GST instalments
GST instalments
When we say:
- business, we are referring to the GST term enterprise
- you, we mean you as the operator of a business for example, a sole trader, a partnership, a trustee of a trust or super fund, or a company
- sales, we are referring to the GST term supplies
- purchases, we are referring to the GST term acquisitions
- GST credit, we are referring to the GST term input tax credit.
If you choose to pay GST by instalments, we work out an amount for you to pay based on:
- the net GST amounts you most recently reported (generally for the last income year) depending on how long you have been registered for GST
- a gross domestic product (GDP) adjustment.
We print this amount on your activity statement.
If you think that using this amount will mean you pay more or less than the GST liability you expect for the year, you can vary it. However, if you pay the instalment amount we print on your activity statement, we will not penalise you, even if your GST liability for the year turns out to be more than the total instalments you paid for that year.
When you pay by instalments you still report via your activity statement.
On your activity statement you must still report any:
- pay as you go (PAYG) amounts you withheld
- PAYG instalments you paid.
The fringe benefits tax, wine equalisation tax and luxury car tax labels will only appear if your business has any of these obligations. Fuel tax credit labels will also appear if you are registered to claim fuel tax credits.
If you want to vary your instalment amount, on your activity statement write your:
- estimate of your annual GST liability
- varied instalment amount
- reason for varying.
If you varied your instalment amount in a previous quarter, the amount we print on your activity statement will be based on your varied amount.
In your annual GST return you report:
- GST on sales
- GST on purchases
- total sales, exports
- other GST-free sales
- capital and non-capital purchases.
If you are paying or claiming wine equalisation tax or luxury car tax, you also report these amounts for the year. Fuel tax credits are only reported each quarter.
You can work out these amounts using either the:
- accounts method
- calculation sheet method.
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If you use the:
- calculation sheet method to work out GST amounts, you report GST-inclusive amounts
- accounts method to work out GST amounts, you can report either GST-inclusive or GST-exclusive amounts, but you must show on your activity statement which one you use.
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You use an annual GST return to account for any difference between your:
- GST liability (plus any wine equalisation tax or luxury car tax you may have to pay or can claim)
- total GST instalments for the year.
If your total instalments are:
- more than your GST liability for the year, you can claim a refund from us
- less than your GST liability, you must pay the difference to us by the time your annual GST return is due.
You must lodge your annual GST return and make any balancing payment by the date your income tax return is due.
Paying by instalments
Working out if you can pay by instalments
You can pay GST by instalments if you are either:
- a small business with an annual turnover (including the turnover of your related entities) of less than $2 million
- not operating a business, but are carrying on an enterprise with a GST turnover of $2 million or less.
You must:
- have lodged an activity statement for at least
- two quarters, or
- four months if you previously lodged your activity statement monthly
- have lodged all your previous activity statements as required.
You must not:
- lodge your activity statement monthly
- be in an overall GST net refund position in the previous year (not including the first activity statement you lodged).
If you lodge monthly activity statements for GST but want to pay GST by instalments, you must first change to quarterly lodgment. However, some businesses (for example, those with turnovers of more than $20 million) must still lodge monthly activity statements.
Option 1 - reporting and paying or claiming quarterly
If your GST turnover is less than $20 million you can report and pay or claim GST amounts each quarter. You can work out your GST amounts using either the:
- accounts method
- calculation sheet method.
Whichever method you use, each quarter you must report any:
- GST on sales
- GST on purchases
- total sales
- exports
- other GST-free sales
- capital and non-capital purchases.
If you are paying or claiming wine equalisation tax, luxury car tax or fuel tax credits, you also report these amounts each quarter.
Option 2 - paying or claiming quarterly and lodging an annual report
You can work out your GST amounts using either the:
- accounts method
- calculation sheet method.
Each quarter, you can pay or claim GST amounts and report only:
- GST on sales
- GST on purchases
- total sales.
If you are paying or claiming wine equalisation tax, luxury car tax or fuel tax credits, you also report these amounts each quarter.
You must also complete a separate annual GST information report to report annual amounts for:
- any exports
- other GST-free sales
- capital and non-capital purchases.
You must lodge your annual GST information report by the date your income tax return is due.
If you lodge monthly activity statements for GST but want to change to this option, you must:
- be eligible
- change to quarterly lodgment.
