MAXIMISE YOUR $25K SMALL BUSINESS STIMULUS PAYMENT

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URGENT STRATEGY – YOU MUST ACT NOW TO MAXIMISE $25K STIMULUS PAYMENT

Ok, we’ve been through the Governments, proposed Economic Stimulus Package regarding the $25k PAYG Withholding payment and have concluded that many businesses are going to need help to fully access and optimise the small business payment.
 
Don’t wait until June to address this because the activity statement and payment cycle can begin from 21 April 2020 through to 28 July 2020. Stimulus payments are based on the content of those activity statements and accordingly nuances in your strategy will affect the amount of payment you receive.
 
As you can appreciate, we may need to undertake planning in order to optimise the benefits for your business in these uncertain times.

There are also a lot of micro employers that may be able to access the $2k minimum payment.

For those of you that would like to work through a detailed example, please see below;

EXAMPLE OF THE POTENTIAL BENEFIT OBTAINED FROM THE $25K PAYG WITHHOLDING PROPOSAL

Brown Family Trust is a discretionary trust that operates a small family business selling children’s clothing  online. The trust is controlled and operated by a husband and wife team. Each year the trust makes a profit of around $100,000. This is after salaries totalling $120,000 paid to the owner-operators ($60,00 each per annum).
 
With these salaries paid on an even monthly basis, the total PAYG withholding paid each quarter by the trust to the ATO would be $6,138. Accordingly, for the quarters ended 31 March, 2020 and 30 June 2020 the total PAYG withholding paid would be $12,276. If this strategy is maintained, the stimulus payment entitlement would be $ 6,138.
 
However, if the salaries are increased from $120,000 to $220,000 then there would be an extra PAYG withholding amount payable in the final two quarters of the 2020 financial year. Depending on when the extra salary was paid the PAYG withholding obligation in the last six months of the 2020 financial year would increase to between $30,420 to $ 38,796.
 
This would result in a stimulus payment entitlement of between $15,210 and $19,398. That’s an increase in your stimulus payment entitlement of $13,260. Tax-free money.
 
Importantly there would be no change to their personal tax position as all trust profits would have been distributed to them anyway.

Other Considerations – Super and On Costs

We will discuss with you the impact of any changes to your remuneration on you and your business before taking any action. You may be required to pay additional Super, Payroll Tax and Workers Compensation Insurance, but the amount will depend on your circumstances.

The details are yet to be finalised.

We will be in touch to discuss your specific circumstances.

Please find details on the Australian Governments Economic response to the Coronavirus in the link below;

https://www.hydadvisory.com.au/wp-content/uploads/2020/03/Fact-sheet-Assistance-for-businesses.pdf