COVID-19 Stimulus - Individuals Operating under Company

Kjong on 28/03/2020 - 23:47
Last edited 28/03/2020 - 23:50

Hello all,

Looking for some insight for my dad's current situation. He is the sole director of his company which is contracted to another business for work.

The business pays my dad's company for the services he provides and my dad draws directors fees from his company as salaries and wages.

Due to the ongoing COVID-19 pandemic, we expect that he is going to be earning less and less.

My question is, when the time comes and if it does come, should my dad be applying for income support as an/a:

  • individual i.e. JobSeeker Payment and the Coronavirus supplement; or
  • business i.e. Supplement for my dad's wages and salaries and the boosting Cash Flow for Employers payments.

I will speak to my dad's accountant first thing Monday but if anyone can shed some light that would be helpful.

Thanks.

Kenny

Financial COVID-19

Comments

  • JimmyF on 28/03/2020 - 23:56
    +1

    I will speak to my dad's accountant first thing Monday

    That would be best.

    But to answer your question I thought from what I read earlier, was the business help was in the form of loans, so if you dad went down this path, they would have to repay the money borrowed at a later date vs the individual path, which is a handout by the gov, no need to repay. Again I could be wrong, but thats what I thought I read earlier.

    • Kjong on 29/03/2020 - 00:10

      Hmmm unsure about that. I don't see a mention of repayment of loan but I haven't read it in detail.

      From (https://treasury.gov.au/coronavirus/businesses)

      Boosting cash flow for employers

      The Government is enhancing the Boosting Cash Flow for Employers measure it announced on 12 March 2020. The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000. These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.

      Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible. NFPs, including charities, with aggregated annual turnover under $50 million and that employ workers will now also be eligible. This will support employment at a time where NFPs are facing increasing demand for services.

      Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.

      An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments

  • Soluble on 29/03/2020 - 06:35
    +2

    My brother in law is in a similar boat. He doesn't pay himself a wage through the company. Rather just draws money. His accountant told him he's ineligible for the 'Boosting cash flow for employers' which is probably a good thing, otherwise any individual with a company and no employees could be getting $20,000+ for nothing.

    My company employs 5 people and that money will be going to their wages in the event we have to close or reduce trade, not to me/the company.

    I would say it's off to job seeker.

    • Kjong on 29/03/2020 - 08:32

      That makes sense, thanks for that!

  • CheapskateQueen on 29/03/2020 - 07:49
    +4

    In other news, sounds like in both those examples (dad and brother in law), you're in "personal services income" arrangements, rather than carrying on a business. I hope you've been reporting your tax correctly.

    • Soluble on 29/03/2020 - 07:59
      +2

      Pretty much. I've mentioned this quite a bit and went through a lot of his accounting in Xero and tidied it up. Breakfast and beers at crown are not a business expense ;) He basically runs it as a sole trader.

      • CheapskateQueen on 29/03/2020 - 08:09
        +1

        very glad to hear.

        More than ever we're going to need Aussies to distill this belief that "getting away with a tax dodge" is part of our culture.

        Tax system is going to need every dollar it can get for the rest of our lives.

        • Mechz on 29/03/2020 - 19:11

          The major corporations should start first and make an example. Their contribution would dwarf anything sole traders or small businesses could contribute.

  • screensaver on 29/03/2020 - 09:09
    -1

    I hope they have GST on toilet paper

    screensaver on 29/03/2020 - 09:09 (Collapsed - Offtopic. Show)
  • Baysew on 29/03/2020 - 09:58
    +2

    Maybe this thread will help - Stimulus Explained: Individuals and Super + Business & Fair Work

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