Option 3 - paying by instalments and lodging an annual return
If you are eligible you can:
- pay GST instalment amounts we have given you (or an amount you varied)
- use an annual GST return to account for any difference between your GST liability and your total GST instalments for the year.
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For more information about GST, small business concessions and working out your annual turnover, visit www.ato.gov.au/sbconcessions
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How to tell us your choice
If you are eligible to use the instalments option, we will notify you on your first quarterly activity statement, which covers the tax period 1 July to 30 September.
You tell us you are choosing to pay or claim by instalments by selecting this option on your first quarterly activity statement.
Your choice will continue as long as you remain eligible. Once you have chosen the instalments option, you cannot use a different option until the start of the next financial year.
If you are a new business, you cannot use the instalments option until you have lodged an activity statement for two quarters and paid GST to us in the second quarter. This is because your GST instalment amount must be based on a previous GST amount paid.
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If you think you are eligible to use instalments, but we have not told you an instalment amount, contact us on 13 28 66.
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When to pay instalments
The following table lists the payment and lodgment dates.
Quarter
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Due date
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Payments by those paying four instalments
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Payments by those paying two instalments
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September
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28 October
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-
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December
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28 February
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-
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March
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28 April
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28 April
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June
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28 July
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28 July
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If the due date is on a weekend or a public holiday, you have until the next business day to report and pay.
How many instalments to pay
You pay either two or four instalments.
You pay GST in two instalments in an income year if both of the following apply:
- you are
- carrying on a primary production business
- a special professional such as an author, inventor, performing artist, production associate or sportsperson
- your gross primary production income or special professional income was more than the deductions for that income in your most recent income tax return - that is, your net income from the business in your most recently assessed income year was at least $1.
When you work out your net income:
- ignore any carried forward losses
- include net farm management deposits and withdrawals if withdrawals were more than deposits.
You pay GST in four quarterly instalments in an income year if either of the following apply:
- you are not
- carrying on a primary production business
- a special professional
- in your most recent income tax return you did not have net assessable
- income from a primary production business
- special professional income.
Example - a primary producer
Russell owns and operates a dairy farm.
On 28 October 2012 he chooses to pay GST by instalments. While Russell has not yet lodged his income tax return for the 2011-12 income year, in his 2010-11 income tax return he had:
- $200,000 income from dairy sales
- farm expenses of $150,000
- a carried forward loss of $60,000 ($40,000 of which is related to his dairy farm).
While Russell has a net loss of $10,000 for his most recently lodged income tax return, he still pays GST for the year in two instalments. This is because:
- he carries on a primary production business
- his assessable income from that business ($200,000) was more than his deductions related to that income ($150,000) in his most recent income tax return.
Russell does not take his carried forward losses into account when working out whether he pays two or four instalments.
Example - a special professional
Jana writes romance novels and short stories.
On 28 October 2012 she chooses to pay GST by instalments. Jana lodged her 2010-11 income tax return in August 2011. In that year she earned $33,000 for her novels and $6,000 for a series of stories in a magazine. Her allowable deductions for expenses she incurred in producing this income were $5,000, leaving her with net assessable income from her writing activities of $34,000.
Jana pays GST for the year in two instalments because:
- she is a special professional
- her assessable professional income ($39,000) was more than her deductions related to that income in her most recent income tax return.
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For more information about deciding if you are carrying on a primary production business, refer to Taxation Ruling TR 97/11 Income tax: Am I carrying on a business of primary production?
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Summary
The following table summarises the reporting and payment arrangements for GST registered businesses:
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Small business with an annual turnover (including the turnover of related entities) of less than $2 million, or not a business, but an enterprise with a GST turnover of $2 million or less.
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Option 1
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Option 2
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Option 3
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Quarterly
Pay GST amounts and report:
- GST on sales (label 1A)
- GST on purchases (label 1B)
- total sales, exports, other GST-free sales, and capital and non-capital purchases (labels G1, G2, G3, G10 and G11).
If you must pay or can claim wine equalisation tax, luxury car tax or fuel tax credits, you also report amounts at label 1C, 1D, 1E, 1F, 7C or 7D.
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Quarterly
Pay GST amounts and report:
- GST on sales (label 1A)
- GST on purchases (label 1B)
- total sales (label G1).
