fbmf wrote:Phonelobster wrote:
as a business (no literally I'm a business, I don't know if you guys do that over there, but I AM a business)
Please elaborate.
Game On,
fbmf
I don't know how you guys deal with business entities, wages and tax.
I struggle to understand how I deal with business entities, wages and tax.
But I will try to explain this as I understand it.
I own and run a small business. Possibly even a micro business. It is very slightly larger than being a single self employed tradesman, I have four part time employees, but outside of the peak of the season they do not do one full time employees hours between them. I probably do about one full time employees hours of work myself, but that literally does not count.
So, of course, the government needs to track this and tax this, or rather, make me do it, including new and exciting forms of extra data entry work they keep off loading onto the end users.
My business needs to register as an entity of some kind. It is not a partnership, because there are no partners, it is not a corporation for several reasons, and the recommended entity type for very small businesses like my own is "Sole Trader".
This means I pay wages and related withheld income tax, compulsory super, all that stuff and more for my employees relatively normally.
And then everything else, specifically to do with me being paid/taxed is just a bit weird and frequently falls through the cracks or requires special exceptions because basically everything is set up for other business entity types. Sole Traders, despite being for instance, basically every trades person in the nation, are kind of a legislative afterthought.
So when I say I AM a business this means I literally am registered for my business number and have bank accounts named "[My Name] Trading As [My Business Name]", and the only reason my business has it's own account separate from my personal account is for convenience of administration. For practical purposes the tax office doesn't especially differentiate and regards all the money as being mine. Basically the the business assets are my assets and visa versa and my income for tax purposes is the business income.
And yes that means I don't get other income. Like for instance wages. I do not pay myself wages. I am in fact
not allowed to pay myself wages. I can work however many hours I want but I also do not count as an employee who works hours, even if I'm not paid for it. This was especially notable with a recent state level Covid relief grant I barely failed to qualify for because my hours of work didn't count so my business, on paper, just barely didn't work enough hours to be counted as a business at all, for the purposes of that grant.
Yes, that does mean basically every plumber/tradey/sole trader in the state was also excluded from that relief grant. Yes that meant bigger businesses did get it. Yes it was a liberal party grant. No that isn't surprising. Oh also good thing I didn't get it, apparently signing on to that one came with small print agreeing to be endlessly audited for no reason and possibly also a agreeing to a bunch of other bizarre special programs. It seems it was kinda like the small business version of taking an IMF loan.
So for instance early on I did qualify for the federal Covid relief program. But, because I'm a sole trader A)It was needlessly weird and demanding and B)They could send their robots* to demand the money back at any time based on retroactive changes to the rules I applied under.
*Robodebt is a thing here.
Anyway to describe the sole trader job-keeper wierdness...
1) The government refused to give economic stimulus money directly to the general populace because fuck labor did it that one time and they will NEVER just give everyone a stimulus payment directly to their bank account and also because fuck that might mean actual poor people got a payment.
2) So they gave the money to businesses instead and the businesses were then required to give it to their employees.
2a) I am a business and I have employees but am not myself an employee.
2b) My business entity type is sole trader.
It changed hands under a year ago (at the time). But sole trader entities CANNOT change hands, because they
are a person and not in the corporations are people sense but in a "it's that guy standing over there" sense, so in order for the business to formally change hands the OLD business (which was the same business and had been running for decades) had to technically end and a new one had to officially start.
2c) To qualify for Job Keeper for my employees... well fuck them the business needed to have records from a year ago to prove that IT had a reduction in turn over for THEM to deserve their stimulus payment. Which actually wasn't a stimulus payment (sort of). As on the books it was just "wage relief" going into MY pocket, sort of. Anyway, point is my business which in reality has run for decades officially existed for less than a year and had no records the tax department would agree were applicable.
2d) BUT GOOD NEWS. If you didn't meet the "standard test" to qualify, you could meet the "special test" instead. Bad news though, the deadline for the initial payments was coming BEFORE the special test requirements were being published. But, Good news, the tax department promises to be nice about it and they will totally let it go if you made an honest attempt at getting it right (details on what defines an honest attempt at getting it right not to be disclosed at this or any future point).
2e) So. My records that don't count tell me I safely qualify. They tell me I have to apply immediately. I do. Then the call do overs the deadline like three times in a row because of the obvious chaos they had caused. (And possibly because an estimated 60 Billion dollars worth of the economy was so scared shitless by the train wreck that they perhaps justifiably preferred to run away and hide with no stimulus/relief money). Anyway then they eventually released the Special Test and I safely qualified for that too. Once I navigated it's arcane mazes and thank fuck my business was 9 months old instead of 3 months old because WOW they screwed those guys with retroactive changes and debt robots. But only if they were sole traders.
3) OK So the government hates casual workers. They don't like poor people getting money. So Job Keeper only went to employees who were Full Time, Permanent Part Time, and "permanent" casual, which is basically a type of casual worker that doesn't exist, and in my business could not exist because among other things they need to be in the same casual job for over 12 months. Fortunately my employees were technically "Permanent Part Time" and for no apparent reason that did NOT come with a 12 month requirement, thank fuck.
