PAYG Instalment Changes

Monday, 7 September 2015    Accounting,Tax

Some of you may be required to make pay as you go (PAYG) instalments monthly rather than quarterly.

Based on your last assessed income tax return, if your adjusted base assessment instalment income meets or exceeds the following thresholds you will need to pay monthly:

  • superannuation funds, trusts and individuals $1 billion threshold
  • companies $20 million threshold. Note that entities that lodge their GST quarterly or on an annual basis, will only be required to pay monthly if their threshold is equal to or exceeds $100 million.

On 1 October 2015 the ATO will conduct a payer requirement test to determine who is affected. If anyone is required to change the ATO will send you a letter in October confirming they will be required to lodge and pay monthly.

From January 2016, these taxpayers will be required to:

  • make their PAYG instalments monthly rather than quarterly
  • lodge and pay electronically to avoid penalties.

An additional method of reporting instalments

Where there is difficulty calculating instalment income, your clients may use the additional method of reporting. This requires providing an estimate of their instalment income in months one and two, with reconciliation in month three.