If you must pay or can claim wine equalisation tax, luxury car tax or fuel tax credits, you also report amounts at labels 1C, 1D, 1E, 1F, 7C or 7D.
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If paying four instalments
Pay the GST instalment amount we work out (or a varied amount) each quarter.
If paying two instalments
Pay the GST instalment amount we work out (or a varied amount) by 28 April and 28 July. If you pay a varied amount, report:
- this amount
- your estimated annual GST liability
- your reason for varying.
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Annually
Lodge an annual GST information report to report annual amounts for:
- exports (label G2)
- other GST-free sales (label G3)
- capital and non-capital purchases (labels G10 and G11).
You must lodge this report by the date your income tax return is due.
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Annually
Lodge an annual GST return to report annual amounts for:
- GST on sales and on purchases (labels 1A and 1B)
- total sales (label G1)
- exports (label G2)
- other GST-free sales (label G3)
- capital and non-capital purchases (labels G10 and G11).
If you must pay or can claim wine equalisation tax or luxury car tax, also report amounts at labels 1C, 1D, 1E and 1F.
Pay or claim the difference between total instalments and GST liability for the year. You must lodge this return by the date your income tax return is due.
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Your instalment amount
If you pay two instalments, we work out the instalment amounts so that you pay:
- 75% of your annual GST liability (and any wine equalisation tax or luxury car tax liability you may have) by 28 April
- the other 25% by 28 July.
If you pay four instalments, we work out each instalment amount so that you pay 25% of your annual GST liability (and any wine equalisation tax or luxury car tax liability you may have) by each of the quarterly due dates.
Whether you pay two or four instalments, we tell you your instalment amount before your due date for paying each instalment.
Changing your instalment amount
You can vary your GST instalment amount for any quarter if you think your total instalments will be more (or less) than your GST liability for the year (and any wine equalisation tax or luxury car tax liability you may have). However, you cannot vary your instalment amount below zero.
If you vary your GST instalment amount and the total of your instalments, or the estimate you use to work out your instalment for a quarter, is less than 85% of your GST liability for the year, we may impose a penalty.
However, if you do not vary the GST amount we work out for you there will be no penalty.
This is the case even if the total of these instalments is less than 85% of your GST liability for the year.
How to vary your instalment amount
To work out your varied instalment amount for a quarter, you first estimate your total GST liability for the year. To avoid a penalty for a quarter, your varied instalment amount, together with GST instalments you have paid (and other payments of GST, wine equalisation tax and luxury car tax you may have to make) for any previous quarters in the year, must be at least the following percentage of your estimated GST liability for the year.
Quarter
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If you pay four instalments
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If you pay two instalments
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September
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25%
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-
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December
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50%
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-
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March
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75%
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75%
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June
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100%
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100%
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Working out if you are entitled to a refund
You are entitled to a refund if your total GST credits were more than the total GST payable on your previous activity statements.
We work this out from your previous activity statements for a maximum of 12 months, but do not include your first three months' lodgment.
You are not entitled to a refund if, at the start of the year:
- you have lodged activity statements for at least 13 months
- your total GST payable is more than your total GST credits for the last 12 months.
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Include any wine equalisation tax or luxury car tax you have paid or claimed when you are working out whether you are entitled to a refund.
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Working out if you are entitled to a refund may be different if you are a new business. For more information, phone us on 13 24 78.
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What to consider before choosing instalments
Carefully consider these points before choosing the instalments option:
- once you choose the instalments option, you cannot use a different option to report and pay your GST until the start of the next financial year
- if you use this option, we only pay refunds after you lodge your annual GST return, not each quarter
- the GST instalment amount we work out takes into account GST credits
- if you vary your GST instalment amount and it is too low, we may impose a penalty.
Definitions
GST credit
A GST credit is what you claim to get back the GST included in the price you pay for most goods and services you purchase for your business.
Sale
For GST, a sale includes a sale of goods or services, lease of premises, hire of equipment, giving of advice, export of goods and the supply of other things.
Purchase
For GST, a purchase includes an acquisition of goods and services such as trading stock, a lease, consumables and other things (and, for the purpose of this publication, includes imports).
More information
For more information on how you can lodge, refer to:
If you need more information, you can:
- phone us on 13 28 66
- write to us at:
Australian Taxation Office
PO Box 3524
ALBURY NSW 2640.
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: Thursday, 2 May 2013
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