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Wondering why you need to make those 'PAYG Instalment' payments to the Australian Taxation Office (ATO)? We get it. The PAYG Instalment system can be a puzzle, especially if it's your first go-round or you're unsure about the payment amount. This article is here to give you the clarity you seek and answer your PAYG Instalment questions.
Let's start with the basics: The ATO introduced the Pay As You Go (PAYG) system to help those taxpayers who are required, or who opt-in, to manage their cash flow and lighten their tax load at the end of the financial year.
It's a straightforward concept – you prepay your expected tax obligations. The confusion comes regarding how much, and when, you are expected to pay.
PAYG Instalments, at the core of this system, are those regular tax payments you make throughout the fiscal year. They're designed to gradually reduce your overall income tax burden when it's time to file your annual tax return. Think of them as breaking down a financial mountain into manageable hills.
The ATO will give you the lowdown on your PAYG Instalments. The calculation hinges on a formula that takes data from your most recent tax return. Alternatively, the ATO might hand you an instalment rate to simplify things. If you anticipate financial changes, you can tweak your PAYG Instalments. But here's a tip: chat with us before making adjustments to avoid potential interest charges and penalties.
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In general, PAYG Instalments are due quarterly, creating a steady financial rhythm. But there are exceptions – businesses with incomes exceeding $20 million may be required to pay monthly.
Some taxpayers, like those in primary production or specific professions, can choose between two annual instalments or a single annual payment. Keep an eye on your Business Activity Statement (BAS) or Instalment Activity Statement (IAS), which arrives at the end of each financial quarter with due dates usually set 28 days later.
At Smith Shearer, we're all about smoothing your path through the PAYG Instalments process. When we provide you with your annual tax completion, we’ll also provide a detailed PAYG. We also ensure your payslips reach you promptly when they're due. If you have questions or need assistance with your PAYG Instalments, reach out to us anytime; we're here to guide you every step of the way.
Reach out to us using the form below and we’ll be in touch.
The Government has reinvigorated the 120% skills training and technology costs deduction for small and medium business.
An election ago, the 2022-23 Budget proposed a 120% tax deduction for expenditure by small and medium businesses on technology, or skills and training for their staff. This proposal has now been adopted by the current Government and details released in recent exposure draft by Treasury.
From 1 July 2022, the standard Superannuation Guarantee (SG) rate increased from 10% up to 10.5%. It’s part of the government’s commitment to increase the SG by half a percent each year until 2025, when the SG rate will reach 12%.
The Australian Federal Budget 2022 was delivered on 29 March 2022 by the Federal Treasurer Josh Frydenberg.
See our breakdown of the tax measures impacting small business in Australia.
Smith Shearer, in collaboration with Kitto and Kitto Lawyers, will be hosting the ECCI Business After Hours on 12 August 2021
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