an awful lot of information to process, and it can get very confusing.

    Programmer. Analyst. Nerd. Calcul8ors.com.au Custom Software & Collaboration
    #1222676
    Rex
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    Calcul8or, post: 269133, member: 29970 wrote:
    There’s an awful lot of information to process, and it can get very confusing.
    Yes indeed. Hence my post asking for a plain English breakdown of the facts.
    All seems like that Monty Python sketch at the moment…
    The classroom one with John Cleese as teacher giving these instructions to his students…
    “…Now, before I begin the lesson, will those of you who are playing in the match this afternoon move your clothes down onto the lower peg immediately after lunch, before you write your letter home, if you’re not getting your hair cut, unless you’ve got a younger brother who is going out this weekend as the guest of another boy, in which case, collect his note before lunch, put it in your letter after you’ve had your hair cut, and make sure he moves your clothes down onto the lower peg for you…
    #1222677
    Henri K
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    JamesMillar, post: 269127, member: 5318 wrote:
    If your company was registered for PAYG withholding as of 12 March 2020

    Are you sure about that interpretation?

    The exact text says: “The payments will only be available to active eligible employers established prior to 12 March 2020.” [1]

    Firstly, that text could be interpreted as: your company was “established” (=founded) prior to 12 March 2020, and is eligible even if it became “active employer” (=PAYG registered) after 12 March 2020.

    Secondly, the PAYG registration form [2] seems to allow backdating of the registration. If we file for PAYG registration today 24th March and mark commencement date as 1st March, have we been PAYG registered on 12th March?

    [1] https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf
    [2] https://www.ato.gov.au/assets/0/104/188/217/02d2dc4e-7dbb-4a83-9b55-eb2574e3f331.pdf

    #1222678
    Paul – FS Concierge
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    Henri K, post: 269142, member: 115510 wrote:
    Are you sure about that interpretation?

    The exact text says: “The payments will only be available to active eligible employers established prior to 12 March 2020.” [1]

    Firstly, that text could be interpreted as: your company was “established” (=founded) prior to 12 March 2020, and is eligible even if it became “active employer” (=PAYG registered) after 12 March 2020.

    Secondly, the PAYG registration form [2] seems to allow backdating of the registration. If we file for PAYG registration today 24th March and mark commencement date as 1st March, have we been PAYG registered on 12th March?

    [1] https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf
    [2] https://www.ato.gov.au/assets/0/104/188/217/02d2dc4e-7dbb-4a83-9b55-eb2574e3f331.pdf
    Be interested in your thoughts [USER=5318]@JamesMillar[/USER]

    #1222679
    James Millar
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    Henri K, post: 269142, member: 115510 wrote:
    Are you sure about that interpretation?

    The exact text says: “The payments will only be available to active eligible employers established prior to 12 March 2020.” [1]

    Firstly, that text could be interpreted as: your company was “established” (=founded) prior to 12 March 2020, and is eligible even if it became “active employer” (=PAYG registered) after 12 March 2020.

    Secondly, the PAYG registration form [2] seems to allow backdating of the registration. If we file for PAYG registration today 24th March and mark commencement date as 1st March, have we been PAYG registered on 12th March?

    [1] https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf
    [2] https://www.ato.gov.au/assets/0/104/188/217/02d2dc4e-7dbb-4a83-9b55-eb2574e3f331.pdf

    Ok here goes our assessment of the legislation which was passed late last night by Federal Parliament (its the bill but I believe there were no amendments). You can never really rely on websites or treasury documents because they are not the law. The legislation is Boosting Cash Flow for Employers (Coronavirus 8 Economic Response Package) Act 2020
    link below and EM link as well

    I will also say that the legislation appears to contain at least one potential error which if interpreted strictly (which probably won’t be in this case) would likely go against the taxpayer. We never like being in that position. Anyway onwards

    So the legislation requires there was an active ABN as of 12 March 2020 – that much is clear. Sect 5(1)(f). There must also have been business income prior to 12 March 2020 (same section referring out to subsection (5) and (6)). The legislation does not specifically say that there must have also been an active PAYGW role registered as of 12 March 2020. However, it does contain a very specific anti-avoidance integrity measure which says in Sect 5(1)(g) that you are ineligible if you enter into a scheme or arrangement with the sole or dominant purpose of gaining eligibility or increasing your entitlement.

    We are seeking verification on some elements but if an entity had an ABN on 12 March 2020 but had no PAYGW role and no employees then theoretically the law may still allow them to employ a person after 12 March 2020. However, I think it’s highly likely (maybe certain) that at some point there will be a review of ALL entities that first activated a PAYGW role after 12 March 2020 (even if backdated to prior date) to determine what they claimed and see whether everything adds up. There would be some permutations of data that would point towards abuse which would activate the integrity measure above. ie little income, no history prior of PAYGW and employing, no history after of PAYG and employing. Just a wage blip out of nowhere for no good reason = audit = fail. However, there may also be some permutations of data that have commercial justification. Presumably, they are trying to encourage businesses that existed on 12 March 2020 to employ people. That might mean keep employing staff you had at 12 March or start employing new staff after 12 March 2020. You certainly wouldn’t want to discourage the latter in the current environment.

    Anyway if you are struggling to sleep read both of these and see you tomorrow

    https://parlinfo.aph.gov.au/parlInfo/download/legislation/bills/r6522_first-reps/toc_pdf/20045b01.pdf;fileType=application%2Fpdf

    https://parlinfo.aph.gov.au/parlInfo/download/legislation/ems/r6522_ems_84ea9dda-1a44-44b8-878b-68c376cbed56/upload_pdf/734816.pdf;fileType=application%2Fpdf

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1222680
    Henri K
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    Thanks James, really appreciated. I did read through the law now.

