GDP adjusted PAYG and GST instalment amounts
GDP adjusted PAYG and GST instalment amounts
Introduction
This overview explains how and why the gross domestic product (GDP) adjustment is applied to pay as you go (PAYG) and goods and services tax (GST) instalment amounts, and what to do if you think this will impact on your tax liability.
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The information given in this fact sheet is based on a balancing date of 30 June, which is when the majority of taxpayers in Australia balance their accounts. For most taxpayers, the term income year used in this publication refers to a financial year (1 July to 30 June).
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Eligible taxpayers who report PAYG instalments or GST quarterly have the option of paying instalment amounts that we calculate for them. These amounts are printed on your quarterly activity statement or instalment notice.
We calculate these instalment amounts from information you have previously reported. We adjust these figures to take into account likely growth in your business and investment income (for PAYG) or in your GST net amount. This adjustment is based on growth in Australia's economy, as measured by GDP.
Why are instalment amounts adjusted?
The information we use to calculate your instalment amounts is generally taken from your most recently assessed income tax return (for PAYG instalments) or annual GST return (for GST).
As PAYG and GST instalment amounts are intended to reflect your expected tax liabilities for the current income year as accurately as possible, we adjust the instalment amounts to reflect expected changes in the economy.
If instalment amounts were solely based on your previous tax situation without any adjustment, they might not cover your actual tax liability - leaving you with an additional payment to make when you lodge your annual return.
We update the GDP adjustment factor at the start of each income year using national accounts data provided by the Australian Bureau of Statistics. The adjustment is based on GDP activity over the previous two calendar years. Using this data, the GDP adjustment for the 2012-13 year is 6%.
The 6% GDP adjustment factor will apply to instalments for the 2012-13 income year for taxpayers whose income year commences on or after 1 April 2012.
The 6% GDP adjustment factor will be used in the calculation of your PAYG instalments if you choose to pay the quarterly instalment amounts we work out for you.
For eligible GST payers, the GDP adjustment factor that applies in 2012-13 is also 6%.
This does not affect you if you choose to work out your own instalments (using the 'rate' method) or to pay annually, because the GDP adjustment factor is not applied to your instalments.
Taxpayers who are eligible to pay instalment amounts (including the GDP adjustment) that we calculate, can vary those instalment amounts, or choose to work out their PAYG instalments (based on their current instalment income) or actual GST net amounts.
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The reporting and payment option you choose in the first quarter will apply for the whole income year.
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If you think the instalment amounts we calculate will be too high or too low, you can do one of the following:
- pay the instalment amounts worked out by us and have any overpayments refunded - or make up any shortfall - once your income tax return or annual GST return is processed
- vary your instalment amounts each quarter
- work out your PAYG instalment or actual GST net amount yourself.
You can choose this option in the first quarter of the income year - for most taxpayers, this is the activity statement or instalment notice due in October. If you choose this option for:
- PAYG, you need to pay the amount shown at label T7 on your activity statement or instalment notice
- GST, you need to pay the amount at label G21 on your activity statement or instalment notice.
If you choose to pay the PAYG or GST instalments calculated by us, your actual income tax and GST liabilities will be worked out when your income tax return or your annual GST return is processed. Any overpayments will be refunded to you, provided you have no other tax debts.
Vary your instalment amounts
You can vary PAYG or GST instalment amounts if you believe the amounts calculated by us (which include the GDP adjustment) will mean you will pay more or less than your actual tax liability for the income year.
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You may be liable to pay the general interest charge if you vary your instalment down and end up paying less than 85% of the actual tax that you should have paid on your business and investment income (for PAYG) or GST net amount.
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Work out your PAYG instalment or GST net amount
You can choose to work out your PAYG instalment or GST net amount yourself for:
- PAYG instalments, use PAYG option 2 (income x rate) on your activity statement
- GST, use GST option 1 or 2 on your activity statement to work out your actual GST net amount.
These options are generally only available in your first quarter.
If you have received an instalment notice in quarter one and you want to go back to working out your PAYG instalment or GST net amount each quarter, you will need to tell us that you want to revoke your election to pay instalment amounts. We will then send you an activity statement to complete and lodge. This needs to be done by 28 October.
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You can revoke your election by phoning us on 13 28 66 between 8.00am and 6.00pm, Monday to Friday.
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The PAYG instalment amount printed at box T7 on your activity statement or instalment notice is based on the income tax that would be payable on your business and investment income (excluding any capital gains) from your most recent income tax return.
When working out the instalment amount, we apply the GDP adjustment to this business and investment income - this takes into account likely changes to your income since the year of that income tax return.
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Your PAYG instalment amounts may change during the year if you vary your instalment amount or lodge an income tax return.
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The GST instalment amount printed at box G21 on your activity statement is generally based on the actual GST net amounts you reported in your activity statements or most recent annual GST return.
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If you are newly registered for GST, the net amount for your first quarter is excluded from the calculation of your GST instalment. This is because the net amount for your first quarter might be affected by start-up costs.
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Your GST instalment amounts may change during the year if you vary your instalment amount or lodge an annual GST return.
If you need more information about PAYG or GST instalments, you can:
- speak to your tax adviser
- phone 13 28 66
- write to
PO Box 1032
ALBURY NSW 2640
Other publications relevant to PAYG instalments include:
Other publications relevant to GST instalments include:
If you do not speak English well and need help from the ATO, phone the Translating and Interpreting Service on 13 14 50.
If you are deaf, or have a hearing or speech impairment, phone the ATO through the National Relay Service (NRS) on the numbers listed below:
- TTY users, phone 13 36 77 and ask for the ATO number you need
- Speak and Listen (speech-to-speech relay) users, phone 1300 555 727 and ask for the ATO number you need
- internet relay users, connect to the NRS on www.relayservice.com.au and ask for the ATO number you need.
Last Modified: Tuesday, 17 July 2012
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