I had to Pay tax and now I have to Pay instalments too?
Please tell me why..
This tax year has seen reduced tax refunds, and a few more tax payables. More individuals are required to now submit Activity Statements and a Pay As You Go (PAYG) Instalment. Entering this system allows automatic calculation giving you the opportunity to prepay your tax liability for the 2024 year. This is done over four equal quarterly instalments to avoid having the same situation next year when you complete your tax return.
The quarterly Activity Statement is a report that is prepared and lodged every 3 months ending in September, December, March and June. Each statement is due for lodgement 28 days after the end of the quarter. The Activity Statement can include sales turnover, GST, wages and a calculated PAYG Instalment. Alternatively, you may have been nominated for PAYG Instalments only.
The amount to pay is based on an estimated tax liability for the year as well as considering the previous year’s tax liability and provides an opportunity to prepay the liability as you go through the year. This reporting system is used for all reporting entities and aims to help ease cash flow by reducing the pressure at the end of the tax year.
If you want to change your instalments, this is usually done in the first quarter. Changes can be made to the instalment calculation, from a fixed amount to a percentage of turnover. We can also vary the amount if there has been a change in business operations, that have resulted in changes to the business turnover and/or a change to future business expectations. The total amount of instalments paid through the tax year are then used to reduce your tax liability at the end of the year when the tax return is completed.
The first quarter Activity statements for the reporting period ending 30th September 2023, including any PAYG Instalments are due to be submitted and paid before 28th October 2023. Contact our office for any assistance.