    Am I correct that to be eligible the company must have had income in the previous tax year?

    And if I am correct, doesn’t that mean that every newly started company in Australia is categorically ineligible?

    #1222681
    James Millar
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    Henri K, post: 269156, member: 115510 wrote:
    Thanks James, really appreciated. I did read through the law now.

    Am I correct that to be eligible the company must have had income in the previous tax year?

    And if I am correct, doesn’t that mean that every newly started company in Australia is categorically ineligible?

    No there are two elements to the business income test. One test looks at the 2019FY income reported in the income tax return. The other test looks at income reported in BAS’s up to 12 March 2020 (since 1 July 2018) “or until such further time as commissioner allows”. We think this last bit contends with situations where a business not only starts in the 2020FY but starts in the March 2020 quarter and has never reported any activity to the ATO in activity statements. There are some that are on annual BAS and some on no BAS so the ATO will not be able confirm business income until the 2020FY income tax return is lodged. That would take too long. It will be interesting to see what they do with taxpayers in that situation – ie will they just pay it now and ask for repayment if no business income (the law has an overpayment clawback provision) or will they defer paying until they are certain entities are in business? Maybe the latter if you started in 2020FY and have not reported any BAS income (because have not lodged or not registered for GST so not required to).

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1222682
    Henri K
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    James, thanks for the clear explanation.

    Am I correct on the second try? For those companies that have not lodged prior to 12 March anything showing income: instead of definitely no, the clause “(or until such further time as commissioner allows)” changes the situation to definitely maybe, at the discretion of ATO?

    #1222683
    James Millar
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    Henri K, post: 269160, member: 115510 wrote:
    James, thanks for the clear explanation.

    Am I correct on the second try? For those companies that have not lodged prior to 12 March anything showing income: instead of definitely no, the clause “(or until such further time as commissioner allows)” changes the situation to definitely maybe, at the discretion of ATO?

    You must have derived business income prior to 12 March 2020. We presume the ATO cannot exclude those that have simply not REPORTED it by that date for the reasons above. ie some have no obligation or opportunity to report income yet if they started after 1 July 2019. eg Small entity no GST registration for example. Not annual income tax return obligation yet and no bas obligations at all but still in business and generating income prior to 12 March 2020

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1222684
    Henri K
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    James, thank you again. I had a second read of the law, and I’m increasingly confused.

    Subsection 6 “the entity made a taxable supply in a tax period that applied to it … and ended before 12 March 2020” is the closest I found, but that is still about tax period, not the specific date of supply.

    Which subsection states that the date of supply must be before 12 March?

    Also, since the period is a quarter for small businesses, and March 2020 quarter ends after 12 March, doesn’t that mean the cut off date for having income is actually the end of the previous period/quarter, i.e. 31 December 2019?

    #1222685
    James Millar
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    Henri K, post: 269164, member: 115510 wrote:
    James, thank you again. I had a second read of the law, and I’m increasingly confused.

    Subsection 6 “the entity made a taxable supply in a tax period that applied to it … and ended before 12 March 2020” is the closest I found, but that is still about tax period, not the specific date of supply.

    Which subsection states that the date of supply must be before 12 March?

    Also, since the period is a quarter for small businesses, and March 2020 quarter ends after 12 March, doesn’t that mean the cut off date for having income is actually the end of the previous period/quarter, i.e. 31 December 2019?

    Contained in these subsections

    (5) For the purposes of paragraph (1)(f), the requirement in this subsection is satisfied if: (a) an amount was included in the entity’s assessable income for the 2018-19 income year in relation to it carrying on a business; and (b) the Commissioner had notice on or before 12 March 2020 (or a later time allowed by the Commissioner) that the amount should be so included.

    (6) For the purposes of paragraph (1)(f), the requirement in this subsection is satisfied if: (a) the entity made a taxable supply in a tax period that applied to it that: (i) started on or after 1 July 2018; and (ii) ended before 12 March 2020; and (b) the Commissioner had notice on or before 12 March 2020 (or a later time allowed by the Commissioner) that the entity had made the taxable supply.

    The EM is a little easier to understand re these two sections

    if the entity is not an Australian Charities and Not-for-profits Commission registered charity, it both: – held an ABN on 12 March 2020; and – either derived assessable income from carrying on a business in the 2018-19 income year or made one or more supplies for consideration in the course of an enterprise it carried on within Australia in tax periods commencing after 1 July 2018 and ending before 12 March 2020 and notice of the income or supplies was held by the Commissioner on or before 12 March 2020 or within such further time as the Commissioner allows

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1222686
    Henri K
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    Those are the exact sections that talk about “period” instead of “date”, and which I based my logic on.

    Well, I’m not going to hire new employees when this is so uncertain.

    Perhaps a future package targets job creation.

    #1222687
    James Millar
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    Henri K, post: 269168, member: 115510 wrote:
    Those are the exact sections that talk about “period” instead of “date”, and which I based my logic on.

    Well, I’m not going to hire new employees when this is so uncertain.

    Perhaps a future package targets job creation.

    I don’t think its uncertain. The law could have been drafted a little more clearly but legislation if often a bit illogical in its referencing structure especially when its been rushed. If you read the EM its more understandable.

    If your decision to hire new employees is reliant on Government funding then I think its unwise to hire. The numbers should stack up on their own.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1222688
    Henri K
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    I do trust your advice more than my logic, but please tell me which part of my logic is wrong:

    1. A company is eligible if it has income during a period that ends before 12 March

    2. The period is a quarter for small companies

    3. March 2020 quarter ends on 31 March 2020

    4. 31 March is later than 12 March

    5. The discretionary clause (“unless..”) applies only to notification, not to the actual period

    6. Therefore, a company must have had income during or before December 2019 quarter, i.e. before 31 December 2019, to be eligible.

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