3a) But, the program was kinda designed thinking part time workers pretty much don't exist (the economy is increasingly just casuals). So it paid out a MINIMUM rate per employee based on them working full time hours. Regardless of however many hours they worked. So my employees got a pretty big boost out of it and all sorts of money went into my bank account, and back out of it, and for some fucking reason it counted for income tax but not for some other things like compulsory super and MAN did it make my accounts into a fucking mess. Also this meant that when I no longer qualified because my business switched straight from a downturn into a pretty huge upturn (I'm in a weird industry that historically does weird things during hard economic times) the reward my employees got for the business turning around... was a sharp decrease in wages as they went off the job keeper scheme...
4) But what about
ME did
I get the actual wages/income relief other than basically making the frankly small amount of wages I pay "free" and giving my workers a temporary raise at... weird administrative costs only for me. And actually I did. Because sole traders ALSO got the Job Keeper payment PERSONALLY. Um. But we had to meet special requirements, because after all
we don't earn wages. And those were so arcane I can barely understand them. But I would like to point out one thing. There was one minor requirement, I can't remember what I think it was another thing screwing the guys who had started their businesses within 3 months, but if you didn't meet it you could still qualify, you just had to
personally notify the minister that you were applying. Now Only two things in the entire scheme required direct communication with the minister. A minor technicality for the newest and poorest of sole traders, and if I recall, something like being a corporation with an estimated turnover of well over a Billion dollars. Yes. Sole traders are expected to liaise directly with the minister on basically the same terms as billion dollar corporations. It's pretty nuts.
Anyway. Point was I also got a full time sort of minimum wages worth of money just for me as well. But I had to apply separately under different stranger rules exclusively for sole traders.
5) Oh. Did I mention that you had to apply every month through a unique online tax app/site in the back end of a menu initially meant for something else? Oh. And you applied each month in advance of knowing if you would qualify. THEN you paid all your employees all that extra money BEFORE YOU WERE PAID BY THE GOVERNMENT, and then in the NEXT month you sent the proof that actually your estimates were right and you DID turn out to qualify! So THEN they pay you the money you already paid all your employees by then.
5a) You might notice the "one month of (probably boosted) wages out of pocket before you (only maybe) get the actual money" thing. Yeah. Another reason many didn't take up the scheme. I had the assets to be a month out of pocket like that. MANY small business did not. A scheme which basically gave businesses free money was in fact
too expensive for many small businesses to be a part of.
5b) Yes hidden in the back end of a weird online tax app thing I never knew existed and will probably never need to log into again. Yes not ALL businesses used that app, pretty much only sole traders had to, yep. Anyway many bigger businesses for instance could just use their normal real time income tax reporting app. I mean, I have to use that too, but as a sole trader and a smaller business and as someone stuck with the specific real time tax app I have...
...
So there is this thing where they've decided every business in Australia now has to do real time online income tax reporting for wages paid. They um, didn't provide an app. You just gotta like, go use a random app made by like some guy, they have a list of like 30, maybe 5 kinda work, badly, and maybe 1 or 2 are suitable for really small businesses (or even any given category of business), oh good luck if you need to change because the app stops working mid financial year because changing apps requires your app to work and the tax department does NOT have a plan b (as I personally discovered).
This would be more controversial in Australia if the government had say... actually told... every business in Australia that they are now supposed to be using this. I'm pretty sure that now it's actually illegal not to use this they've managed to get something like a quarter of Australian businesses using it. The tax department is basically just winging it and pretending that isn't happening at this point.
Oh and that's the employer end of it. The employees also use this, well not the app, but the derived database. But they only use it once a year at tax time. So. Back in the trial period when less than what, 5 or 10 percent of Australian businesses were on the app and about 15% of smaller businesses like mine had managed to be told that they were going to start using it the employees of a fraction of australian businesses all logged in to do their tax... and crashed the entirety of all government online services for all departments for days.
6) Oh and did you know WHY my tax app stopped working, because, in the middle of covid and job keeper, and a continuing failure to get anyone to even notice they were rolling out this new tax app thing they CHANGED THEIR PROPRIETARY ENCRYPTED IDENTITY VERIFICATION APP. Because they ALSO had one of those, I think it had existed, at least in its form at the time, for only a few years, but they switched to a new one, right at the worst time, and it made my tax app stop working for a week or two.
6b) OH AND DON'T GET ME GOING about the fucking cyber security on the new identity verification app. No wait I'm a fucking computer scientist, lets DO. The key, the fucking encryption key I am legally required to use, is in a human readable default visible easily opened file in a known location on your fucking hard drive. The security solution for this is that they
made me sign a fucking disclaimer that it's my fault if someone gets their hands on that key.
Oh and the app that handles that key and all my sensitive accounting data and all my employees sensitive account data is written (badly) by seriously "some guy on the internet" who kindly does so (badly) "for free" gaining nothing for himself! And the tax department takes no responsibility for it even working let alone not stealing my data. Yes this was the governments idea and I have to do it. The alternative is mostly just the same thing but I pay a fortune for it.
I'm getting off track.
Point is.
I am Business.
It's pretty nuts.
