The Pay As You Go (PAYG) instalment system is designed to help taxpayers budget for their income tax and keep healthy cashflow, by making regular payments toward their estimated tax bill.
By making regular payments throughout the year, your tax bill will be reduced when your tax return is lodged.
When paying your IAS or BAS each quarter we recommend that you review your PAYG Instalment. The reason being is that the instalment is based on the final return the ATO has received. The issues that arise with this are as follows:
- If you are behind with lodgement of your returns these instalments may not accurately reflect the actual tax payable. e., if your business has improved you perhaps should be putting more tax aside to ensure if you do not have a tax surprise at the end of the year.
- If your situation has changed and your profit will be less, then you may be able to vary the instalment so that you can retain more funds in your cashflow.
- If you have made a large capital purchase which will result in an increased tax deduction for the year, you should review the option of varying your instalments.
Options for choosing how your instalments will be calculated:
- Use the instalment amount provided by ATO – which they calculate off your most recently lodged income tax return
- Work out the instalment rate yourself based on income earnt. This is beneficial if your income fluctuates throughout the year.
- The instalment rate is calculated by: (Estimated tax ÷ instalment income) X 100.
Due dates for PAYG instalments
28 July – Quarter 4 (April–June)
|
· Instalment notices – final date for payment and, if varying the instalment amount, lodgement.
· Finalising all your PAYG instalments before you lodge your tax return will ensure you receive the correct amount of credit in your income tax assessment. · If you have a BAS agent, your due date for lodgement will be 25 August. |
21 October – Annual PAYG instalment notice
|
· Final date for payment and, if using the rate method or varying the instalment amount, final date for lodgement.
· If you have already received your income tax assessment, you should not vary your annual instalment. |
28 October – Quarter 1
|
· Final date for eligible instalment reporters to elect to report annually for June balancers.
· Final date for notifying your quarterly PAYG instalment reporting and payment choice for the current financial income year for June balancers. · Quarter 1 instalment notices – final date for payment and, if varying the instalment amount, lodgement. · If you have a BAS agent, your due date for lodgement will be 25 November |
28 February – Quarter 2 (October–December) | · Instalment notices – final date for payment and, if varying the instalment amount, lodgement. |
28 April – Quarter 3 (January–March)
|
· Instalment notices – final date for payment and, if varying the instalment amount, lodgement.
· If you have a BAS agent, your due date for lodgement will be 26 May |
If you have an instalment and you are unsure what you need to do please feel free to contact us on 07 5451 1118.
Comments are closed.