Am I eligible for PAYG Withholding relief?

By far the most common question being asked now by small businesses is am I eligible for PAYG withholding relief?

There have been two announcements with the effective doubling of the concession on the second stimulus package as announced last Sunday.

That package was rushed through Parliament earlier in the week.  Whilst we now have some clarity, questions still remain.

To qualify a business must:-

  1. Have an ABN by March 12, 2020. This is an obvious requirement to avoid restructuring.

  2. Make a payment of salary and wages (or directors fees, commissions etc). It doesn’t matter that there may be no requirement withhold PAYG withholding if the wages are small. 

  3. Either have (a) lodged the 2019 Tax Return by March 12, 2020 which reports assessable business income or (b) lodged an activity statement for the 2019/20 year which declares business income (which is presumably either sales subject to GST and/or business income subject to PAYG Instalments).

  4. The entity has not engage in a scheme for the sole or dominant purpose of seeking to make the entity entitled to the payment would increase entitlement entity to the payment. In other words, tax avoidance.

The ATO has also stated that they will review sudden changes to the characterisation of payments and investigate whether the payments are in fact wages.  This is quite reasonable where PAYG withholding and not been reported and SG super contributions had not been made.  We also note that some people who may wrongly trying claim may have a hard time proving so where there is no WorkCover policy in place.  This is much easier for the ATO to determine given the introduction of Single Touch Payroll for all employers from July 2019. 

However, questions do remain.  

In particular, it is very common for a business owner to only draw a salary at the end of the financial year when the business is known to be profitable.  It would be most unfair if they were to miss out.

We will post further information when matters are made clearer.

In the meantime:-

  • We would be happy to answer any question you may have.

  • Ask you to keep returning to this section as blogs will be posted at least twice daily

 

At MRS, we will spend today planning for your success.