News
There’s certainly a lot going on right now… from rising interest rates, the costs of supplies or possibly lack of consumer demand, that might make it feel like you are paying too much on your quarterly Pay-As-You-Go(PAYG) income tax instalments. Know however, that you do have the option to vary these down. There are a few important factors you need to consider so we’ll run through them to help you avoid getting caught out.
The ATO automatically sets your PAYG instalments based on your last return lodged. So, if your business circumstances have changed since your last tax return (keeping in mind this can sometimes be 12-18 months depending on when you last lodged!), the ATO actually won’t know about it unless you let them know.
Your first step is to work out what your tax estimate is for the current financial year. Then work out what you expect to pay on your PAYG instalments. If your estimated tax is less than your PAYG instalments, you can vary down your instalments to avoid paying too much to the ATO. Just remember, if you do pay too much to the ATO you will receive a tax refund when you lodge your return so not all is lost (and some taxpayers even prefer this).
You either receive notification of your PAYG instalment on an Instalment Activity Statement (IAS) or a Business Activity Statement (BAS).
The ATO generally sends out IAS each quarter, and the payment due date is 28 days after the end of the quarter:
Quarter & Due Date for Payment
1 July to 30 September – Due 28 October
1 October to 31 December – Due 28 February
1 January to 31 March – Due 28 April
1 April to 30 June – Due 28 July
For BAS lodged through a BAS or Tax Agent, you receive an extension as follows:
Quarter & Due Date for Payment
1 July to 30 September – Due 25 November
1 October to 31 December – Due 28 February
1 January to 31 March – Due 25 May
1 April to 30 June – Due25 August
When you receive your IAS or BAS which includes the details of your PAYG Instalment enter the following:
You can only vary an instalment on or before the due date of the BAS or IAS. You cannot vary if it is after the due date – and this is an important date to remember!
If you have missed a due date, please pay the PAYGInstalment as notified and process the variation in the next statement. You can then request a credit from the previous instalment you paid incorrectly so not all is lost.
The ATO can sometimes penalise you with interest and penalties if you vary down your instalments and your estimated tax is vastly different to what you advised. Keep clear records and calculations as to how you came up with your figures, as honest mistakes can happen. Also, if you vary down due to a natural disaster, the ATO will not penalise, and they will usually send out some information regarding this if you are ever impacted.
If you need a hand with your PAYG instalments, or processing a variation, reach out to the Attune team by phone on 1300 866 113 or send us an email to start the conversation.
